Litigation

District Court Finds Indemnity Provision Repugnant to Delaware Public Policy, Refuses to Enforce

By Morris James LLP

Kempski v. Toll Bros., Inc., 2008 WL 4642633 (D. Del. Oct. 21, 2008)

In this opinion, the District Court reinforced Delaware’s law that indemnity provisions that require one party to indemnify another party for the second party’s own negligence are void as against Delaware’s public policy. Here the Defendant, Toll Brothers, Inc., contracted with Delaware Heating and Air Conditioning Services, Inc. (“DHAC”), to perform HVAC work on Defendant’s housing developments. One of DHAC’s employees was injured while performing the work, and sued Defendant. Defendant sought indemnification from DHAC pursuant to their contract. Both Defendant and DHAC sought summary judgment on the indemnification claim. The Court found that under Delaware law, the contractual indemnification provision that Defendant sought to invoke was against Delaware public policy, and granted summary judgment for DHAC.

The contractual indemnification provision provided, in relevant part, that DHAC would indemnify Defendant for any claims or damages resulting from work under the contract, whether or not it was based upon any negligent act or omission of Defendant. As an initial matter, the Court held that even though the contract provided that it was governed by Pennsylvania law, under the Delaware Supreme Court’s decision in J.S. Alberici Construction Co., Inc. v. Mid-West Conveyor Co., Inc., that law could not be used to interpret the contract in a manner repugnant to the public policy of Delaware. The Court then concluded that under 6 Del. C. 2704(a), the indemnity provision was void and unenforceable. The Court rejected Defendant’s argument that the severability clause in the contract permitted the court to void the portion of the indemnity provision that was repugnant to Delaware public policy without voiding the portion that required DHAC to indemnify Defendant for damages arising out of DHAC’s negligence. The Court found that under the indemnity provision, “the duties to indemnify for the conduct of [Defendant] and the actions of DHAC are expressed together as a single obligation, and are not severable . . . .” The Court stated that it would not and could not rewrite the indemnification provision to make it severable. 

Full post as published by Delaware Business Litigation Report on October 21, 2008 (boomark / email).