Minnesota Court of Appeals, 1985 A standard AIA subcontract indemnity clause purporting to cover the general contractor's own negligence is equivocal and fails strict construction, so the general contractor is not entitled to indemnification for damages caused by its own negligence.

A standard AIA subcontract indemnity clause purporting to cover the general contractor's own negligence is equivocal and fails strict construction, so the general contractor is not entitled to indemnification for damages caused by its own negligence.

Braegelmann v. Horizon Development Co.
Minnesota Court of Appeals · Decided July 30, 1985 · Heard
371 N.W.2d 644; 1985 Minn. App. LEXIS 4428 (North Western Reporter, Second Series)

Outcome: Reversed for appellant.

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Counsel

Mitchell R. Spector, Minneapolis, for respondent Braegelmann., M.C. Green, St. Paul, for respondent Horizon Development Co., Robert L. Bach, St. Paul, for appellant.

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Braegelmann v. Horizon Development Co.

What happened

The facts of the case, in plain language.

Peter Braegelmann, an employee of Bernard L. Dalsin Co., sued Horizon Development Company for personal injuries sustained while working on a construction project in Arden Hills, where Horizon was the general contractor.

Horizon filed a third-party action against Dalsin, the subcontractor, alleging Dalsin's own negligence at least partially caused Braegelmann's accident.

The subcontract, executed March 3, 1981, was an American Institute of Architects standard form (AIA Document A401 — 1978 Edition) whose indemnification clause required Dalsin to indemnify and hold harmless Horizon for claims arising out of Dalsin's work, to the extent caused by Dalsin's negligence, regardless of whether also caused in part by a party indemnified.

On cross-motions for summary judgment, the trial court ruled for Horizon, holding that if Dalsin was negligent in any degree it was obligated to indemnify Horizon for all damages irrespective of any contributory negligence on Horizon's part.

Because the subcontract predated August 1, 1984, Minn. Stat. § 337.02 did not void the indemnification provision, but such pre-1984 provisions are strictly construed against the party seeking indemnification unless the intent is expressed in clear and unequivocal terms.

What the court decided

Peter Braegelmann, an employee of Bernard L. Dalsin Co., sued Horizon Development Company, the general contractor on an Arden Hills construction project, for personal injuries; Horizon responded with a third-party claim against Dalsin, the subcontractor, for contractual indemnification under their March 3, 1981 AIA-form subcontract. The trial court granted Horizon summary judgment, reading the clause to require Dalsin to indemnify Horizon for all damages whenever Dalsin was negligent to any degree, even if Horizon's own negligence contributed. Reversing, the Court of Appeals applied the strict-construction rule governing pre-August 1984 construction indemnity agreements (Minn. Stat. § 337.02; Johnson v. McGough Construction Co.). Although "indemnify and hold harmless" language can reach the indemnitee's own negligence, the qualifiers "to the extent caused" and "regardless of whether it is caused in part by a party indemnified hereunder" made the provision equivocal, so Horizon cannot recover for damages attributable to its own negligence.

  1. Indemnification provisions in building and construction contracts executed before August 1, 1984, that purport to cover losses resulting from the indemnitee's own negligence are strictly construed against the party seeking indemnification and are not construed in favor of indemnification unless the intention is expressed in clear and unequivocal terms or no other meaning can be ascribed to the provision. (*646)
  2. A standard American Institute of Architects subcontract indemnity clause obligating the subcontractor to indemnify the general contractor for damages 'to the extent caused' by the subcontractor's negligence 'regardless of whether it is caused in part by a party indemnified hereunder' is equivocal, fails strict construction, and therefore does not entitle the general contractor to indemnification for damages caused by the general contractor's own negligence. (*646)
  3. Within an indemnity clause, the qualifier 'to the extent caused' suggests a comparative-fault construction under which each party is accountable to the extent its own negligence contributes to the injury. (*646)

How the court reached its decision

The court's reasoning, step by step.

Under an AIA-form indemnification clause in a subcontract executed before August 1, 1984, is the general contractor entitled to indemnification for damages attributable to its own share of negligence? Following Johnson v. McGough Construction Co., the court contrasted the Associated General Contractors clause that Johnson found to 'clearly and unequivocally' shift liability for the contractor's own negligence with the AIA clause at issue, observing that 'indemnify and hold harmless' language in its technical sense suggests reimbursing the indemnitee for damages asserted against it for its own negligence, but the qualifier 'to the extent caused' points toward a comparative-fault allocation, and the further phrase 'regardless of whether it is caused in part by a party indemnified hereunder' leaves the provision equivocal at best, so it fails the strict-construction standard. Because the indemnification provision is equivocal and fails strict construction, the general contractor is not contractually entitled to indemnification from the subcontractor to the extent damages were caused by the general contractor's own negligence, and the summary judgment for Horizon was reversed.

Key quotes from the opinion

Notable passages from the opinion, in the court's own words.

“Agreements entered into prior to August 1984, including the provision before us, are not construed in favor of indemnification unless such intention is expressed in clear and unequivocal terms, or unless no other meaning can be ascribed to it. In short, such provisions are strictly construed against the party seeking indemnification.”
Strict-construction rule for pre-August 1984 construction indemnity provisions — *646
“The AIA subcontract provision required Dalsin to “indemnify and hold harmless” Horizon from damages “to the extent caused in whole or in part by any negligent act or omission of [Dalsin].””
Court identifies the AIA clause's 'to the extent caused' qualifier distinguishing it from the Johnson language — *646
“The remaining language, “regardless of whether it is caused in part by a party indemnified hereunder,” makes the indemnification provision equivocal at best and it therefore fails under the strict construction standard.”
Core reasoning: the 'regardless' phrase renders the provision equivocal, defeating strict-construction approval — *646

Cases the court relied on

Earlier decisions the court cited as authority for its ruling.

  • Johnson v. McGough Construction Co. (294 N.W.2d 286 (Minn. 1980)) — Established the strict-construction standard for pre-1984 construction indemnity provisions and supplied the Associated General Contractors clause language found clear and unequivocal, against which the AIA clause here was measured and found equivocal.

Separate opinions from other justices

Views from justices who wrote separately from the majority.

Popovich, Chief Judge: Chief Judge Popovich dissented and would affirm, reasoning that the 'regardless of whether it is caused in part by a party indemnified hereunder' language is no different from the language the supreme court approved in Johnson and that the provision clearly and unequivocally obligated the subcontractor to indemnify the general contractor completely whenever the subcontractor was negligent in any degree.

Minnesota statutes cited

Sections of the Minnesota Statutes this opinion cites.

Cases that cite this one

19 later published cases cite this decision.

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Full opinion

The complete text of the court's opinion as published.

Opinion of the Court

OPINION

NIERENGARTEN, Judge.

Appellant Bernard L. Dalsin Co. appeals from summary judgment holding that Dal-sin is obligated to indemnify respondent Horizon Development Co. for all damages under the terms of an indemnification contract irrespective of any contributory negligence on the part of Horizon. On appeal, Dalsin contends the indemnification clause does not entitle Horizon to indemnification for damages to the extent caused by Horizon’s negligence. We reverse.

FACTS

Respondent Peter Braegelmann, an employee of Bernard L. Dalsin Co. (Dalsin), brought suit against Horizon Development Company (Horizon) for personal injuries sustained while working on a construction project in Arden Hills, for which Horizon was the general contractor. Horizon filed a third-party action against Dalsin, the subcontractor, alleging Dalsin’s own negligence at least partially caused Braegel-mann’s accident.

Horizon tendered the defense to Dalsin and asserted its claims against Dalsin for contractual indemnification pursuant to the subcontract executed on March 3, 1981. The subcontract was an American Institute of Architects standard form (AIA Document A401 — 1978 Edition). Clause 11.-11.1 provides, in part:

To the fullest extent permitted by law, the Subcontractor shall indemnify and hold harmless the * * * Contractor and all of their agents and employees from and against all claims, damages, losses and expenses * * * arising out of or resulting from the performance of the Subcontractor’s Work under the Subcontract, provided that any such claim, damage, loss, or expense is attributable to bodily injury, sickness, disease, or death, * * * to the extent caused in whole or in part by any negligent act or omission of the Subcontractor or anyone directly or indirectly employed by him or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, or abridge, or otherwise reduce any other right or obligation of indemnity which would otherwise exist as to any party or person described in this Paragraph 11.11.

Dalsin refused to accept the tender of defense.

Horizon and Dalsin filed cross-motions for summary judgment regarding the scope of this indemnification clause. The trial court entered summary judgment in favor of Horizon, holding that if Dalsin is in any degree negligent, Dalsin is obligated to in*646demnify Horizon for all damages irrespective of any contributory negligence on the part of Horizon. The proceedings were stayed pending appellate review. Dalsin appealed.

ISSUE

Under the terms of the indemnification clause, is Horizon entitled to indemnification for damages resulting from its share of negligence?

ANALYSIS

Dalsin asserts that, under the clause, Horizon is entitled to indemnification only to the extent of Dalsin’s share of the total negligence. Under this interpretation, if Dalsin is found to be only 20% negligent, Dalsin would be obligated to indemnify Horizon for 20% of the eventual damages, if any, to Braegelman.

Indemnification agreements seeking to indemnify a party for losses resulting from that party’s own negligent acts are not favored in the law. Such agreements contained in, or executed in connection with, building and construction contracts entered into after August 1, 1984, are void and unenforceable. Minn.Stat. § 337.02 (1984). Agreements entered into prior to August 1984, including the provision before us, are not construed in favor of indemnification unless such intention is expressed in clear and unequivocal terms, or unless no other meaning can be ascribed to it. In short, such provisions are strictly construed against the party seeking indemnification. Johnson v. McGough Construction Co., 294 N.W.2d 286 (Minn. 1980).

In Johnson, the Minnesota Supreme Court applied strict construction to a standard Associated General Contractors subcontract agreement which contained the following indemnity provision:

The Sub-Contractor agrees to assume entire responsibility and liability for all damages * * * and the Sub-Contractor agrees to indemnify and save harmless the Contractor * * * from all such claims including, * * * claims for which the Contractor may be, or may be claimed to be, liable ⅜ * *.

Id. at 287. The court found that this language “clearly and unequivocally” expressed the intention that the subcontractor was to indemnify the general contractor for liability occasioned by its own negligence. Id. at 288.

The standard AIA language used here differs from the standard Associated General Contractors language interpreted by Johnson. The AIA subcontract provision required Dalsin to “indemnify and hold harmless” Horizon from damages “to the extent caused in whole or in part by any negligent act or omission of [Dalsin].” (Emphasis added). The trial court, relying on the clause “regardless of whether it is caused in part by a party indemnified hereunder,” held that the provision passes the strict construction test. We disagree.

The phrase “indemnify and hold harmless”, in the technical sense, suggests an intent to reimburse the indemnitee for damages which may be asserted against the indemnitee for its own negligence. If that were the end of it, the trial court’s interpretation would be correct.

The additional phrase, “to the extent caused,” however, suggests a “comparative negligence” construction under which each party is accountable “to the extent” their negligence contributes to the injury. Minnesota is a comparative negligence jurisdiction — more specifically “comparative fault.” See Minn.Stat. § 604.01 (1984). The remaining language, “regardless of whether it is caused in part by a party indemnified hereunder,” makes the indemnification provision equivocal at best and it therefore fails under the strict construction standard.

DECISION

Under the terms of this indemnification clause, the general contractor is not contractually entitled to indemnification from the subcontractor to the extent damages *647were caused by the general contractor’s own negligence.

Reversed.

Dissenting Opinion

POPOVICH, Chief Judge,

dissenting.

I respectfully dissent and would affirm the trial court, which had little difficulty recognizing the clear meaning of the indemnification provision and said:

There is in fact no difference between the language “regardless of whether it is caused in part by a party indemnified hereunder” as found in the instant indemnification agreement and the language “claims for which the contractor may be, or may be claimed to be, liable” which the Johnson court approved.
The language in the instant indemnification agreement “clearly and unequivocally states the intent that the indemnitor is liable to the indemnitee for its negligence.” Johnson, supra., 294 N.W.2d at 288. Further, the language is clear in its intent to hold the contractor harmless from all liability if the sub-contractor is in any way found to be negligent.
The language “to the extent caused in whole or in part by any negligent act or omission of the sub-contractor * * regardless of whether it is caused in part by a party indemnified here-under,” clearly manifests an intent that the subcontractor will be completely liable for indemnification if in any way negligent.

The parties clearly agreed to the provision which was entered into prior to August 1, 1984, after which date such provisions are void and unenforceable. Minn. Stat. § 337.02 (1984). I believe the provision met the strict construction test and is similar to the standard Associated General Contractors’ indemnity provision that was upheld by the Minnesota Supreme Court.

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