Our recent blog post explained the importance of indemnification provisions in construction contracts. A 2018 federal case has clarified just how carefully they must be drafted in order to have any meaning.
For background, section 11-4.1 of the Virginia Code is sometimes known as the “Anti-Indemnity Statute.” Under 11-4.1, any indemnification provision in a construction contract that obligates the contractor to indemnify another party to the contract for that other party’s negligence is unenforceable.
In the recent case, Travelers Indem. Co. v. Lessard Design, Inc., No. 1:17-cv-1401 (E.D. Va. June 12, 2018), Judge Ellis for the Eastern District of Virginia considered the Anti-Indemnity Statute in a very different context.
In an earlier case, Humphreys – an out-of-state architect, had sued Lessard – a Virginia architect, and PDT– the builder. In that copyright case, Humphreys claimed that Lessard and PDT designed and built a Virginia project that was similar to Humphreys’ Minnesota project. Travelers bore the cost of defending PDT in that case. Lessard eventually won on summary judgment, but that was not the end of the saga.
After the initial case, Travelers, as subrogee to PDT, later sued Lessard to recover the attorney’s fees it incurred in the initial case under a theory of indemnification under Lessard’s contract with the Virginia owner. The indemnification provision in that Owner-Architect contract obligated Lessard to indemnify the owner and PDT from any losses related to Lessard’s services on the Virginia project.
The Court ruled that the Owner-Architect contract attempted to obligate Lessard to indemnify PDT for the Owner’s and PDT’s own negligence. The Court recognized that the contract did not actually say that – rather, the contract simply said that the Architect would indemnify the Owner and PDT for “all losses.” But because the contract did not expressly create an exception in the event the Owner or builder caused the losses, the Court found that it violated Section 11-4.1. Under this reading, the Court barred Travelers, as subrogee to PDT, from recovering against Lessard.
The Court also ruled an architecture contract can be a “construction contract” and an architect can be a “contractor.” The Court decided this because an architect can supervise and administer construction. The Court issued this ruling even though the losses were incurred under a copyright claim and were not for personal injury or property damage.
This new ruling is very important and requires parties to construction contracts to again review them. Do your construction or design professional contracts expressly carve out losses caused by the indemnified parties from any indemnification obligation? Under Travelers v. Lessard, a failure to do so could mean that the entire indemnification provision is void.
As president of Hirschler and head of the firm's litigation section, Courtney knows how to lead people and projects to a successful outcome.
Leveraging deep experience in the construction industry, Courtney advises public and ...
Kelly’s practice focuses on construction law, commercial and product liability law, with an emphasis on dispute resolution—including mediation, arbitration, jury and bench trials in state and federal court. She routinely ...
Nate fully engages in each case and shoulders his clients’ needs. Communication, efficiency and careful judgment define his practice. In every case, he investigates competing claims to thoroughly understand their strengths ...
A professional engineer (P.E.) and an experienced lawyer, Webb began practicing at Hirschler Fleischer following four years of work as a consulting engineer. His multidisciplinary practice focuses on general business and ...
SubscribeSubscribe to Hirschler by Email
- New Defense to Joint Liability Available to Contractors
- What Employers Need to Know About Virginia’s New Overtime Wage Act
- OSHA Increases Amounts of Civil Penalties for 2021
- Have Force Majeure Defenses Based on COVID-19 Been Successful This Year?
- Kelly Bundy and Liz Burneson Publish Article on Joint Employer Status in Construction Executive
- Kelly Bundy Authors Article for ABA Construction Law Forum’s “Under Construction” Series
- Miller Act Notice More Than 90 Days Before A Subcontractor’s Final Day of Work Held Untimely
- Virginia Supreme Court Allows Sub-Sub Material Supplier To Recover Directly From General Contractor For Unpaid Material
- New Virginia Law Can Make General Contractors Liable for Subcontractors' Employee Wages
- OSHA Changes Course on COVID-19 Record-Keeping Requirements
- Occupational Safety and Health Act (OSHA)
- COVID-19, Coronavirus Outbreak
- Fair Labor Standards Act
- Lien Waivers
- Department of Labor (DOL)
- Little Miller Act
- Dispute Resolution
- Miller Act
- Government Contracts
- Workforce Development
- Mechanic's Liens
- Department of Professional and Occupational Regulation (DPOR)
- Force Majeure
- Joint Checks
- Unjust Enrichment
- Virginia Employment Commission (VEC)
- Virginia Workers' Compensation Commission
- Uniform Statewide Building Code
- Change Orders
- April 2021
- January 2021
- October 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- August 2019
- June 2019
- April 2019
- February 2019
- January 2019
- December 2018
- October 2018
- September 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- November 2017
- October 2017
- September 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016