Summary
The Supreme Court of Virginia considered whether Amtech Elevator Services had contractual duties to defend and indemnify Uniwest Construction for claims arising from injuries to Amtech employees, and whether Uniwest was insured under Amtech's insurance policies. The court held that one indemnification provision was void under Virginia Code § 11-4.1, but that another provision incorporated from the prime contract imposed a duty to defend and indemnify Uniwest. It also held that Uniwest was insured under the relevant CNA and AIU policies, reversed contrary rulings, and remanded for determination of comparative liability and damages.
Topics
Practice areas
Questions Presented
- Whether the subcontract's Paragraph 10 indemnity provision was void under Code § 11-4.1 because it purported to indemnify Uniwest against liability for its own negligence.
- Whether incorporation of the prime contract and its General Conditions imposed on Amtech a duty to defend and indemnify Uniwest under Paragraph 3.18.1.
- Whether the incorporated Zipf Specifications required Amtech to procure insurance naming Uniwest as an additional insured.
- Whether Uniwest was insured under the CNA and AIU policies and whether AIU therefore had duties to defend and indemnify Uniwest.
- Whether damages had to be reduced or apportioned according to Uniwest's relative liability for the accident.
Holdings
- Paragraph 10 was void and unenforceable under Code § 11-4.1 because its language indemnified Uniwest against claims based on Uniwest's own negligence.
- The subcontract incorporated Paragraph 3.18.1 of the General Conditions and imposed on Amtech a duty to defend and indemnify Uniwest.
- Uniwest was an insured under the CNA and AIU policies because the subcontract required Amtech both to indemnify Uniwest and to provide insurance for it.
- AIU had a duty to defend and indemnify Uniwest under both Subdivision E-4 and Subdivision E-7 of the AIU Policy.
- The case had to be remanded to determine the extent to which the accident was caused by Uniwest's own negligence and to calculate compensatory damages based on Amtech's relative liability, including covered defense costs.
Key quotations
“Because the phrases "caused by" and "resulting solely from" are disjunctive in the statute, it voids any indemnification provision that reaches damage caused by the negligence of the indemnitee, even if the damage does not result solely from the negligence of the indemnitee.” (*230)
“The plain meaning of these words is that Uniwest's duty to defend and indemnify Fountains became a duty by Amtech to defend and indemnify Uniwest.” (*230)
“Nothing in the plain meaning of these words limits the incorporation of the Zipf Specifications to the technical requirements for the elevators to the exclusion of other requirements, including the insurance provision.” (*232)
Factual background
Uniwest, the general contractor for a building renovation project, subcontracted elevator work to Amtech under a Virginia-law subcontract incorporating the prime contract and related specifications. The subcontract contained a broad indemnity clause and incorporated an AIA indemnity provision and specifications requiring Amtech to name Uniwest as an additional insured or obtain separate liability insurance. Two Amtech employees were injured when a scaffold collapsed during the elevator work; one died and the other was seriously injured, leading to a settlement by Uniwest and its insurers for $9,500,000. Amtech agreed to defend and indemnify Uniwest, but AIU disputed its coverage obligations and did not fully participate in settlement discussions.
Procedural history
Uniwest and its insurers initially sued Amtech and its insurers for breach of duties to defend and indemnify Uniwest in litigation arising from an elevator-construction accident. The circuit court ruled that Paragraph 10 of the subcontract was void under Code § 11-4.1, and the plaintiffs nonsuited that action. In a subsequent declaratory-judgment action, the court held that Amtech had no duty to defend or indemnify under Paragraph 3.18.1, that AIU had no such duty under its policy, but that Amtech breached a duty to procure insurance for Uniwest and owed $9,500,000 plus prejudgment interest. The Supreme Court of Virginia affirmed the invalidity of Paragraph 10, reversed the rulings concerning Paragraph 3.18.1 and AIU's policy obligations, and remanded for determination of relative liability and damages.
Remand instructions
Remand for trial to determine the relative liability for the accident and to enter judgment against Amtech and AIU for compensatory damages based on Amtech's relative liability. The damages calculation must also include Uniwest's defense costs in the Employees' lawsuit for which Amtech and AIU are liable, to the extent those costs have not already been paid.