For almost a century, the construction industry in the U.S. has relied on standard contract forms promulgated by the American Institute of Architects (AIA). I have frequently commented on the peculiarities of Texas law governing the enforceability of indemnification agreements in contracts, and nowhere are indemnities more used than the construction industry. AIA form contracts have evolved over the years, but one particular iteration of the indemnification clause, A201 subparagraph 4.18.1 (1976) is still frequently incorporated into construction contracts today. It is unenforceable under Texas law.
This indemnity is as follows (I paraphrase the unimportant parts) contractor will indemnify and hold harmless the owner and others from claims, etc. arising from the contractors performance of the contract and attributable to the contractor's negligence in whole or in part, regardless of whether or not . . . caused in part by a party indemnified hereunder. This last phrase is the part that causes the trouble. A common sense reading of this phrase suggests that a lawsuit alleging legal liability against both the contractor and the owner for, say, an injury at the construction site would trigger the contractor's obligation to indemnify the owner. The allegations necessarily imply that the injury was caused in part by the contractor and in part by the party indemnified hereunder, the owner.
However, under Texas law, commons sense and logic do not always apply or prevail. Texas has adopted the strictest rules against enforcement of any state in the nation. Referred to as the "express negligence" test, the rule requires the contract to state expressly that the contractor, the indemnitor, agrees to indemnify the indemnitee against the indemnitee's own negligence. (For earlier discussions of this rule, see Court Finds Indemnity's Express-Negligence Language Enforceable, Another “Additional-Insured” Coverage Riddle: Court Misses Key Distinction, and Texas's Express-Negligence Rule Strikes Again)
The AIA provision indemnifies not against the owner's partial negligence, but rather against its partial causation of the injury. Texas courts are instructed not to infer anything in the indemnification clause, including the inference of legal liability for negligence from the allegation that the owner helped cause the injury. In fact, this point makes sense because simply causing an injury is not enough to subject someone to legal responsibility for causing the injury. I may set in motion a chain of events that ends up crashing an airliner hundreds of miles away: admittedly an unlikely example of the butterfly effect. In law, the distinction is between but-for cause and proximate cause. A plaintiff must prove that my negligent conduct was the proximate cause of the injury to obtain a judgment.
A sample of Texas cases refusing to enforce this indemnity language includes:
- Gilbane Bldg. Co. v. Keystone Structural Concrete, Ltd., 2007
Tex. App. LEXIS 5903 (Tex. App.- Houston [1st Dist.] July 26, 2007); Cabo Constr., Inc. v. R S Clark Constr., Inc., 2007 Tex. App. LEXIS 2880, .(Tex. App.-Houston [1st Dist.] April 12, 2007); Delta Air Lines, Inc. v. ARC Sec., Inc., 164 S.W.3d 666 (Tex. App.-Fort Worth 2005); J.M. Krupar Constr. Co. v. Rosenberg, 95 S.W.3d 322 (Tex. App.- Houston [1st Dist.] 2002); Lee Lewis Constr., Inc. v. Harrison, 64 S.W.3d 1 (Tex. App. Amarillo 1999)