Inherent Limitations in Some Anti-Indemnity Laws

A majority of states have enacted anti-indemnity laws in various forms, protecting subcontractors (in most states with such laws) and prime contractors (in a lesser number of states) from overbroad indemnity clauses. But some clauses target sectors of the construction market and do not apply universally to construction projects. One such limitation featured prominently in a recent Florida appellate court decision.

BellSouth Telecommunications has been upgrading its service in Florida. BellSouth contracted with Mastek to unearth and provide access to utility lines, and Mastek in turn hired Blok Builders to do excavation work. While Blok was performing excavation work near a driveway, a homeowner walking down the driveway was severely injured when the driveway collapsed due to the adjacent excavation work. The homeowner sued Blok, Mastek and BellSouth, and the latter two sought indemnity from Blok.

The subcontract indemnity clause read, in part –

16. Indemnification. a) Subcontractor agrees to indemnify and hold harmless Contractor . . . from and against any loss, costs, damages, claims, . . . by reason of any injury to or death of any person or damage to or destruction or loss of any property arising out of, resulting from, or in connection with (i) the performance or nonperformance of the Work . . . which is or is alleged to be directly or indirectly caused, in whole or in part, by any act, omission, . . . of Subcontractor . . ., regardless of whether it is, or is alleged to be, caused in whole or part . . . by any act, omission, . . . of the indemnitees, or any of them . . .

Blok argued that this clause violated the Florida anti-indemnity law, at Section 725.06 of the Florida Statutes, which provides:

Any portion of any agreement or contract for or in connection with, or any guarantee of or in connection with, any construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance, including moving and excavating associated therewith . . . shall be void and unenforceable unless the contract contains a monetary limitation on the extent of the indemnification that bears a reasonable commercial relationship to the contract and is part of the project specifications or bid documents, if any.

But the Florida court noted that the project at issue did not involve excavation in conjunction with any “building, structure, appurtenance, or appliance.” Thus, the Florida anti-indemnity law did not apply to the Mastek-Blok subcontract, and did not affect the scope of Blok’s indemnity obligations to Mastek.

Some anti-indemnity laws will apply almost across the board, such as the law in Massachusetts, at Mass. Gen. Laws c. 149, § 29C:

Any provision for or in connection with a contract for construction, reconstruction, installation, alteration, remodeling, repair, demolition or maintenance work, including without limitation, excavation, backfilling or grading, on any building or structure, whether underground or above ground, or on any real property, including without limitation any road, bridge, tunnel, sewer, water or other utility line, which requires a subcontractor to indemnify any party for injury to persons or damage to property not caused by the subcontractor or its employees, agents or subcontractors, shall be void.

Even in Massachusetts, though, the broad law might not apply to marine construction, for example. Thus, many anti-indemnity laws have restrictions, subtle or otherwise, that limit the effect to building or vertical projects, or that exclude certain categories of projects, such a single-family residential. Those who would rely on anti-indemnity laws to limit or nullify stiffer contract clauses would do well to closely scrutinize the pertinent law and decide whether, in fact, the anti-indemnity law will actually apply to the project or to the contract in question.

The case is Blok Builders, LLC v. Katryniok, 2018 Fla. App. LEXIS 1312 (Jan. 31, 2018).