Cousineau McGuire Chartered | Contractual Indemnification

Contractual Indemnification and Construction Contracts
by Mark A. Gwin

I. INTRODUCTION.
In recent years, our firm has been seeing more and more cases involving the issue of contractual indemnification in the building and construction setting. Typically, the issue arises when a construction worker employed by a subcontractor is injured on a construction site and, after collecting worker's compensation benefits from his employer, commences a civil action seeking damages from the general contractor on the project. The general contractor, in turn, has a contract with one or more of the subcontractors on the project and claims that under the terms of the contract, the subcontractor is obligated to defend and indemnify it, even for claims of its own negligence. The question then becomes: Is there a duty to defend and indemnify? In this article, I will attempt to provide a historical perspective of contractual indemnification and to set forth what I feel to be the present state of the law.

II. HISTORICAL OVERVIEW.
A. Fair Construction. Minnesota courts have been grappling with the issue of contractual indemnification agreements for close to sixty years. One of the earliest cases involving contractual indemnification was decided by the Minnesota Supreme Court in 1939. In Northern Pacific Railway Co. v. Thornton Brothers Co., 206 Minn. 193, 288 N.W. 226 (1939), the court adopted a "fair construction" approach to the interpretation of indemnification agreements in construction contracts. The specific indemnification language in the agreement before the Northern Pacific court provided that the contractor was to indemnify the owner for "loss of or damage to the property of third persons arising in any manner out of or in any manner connected with the said work . . . ." The court, adopting and applying the "fair construction" approach, found that this language required the contractor to indemnify the railroad for damages caused by the railroad's own negligence.
B. Strict Construction. The "fair construction" standard continued to be applied by the courts in deciding contractual indemnification cases until 1979, when the Minnesota Supreme Court decided the case of Farmington Plumbing & Heating Co. v. Fischer Sand and Aggregate, Inc., 281 N.W.2d 838 (Minn. 1979).¹ In Farmington, the court jettisoned the "fair construction" standard and adopted the "strict construction" rule, holding that when a party is seeking to be indemnified for its own negligence, such indemnification agreements are to be strictly construed. The court stated that "[t]here must be an express provision in the contract to indemnify the indemnitee for liability occasioned by its own negligence; such an obligation will not be found by implication."² 281 N.W.2d at 842. (emphasis added).
After Farmington, the Minnesota Supreme Court decided Johnson v. McGough Construction Co., 294 N.W.2d 286 (Minn. 1980). In Johnson, the court held that language stating that claims "for which the [contractor] may be, or may be claimed to be, liable" was sufficient to meet the strict construction rule, rejecting an argument that the word "negligence" must be used in the indemnification agreement.³ The Johnson court maintained its stated commitment, however, that there must be an express provision in the agreement to indemnify the indemnitee for liability caused by its own negligence. In examining this contractual indemnification language⁴, the court held that the language "claims for which the Contractor may be, or may be claimed to be, liable . . . necessarily includes claims of the contractor's negligence." 294 N.W.2d at 288 (emphasis added).
Since the Johnson decision, however, the courts have increasingly become less likely to find contractual indemnification language to be enforceable. For instance, in Mattila v. Minnesota Power and Light Co., 363 N.W.2d 842 (Minn. Ct. App. 1985), the court was faced with the following provision:

Except as may be caused by the sole negligence of [MP&L], [National] shall indemnifiy and save harmless [MP&L] from all claims . . . arising in whole or in part from any act or omission of [National] . . . incidental to the performance of this contract . . . and shall assume . . . the defense of any such claims
. . . irrespective of whether it is alleged, claimed or proved in connection with such act or omission that negligence of [MP&L]
. . . caused or contributed thereto.

363 N.W.2d at 843-44 (emphasis added). At first blush, a reasonable construction of this provision would require National to indemnify MP&L for all claims unless the claim arose solely as a result of MP&L's own negligence. In other words, the contractual indemnification language appears to have been drafted so as to require National to indemnify MP&L unless it was MP&L's, and only MP&L's, negligence that gave rise to the claim. However, the Mattila court held that this clause was "merely a provision requiring National to indemnify MP&L for liability brought about by National's negligence. It clearly does not contain an express provision to indemnify MP&L for liability occasioned by MP&L's own negligence."⁵
A similar example of the court's apparent reluctance to uphold contractual indemnification agreements can be found in Braegelmann v. Horizon Development Co., 371 N.W.2d 644 (Minn. Ct. App. 1985), review denied (Oct. 11, 1985). The subcontract at issue in Braegelmann was an American Institute of Architects standard form contract that provided, in part,

To the fullest extent permitted by law, the Subcontractor shall indemnify and hold harmless the . . . Contractor . . . from and against all claims . . . arising out of or resulting from the performance of the Subcontractor's Work . . . to the extent caused in whole or in part by any negligent act or omission of the subcontractor . . . or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder . . . .

In examining this language, the court noted that it differed from the language contained in the standard subcontractor's agreement as construed by the Johnson court. The Braegelmann court found that the additional phrase, "to the extent caused" suggested a comparative negligence context. The court went on to state that the remaining verbiage, "regardless of whether it is caused in part by a party indemnified hereunder" did not make the intent clear, but instead made it "equivocal at best," thus rendering it unenforceable under a strict construction analysis. 371 N.W.2d at 646.
In a later case, the Minnesota Court of Appeals examined language that was nearly identical to that in Braegelmann, but did not contain the phrase "to the extent." In Oster v. Medtronic, Inc., 428 N.W.2d 116 (Minn. Ct. App. 1988) the court upheld this language and found it to be "at least as specific as that found in the Johnson contract" and held that it did, indeed, unequivocally express an intent to indemnify the contractor even for damages occasioned by its own negligence.⁶

III. MINNESOTA STATUTES SECTION 337.01 - .06
It is noteworthy that all of these cases involved construction contracts predating the legislative enactment of Minnesota Statutes section 337.02, which provides that

An indemnification agreement contained in, or executed in connection with, a building and construction contract is unenforceable except to the extent that the underlying injury or damage is attributable to the negligent or otherwise wrongful act or omission, including breach of a specific contractual duty, of the promisor or the promisor's independent contractors, agents, employees or delegatees.

A. Post-Statute Cases. Minnesota Statutes section 337.02 became effective on August 1, 1984 for contracts executed after that date. The first reported case to address an indemnity contract executed after the enactment of the statute is Holmes v. Watson-Forsberg Co., 488 N.W.2d 473 (Minn. 1992).⁷ In Holmes, the court was faced with the same contractual indemnification language as that in Johnson, paragraph 7 of the Associated General Contractor's Standard Subcontract Agreement. Among other defenses to Watson-Forsberg's claim for contractual indemnification against the subcontractor, was the allegation that section 337.02 rendered the agreement unenforceable. On appeal, the Minnesota Supreme Court held that it was enforceable. In reaching its decision, the Holmes court first noted the "anti-indemnity" language contained in section 337.02, then examined the language of section 337.05, subdivision 1, which states

Sections 337.01 to 337.05 do not affect the validity of agreements whereby a promisor agrees to provide specific insurance coverage for the benefit of others.

The Holmes court noted that the language of the agreement between Watson-Forsberg and its subcontractor clearly required the subcontractor to obtain "general liability insurance coverage and endorsements as will insure the provisions of this paragraph." The court reasoned that the legislature "both anticipated and approved a long-standing practice in the construction industry by which the parties to a subcontract could agree that one party would purchase insurance that would protect 'others' involved in the performance of the construction project. . . . Here, the subcontractor did in fact pay a premium and obtain the specific coverage contemplated by the agreement. To now argue that the agreement is unenforceable is disingenuous." 488 N.W.2d at 475. The Holmes court upheld the indemnification language (that had earlier been upheld by Johnson and others as clearly expressing the intent to indemnify the contractor even for its own negligence) and held that it was enforceable since it was coupled with the promise to provide insurance to insure the obligation. Hence, the Holmes court found that the statute did not render all indemnification agreements unenforceable; rather, if the indemnification language met the strict construction standard and if the indemnification agreement was coupled with a promise to provide insurance to cover the promise to indemnify, it would be enforceable.⁸
Since the Holmes decision, however, the Minnesota courts have been loathe to expand its holding and have seemingly attempted to find language and/or circumstances upon which to deny contractual indemnification. For instance, in D.W. Hutt Consultants, Inc. v. Construction Maintenance Systems, Inc., 526 N.W.2d 62 (Minn. Ct. App. 1995), Hutt was hired as the general manager of a construction project. Hutt, in turn, subcontracted with Construction Maintenance Systems to perform installation work on the project. The subcontract language was the Associated General Contractors' Standard Subcontract Agreement (as in Holmes). CMS, in turn, subcontracted some of the labor to Quality Roofing and Siding. Quality hired Horsman to perform labor. Quality, however, quit the job over a pay dispute with CMS. After Quality quit, Horsman asked Hutt to keep him on to finish the installation work he had started while employed by Quality. Hutt hired Horsman to finish the job. He was injured during performance of the installation work. Hutt had no workers' compensation insurance coverage. Horsman initiated a worker's compensation claim against Hutt, CMS and Quality. A workers' compensation judge found him to be an employee of Hutt. Hutt sued CMS seeking indemnification under the subcontract agreement for worker's compensation benefits sought by Horsman. Notwithstanding that the language of the agreement seemingly would provide that CMS was required to indemnify Hutt, the court of appeals distinguished the case from Holmes, noting that the general contractor in Holmes was seeking indemnification from the subcontractor for tort liability - not for worker's compensation liability after having failed to meet its statutory duty to acquire workers' compensation insurance. The court based its decision on public policy reasons, noting that to allow indemnity under the circumstances presented "might also create an incentive for employers to forego purchasing insurance for their employees as required by law." 526 N.W.2d at 65. Consequently, it denied indemnification.
Another example of the courts' attempt to find language and/or circumstances upon which to deny contractual indemnification is the case of Katzner v. Kelleher Construction, 545 N.W.2d 378 (Minn. 1996).⁹ In Katzner, the court found that the following language did not clearly express an intent to indemnify the indemnitee for its own negligence:

The Contractor shall indemnify . . . the Owner . . . from and against all claims . . . arising out of or resulting from the performance of the Work, provided that any such claim . . . (a) is attributable to bodily injury . . . and (b) is caused in whole or in part by any negligent act or omission of the Subcontractor or Subcontractors, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnified hereunder
.

545 N.W.2d at 379 (emphasis added).¹⁰ The Katzner court felt that the language was ambiguous since it could be read in two ways: either as an agreement to indemnify the owner from all claims regardless of fault or as an agreement to only indemnify the owner from claims caused "in whole or in part by any negligent act or omission of the Contractor" or its subcontractors. This analysis ignores the language of the remainder of the provision that requires indemnity for all claims regardless of whether the party to be indemnified was partially at fault. This construction again underscores what I feel to be the length to which the courts will go to avoid enforcement of contractual indemnification agreements.
Perhaps the real basis for the decision in Katzner however, is not its treatment of the contractual indemnification provision, but its treatment of the contractual undertaking to procure insurance. See note 8 supra. Although the Katzner court first addressed what it felt to be the ambiguity of the contractual indemnification agreement, it then stated that the "heart of this case lies in the correct interpretation of the parties' agreement to purchase insurance . . . ." The insurance provision contained in the Katzner contract provided, in part, that

The Contractor shall purchase and maintain comprehensive general liability insurance as will protect [designer, architect and consultants] and the Owner from claims set forth below which may arise out of or result from the Contractor's operations under the Contract . . . whether such operations be by himself or by any Subcontractor or by anyone directly or indirectly employed by any of them or by anyone for whose acts any of them may be liable . . .

* * * *

The insurance required . . . shall include contractual liability insurance as applicable to the Contractor's obligations under [the contractual indemnification provisions of the contract]. . .

545 N.W.2d at 380 (emphasis added).
In Katzner, Ellerbe, the designer and supervisor of the project, sought to be indemnified, even for its own negligence, by contractors with whom it had entered into contracts. In examining the insurance language quoted above, the Minnesota Supreme Court held that the language only required the contractors to purchase liability insurance coverage to protect themselves and Ellerbe from claims "which may arise out of or result from the Contractors' operations under the Contract . . . whether such operations be by himself or by any Subcontractor or by anyone directly or indirectly employed by any of them or by anyone for whose acts any of them may be liable" - not to purchase insurance for claims arising out of Ellerbe's operations, acts or omissions. This decision makes it clear that absent an unambiguous agreement to insure for the indemnitee's own negligence, the courts will not enforce an otherwise unambiguous indemnification agreement.
It is difficult to harmonize the decisions in Oster and Katzner since the Katzner court neither cites to Oster nor mentions it. It is possible that Katzner, a post-statute decision, reflects a judicial response to Minnesota Statutes section 337.02, which has resulted in an even stricter construction, i.e., language which once passed muster, no longer does. It is also possible that Katzner is, at heart, a decision about the "promise to procure insurance" requirement. Consequently, while Katzner is facially irreconcilable with Oster in its construction of the indemnification language, it would be a mistake to suggest that the supreme court intended to implicitly overrule Oster's holding with regard to the indemnification language. However, in my view, it is safest to assume that the dicta in Katzner about the deficiencies of the indemnification language suggests that it will no longer pass muster.
In Hurlburt v. Northern States Power Co., 549 N.W.2d 919 (Minn. 1996), the Minnesota Supreme Court was faced with the identical indemnification language it had held enforceable in Holmes (i.e., paragraph 7 of the Associated General Contractors' Standard Subcontract Agreement) except it was modified by a rider to the contract which the court found to negate the effect of the indemnification agreement. The rider provided that:

Notwithstanding the provisions of Paragraphs 7 . . . the indemnity set forth therein shall apply only to the extent that the underlying injury or damage is attributable to the negligence or otherwise wrongful act or omission . . . of Subcontractor or Subcontractor's independent contractors . . . .

Id. at 921 (emphasis added). The Hurlburt court had little trouble deciding that the rider to the contract clearly modified the indemnification language of paragraph 7 from an agreement to indemnify the indemnitee for all damages in any way connected with the work to be performed under the subcontract without regard to fault, to an agreement that the subcontractor would be responsible only for injury or damage attributable to its own fault or the fault of its subcontractors. It is interesting to note that the Minnesota Supreme Court rejected the argument of the contractor and the court of appeals' decision that the rider merely modified the indemnification agreement - not the agreement to procure the insurance (which the subcontractor did procure) and that the procurement of the insurance should redound to the benefit of the contractor.
Another case decided since Holmes is Van Vickle v. C.W. Scheurer and Sons, 556 N.W.2d 238 (Minn. Ct. App. 1996), review denied (Mar. 18, 1997).¹¹ In Van Vickle, the subcontractor, C.W. Scheurer and Sons, entered into a subcontract with the general contractor, Knutson Construction Co. The subcontract contained language identical to that addressed and upheld by the courts in Johnson and Holmes and it also contained the same insuring language as that faced by the Holmes court. Again, the court upheld the duty of the subcontractor to defend and indemnify the contractor even for claims of negligence on the part of the contractor. The court also held that the subcontractor, which had refused the tender of defense when made at an early stage of the litigation, was required to pay for the attorney's fees, costs, disbursements and interest incurred by the general contractor in settlement of plaintiffs' claims and in defending itself after the tender of defense, as well as the attorney's fees, costs, disbursements and interest incurred in the enforcement of the indemnification agreement. The Van Vickle court further held that the agreement did not preclude an obligation to defend and indemnify for the personal injury claim of another subcontractor's employee. Finally, the court held that even if the subcontractor failed to name the general contractor as an additional insured under its policy, Minnesota Statutes section 337.05, subdivision 2 mandated that the general contractor was still entitled to be defended and indemnified up to the limits of the insurance required by the subcontract agreement.¹²
Another line of cases that has recently impacted this area of the law arises from a 1975 decision of the Minnesota Supreme Court. In Anstine v. Lake Darling Ranch, 305 Minn. 243, 233 N.W.2d 723 (1975), the court addressed the issue of contractual indemnification at a time when it was still applying the "fair construction" rule. The Anstine court announced a further limitation - a "nexus" rule requiring that indemnification provisions be enforceable only when there is a "temporal, geographical, or causal nexus between the indemnitor's work under the contract and the injury that gives rise to liability." In Anstine, the plaintiff was a worker on a construction project who was injured when he fell from the roof at the construction site upon which he was working. The general contractor had entered into subcontract agreements¹³ with all subcontractors on the project. When the plaintiff sued the general contractor and owner for his injuries, they commenced a third-party action against eight subcontractors, none of whom were performing work on the site at the time of the plaintiff's injury and some of which had not even entered into the subcontract or commenced work at the job site at the time of the plaintiff's injury. The general contractor sought to have the court construe the language of the subcontract so as to mean that all of the subcontractors working on the construction site formed an indemnification pool for the benefit of the general contractor and should be held liable to indemnify it for all personal injuries that arose on the project. The Anstine court, however, refused to do so, instead stating that it seemed "clear to us that indemnity was intended only where there is a temporal and geographical or a causal relationship" between the subcontractor's work and the injury giving rise to the liability. The court noted that with each of the eight subcontractors, plaintiff's injury would have occurred even if none of them had ever been employed on the project. The court also indicated that a "contract which requires the indemnitor to indemnify the indemnitee for losses with which the indemnitor had no connection and over which it had no control would be a contract for insurance." The court refused to construe the language of the subcontract so as to be "indemnity for hire."
Later, in R.E.M. IV, Inc. v. Robert F. Ackermann & Associates, Inc., 313 N.W.2d 431 (Minn. 1981), the court was again asked by a general contractor to uphold indemnification language against a subcontractor after its work was completed on the project. In R.E.M., the owner brought suit against the architect, the general contractor and a subcontractor for property damage and lost profits caused when a sprinkler system froze and burst. Norcol, the subcontractor, had entered into an Associated General Contractors of Minnesota Standard Subcontract Agreement with the general contractor. Norcol's work on the project was to complete the sprinkler system. It finished its work and the sprinkler system was accepted as complete six days before water in the sprinkler system froze and burst, causing damage to the plaintiff's building. Approximately one month later, a second such incident occurred. Amazingly, even though it was a malfunction of the sprinkler system that caused the damage, the R.E.M. court held that only damage occurring during the performance of the work of the subcontract was within the intended coverage of the contractual indemnity provision. In reaching this conclusion, the R.E.M. court referred to the temporal and geographical or causal relationship required by Anstine, but seemed to have ignored or eliminated the causal nexus by not even addressing the fact that Norcol's negligence in the performance of its duties may have caused the damages, notwithstanding that the incident oc curred after Norcol's duties on the job were finished.¹⁴ It should be noted, however, that the R.E.M. court did indicate that "[r]efusing to require indemnity does not mean appellant Norcol necessarily escapes liability." 313 N.W.2d at 436. Indeed, Norcol still remained liable for its own negligence.
It should also be noted that the R.E.M. court, in dicta, supported its conclusion that an interpretation of the indemnity language requires indemnification only when the damage occurs while the work is in progress by examining the insurance requirement language of the agreement. In doing so, the court noted that the language of the insurance provision in the contract did not require the subcontractor to obtain completed operations insurance. Rather, it only required the subcontractor to obtain general liability insurance - suggesting that the drafters intended that the subcontract require indemnification only while the work was in progress.
A recent Minnesota Supreme Court case which further expands Anstine, and restates its holding in a post-Holmes context, should also be mentioned. In Seward Housing Corp. v. Conroy Brothers Co., 573 N.W.2d 364 (Minn. 1998), the plaintiff contracted with Conroy Brothers to install an exterior wall. Conroy, in turn, subcontracted with Right-Way to provide caulking, sealing and other services in connection with the wall. Right-Way's work on the project was concluded by May of 1986. In April of 1993, part of the wall fell to the ground. (There was evidence that as early as November of 1987, cracks began to appear in the wall.) Seward sued Conroy, which commenced a third-party action against Right-Way, alleging that it was the negligence of Right-Way that caused the damage. During the lawsuit, Seward and Conroy entered into a Pierringer release and Conroy then moved for summary judgment against Right-Way for indemnification. Right-Way had failed to procure the general liability policy as required by the language of the agreement; however, Conroy only sought indemnification up to the amount of the insurance specified in the agreement as seemingly permitted under Minnesota Statutes section 337.05, subdivision 2. The court noted the indemnification language contained in the agreement between Conroy and Right-Way was the standard subcontract language of the Associated General Contractors of Minnesota that previously had been analyzed and upheld in Johnson v. McGough Construction Co. However, the legislature, by enacting section 337.02, had rendered all indemnification agreements unenforceable except when the parties agreed to provide insurance "for the benefit of others." Thus, the Seward court held that the only issue before it was whether the claim "arises within the scope of the specified insurance." Citing to R.E.M., the court held that even if Right-Way had procured the general liability insurance required by the agreement, such insurance would not have provided coverage for the damages alleged by Conroy. The court noted that a general liability insurance policy would only have provided coverage for losses that occurred during the performance of the work of the subcontract. Also, citing to Anstine, the court noted that, like the subcontractor in Anstine, Right-Way had completed its work more than a year before the earliest damage occurred.
The result in Seward is consistent with the body of post-Holmes decisions which, taken as a whole, express the court's desire to very strictly limit the circumstances in which indemnity agreements may be enforced.

IV. CURRENT STATE OF THE LAW
It now appears that Minnesota courts will uphold the standard contractual indemnification language contained in the Associated General Contractor's Standard Subcontract Agreement (as evidenced by the court in Holmes, Seifert¹⁵ and Van Vickle.¹⁶ However, if the courts can find any other limiting language (for instance in a rider to the contract such as in Hurlburt) or a factual basis upon which to escape the holding of those cases (such as if the subcontractor has finished its work before the injury or damage occurs as in R.E.M. and Seward Housing) or some public policy reason (such as in D.W. Hutt), I believe that it will attempt to do so.¹⁷
In addition, if the indemnification agreement does not also contain an unambiguous provision to obtain insurance so as to insure the indemnity obligation, the court will find the indemnification agreement to be unenforceable (such as in Katzner). Note, that it is not sufficient that the indemnification agreement require insurance coverage if the agreement itself is in any way defective.
As a caveat, when analyzing contractual indemnification issues, it is also important to examine the insurance policy. For instance, if the contractor or indemnitee has been added as an additional insured to the policy, there may well be coverage under the policy regardless of whether or not the contractual indemnification provision is enforceable and, the additional insured may be entitled to enforce its rights to coverage as a third-party beneficiary to the policy.

V. CONCLUSION
The Minnesota courts will continue to enforce unambiguous indemnity agreements in construction contracts when they are coupled with an appropriate promise to procure insurance, such as in Holmes and Van Vickle. Thus, cases involving the Associated General Contractor's Standard Subcontract Agreement will continue to be resolved in favor of the indemnitee. However, any case involving an indemnification agreement in a construction contract should be carefully scrutinized for any of the following factors:

(1) Is there any deviation from the Associated General Contractor's Standard Subcontract Agreement (such as in Katzner)?
(2) Are there any riders to the subcontract that might affect the language of the indemnification agreement or the promise to insure (such as in Hurlburt)?
(3) Is there an unambiguous promise to procure the insurance that will insure the indemnitee for its own negligence (see Katzner)?
(4) Did the injury occur while the work under the subcontract was being performed and is there a nexus between the work and the injury (see Anstine, R.E.M. and Seward)?
(5) Is there a public policy rationale to avoid indemnification of the indemnitee for its own negligence (such as in D.W. Hutt)?

* I would like to thank Andrea E. Reisbord for her assistance in some of the research for this article and for her usual invaluable editorial comments. As always, her skills, analysis and insights were indispensable. I would also like to express my appreciation to one of my partners, Bruce D. Elliott, who generously offered his analysis and comments.

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Footnotes:
¹E.g., Christy v. Menasha Corp., 297 Minn. 334, 211 N.W.2d 773 (1973); Jacobson v. Rauenhorst Corp., 301 Minn. 202, 221 N.W.2d 703 (1974)BACK
²In its decision, the court did not mention Northern Pacific Railway Co. v. Thornton Brothers Co., 206 Minn. 193, 288 N.W. 226 (1939). However, in a footnote, it did state that"[t]o the extent that prior cases . . . rejected the strict construction rule for indemnity agreements, . . . they . . . are hereby overuled." 281 N.W.2d at 842 n.4. It is no doubt noteworthy that, at about the time of this decision, the common law principles of contribution and indemnity were undergoing change, compare Tolbert v. Gerber Industries, Inc., 255 N.W.2d 362 (Minn. 1977), with Hendrickson v. Minnesota Power & Light Co., 258 Minn. 368, 104 N.W.2d 843 (1960), and Minnesota caselaw was adapting to its comparative fault statute enacted in 1969. Minn. Stat. § 604.01. In fact, the Farmington court did note that the strict construction rule was in keeping with recent cases and statutory changes that adopted comparative fault principles, thus requiring each tortfeasor to be responsible for damages caused by its own negligence.BACK
³This same language had earlier been held enforceable under the "fair construction" standard in Christy v. Menasha Corp., 297 Minn. 334, 211 N.W.2d 773 (1973) and Jacobson v. Rauenhorst Corp., 301 Minn. 202, 221 N.W.2d 703 (1974). It is also the same language that would later be addressed in Holmes v. Watson-Forsberg Co., 488 N.W.2d 473 (Minn. 1992) and Van Vickle v. C.W. Scheurer & Sons, 556 N.W.2d 238 (Minn. Ct. App. 1996), review denied (Mar. 18, 1997).BACK
⁴The provision stated: The sub-contractor agrees to assume entire responsibility and liability for all damages or injury to all persons, whether employees or otherwise, and to all property, arising out of, resulting from or in any manner connected with, the execution of the work provided for in this Sub-Contract or occurring or resulting from the use by the Sub-Contractor, his agents or employees, of materials, equipment, instrumentalities or other property, whether the same be owned by the Contractor, the Sub-Contractor or third parties, and the Sub-Contractor agrees to indemnify and save harmless the Contractor, his agents and employees from all such claims including without limiting the generality of the foregoing, claims for which the Contractor may be, or may be claimed to be, liable, and legal fees and disbursements paid or incurred to enforce the provisions of this paragraph, and the Sub-Contractor further agrees to obtain, maintain and pay for such general liability insurance coverage as will insure the provisions of this paragraph.BACK
⁵The fact that it would be reasonable to construe this language to mean that National must indemnify MP&L in all cases except when MP&L is the only negligent party underscores what appears to be the length to which the courts apparently will go to avoid enforcement of indemnification agreements. BACK
⁶In yet a later case, Katzner v. Kelleher Construction, 545 N.W.2d 378 (Minn. 1996), the Minnesota Supreme court examined identical indemnification language and held that it was "at, best, ambiguous." 545 N.W.2d at 382. The Katzner court did not cite Oster. It is, perhaps, noteworthy that the contract at issue in Oster was executed before the enactment of Minn. Stat. § 337.02, while the contract in Katzner was executed after the statute's enactment.BACK
⁷This was a case handled by our firm.BACK
⁸The importance of the second prong-i.e., the promise to insure is vital, as examined later in discussion about Katzner v. Kellerher, 545 N. W.2d 378 (Minn. 1996).BACK
⁹This case was also handled by our firm.BACK
¹⁰In doing so, the Minnesota Supreme Court completely ignored the Minnesota Court of Appeals' decision in Oster v. Medtronic, Inc., 428 N.W.2d 116 (Minn. Ct. App. 1988) in which the court held that the identical indemnification provision was "at least as specific as that found in the Johnson contract" and therefore enforceable. Id. at 119.BACK
¹¹This is another case handled by our firm.BACK
¹²Minnesota Statutes section 337.05, subdivision 2 provides that when an indemnitor fails to obtain the specified insurance, the indemnitee is entitled to indemnity to the same extent as that specified in the subcontract. This language is important, as discussed in the next section of this article.BACK
¹³The subcontracts were the standard Associated General Contractors agreements.BACK
¹⁴In Fossum v. Kraus-Anderson Const. Co., 372 N.W.2d 415 (Minn. Ct. App. 1985), the court held that no temporal and geographical relationship between the performance of the work and the injury existed when an employee was injured when struck by a car after walking out of the construction gate.BACK
¹⁵In Seifert v. Regents of University of Minn., 505 N.W.2d 83 (Minn. Ct. App. 1993), the Minnesota Court of Appeals followed Holmes and upheld an indemnification obligation contained in an Associated General Contractor's Standard Subcontract Agreement.BACK
¹⁶While it may be that the courts will enforce other contractual provisions that contain language that otherwise clearly indicates an intent to indemnify the indemnitee even for its own negligence, no cases since the enactment of Minnesota Statutes section 337.02 have enforced any indemnification provision in a construction contract other than that contained in the standard paragraph 7 of the Associated General Contractors form contract and even then, only if (1) the work was in progress, i.e., not finished; and (2) there were no riders or attachments to the contract that might alter the scope of the indemnity language.BACK
¹⁷Indeed, the Minnesota Supreme court itself has indicated that "we have been reluctant to impose indemnity . . . ." National Hydro Systems v. M.A. Mortenson Co., 529 N.W.2d 690, 694 (Minn. 1995).BACK

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