In an indemnification clause between a contractor and project owner, the words “agents and representatives” did not require the contractor to indemnify a particular employee of consulting firm as an “agent” of the Owner. The project agreements did not contain any language suggesting the individual employee was an “agent” of the Owner. The court stated that the individual was not covered because the term “agent” was ambiguous and the individual’s specific role on the project as perhaps a foreman, construction manager, or member of the construction team, was not identified in the clause as being indemnified. Firemen’s Insurance Company v. Thomas J. Story, 2021 WL 2155037 (Fed.Appx., New York, 2021).
The project owner, Wegmans Food Markets, Inc., entered into a “Staffing Agreement” with a consulting firm (Aerotek, Inc.) to provide “staffing services.” That agreement specified that “the relationship between both [consultant] and each of its Vendor Assigned Employees, respectively, vis-à-vis Wegmans hereunder is that of an independent contractor, and nothing set forth herein shall be deemed to render the parties as … employer and employee.” The Agreement further stated that, “Assigned Employees of [consultant] are employees of [consultant] and not of Wegmans.” Pursuant to this Agreement the consultant assigned an employee (Mr. Story) as a foreman on a construction site where Wegmans was building a new store.
During construction work, a laborer employed by a separate masonry contractor was injured. That laborer then filed suit against Wegmans, Mr. Story, and others. Wegmans and Mr. Story tendered the claims to the masonry contractor pursuant to the masonry contract indemnity agreement. That indemnity agreement required the contractor to defend and indemnify Wegman’s “agents, employees, and representatives.”
Mr. Story was not an employee of Wegmans and, therefore, couldn’t be indemnified as an employee. So the question was whether he was an “agent” or a “representative” of Wegmans. The court noted that the construction contract didn’t define the term “representative” but it did in separate articles designate a “project Manager to act as [Wegman’s] representative in administering the Contract.” It further named members of the “Project Management Team” but didn’t designate Mr. Story as one of the members. Thus, there was no basis for the court to find Mr. Story to be an indemnified “representative.”
Finally, the court concluded that neither the Staffing Agreement with Aerotek nor the Construction Contract with MP Masonry, Inc. contained any language suggesting that Mr. Story was an “agent” of Wegmans. For these reasons, Mr. Story was not entitled to be indemnified against the claim.
Risk Management Comment. This case was decided under New York law. New York law provides that “when a party is under no legal duty to indemnity, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed.” The court here explained that “Courts require an ‘unmistakable intention to indemnify before … enforcing such an obligation.’” The term “agents and representatives” was here deemed by the New York court to be too ambiguous to find a duty to defend Mr. Story. Courts in other states may, however, have concluded differently under their state law. When reviewing indemnification articles we believe it is important to delete the ambiguous term “agents and representatives,” and if the other party resists that deletion then they should expressly identify the specific companies or individuals they want to be identified.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 23, No. 5 (August 2021).
Copyright 2021, ConstructionRisk, LLC
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