By Frank V. Reilly, Esq.
June 2002

On June 5, 2002, Florida’s Fourth District Court of Appeal held that under some circumstances, certain construction indemnification agreements may be unenforceable if they violate Florida Statutes. In George’s Crane Service, Inc. and Craven, Thompson & Associates, Inc. v. Signal Services Industries, Inc., Case # 4D01-3043, the Court found the indemnity agreement to be illegal and affirmed the Broward County trial court’s final judgment. The Court based it’s decision on Florida Statutes § 725.06, which provides that:

Florida Statutes, TITLE XLI STATUTE OF FRAUDS, FRAUDULENT TRANSFERS, AND GENERAL ASSIGNMENTS, CHAPTER 725 UNENFORCEABLE CONTRACTS

725.06 Construction contracts; limitation on indemnification. —

(1) Any portion of any agreement or contract for or in connection with, or any guarantee of or in connection with, any construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance, including moving and excavating associated therewith, between an owner of real property and an architect, engineer, general contractor, subcontractor, sub-subcontractor, or materialman or any combination thereof wherein any party referred to herein promises to indemnify or hold harmless the other party to the agreement, contract, or guarantee for liability for damages to persons or property caused in whole or in part by any act, omission, or default of the indemnitee arising from the contract or its performance, shall be void and unenforceable unless the contract contains a monetary limitation on the extent of the indemnification that bears a reasonable commercial relationship to the contract and is part of the project specifications or bid documents, if any. Notwithstanding the foregoing, the monetary llimitation on the extent of the indemnification provided to the owner of real property by any party in privity of contract with such owner shall not be less than $1 million per occurrence, unless otherwise agreed by the parties. Indemnification provisions in any such agreements, contracts, or guarantees may not require that the indemnitor indemnify the indemnitee for damages to persons or property caused in whole or in part by any act, omission, or default of a party other than:

(a) The indemnitor;
(b) Any of the indemnitor's contractors, subcontractors, sub-subcontractors, materialmen, or agents of any
tier or their respective employees; or
(c) The indemnitee or its officers, directors, agents, or employees.

However, such indemnification shall not include claims of, or damages resulting from, gross negligence, or willful, wanton or intentional misconduct of the indemnitee or its officers, directors, agents or employees, or for statutory violation or punitive damages except and to the extent the statutory violation or punitive damages are caused by or result from the acts or omissions of the indemnitor or any of the indemnitor's contractors, subcontractors, sub-subcontractors, materialmen, or agents of any tier or their respective employees.

(2) A construction contract for a public agency or in connection with a public agency's project may require a party to that contract to indemnify and hold harmless the other party to the contract, their officers and employees, from liabilities, damages, losses and costs, including, but not limited to, reasonable attorney's fees, to the extent caused by the negligence, recklessness, or intentional wrongful misconduct of the indemnifying party and persons employed or utilized by the indemnifying party in the performance of the construction contract.

(3)  Except as specifically provided in subsection (2), a construction contract for a public agency or in connection with a public agency's project may not require one party to indemnify, defend, or hold harmless
the other party, its employees, officers, directors, or agents from any liability, damage, loss, claim, action, or proceeding, and any such contract provision is void as against public policy of this state.

(4) This section does not affect any contracts, agreements, or guarantees entered into before the effective date of this section or any renewals thereof.

Practical Tip:  Indemnity agreements should almost always be drafted with the assistance of a skilled and experienced attorney. Remember, the law is always subject to change from time to time. If your attorney has not reviewed your contracts lately, it may be a good time to get a quick "check up".