Section 5.9.2.5.1 Express Indemnity

• Library: Construction Law Practice Manual 3rd Edition 2016

§ 5.9.2.5.1 Express Indemnity¹¹⁴

Express indemnity occurs when there is a written indemnity provision in a contract or agreement that dictates the breadth of the indemnity provided. When interpreting an express indemnity agreement, the extent of the duty to indemnify must be determined from the contract itself.¹¹⁵ Express indemnity provisions historically have been classified in two different categories: general and specific. A general indemnity agreement does not specifically address what effect the indemnitee’s (e.g., developer) negligence will have on the indemnitor’s (e.g., subcontractor) obligation to indemnify.¹¹⁶ In contrast, a specific indemnity agreement does address what effect the indemnitee’s negligence will have on the indemnitor’s obligation to indemnify.¹¹⁷ The distinction is subtle but important.

Under a general indemnity provision, indemnification is only afforded to an indemnitee when, at most, the loss is attributable in part to the indemnitee’s passive negligence but not active negligence.

In 2001, the Arizona Supreme Court called into question the active/passive distinction in general indemnity agreements. In Cunningham v. Goettl Air Conditioning,¹¹⁸ the court looked to the indemnity provisions in determining whether to afford indemnity.¹¹⁹ Goettl involved a lease agreement, between Goettl Air Conditioning (“Goettl”) as lessee, and Washington Street Investments (“WSI”), as lessor, that contained an indemnity and hold harmless provision in favor of WSI. The indemnity provision required Goettl to, in part:

“indemnify and hold lessor [WSI] harmless . . . against any and all claims [and] expenses (including attorneys’ fees) . . . arising [from] . . . any accident or other occurrence in or about Premises when such injury. . . shall be caused in part or in whole by . . . the act, neglect, fault of or omission of any duty. . . or negligence of Lessee [Goettl] . . . .”¹²⁰

The lawsuit arose out of injury to Mark Cunningham, an employee of Goettl, who fell through an uncovered roof penetration. Cunningham sued WSI for his personal injuries. Pursuant to the indemnity provision in the lease agreement, WSI tendered the defense to Goettl who refused the defense. On the eve of trial, Cunningham settled with WSI, which included Plaintiff’s release of all claims against WSI in return for an assignment of WSI’s indemnity claims against Goettl.

In determining the breadth of the indemnity agreement, the supreme court noted that the indemnity agreement...