Virginia Lawyer April 2021 : Page 33

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its own negligence whether it is solely negligent or only partially negligent. The Court held that the indemnification provision at issue “clearly reaches beyond the negligence of other parties and indemnifies [the indemnitee]. Therefore, it violates Code 11-4.1 and is void.” 16 Many practitioners, fifty-state compendia, and even some treatises, review Section 11-4.1 and, finding the language so similar to those other jurisdictions that permit an indemnitee to be indemnified for its own negli-gence as long as it is not solely negligent, conclude that Virginia falls within that camp. Indeed, an internet search for anti-indemnity statutes results in myriad compendia and articles interpreting Section 11-4.1 and Virginia’s law on construction-related contractual indemnification clauses as permitting an indemnitee’s indemnification for its partial negligence, and precluding such indemnification only when the indemnitee is solely negligent. Thus, the trap is sprung. The result in some cases has been a finding that flies in the face of the contract certainty for which parties yearn — that the indemnification clause the parties agreed to, permitting a party to be indemnified for its own partial negligence, is in fact void ab initio and cannot be reformed. 17 Other juris-dictions with statutory language similar to Section 11-4.1 do not preclude indemnification for an indemnitee’s concurrent or partial negligence, instead limiting the statutory prohibition to damages arising out of an indemnitee’s sole negligence. 18 Yet after Uniwest , despite the similarity in language to these other statutes where indemnification is prohibited only for an indemnitee’s sole negligence, Section 11-4.1 is interpreted in a more expansive fashion, also precluding indemnification for the indemnitee’s partial negligence. It is high time for the General Assembly to correct the uncertainty created by the statute’s ambiguous language. If Section 11-4.1’s intent is to preclude an indemnitee’s indemnification only when it is solely negligent, as many states do, then it should modify Section 11-4.1 to read “caused by or resulting from the sole negligence of such other party.” Alternatively, if the intent is really as the Court found in Uniwest , then the General Assembly should remove Section 11-4.1’s current ambiguity by modifying it to read “caused partially or solely by, or resulting partially or solely from, or arising partially or solely out of the negligence of such party.” Further, given some of Uniwest ’s progeny, the revised legislation should clarify that savings clauses inserted in indemnification clauses, such as the commonplace “to the fullest extent permitted by law,” will permit reformation of a non-conforming clause rather than a finding that it is void ab initio . At the end of the day, contractual certainty is best for all. James P. Bobotek, a partner in Pillsbury’s McLean office, guides clients through all phases of development and construction of office, multi-family housing, hotel, and other commercial properties, including preparation, review and negotiation of development, design, construction, design-build, and related agreements. Bobotek also counsels clients in analyzing insurance coverage claims, formulating risk management strategies, and developing contractual insurance requirements. He has secured many favorable outcomes for commercial policyholders on CGL, builder’s risk, commercial property, business interruption, cyber, professional liability, D&O, pollution, fidelity, and other claims. www.vsb.org Endnotes 1 See, e.g., Travelers Indem. Co. v. Lessard Design , Inc. , 321 F. Supp. 3d 631, 635 (E.D. Va. 2018). 2 These states are Alaska, Arizona (private contacts only), Arkansas, California, Georgia, Hawaii, Idaho, Indiana, Maryland, Massachusetts, Michigan, New Jersey, South Carolina, South Dakota, Tennessee, and West Virginia. 3 These states are California, Colorado, Connecticut, Delaware, Florida (public contracts only), Illinois, Iowa, Kansas, Kentucky, Louisiana (protects prime contractors on public works projects only), Minnesota, Mississippi, Missouri, Montana, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Utah, Virginia, and Wisconsin. 4 These states are Alabama, Maine, Nevada, North Dakota, Pennsylvania, and Vermont. They do so either by statute or case law, and some of them require that such indemni-ty is allowed only if it is “clear and unequivocal.” 5 Va. Code Ann. § 11-4.1 (Cum. Supp. 1991). 6 See, e.g. , N.J. Stat. Ann. § 2A:40A-1 (“caused by or result-ing from the sole negligence of the promisee …”); Md. Cts. & Jud. Proc. § 5-401 (“caused by or resulting from the sole negligence of the promisee …”); W. Va. Code §55-8-14 (“caused by or resulting from the sole negligence of the indemnitee …”; S.C. Code § 32-2-10 (“caused by or resulting from the sole negligence of the promisee …”). 7 Va. Code Ann. § 11-4.1. 8 See, e.g. , Del. Code Ann. title 6, § 2704 (caused partially or solely by, or resulting partially or solely from, or arising partially or solely out of the negligence of such promi-see or indemnitee …”); N.Y. Gen. Oblig. Law § 5-322.1 (“caused by or resulting from the negligence of the prom-isee … whether such negligence be in whole or in part ….”); Conn. Gen. Stat. § 52-572k (“caused by or resulting from the negligence of such promisee …”); N.C. Gen. Stat. § 22B-1 (“proximately caused by or resulting from the negligence, in whole or in part, of the promise …”). 9 Id . 10 280 Va. 428, 699 S.E.2d 233 (Va. 2010), opinion withdrawn in part on reh’g on other grounds , 281 Va. 509, 714 S.E. 2d 560 (2011). 11 Id. , 699 S.E.2d at 225. 12 Id . at 226-27. 13 Id . at 229. 14 Id . 15 Id . 16 Id .; see also Hensel Phelps Constr. Co. v. Thompson Masonry Contr., Inc. , 292 Va. 695, 704, 791 S.E. 2d 734, 738-39 (2016) (confirming Uniwest’s holding that an indemnification provision indemnifying an indemnitee for its own negligence was void for violating the public policy expressed in Section 11-4.1). 17 See, e.g. , Morris v. DSA Roanoke LLC , 102 Va. Cir. 204 (Va. Cir. Ct. City of Roanoke 2019); Supchak v. Fuller Constr. Corp , 86 Va. Cir. 517 (Va. Cir. Ct. City of Chesapeake 2013); Allstate Ins. Co. v. Structures Design/Build, LLC, No. 7:15-CV-00354, 2016 U.S. Dist. LEXIS 34349 (W.D. Va. Mar. 17, 2016); but see Wasa Props, L.L.C. v. Chesapeake Bay Contrs., Inc. , 103 Va. Cir. 423 (Va. Cir. Ct. City of Chesapeake 2019) (contract included a broad indemnity provision, but because it did not expressly permit the owner to be indemnified for its own negligence, the Court held the provision did not violate Uniwest .). 18 See, e.g. , Md. Cts. & Jud. Proc. § 5-401 (precluding indem-nification only for an indemnitee’s sole negligence when the statute states “caused by or resulting from the sole negligence of the promisee or indemnitee.”); W. Va. Code §55-8-14 (“caused by or resulting from the sole negligence of the indemnitee …”; S.C. Code § 32-2-10 (“caused by or resulting from the sole negligence of the promisee …”). THE CONSTRUCTION LAW AND PUBLIC CONTRACTS ISSUE | VOL. 69 | APRIL 2021 | VIRGINIA LAWYER 33

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