1. Deconstructing anti-indemnity in Texas, Louisiana, California and New York
Tom Stilwell & Sameer Mohan
May 14, 2015

2. Contractual Risk Transference
Indemnity – a means of contractual risk transfer
One party agrees to compensate another for losses or damages that arise from the contracted action
Preserves a party’s insurance limits
Protects a party from assuming more liability than the benefits received from the relationship/contract
In construction projects, those higher on the chain demand protection from those lower on the chain:
Owner seeks indemnity from the Architect, any Engineers (FEED), and the General Contractor
Architect, Engineer also seek indemnity from the General Contractor
General Contractor seeks indemnity from the subcontractors, suppliers, and material/equipment providers
Anti-Indemnity Statutes legislatively attempt to level the playing field (negotiating power/positions of the parties) by invalidating broad form and intermediate form indemnity provisions favoring the top tier of the chain
Attempt to limit indemnity provisions to the fault or responsibility of the indemnitor

3. Types of Clauses: Broad Form
Broad form: Indemnitor promises to indemnify the indemnitee regardless of fault
Including for the indemnitee's sole negligence
I.e. Subcontractor agrees to indemnify the General Contractor for the General Contractor's sole fault and negligence
Example:
The Subcontractor shall indemnify and hold harmless the Owner and Contractor and all their agents and employees from and against all claims, damages, losses and expenses, including attorney’s fees, arising out of or resulting from the performance of the Subcontractor’s work regardless of fault, whether it is caused in whole or in part by the negligence of Owner or Contractor. It is specifically understood that this indemnity shall be interpreted as indemnifying Owner, Contractor and their agents and representatives from their own sole and/or partial negligence.

4. Types of Clauses: Intermediate Form
Intermediate Form: Indemnitor assumes responsibility for its own sole negligence or partial negligence. If the indemnitee is solely at fault, there is no indemnity.
Shifts the risk where both parties have, in some percentage, contributed to the loss
I.e. Both parties are jointly or contributorily at fault / responsible for the loss
Two Types:
Full Indemnity: If the subcontractor is partially at fault, it pays all damages. An owner or general contractor who is 99% at fault still receives indemnity.
Partial Indemnity: Indemnity is calculated on a sliding scale up to the indemnitor’s percentage of responsibility for the loss. If the owner/contractor is 60% at fault, they can receive 40% indemnity from the subcontractor.
Example: To the fullest extent permitted by law, the Subcontractor shall indemnify, defend, and hold harmless the Owner, Contractor, … their agents, consultants, and employees ... from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Subcontractor's work, …, but only to the extent caused in whole or in part by the negligent acts or omissions of the Subcontractor, regardless of whether or not such a claim, damage, loss or expense is caused in part by a party indemnified hereunder. This clause is not intended to indemnify and indemnified party for claims, damages, losses and expenses caused by the sole negligence of the indemnitee.

5. Types of Clauses: Limited Form
Limited Form: Indemnitor assumes responsibility for its own sole negligence. There is no protection for an indemnitee who is partially or contributorily at fault.
Most favorable clause for subcontractors
Subcontractor only agrees to indemnify the General Contractor for the Subcontractor's own sole fault / negligence
Example: The Subcontractor shall indemnify, defend and hold harmless the Owner, Contractor, …, their agents, consultants and employees from and against all claims, losses, costs and damages, including but not limited to attorney’s fees, pertaining to the performance of the Subcontractor’s work, …, but only to the extent solely caused by the negligent acts or omissions of the Subcontractor, the Subcontractor's subcontractors, or anyone directly or indirectly employed by them.

6. Additional Insured Provisions
Indemnity agreements provide assurance of responsibility, not insurance for the loss
Additional insured provision requires the indemnifying party to obtain insurance to support the indemnity obligation
and to obtain an endorsement naming the indemnitee (owner/general contractor/architect) as an additional insured on the policy
Separate and distinct obligation from the indemnity provision
Parties may limit the scope of the insurance coverage to the indemnitor's indemnity obligation
Prevents unlimited coverage for the indemnitee beyond the scope of the contractual indemnification

7. States with Anti-Indemnity Statutes
43 states possess some form of anti- indemnity statute
18 states prohibit "broad form" indemnity provisions
25 states prohibit "intermediate form" indemnity provisions
Every state allows "limited form" indemnity provisions
11 states limit additional insured provisions
March 26, 2015

8. 4 State Comparison State Statute
Prohibits Indemnity for sole negligence of the indemnitee?
Prohibits indemnity for the partial negligence / fault of the indemnitee
Prohibits Additional Insured Clauses protecting the indemnitee
Prohibits Choice of Law Clauses nominating other jurisdictional law
Notable Provision
Texas
Texas Ins. Code § X
Employee personal injury and wrongful death exclusion
Louisiana
La-R.S. § 9:2780
Saves voidable indemnity clauses if the indemnitee pays for insurance to support the obligation
California
Cal. Civ. Code
§ 2782 (General)
§ (Contractor/Subcontractor)
Encourages additional insured provisions
New York
NY. Gen. Oblig. Law §

10. Texas: Common Law
Texas courts generally enforce indemnity provisions if
Unambiguous, and
does not violate the constitution, statute, or public policy
Prospective indemnity for gross negligence or intentional torts probably violates public policy
Texas follows general contract drafting principals when interpreting indemnity language
If the provision is not ambiguous, the court will give effect to the stated intentions of the parties
If the provision is ambiguous, the court will construe the provision in favor of the indemnitor
strictly interpreted against the indemnitee,
meaning the indemnity provision will likely be invalidated
prevents indemnification to extend by implication or assumption beyond the precise terms of the agreement
Words and phrases are given their ordinary, popular, commonly-accepted meaning
Texas still follows Fair Notice Requirements
Anti-indemnity statute is silent as to the common law fair notice requirements
Practice Tip: Continue to draft indemnity clauses to meet the fair notice requirements

11. Texas Fair Notice Requirements
Express Negligence Rule - parties must state their intention to transfer risk, and the amount and type of risk, plainly within the 4 corners of the contract
To indemnify for the indemnitee’s fault/negligence, Courts look for "magic language"
Even “to the extent the claim, loss, or damage is caused by the sole, joint, concurrent, comparative, or contributory negligence or fault of the indemnitee”
Indemnification for the indemnitee's "own negligence”
“Regardless of fault”
Conspicuous - the presence of the indemnity clause must attract attention of the reader
Conspicuous 
UCC definition - a term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it
capital headings, larger font size, contrasting font color, bold type
More visible than other items on the page
Not Conspicuous
Hidden on the reverse side of the document under the heading "warranty"
printed in small, light, text on the back of a delivery ticket
surrounded by unrelated terms
Sometimes viewed on a sliding scale of acceptability based upon the length and complexity of the contract at issue
Actual notice or actual knowledge serves as an exception to fair notice requirements

12. Texas Anti-Indemnity Statute
Texas Insurance Code §
“…a provision in a construction contract, or in an agreement collateral to or affecting a construction contract, is void and unenforceable as against public policy to the extent that it requires an indemnitor to indemnify, hold harmless, or defend a party, including a third party, against a claim caused by the negligence or fault, the breach or violation of a statute, ordinance, governmental regulation, standard, or rule, or the breach of contract of the indemnitee, its agent or employee, or any third-party under the control or supervision of the indemnitee, other than the indemnitor or its agent, employee, or subcontractor of any tier.”

13. Texas Anti-Indemnity Explained
Effective as to indemnity provisions in construction contracts after January 1, 2012
Prohibits any indemnification of the indemnitee for the indemnitee’s own negligence
General contractor cannot demand indemnity from a sub for the GC’s own negligence or fault
Cannot obtain indemnity for GC’s partial, concurrent, or comparative fault
Indemnification for percentage of fault attributable to the indemnitor (sub) is allowed
Eliminates use of broad form and intermediate form indemnity provisions

14. Employee Injury Exception
Texas Insurance Code § : “Section does not apply to a provision in a construction contract that requires a person to indemnify, hold harmless, or defend another party to the construction contract or a third party against a claim for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier.”
Allows broad form indemnity for employee injury / death claims
Sub can still indemnify the GC for the GC’s sole or concurrent fault if the claim is made by an employee of the sub, or any sub-subcontractor of any tier
Even if the GC is wholly or partially at fault, negligent, or otherwise responsible for the loss
Practice Tip: Draft bifurcated indemnity provisions in indemnity contracts
One clause dealing with property losses and non-employee damage claims
One clause dealing with employee personal injury/death claims

15. Texas Exclusions §
Insurance Agreements (other than additional insured provisions) including OCIP and CCIP programs
Breach of contract or warranty actions
Requires the breach of contract or warranty action to be completely separate from the indemnity obligation
Cannot use the act to shield yourself or avoid a direct breach of contract action
Loan and financing documents (other than construction contracts to which lenders are a party)
General agreements of indemnity required by bond sureties
Workers compensation agreements, benefits and protections
Governmental immunity protections
Agreements governed by the Texas Oilfield Anti-Indemnity Act
License or access agreements with railroad companies
Indemnity provisions related to copyright infringement claims
Construction contracts pertaining to single family homes, townhomes, and duplexes
Public works projects of municipalities
Preserves exclusions for governmental immunity protections
Joint defense agreements entered after a claim is made

16. Texas Construction Contract Defined
Luminant Oak Grove, Solid Fueled Power Generating Station

17. Texas “Construction Contract” Defined
Anti-Indemnity Statute applies to construction contracts and agreements “collateral to or affecting” a construction contract
Texas Construction Contract Definition Insurance Code § (5)
Includes any agreement for the design, construction, alteration, renovation, remodeling, repair or maintenance of,
Or furnishing material or equipment for
A building, structure, appurtenance, or other improvement
On public or private property
Including moving, demolition, and excavation connected with the real property
People covered in the definition: owners, architects, engineers, contractors, construction managers, subcontractors, suppliers, and material or equipment lessors.
Broadly includes activities not thought of as pure construction
Remodeling, maintenance, moving
No definition or guidance as to a “collateral” agreement
TOAIA - uses similar language - collateral to or affecting an agreement related to an oil or gas well or mine.
This language has been interpreted to require some connection between the contract and the actual services performed on a well or mine.
Similarly, construction statute may require some connection to real property (land) and actual services performed on the land

18. Texas Additional Insured Provisions
Tex. Ins. Code § – voids any requirement for the indemnitor to obtain additional insured coverage or to provide the indemnitee with an additional insured endorsement, to the extent it requires coverage beyond scope of indemnity allowed under the statute
Cannot use a separate additional insured clause to circumvent the statute
Cannot require insurance for indemnitor’s own negligence or fault
OCIP and CCIP (Wrap-Up Insurance) programs are allowed

19. Texas: Choice of Law Not Allowed
Tex. Ins. Code § – No waiver of the statute
“A provision of this chapter may not be waived by contract or otherwise.”
Effectively prevents the parties from choosing another state’s law to apply to the construction project

20. Texas: Architects & Licensed Engineers
Texas Civil Practice & Remedies Code §
Voids provisions in a construction contract requiring a contractor to indemnify a registered architect or licensed engineer for damage that:
Results from defects in plans, designs, or specifications prepared, approved, or used by the architect or engineer; or
Negligence of the architect or engineer in the performance of his/her professional duties, AND
Arises from
Personal injury or death
Property injury
Or any other expense that arises from personal injury, death, or property injury.
Also voids provisions requiring a registered architect or licensed engineer to indemnify or hold harmless an owner from the owner’s negligence or fault
But Limitation of liability clauses between an owner and registered architect or licensed engineer are specifically approved
Definition of a construction contract in this section includes roads, highways, bridges, dams, and levees specifically

21. Texas: Architects & Engineers - Exceptions
Does not apply to certain residential construction: owners of single family or multifamily residences
Apartment complexes probably do not fall in this exception
Does not apply to owners of interests in real property
Does not apply to provisions indemnifying an architect or licensed engineer for other negligent acts
Does not apply to provisions indemnifying an architect or licensed engineer from the negligent acts of a contractor or subcontractor

22. Texas Practice Tips Consider a bifurcated indemnity clause
One clause addresses employee injury/death claims – broad form / sole negligence allowed
One clause considers property claims – limited form up to indemnitor’s negligence
Design professionals need a third clause indemnifying for losses such as delays/cost overruns – something other than defects in plans or professional negligence causing injury or property loss
In the indemnity clauses, state that they will be applicable “to the extent allowed by law”
This language may allow the court to find the parties intent to comply with the limits or provisions of the statute
Make sure the clause still meets the Fair Notice requirements – express negligence rule and conspicuous
Consider a multi-tier additional insured provision
Additional insured provision “to the extent” of or limit of the indemnity provision
Consider a separate provision relating to employee injury claims that includes coverage for the negligence of the indemnitee in employee claims
Include a severability clause or savings clause that protects the indemnity, additional insured, and other limitation of liability clauses in the event that any one provision is found to be invalid
Include limitation of liability clauses and waivers of consequential, indirect damages
Texas law may not be avoided, but include a forum selection clause nominating a particular court or county in which the dispute must be pursued and resolved

24. Louisiana: Common Law Indemnity agreements are generally enforceable
General contractual interpretation rules apply
When the common intent of the parties and the words of the contract are clear and lead to no absurd consequences, no further interpretation may be made in search of the parties intent.
The obligation to indemnify must arise from an unequivocal express agreement in the contract
The controlling question is whether the risk that resulted in the injury was one contemplated by the parties to the contract.
Indemnification for the indemnitee's own negligence must be expressed in unequivocal terms
If there is doubt, there is a presumption the parties did not intend to indemnify the indemnitee against losses caused by the indemnitee's own negligence
“Any and all liability" does not, alone, establish an intent to indemnify the indemnitee for the indemnitee's sole negligence

25. Louisiana: Anti-Indemnity Statute
LSA-R.S. 9:2780.1B.
“…any provision, clause, covenant, or agreement contained in, collateral to, or affecting a motor carrier transportation agreement or construction contract which purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the indemnitee from and against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the indemnitee, an agent or employee of the indemnitee, or a third party over which the indemnitor has no control is contrary to the public policy of this state and is null, void, and unenforceable.”

26. Louisiana: Anti-Indemnity Explained
La. Rev. Stat. Ann. sec. 9: (applicable to contracts entered after January 1, 2011)
Does not permit indemnification for the negligence or intentional acts or omissions of the indemnitee
Prohibits Broad form and Intermediate form indemnity provisions
Sub cannot be required to indemnify GC for GC’s negligence (full or partial) or intentional conduct
Does not permit indemnification for the negligence or intentional acts of a third party over whom the indemnitor has no control
Allows indemnity for negligence of the promisor
Contributory fault / negligence of the promisor may be indemnified

27. Louisiana Construction Contract: Defined
Mercedes Benz Superdome

28. Louisiana Construction Contract: Defined
Construction contract definition includes agreements:
For the design, construction, alteration, renovation, repair or maintenance
Of buildings, structures, highways, roads, bridges, water lines, sewer lines, oil lines, gas lines,
Appurtenances or improvements to real property
Including moving, demolition and excavation
Does not include dirt or gravel roads used to access oil and gas wells and associated facilities
Does not include oil flow lines and gas gathering lines from the point where product is co-mingled for transportation.
Includes “design” in the definition of construction
One of the few references to design professionals in the statute

29. Louisiana: Insurance Exception
Similar to the LaOAIA - an insurance exception exists
Indemnification provision is not invalid, if the contract also requires the indemnitor to obtain insurance to insure the obligation to indemnify, defend, or hold harmless, and there is evidence that the indemnitor recovered the cost of the required insurance in the contract price.
Indemnity limited to the amount of insurance proceeds available under the insurance policy the indemnitor was required to obtain by contract
Provision saves an otherwise invalid indemnity clause
Under this exception, may also name the other party as an additional insured to the required insurance
Such insurance is valid only if it applies when the indemnitor is at least partially at fault
Otherwise, statute invalidates additional insured provisions that covers the acts or omissions of the indemnitee

30. Louisiana: Public Works Contracts
La. R. S. 38:2195 (public contracts) - public entities are prohibited from assuming liability for damages caused by others with whom the public entity contracts 
Voids indemnity agreements by the state or governmental entities
La. Rev. Stat. Sec. 38:2216.G (public contracts)
Voids indemnity agreement requiring a contractor to protect the governmental entity from third party claims caused by the governmental entity
Voids indemnity agreement protecting architects, landscape architects, engineers, or land surveyors hired /contracted by a governmental entity for damages caused by their negligence
Applies to prime contractors only
Bars indemnity for the indemnitee's negligence, sole or partial
Allows indemnity for concurrent negligence, up to the percentage attributable to the indemnitor

31. Louisiana: Choice of Law
La R.S. 9:2779 holds choice of forum and choice of law provisions invalid
When one party is domiciled in Louisiana, and
The work, materials, and equipment involve a construction project in Louisiana
Requires the lawsuit or arbitration to occur in Louisiana
Voids provision requiring interpretation of the agreement under another jurisdiction's law
La R.S. 9:2778 same provisions with respect to public contracts involving the state or a political subdivision of the state
Effectively prevents ability of a party to contract around application of Louisiana Construction Anti-Indemnity Statute

32. Louisiana: Practice Tips
Expressly state the intention to indemnify and the scope of the indemnity
Single global indemnity clause acceptable – no differentiation for personal injury, property loss, or design negligence
To indemnify another party for their own negligence, specifically support the provision with an insurance provision
State that part of the contract consideration includes the indemnitor’s recovery of the cost of the insurance for the indemnitee
Utilize a separate additional insured provision stating that it applies to the indemnitee’s own negligence
Use severability clauses to protect the remainder of the contract from any invalid provision
Include limitation of liability clauses – waivers of consequential and indirect damages
Cannot avoid La law or jurisdiction, but consider a venue provision requiring disputes to be brought in a particular court or parish of Louisiana
Avoids disputes in liberal parishes
Nominate a federal court in Louisiana

34. California: Common Law
Agreements interpreted to give effect to the mutual intent of the parties as it existed at the time of contracting
Strictly construed against the indemnitee
May indemnify the indemnitee for the indemnitee's own active negligence
Must use sufficiently specific language
Must be clear and explicit
In the absence of express language, the provision will be interpreted to indemnify the indemnitee only for the indemnitee's passive negligence

35. California Distinguishes Between Active & Passive Negligence
mere nonfeasance 
failure to discover a defect
failure to perform a duty
Active negligence - exists where there is participation in some manner in the conduct or omission which cause the injury beyond mere failure to perform a duty imposed on him by law.
personal participation of the indemnitee in affirmative acts
failure to perform a precise duty agreed to be performed
Indemnity for active negligence requires a plain, clear, and explicit statement in the clause that negligence is to be included in the indemnity and such language will be strictly construed against the indemnitee
Definitions assessed on a case by case basis with each case turning on its own facts

36. California’s Anti-Indemnity Statute (General Provision)
§ 2782 “…provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract and that purport to indemnify the promisee against liability for damages for death or bodily injury to persons, injury to property, or any other loss, damage or expense arising from the sole negligence or willful misconduct of the promisee or the promisee’s agents, servants or independent contractors who are directly responsible to the promisee, or for defects in design furnished by those persons, are against public policy and are void and unenforceable; provided, however, that this section shall not affect the validity of any insurance contract, workers’ compensation, or agreement issued by an admitted insurer as defined by the Insurance Code.”

37. California: Anti-Indemnity Explained
§ 2782(a) – General Clause Prohibits indemnity for sole negligence or willful misconduct of the indemnitee,
Allows Intermediate form indemnity: allows full indemnification of the indemnitee, so long as the indemnitor is at least 1% responsible for the loss
Also voids agreements where a party seeks indemnification for defects in design furnished by the indemnitee or its agents
§ 2782(B)(2) Public Agencies – Agreements relieving a public agency of liability for the agency’s active negligence are void and unenforceable
Protects contractors, subcontractors, and suppliers of goods
Allows Intermediate form indemnity – may indemnify to the extent of indemnitor’s negligence
In the event of passive negligence, broad form indemnity for sole negligence of the indemnitee is allowed
§2782(C)(1) Private Owners of Real Estate– Agreements relieving a private owner from liability are unenforceable to the extent of the active negligence of the owner
Protects contractors, subcontractors and suppliers of goods
Allows Intermediate form indemnity – may indemnify for indemnitor’s negligence
In the event of passive negligence, broad form indemnity is allowed
Private owner exceptions:
when the private owner is acting as a contractor or supplier of materials or equipment to the work (2782(c)(1)or is a homeowner performing an improvement on his or her single family dwelling (2782(c)(3)).

38. California’s Anti-Indemnity Statute (Contractor/Subcontractor)
§ “…provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any construction contract and amendments thereto entered into on or after January 1, 2013, that purport to insure or indemnify, including the cost to defend, a general contractor, construction manager, or other subcontractor, by a subcontractor against liability for claims of death or bodily injury to persons, injury to property, or any other loss, damage, or expense are void and unenforceable to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor, construction manager, or other subcontractor, or their other agents, other servants or other independent contractors who are responsible to the general contractor, construction manager, or other subcontractor, or for defects in design furnished by those persons, or to the extent the claims do not arise out of the scope of work of the subcontractor pursuant to the construction contract. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties….”

39. California: Anti-Indemnity Explained
§ Agreements between General Contractors, Construction Managers, or Subcontractors
Agreements indemnifying or insuring a general contractors, construction manager, or other subcontractor, by a subcontractor are void and unenforceable to the extent the claims arise out of or relate to
the active negligence or willful misconduct of the general contractor, construction manager, or subcontractor, or
Defects in design furnished by the general contractor, construction manager, or subcontractor or
Claims that do not arise out of the subcontractor’s scope of work
For active negligence
Bars broad form indemnity provisions
Permits Limited form indemnity provisions, up to negligence of indemnitor
For passive negligence – allows full indemnity under a broad form provision
No Alternate Choice of Law: the statute prohibits its waiver by contractual agreement, act or omission of the parties
Limitations of liability are permitted and reserved to the agreement of the parties

40. California: Exceptions
§ (a) protecting subcontractors does not apply to:
Contracts for residential construction
Direct contracts with a public agency
Direct contracts with owners of privately owned real estate
Wrap-up insurance programs (OCIP / CCIP)
Breach of warranty claims existing independently of the indemnity obligation
Additional insured provisions
Loan and financing documents
Indemnities required by sureties
Workers compensation agreements / benefits
Governmental immunity laws / benefits
Provisions requiring the purchase of insurance
Contracts with design professionals

41. California: Construction Contract Defined
Centinela Solar Power Plant

42. California: Construction Contract Defined
Very broad definition
Activities Included: construction, surveying, design, specifications, alteration, repair, renovation, maintenance, removal of or demolition of
Projects: buildings, highways, roads, parking facilities, bridges, water lines, sewer lines, oil line, gas line, electric utility transmission or distribution line, railroad, airport, pier or dock, excavation
Or other structure, appurtenance, development or other improvement to real or personal property,
Collateral Activities Included: Agreements to perform any portion thereof or any act collateral thereto, or to perform any service reasonably related thereto, including,
the erection of all structures or performance of work in connection therewith,
electrical power line clearing, tree trimming, vegetation maintenance,
the rental of all equipment,
all incidental transportation, moving, lifting, crane and rigging service
and other goods and services furnished in connection therewith.
Covers incidental activities that may support construction, but are not typically or traditionally considered construction

43. California: No Waiver
California prohibits choice of law clauses to avoid the effect of the statute
Cannot circumvent the statute by nominating another state’s law in the contract
§ (c): “Notwithstanding any choice of law rules that would apply the laws of another jurisdiction, the law of California shall apply to every contract to which this section applies.”
§ (d): “A waiver of the provisions of this section is contrary to public policy and is void and unenforceable.”

44. California: Encourages Additional Insured Provisions
California’s anti-indemnity statute does not invalidate additional insured provisions
§ (n) “Nothing in this section shall be construed to affect the obligation, if any, of either a contractor or construction manager to provide or maintain insurance covering the acts or omissions of the promisor, including additional insurance endorsements covering the acts or omissions of the promisor during ongoing and completed operations pursuant to a construction contract with a public agency …or an owner of privately owned real property to be improved….”

45. California: Design Professionals
Contracts between Design Professionals and Public Agencies
Agreements requiring a design professional to indemnify a public agency are unenforceable except for claims that arise out of the negligence, recklessness, or willful misconduct of the design professional
Does not distinguish between active and passive negligence
Allows a Limited form indemnity clause, indemnifying the public agency for the design professional’s responsibility for the loss/claim
Design professionals include licensed architects, licensed landscape architects, registered professional engineers, and licensed professional land surveyors.
This provision may not be waived or modified by contract, act, or omission of the parties

46. California: Drafting Suggestions
Separate indemnity clauses to account for active and passive negligence of the parties
Active negligence - each party only indemnifies for its own fault
Passive negligence – indemnity flowing to owners (public or private) or contractor (upper tier contractor), full indemnity regardless of fault allowed
For GC/Sub relationships, limit indemnity to sub’s scope of work
Draft broad scope of work clauses for all subs
Remember ancillary activities such as trucking to site/deliveries on site
Consider a catchall indemnity meeting 2782 general provision
Where no other specific indemnity provision applies, indemnitor will fully indemnify indemnitee if the indemnitor is alleged to be solely or partially at fault/negligent, whether active or passive.
Include broad additional insured provisions
Only way to protect against design defect claims – indemnity prohibited
Include limitations of liability clauses
§ permits “allocation, release, liquidation, exclusion, or limitation” for
Design defects
Promisor’s liability under a construction contract

48. New York: Common Law
Contractual agreements to indemnify are enforceable in New York
Strictly construed
Will not be enforced unless there is manifestation of "clear and unmistakable intent to indemnify.”
If the intent is unclear from the writing, the court is required to consider extrinsic evidence of intent
the intent must be "unattended by danger of misconception in the purport of the contract itself, and concerning which there is not reasonable basis for a difference of opinion.”
If there is "unmistakable intent" to indemnify an indemnitee for its own negligence, the Court will enforce it.
An agreement to indemnify "whether ... damages or injuries be attributable to negligence of the contractor or his employees or otherwise" extends indemnity for the indemnitee's own negligence.
Where the indemnitee is actively negligent, greater scrutiny is applied to the indemnification clause.

49. New York: Anti-Indemnity Statute
New York General Obligations Law §
“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 indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property contributed to, caused by, or resulting from the negligence of the promisee, his agents or employees, or indemnitee, whether such negligence be in whole or in part, is against public policy and is void and unenforceable; provided that this section shall not affect the validity of any insurance contract, workers’ compensation agreement or other agreement issued by an admitted insurer. This subdivision shall not preclude a promisee from requiring indemnification for damages arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of a party other than the promisee, whether or not the promisor is partially negligent.”

50. New York: Anti-Indemnity Explained
NY Gen. Oblig. Law sec
Applies to all contracts to provide construction services after July 16, 2009.
Applies promises and agreements in connection with or collateral to a contract for the construction, alteration, repair, or maintenance of a building, structure, appurtenances and appliances including moving, demolition, and excavating connected therewith
Prohibits indemnification of a party for their own actual negligence
In whole or in part
Bars indemnification for indemnitee's sole or concurrent/partial negligence
Allows indemnification up to the fault attributable to the indemnitor
Effectively prohibits Broad Form and Intermediate Form indemnity provisions

51. New York: Exceptions
Anti-Indemnity statute does not prohibit or void a requirement to purchase insurance indemnifying another person for their own negligence
Additional insured provisions are allowed
No limitation on the scope of an additional insured provision
New York encourages the use of insurance to allocate risk
Statute does not prevent a GC from requiring a sub to indemnify the GC for the acts of an owner, architect, engineer, (upper tier entity) or a material supplier, equipment provider, or sub-subcontractor (lower tier entity)
Prohibition on indemnity solely prevents an entity from receiving protection for his/her own negligence (fault)

52. New York: Design Professionals

53. New York: Design Professionals
NY Gen. Oblig. Law sec
Includes architects, engineers, and surveyors
Applies to such professional seeking indemnity for liability arising out of defective maps, plans, designs or specifications prepared, acquired, or used by the architect, engineer, or surveyor
Does not have to be an original document created by the professional
Applies to documents “acquired” OR “used”
Could be furnished by another party in the chain
Bars indemnity of the architect, engineer, or surveyor for liability that arises out of defects in the maps, plans, designs or specifications
Architect, Engineer, Surveyor are strictly liable for all defects
Prohibits indemnity for professional’s sole negligence
Prohibits indemnity for professional’s concurrent/partial negligence
Prohibits indemnity for an innocent professional if the loss is alleged to be attributable to the defects in the maps, plans, designs, or specifications

54. New York: Drafting Considerations
NY does not prohibit choice of law clauses. Consider the law being chosen to govern the contract
Include a clear choice of law provisions nominating favorable law
Include a clear forum selection provision nominating a venue in which a dispute must be pursued/resolved
Broad indemnity agreement covering all types of loss is permissible
Limit indemnity to each party’s own negligence, but specify the duty to indemnify occurs even when the indemnitee is partially negligent/at fault
“To the fullest extent of law” will save an indemnity clause
Courts will interpret the parties’ intent as to comply with the statute
Consider separating indemnity for contractors vs. architects, engineers, and surveyors and treat design defect claims separately
Cannot indemnify for design defect claims / protect risk through additional insured clause
Require as broad an additional insured clause as possible
If applicable, specifically include protection for architects, engineers, and surveyors for design defect claims
Include a severability / savings clause to prevent any one provision from invalidating all provisions
Include waivers of consequential and indirect damages