We have previously written about the importance of indemnification clauses in both construction and design contracts. Of all of the provisions in construction contracts, indemnification clauses are among the most important, most difficult to negotiate, and can have the most far-reaching legal consequences.
A recent Florida case (Blok Builders v. Mastec North America and BellSouth Communications) shows how a subcontractor evaded an obligation to indemnify a project owner because of language in both the prime contract and subcontract. The case was decided in April of this year by the Florida Court of Appeals.
The Blok Builders case arose when BellSouth decided to improve its underground telecommunications services. BellSouth hired Mastec to perform the work necessary to access telecommunications lines buried in certain neighborhoods. In turn, Mastec signed a contract with a subcontractor, Blok Builders, to excavate the existing underground utility lines. After Blok performed excavation work near a homeowner’s driveway, the driveway collapsed and caused a homeowner to fall and sustain permanent, life-altering injuries.
The homeowner sued both BellSouth, as owner of the project, and Mastec, as general contractor. Both BellSouth and Mastec sued Blok, demanding indemnification. The trial court entered final judgment against Blok, ruling that Blok was contractually required to indemnify both BellSouth and Mastec.
Blok appealed to the Court of Appeals for the Fourth District of Florida. The Florida appeals court reversed the part of the trial court’s decision requiring Blok to indemnify BellSouth, the owner of the project with whom Blok did not have a contract. The appeals court reasoned as follows:
Blok’s subcontract with Mastec incorporated by reference the prime contract between Mastec and BellSouth. The prime contract, in turn, had an indemnification provision similar to the subcontract indemnification provision, requiring Mastec to indemnify BellSouth. Significantly, however, the Mastec/BellSouth prime contract was silent as to whether Mastec’s subcontractors were also obligated to indemnify BellSouth against personal injury claims. At trial, because Blok’s subcontract incorporated the prime contract by reference, the trial court ruled that Blok also had a duty to indemnify BellSouth.
But the Florida Court of Appeals ruled that, because the prime contract was silent on the matter, the trial court should not have read additional language into the subcontract and imposed such a duty on Blok. This was a huge victory for Blok because the appeals court then reversed the award of BellSouth’s attorneys’ fees and costs against Blok.
Lessons to take away from the Blok Builders case? If you are a subcontractor and your subcontract incorporates the prime contract by reference, ask to see the prime contract so that you are aware of any extra risk or potential liability you might be taking on in the general contract. Do not assume that all indemnification clauses and all construction contracts are created equal, because they are not. Contractual indemnification provisions are among the most legally significant clauses in your construction contract because they can be used to force you to pay someone else’s legal bill. Read all parts of your contract carefully, including the indemnification section, and consult with your construction law specialist in the event of any uncertainty.
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
- 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
- New OSHA Guidance Suspends Enforcement of Record-Keeping Requirements for COVID-19 Cases in Most Industries
- What the Virginia Temporary Stay at Home Order Means for Your Business
- Ten Tips For Addressing Coronavirus Concerns In Your Workplace
- Closure of “Non-Essential Businesses” and “Stay at Home” Orders: What Do These Mean for the Construction Industry?
- COVID-19, Coronavirus Outbreak
- Occupational Safety and Health Act (OSHA)
- Little Miller Act
- Miller Act
- Dispute Resolution
- Government Contracts
- Department of Labor (DOL)
- Workforce Development
- Mechanic's Liens
- Department of Professional and Occupational Regulation (DPOR)
- Joint Checks
- Unjust Enrichment
- Virginia Employment Commission (VEC)
- Virginia Workers' Compensation Commission
- Uniform Statewide Building Code
- Change Orders
- 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