Recently, the 8th District Court of Appeals issued an opinion in Kovach v. Warren Roofing & Illuming Company, 2007 - Ohio - 2514 that further clarifies how Ohio’s anti-indemnity statute (Ohio Revised Code §2305.31) is applied to litigation involving injuries occuring on construction job sites. Additionally, this opinion further strengthens the indemnity provisions upon which many contractors rely in today’s construction industry.
In Kovach, Plaintiff fell and was injured while replacing a roof on a building owned by Cleveland Electric Illuminating Co. (“CEI”) CEI had contracted with Tremco, Inc. “(Tremco)”, the plaintiff’s employer, to replace the roof. Tremco’s contract contained a standard hold harmless and indemnification provision. As a result of Kovach’s injuries, he and his wife brought a negligence action against Tremco, CEI, and others. Despite multiple parties and claims included in Kovach’s underlying case against the roofing defendants, the 8th District Court of Appeals focused only on CEI’s cross claims against Tremco for indemnity of all attorney fees and costs in defending against Plaintiffs’ negligence claims.
CEI’s contract with Tremco included a clause that Tremco would indemnify and hold CEI harmless for all fees and costs incurred as a result of the roofing work that was under Tremco’s control. Also included in the contract was a specific exclusion for losses caused by CEI’s own negligence.
Following a jury verdict that CEI was not negligent in regards to Plaintiff’s underlying personal injury claim, the trial court granted CEI’s cross claim against Tremco for indemnification in part, and denied it in part. Specifically, the trial court held that Tremco was liable to CEI only for the attorney fees and costs CEI would expend from the verdict finding CEI was not negligent forward, but not for fees and costs it had expended to date. The trial court reasoned that Plaintiffs assertion of a “colorable independent claim of negligence” against CEI triggered Ohio’s anti-indemnity statute, such that precluded CEI’s indemnification from Tremco for what Plaintiffs assert was CEI’s own negligence. Ohio’s anti-indemnity statute essentially prohibits indemnity agreements under which the promisor agrees to indemnify the promisee for the promisee’s own negligence.
Accordingly, the 8th District Court confronted the issue of whether “alleged” negligence is sufficient to defeat a contractual indemnification clause. In following Ohio law, the court held that indemnification agreements are generally enforceable to the extent that the negligence arises solely from activities under the promisor’s contractual control and when liability is not attributable to the promisee’s own negligence. Therefore, a mere assertion of negligence would not be sufficient to defeat a contractual indemnification provision of a construction contract. In analyzing this issue, the court reasoned that the key inquiry is whether the alleged negligence claims arise from activities found to be under the promisor’s contractual control. Otherwise, contradictory to
public policy, a promisee would be allowed to avoid an otherwise enforceable indemnification provision for negligence arising solely from activities under their own contractual control simply by the assertion of a separate negligence claim against the promisor.
Eventually, the 8th District Appellate Court reversed the trial court’s judgment, holding that Tremco was responsible for all CEI attorney fees and litigation costs incurred in defense of Plaintiffs’ negligence claim. The Court reasoned that CEI’s indemnification claim was not barred by the anti-indemnity statute because of all of Plaintiffs’ negligence claims against CEI arose “from activities under the contractual control of Tremco.”
In light of the Kovach decision, construction professionals should review their contracts to ensure that it provides the indemnity protection and additional insured coverage contemplated by the parties, while still complying with Ohio’s anti-indemnity statute. Moreover, carriers and their insured construction professionals are at risk for fees and expenses if a request for defense and indemnity is denied and a jury ultimately decides that there is no negligence or wrongful conduct on the part of the party seeking indemnity.
If you would like a copy of this opinion or if you have any other questions regarding so-called “indemnity agreements,” please call any of our Construction Design Liability Practice Group members.