SAN DIEGO, June 15, 2015 – HechtSolberg’s Jerold H. Goldberg and his co-presenter Laurence R. Phillips, an attorney with McKenna Long & Aldridge, gave a 90-minute primer on “Indemnification in Contracts” to a sold-out crowd of subcontractors and builders June 11 at the Building Industry Association (BIA) San Diego office.
Goldberg, who has many years of experience representing builders, and Phillips, who regularly represents subcontractors, agreed that, generally, all parties benefit if these contractual indemnity provisions are clear, concise and transparent in their intended effect.
“Complex, inconsistent or ambiguous indemnity language can lead to protracted litigation,” said Goldberg. “The extent that you can simplify the language can protect you in the end,” he advised, noting that often the people who write the contract won’t be around when litigation occurs. Goldberg also noted that indemnity disputes among the members of the development team might serve to aid the third-party claimants; another reason to make contracts transparent.
Goldberg also noted that, when claims do arise, for tactical reasons the builder and the subcontractors may find it in their best interests to cooperate in defending the third party claims and defer the indemnity claims, while taking care to preserve them and not to prejudice insurance claims.
The panel discussion, sponsored by the BIA’s Specialty Contractors Council, was attended by a number of subcontractors, but Goldberg offered a number of takeaways that are valuable to builders. For example, while noting a humorous take on the Golden Rule – he who has the gold makes the rules – under which builders/developers may be in a superior bargaining position with respect to one-sided, favorable indemnity provisions, Goldberg cautioned that builders may want to avoid overbroad indemnities which exceed the capacity of subcontractors to satisfy.
Goldberg also summarized some important statutory limits on contractual indemnity in construction contracts, while also cautioning that “California’s construction indemnity statues are complex and must be carefully considered when negotiating and drafting contractual indemnity provisions.”
Given the complexity of indemnity provisions, both attorneys cautioned that professional legal advise is a necessity.
HechtSolberg lawyers have in-depth expertise in all legal aspects of the constructions process. For further assistance, contact Jerold H. Goldberg or Jim Ehlers.