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Indemnification Clauses

Indemnification Clauses

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A contractor may be found liable for an act of negligence which results in the creation of a dangerous condition upon a public street or sidewalk .  A contractor may be required to indemnify their employer when their employer is sued by a third party injured as a result of this dangerous condition.  This could be the case if an indemnity agreement exists within the contract, even where the contractor was not at fault for the injury of the third party.

For example, in Sand v. City of New York, 83 A.D.3d 923, 921 N.Y.S.2d 312 (2d Dept. 2011), the plaintiff, a motorcyclist, was injured when his motorcycle struck a pothole on a public street in Brooklyn.  As a result of his injury, the plaintiff commenced an action against the City of New York.  The City of New York in turn commenced an action for indemnification against Verizon of New York, Inc.  Verizon had been provided with a permit to open the roadway on which the motorcyclist had been injured.  Verizon commenced a fourth-party action for contractual indemnification against S. DiFazio and Sons Construction, Inc., which had performed the work for Verizon under the subject permit.  As a result of the indemnification clause in the contract between Verizon of New York, Inc. and DiFazio and Sons Construction, Inc., the court found that Verizon was entitled to be indemnified for attorneys’ fees and costs incurred in the defense of the action against the plaintiff motorcyclist.  The indemnification clause in question provided that DiFazio would defend and indemnify Verizon for all claims arising out of DiFazio’s “actual or alleged acts or omissions.” The plain and unambiguous terms of the contract did not condition DiFazio’s obligation for attorneys’ fee and costs on a finding of fault.

However, where the contract does not provide for broad indemnity, the contractor may not be required to indemnify the other party to the contract for damage to a third party.  The degree of liability of the contractor depends on the precise terms of the relevant contract clause.  Such was the case in Farrell v. City of New York, 83 A.D.3d 655, 919 N.Y.S.2d 531 (2d Dept. 2011).  Public contractors retained by State of New York to perform re-decking and structural steel replacement work on a roadway.  Subsequent to the work being done, a motorist’s vehicle was allegedly struck by road debris identified as a break shoe, which in turn injured the motorist.  The court found, that despite an indemnity clause in the contract between the contractor and the city with regard to the project, the contractor could not be held liable for the motorist’s injuries.  The contract with the State was limited and did not entirely displace the State’s duty to maintain the roadway.  It was found that the contractor did not cause the brake shoe to be on the roadway,  did not know how long it was there, and did not have any duty to remove non-construction roadway debris.

Therefore a broadly worded indemnification clause in a contract between a contractor and their employer may leave the contractor open to more liability than he would anticipate.  If a contract provides for indemnification for anything and everything related to a claim by a third party as a result of the work, the contractor may be required to indemnify their employer for the damages, even if the contractor was not himself at fault.

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