The Minnesota Supreme Court recently struck down language purporting to apply to the indemnitee’s because the indemnity clause did not state so expressly. Put another way, broad, indemnity clauses – e.g. “from and against any and all liabilities” – does not require the indemnifying party to indemnify against claims for the other party’s own negligence. The court concluded to indemnify against one’s own negligence, clause must use express language which clearly and unequivocally shows the parties’ intent to fully transfer liability. The potential impact of this case, Dewitt v. London Road Rental Center, Inc., 910 N.W.2d 412 (Minn. 2018) is quite significant.
Tower Tap Restaurant entered into an agreement to rent folding picnic tables from London Road Rental Center, Inc. for its annual Ma and Pa Kettle Days event in 2012. Craig Dewitt, attended the event and injured his hip after one of the rented tables collapsed on him while he was sitting at the table.
Dewitt sued Tower Tap and London Roads. London Road filed a cross-claim against Tower Tap, invoking the indemnity clause in the rental agreement that Tower Tap agreed to:
INDEMNIFY, DEFEND AND HOLD HARMESS LONDON ROAD FROM AND AGAINST, ANY AND ALL LIABILITIES, . . . RESULTING FROM OR ARISING IN CONNECTION WITH SUCH POSSESION, USE, TRANSPORTATION AND/OR STROAGE, REGARDLESS OF THE CAUSE . . .
The district court granted summary judgment to London Road and the court of appeals affirmed holding that the indemnity agreement required Tower Tap to indemnify London Road for London Road’s own negligence.
The Minnesota Supreme Court reversed, concluding that the indemnity provision does not include express language to show that Tower Tap clearly and unequivocally intended to indemnify London Road for London Road’s own negligence. The court clarified the rule from Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc., to emphasize the language that is necessary in an indemnity provision to shift the economic risk and costs of defending against claims related to that contract from the indemnitee and the indemnitor. 281 N.W.2d 838, 842 (Minn. 1979). It pointed to the fact that Minnesota courts disfavors agreements “seeking to indemnify the indemnitee for losses occasioned by its own negligence,” and those provisions must be strictly construed. See Id. To pass strict construction, the contract must include an “express provision” that “indemnifies the indemnitee for liability occasioned by its own negligence,” but the provision need not include the word “negligence.” Id. When the provision does not clearly and unequivocally provide for a complete shift in liability, the provision will be interpreted to provide that each party accepts responsibility only for damages commensurate with its own fault.
The decision is monumental for a number of reasons. First, where indemnify provisions which do not expressly state that the indemnified party is indemnified for its own negligence, each party remains subject to comparative fault. This might now come as a surprise to the party to be indemnified. Moreover, individuals and companies seeking to be indemnified should review – and if necessary revise – their standard agreements to be sure the agreement expressly covers their own negligence. As a final note, the Minnesota Supreme Court did not address whether the sophistication of the contracting parties is relevant to determine the scope of an indemnity provision. While the case involved a business-to-business transaction, many businesses would be surprised to learn that their otherwise comprehensive indemnity agreements do not fully protect them from liability for claims arising from their negligence. We predict this decision will usher in significant revisions to indemnity agreements throughout Minnesota.
If you have questions concerning this case or indemnity agreements and disputes, contact Bob Kuderer, Matt Johnson, or Tom Brock.