On August 8, 2011, the Sixth Circuit Court of Appeals affirmed a Michigan district court’s holding that a subcontractor breached its obligation to indemnify a general contractor under the contract between the parties. Honeywell Internat’l Inc. v. Lutz Roofing Co., Inc., No. 09-1877.
The relationship between Plaintiff Honeywell (the general contractor) and the Defendant Lutz (the roofing subcontractor) was governed by a Subcontract Agreement. Under the terms of the agreement, Lutz agreed to take reasonable precautions to protect the safety of its employees. The agreement also included an indemnity clause requiring Lutz to indemnify Honeywell in the event of Lutz’s negligence or willful misconduct. Lutz was not obligated to indemnify Honeywell Lutz in the event of Honeywell’s negligence or willful misconduct.
During a construction project, one of Lutz’s employees was injured when he fell off of a roof. The employee and his wife sued Honeywell, alleging that Honeywell was negligent in failing to take certain safety precautions. Because the employee had filed a workers’ compensation claim with Lutz, he was barred from brining a negligence suit against his employer. Honeywell’s request for indemnification from Lutz was refused.
Lutz argued that because the employee’s complaint did not allege that Lutz was negligent, the indemnification provision was not triggered. Honeywell argued that the court’s review should not be limited to the four corners of the complaint, but rather guided by the facts out of which the claims arose. After reviewing Michigan laws and case precedent, the Court agreed with Honeywell, holding that because there was no evidence that Honeywell had breached any duty to Lutz’s employee, Lutz was obligated to defend Honeywell against the suit.
The Honeywell case serves as a valuable reminder to those companies working with subcontractors to ensure that an unambiguous indemnification clause is included in any agreement between the parties. Contractors and subcontractors should also ensure that the indemnification provision in their agreement complies with the laws in the state in which they operate.