Indemnity agreements don’t always produce the results the drafters desire. Indemnity language can be very tricky, and drafting the perfect indemnity requires not only good drafting skills but an understanding of Georgia courts interpretation of indemnity language.
Indemnity agreements don’t always produce the results the drafters desire. Indemnity language can be very tricky, and drafting the perfect indemnity requires not only good drafting skills but an understanding of Georgia courts interpretation of indemnity language. For instance, broadly drafted agreements will not require party X to indemnify party Y for party Y’s own negligence absent express language; however, if you are party Y maybe you want to be indemnified for your own negligence. A more thorough explanation follows:
“Georgia courts never imply an agreement to indemnify another for one’s own negligence in the absence of express language.” Service Merchandise Co. v. Hunter Fan Co., 274 Ga. App. 290, 291, 617 S.E.2d 235 (2005). "Contracts indemnifying one against the consequences of his own negligence are not favored, but will be given effect where the intent is expressed in plain and unequivocal terms." (Emphasis added) Satilla Community Service Board v. Satilla Health Services, Inc., 251 Ga. App. 881,887, 555 S.E.2d 188 (2001). An all inclusive indemnity provision, which provides indemnity for anything and which does not specifically provide an exception for the indemnitee’s sole negligence, may be construed as void because indemnity for the sole negligence of the indemnitee is overly broad. In other words, a lazy drafter who thinks he is covering all his bases with broad language is doing the parties a disservice if the parties intended complete indemnity for a parties sole negligence.
Where the contract “may not be sufficiently explicit to indemnify the indemnitee against liability resulting strictly from its own negligence, such less than explicit language may be sufficient to require indemnification for damages resulting from the combination of the indemnitee’s negligence and the indemnitor’s negligence.” Satilla Community at 887. Thus, where the indemnitor contributes to the negligence which causes the injury, the express language may not be necessary.
The Service Merchandise Co. case dealt with an air purifier that was recalled by the manufacturer but not returned to the manufacturer, subsequently caused a house fire and the death of plaintiff. At issue was a purchase agreement between Service Merchandise and the air purifier’s manufacturer. The agreement contained an indemnity hold harmless paragraph:
[Hunter Fan Co.] agrees to protect, defend, hold harmless, and indemnify [Service Merchandise] from and against any and all claims, actions, lawsuits, liabilities, product recalls, losses, royalties, damages, or costs and expenses:…(b) arising out of any actual or alleged death of or injury to any person, or damage to any property, or any other damage or loss by whomever suffered, resulting or claimed to result in whole or in part from any actual or alleged defect in Products, whether latent or patent, including actual or alleged improper or negligent manufacture, construction or design of Products or the failure of Products to comply with specifications or any express or implied warranties of [Hunter Fan Co.]. .
Service Merchandise Co. at 293
This paragraph obligated Hunter to indemnify Service Merchandise for lawsuits and liability arising from the death or injury to any person alleged to result from any defective products that Hunter sold to Service Merchandise. The facts of the case established that Hunter sold air purifiers to Service Merchandise that were later recalled. Hunter requested a list of all purchasers from Service Merchandise who failed to inform Hunter that plaintiff purchased an air purifier. Plaintiff subsequently died in a house fire caused by the recalled air purifier. Nothing under the agreement expressly required Hunter to indemnify Service Merchandise in the event that the claims, lawsuit, or losses were caused by or were the result of Service Merchandise’s own fault, negligence, or error in providing the names and addresses of those who purchased the air purifiers. Therefore, the court denied Service Merchandise’s motion for summary judgment that Hunter indemnify Service Merchandise.
The court found that the contract language did not specifically require indemnity for Service Merchandise’s own negligence even though it referred to indemnity for “all claims.” The court stated:
[p]ublic policy is reluctant to cast the burden for negligent actions upon those who are not actually at fault. Public policy seeks to encourage people to exercise due care in their activities for fear of liability, rather than to act carelessly cloaked with the knowledge that an indemnity contract will relieve such indifference. Unless a contract for indemnification explicitly and expressly states that the negligence of the indemnitee is covered, courts will not interpret such an agreement as a promise to save the indemnitee from his own negligence.
Service Merchandise Co. at 296. The court also addressed the issue of which of two indemnity contracts applied to this fact scenario but that decision is not important to the above evaluation.
In Park Pride Atlanta, Inc. v. City of Atlanta, 246 Ga. App. 689, 690-691, 541 S.E.2d 687 (2000) a woman was killed, and her husband seriously injured when a city dump truck previously occupied by a city employee and left unattended rolled into them while they were working on a park beautification project organized by Park Pride. The City of Atlanta settled with the parties and sought indemnification from Park Pride pursuant to an agreement they had for the park project. The indemnification paragraph of the contract stated:
Park Pride agrees to protect and hold harmless the City, its officers, agents and employees, from any and all claims, demands, actions, causes of action, suits, damages, loss, and expense of any kind whatever, kind or nature to any person or to any property for any activity sponsored by or coordinated by Park Pride. Park Pride Atlanta, Inc. at 691.
The court noted that the indemnification wording initially appeared to indemnify the City “against any and all claims”, but this language was bereft of any express or explicit statement about coverage for the City’s own negligent acts or omissions done by the City’s own employees. Therefore, the court refused to hold Park Pride responsible for the City of Atlanta’s acts of negligence in leaving the vehicle unattended and not securely parked. In Park Pride Atlanta, Inc. v. City of Atlanta, the court of appeals found that “public policy is reluctant to cast the burden of negligent actions upon those who are not actually at fault,” and that “it is well established in Georgia that contractual indemnities do not extend to losses caused by an indemnitee’s own negligence unless the contract expressly states that the negligence of the indemnitee is covered.” Citing Allstate Ins. Co. v. City of Atlanta, 202 Ga. App. 692, 693, 415 S.E.2d 308 (1992). The court stated further that “an underlying public policy is to assure that people exercise due care in their activities for fear of liability, rather than act carelessly in the knowledge that indemnity will relieve them.” Allstate, supra. Ultimately the court ruled in favor of Park Pride and did not require indemnification for the acts of the City of Atlanta as the broad language of the indemnification paragraph of the contract seemed to require.
In summary, if indemnification is desired for a party’s sole or own negligence, then the agreement should clearly express that intent in an unequivocal manner enabling the Georgia courts to enforce the provision. However, if a party relies on broad “all claims” language then Georgia courts will most likely narrowly construe this language and not require indemnification from an innocent party for another’s sole negligence. The lesson is to assume nothing and clarify everything.