Litigation Management

SPECIFICALLY SPEAKING | CONSTRUCTION
The Devil is
in the Details
Successfully Revoking the indemnity Dilemma
By elizabeth a. Skane and Chris Casson

Whenfacedwith theindemnity dilemma,the keystosuccess- fullyresolvingit are to: know the facts, know the agreement and know the law. The concept of indemnity seems straight forward enough, but is it? One party asks for and the other agrees to provide indemnity to the other. As is often the case however, the devil is in the details and when it comes to indemnity, the details have been a battleground for over a century and will surely continue to be so into the foreseeable future.

The trend in the construction industry has been an attempt to level the playing field by restricting and regulating the types of enforceable indemnity provisions. This results, in many cases, in unintended consequences inherent with such legislation. Construction

cases often involve numerous parties, contracts and indemnity agreements. Who is to be made whole and why? When does the obligation to protect the indemnitee begin? Is there a distinction for causation or fault? How does insurance interplay in the milieu of competing agreements? Managing the answers to these questions can make the difference between successfully managing the litigation or not.

In the construction world, indemnity
agreements usually follow a hierarchy
where artisan subcontractors must
agree to indemnify a general contrac-
tor and/or developer in order to work
on the project. If during the course of
that work or after the work is complet-
ed, damages are claimed, there may
be a number of parties who share the
blame and are liable for the damages,
including the party indemnified. This
sets the table for contentious litigation
because of the potential inequity cre-
ated for the artisan on the one hand
and the general contractor on the oth-
er. Moreover, indemnity agreements
today are written in many different
forms and laws in various venues may
restrict how much indemnity may
be available through the agreements.
Which is why in managing construc-
tion defect litigation involving indem-
nity provisions, it is so important to
evaluate the facts, terms of the indem-
nity agreement and the law.

Know the Facts

The initial goal of any case should be the same — to discover as quickly as possible the facts that may be considered in determining the basic but always important information of who, what, when, why and where.