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 Given that Amberwood Development is an unpublished memorandum decision (and not an opinion), it will have no precedential effect on any subsequent Arizona cases.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.
The Arizona Court of Appeals recently issued an opinion in Double AA Builders, Ltd. v. Preferred Contractors Insurance Company, LLC., No. 1 CA-CV 15-0375, which addresses several key construction-related commercial general liability insurance policy (“CGL”) provisions. The court ultimately held that the subject CGL policy did not provide the general contractor (who was an additional insured) more and/or different coverage than the subcontractor (who was the named insured). As a result, the court found that the General Contractor was not insured for the loss at issue. But in reaching its decision, the court examined the concepts of “additional insureds,” ” your work exclusions,” and “subcontractor exceptions” in connection with CGL policies. For this reason, Double AA Builders is a particularly interesting case.
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(A). 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:
This post is the first installment of new a monthly series highlighting notable awarded bids and contracts for Arizona public construction projects. I know that it is helpful for my practice to keep track of new projects around the state. So, without any further adieu, here is a list of some of the public projects awarded in or about November, 2016:
***UPDATE – 2/12/2018***
The Court of Appeals’ decision in Hatch Development, LLC, et al. v. Sol’s Construction Co., Inc., 240 Ariz. 171 (App. 2016), which is the subject of this post from November 2016, is no longer good law. The decision in Hatch was abrogated by the Arizona Supreme Court’s February 8, 2018 opinion in KnightBrook Ins. Co., et al. v. Payless Car Rental System, Inc., No. CV-17-0156-CQ.
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).