Construction Defects & Indemnity
Indemnity. Given the complexity of major projects -- where the intersection of multiple parties can yield unanticipated and costly problems -- there may be no single clause in a construction contract more essential than the indemnity provision.
A new Washington Court of Appeals case is an instructive lesson in how the language used in the indemnity clause matters. That case is Heritage at Deer Park Owners Association v. Kirtley-Cole Associates, handed down on August 8, 2005.
This was a condo case where the Owner believed the GC was liable, under the indemnity clause in the prime contract, for assorted (and no doubt "alleged") defects existing in the project. The GC said: No, the indemnity clause is limited in scope to "property damage" claims and a mere lapse in quality (again, "alleged") doesn't constitute such damage.
The Court agreed with the GC and denied the Owner's indemnity claim. In doing so, the Court stakes out a two-part test for distinguishing between construction defects and damage to property, in turn which focuses on the nature of the defects and the manner in which the damage occured. Presumably, the Owner would still have regular breach of contract claims separate and apart from the indemnity claim which the Court rejected.
