05 Nov Indemnification Clauses – An Often Litigated Contractual Provision
Written by: Pamela L. Coleman, Esq.
An often litigated, and often overlooked or non-negotiable, provision of construction contracts is the indemnification clause. Such provision requires a party to protect another from claims and damages. It seeks to impute liability to the indemnitor for the torts, or negligence, of the indemnitee. The general rule in Georgia is that indemnity clauses are enforceable as written, including those that expressly, clearly, and unequivocally indemnify against a party’s own negligence. Batson-Cook v. Georgia Marble Setting Co., 112 Ga. App. 226 (1965). However, Georgia has enacted the anti-indemnification statute, O.C.G.A. § 13-8-2(b), providing an exception to the general rule. The statute provides:
A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair, or maintenance of a building structure, appurtenances, and appliances, including moving, demolition, and excavating connected therewith, purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, arising out of bodily injury to persons, death, or damage to property caused by or resulting from the sole negligence of the indemnitee, or its, his, or her officers, agents, or employees, is against public policy and void and unenforceable.
O.C.G.A. § 13-8-2(b) (2015).
To fall within the exception of the statute, an indemnification provision must “(1) relate in some way to a contract for ‘construction, alteration, repair, or maintenance’ of certain property and (2) promise to indemnify a party for damages arising from that own party’s sole negligence.” Kennedy Dev. Co. v. Camp, 290 Ga. 257, 259 (2011). Georgia courts have consistently construed the first condition broadly to include not only traditional construction contracts, such as between contractor and subcontractors, or between developers and civil engineers, but also commercial and residential lease agreements, and contracts for repair and maintenance within an existing commercial structure. As to the second condition, Georgia courts have held that an indemnity provision purporting to indemnify a party from “all claims” and ” any loss of damage to property, or an injury to or death of any person,” applies to the indemnitee’s sole negligence, and, thus, such indemnification provision was void and unenforceable. Id. at 259-61 (citing Frazier v. City of Albany, 245 Ga. 399, 402 (1980)).
A word of caution is in order, however. The complexity of an indemnification provision, its specific or ambiguous language, and the relevant facts of any given situation will determine whether the courts uphold the provision or deem it void under the anti-indemnification statute or any other legal premise. There is no overall, sweeping rule as to how a court will construe an indemnity provision. Accordingly, when entering into a construction contract, it would be wise to carefully consider the language of the indemnification clause.