In County of Saratoga v. Delaware Engineering, D.P.C.,
189 A.D.3d 1926, 139 N.Y.S.3d 381 (3d Dept 2020), the New York Supreme
Court Appellate Division held that an engineer’s contractual indemnity claim
against the contractor was due to be dismissed, as the indemnity provision unambiguously
and expressly excluded claims for damage to the “work itself.”
In 2007, Saratoga County (“Saratoga”) retained Delaware
Engineer, D.P.C. (“Delaware”) to provide design services related to the expansion
of a wastewater treatment plant. Saratoga hired Jett Industries, Inc. (“Jett”)
as the general contractor. After the project was complete, two pumps malfunctioned
and one of the water tanks ruptured. Saratoga sued Jett and Delaware. Delaware cross
claimed against Jett for contribution, common-law indemnification and
contractual indemnification.
Jett moved to dismiss Delaware’s claims, arguing the
contract language limited any liability to Delaware. The Court granted the
motion as to the common law indemnification and contribution claims, but denied
it as to the contractual indemnification claim. In
support of its Motion, Jett cited the contract, which stated that Jett was
required to indemnify Delaware if
Jett's negligence, either in whole or in part, caused personal injury or destruction
of property “other than to
the work itself.”
The New York Appellate Division reversed,
ruling the agreement did not extend to the damages in this case. Saratoga
asserted claims for damage to the tank, specifically the rupturing and heaving
of its concrete floor. The Court concluded that such damage clearly was to the work itself, as Delaware designed the tanks
and Jett installed them. The Court agreed with Jett that the provision explicitly excluded claims
for damage to the work itself.
The Court reinforced its position that it would not interfere
with indemnification agreements as long as the intent to indemnify is clear. The
Court stated, “It is well established that an
indemnification agreement must be strictly construed to avoid reading into it a
duty which the parties did not intend to be assumed.” In other words, but for the limiting language
of the agreement, the Court most likely would have allowed the claim to
continue.
This holding reinforces the position that Courts are not willing to interfere when a written agreement is clear and unambiguous on its face. In the present case, the Court recognized that the indemnitor and indemnitee agreed to shift certain risks, but not others. In light of the limitation of scope, the Court would not broaden the indemnity obligation. Parties should be careful to consider the addition or deletion of such qualifying clauses, as the impact can be determinative of whether indemnity is owed.
