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Subcontractor Must Indemnify General Even When Sub Was Not Negligent


July 3, 2000


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(A revised version of this article appears in The Construction Lawyer, Volume 20, No. 3, July 2000, published by the American Bar Association's Forum on the Construction Industry.)


By John W. Ralls
Howrey LLP

At the conclusion of a commercial project, the owner claimed the work was defective, including the tile work. The general contractor sought contractual indemnity from the tile subcontractor.

The subcontract contained an indemnity clause which provided: "All work covered by this agreement… shall be at the risk of SUBCONTRACTOR exclusively. SUBCONTRACTOR shall, with respect to all work which is covered by or incidental to this contract, indemnify and hold CONTRACTOR harmless from… [a]ny claim… including reasonable attorneys' fees… resulting from contractor's alleged or actual negligent act or omission, regardless of whether such act or omission is active or passive…. However, SUBCONTRACTOR shall not be obligated under this Agreement to indemnify CONTRACTOR with respect to the sole negligence or willful misconduct of CONTRACTOR, his agents or servants or subcontractors who are directly responsible to CONTRACTOR, excluding SUBCONTRACTOR herein.'"

The tile subcontractor refused to defend or indemnify the general contractor. The general contractor settled with the owner and then filed an indemnity action against the tile subcontractor in which it sought reimbursement for the money it had paid the owner on the tile claim as well as the attorney fees it incurred in defending the claim.

At trial, the jury found that neither the general contractor nor the subcontractor had been negligent. A judgment was nonetheless entered against the tile subcontractor for the money paid by the general contractor as well as attorney fees incurred based on the contractual indemnity obligation. The subcontractor appealed. The California Court of Appeal affirmed.

On appeal, the tile subcontractor argued that it was not required to indemnify the general contractor "in the absence of some showing that it had been negligent." The court treated the issue as one of contractual interpretation. Examining the contract language, the court found the expression of the subcontractor's agreement to provide indemnity in the absence of any fault was clear.

The court rejected the subcontractor's argument that every cause of action for indemnity requires a showing of fault on the part of the indemnitor. Centex Golden Constr. Co. v. Dale Tile Co., 93 Cal. Rptr. 2d 259, 2000 Cal. App. LEXIS 150 (Cal. App. 2000). "An agreement by a subcontractor to indemnify a general contractor for any claim made with respect to the work covered by or incidental to their subcontract may require indemnity even if the claim is not meritorious and subcontractor is not guilty of any negligence."

The court found the agreement conformed to public policy. The contract did not require the subcontractor to assume unlimited liability because the claim had to arise out of the subcontractor's work. In addition, as required by California Civil Code §2782, the agreement relieved the subcontractor of liability when the claim or loss arose out of the sole negligence or willful misconduct of the general contractor or its other subcontractors.

"Under the contract as we have interpreted it, [the general contractor] was only required to show that the claim was connected to [the subcontractor's] work and that it did not grow out of [general contractor's] sole negligence or willful misconduct."


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For more information about the issues covered in this report, please contact John Ralls in our San Francisco office at 415-848-3362 or at rallsj@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.


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