RRD Secures Summary Judgment for Property Owner in Indemnification Action

December 6, 2010

RRD partner John F. Costa and associate Liam M. West recently obtained summary judgment in favor of their client, a healthcare facility, in an indemnification action.

In the underlying action, the plaintiff, an employee of the healthcare facility represented by RRD, allegedly sustained injuries after falling on ice at the healthcare facility during the course of his employment. In response, he filed a complaint against the independent contractor that provided snow removal services to the healthcare facility. The snow removal contractor then filed a third party claim for contractual indemnification against the healthcare facility. Specifically, the contractor alleged that the agreement between the parties required the healthcare facility to indemnify the contractor for: (1) Any damages awarded to the plaintiff in the underlying action; and (2) Attorney’s fees, costs and expenses associated with defending the underlying action and pursuing the indemnification claim. The underlying action was subsequently severed from the indemnification claim. A trial was then held in the underlying action, which resulted in a defense verdict for the snow removal contractor.

After the underlying action was resolved in favor of the snow removal contractor, RRD filed a motion for summary judgment on the indemnification claim on the ground that the agreement between the healthcare facility and the snow removal contractor did not require the healthcare facility to indemnify the contractor for attorney’s fees, costs, or expenses associated with defending the underlying claim or pursuing the indemnification action. Specifically, RRD successfully argued that indemnification agreements do not automatically provide for the reimbursement of attorney’s fees. Instead, contracts for indemnity should be construed to cover only those losses that appear to have been intended by the parties. In the present case, the contract between the parties only required the healthcare facility to indemnify the contractor for “damages” to third parties. The court agreed with RRD that the term “damages” is defined as “sums recoverable as amends for the wrong” and cannot be interpreted as encompassing attorney’s fees or costs. Accordingly, the court determined that the contract for indemnity did not include attorney’s fees or costs and was limited to reimbursement for any money that the plaintiff might have recovered in the underlying action. As the underlying action resulted in a defense verdict, the snow removal contractor’s claim for indemnification had been extinguished.