Division One of the Arizona Court of Appeals recently issued a decision addressing contractual indemnification provisions in Amberwood Development, Inc., et al. v. Swann’s Grading, Inc., 2017 WL 712269. Given that Amberwood Development is an unpublished memorandum decision (and not an opinion), it will have no precedential effect on any subsequent Arizona cases. It is, nevertheless, worth reviewing because it touches on two key aspects of indemnification provisions—(1) what acts or omissions are covered; and (2) whose acts or omissions are covered. In Amberwood Development, the court ultimately found that the subcontractor, Swann’s Grading, Inc. (“Swann’s”), was obligated to indemnify the general contractor, Amberwood Development, Inc. (“Amberwood”), for: (1) Swann’s non-negligent actions; and (2) all claims “arising out of or connected to Swann’s work,” regardless of who caused them.
In an earlier post, I addressed the statutorily-required minimum elements of Arizona construction contracts between contractors and property owners. As a reminder, those minimum elements are set forth in A.R.S. § 32-1158(B). This post will, however, address the other side of that same coin—namely, the relatively few construction contract provisions that are statutorily void and unenforceable in Arizona.
First, A.R.S. § 32-1129.05(A) provides that the following are against Arizona’s public policy and are void and unenforceable:
Indemnification provisions are mainstays of most construction contracts. As a result, all contractors should be aware that the agreements they enter likely impose certain indemnification obligations upon them. But even the most seasoned contractors may not realize that construction contracts are not always the final word on indemnity. Rather, certain indemnification obligations can arise purely as a matter of law, even if the parties’ contract is silent on the issue. This is what is referred to as “common law indemnification,” and it was the subject of the Arizona Court of Appeals’ recent decision in Hatch Development, LLC, et al. v. Sol’s Construction Co., Inc., 240 Ariz. 171 (App. 2016).
It has been several months since I last published a blog entry. My term as the President of the Scottsdale Bar Association and a particularly busy period in my practice have recently left too few hours in the day for blogging. But now that my term has ended, I intend on resuming my regular posts. In light of my time away, I thought it only fitting that this post cover some aspect of delay. I will, therefore, address in this post the often controversial “no-damages-for-delay” clause.
A “cardinal change” has nothing to do with the football team, the baseball team, or, for that matter, the bird. It is, instead, an important legal concept for contractors to understand. Where applicable, the cardinal change doctrine puts limits on the amount of changed work or extra work that can be ordered under the changes clause of a construction contract. I recently dealt with the doctrine in connection with my practice. Here are the basics.
Cardinal Changes Defined.