Minnesota Supreme Court rules on contractual indemnity provisions in construction contracts
In Engineering & Construction Innovations, Respondent, v. L.H. Bolduc Co., Inc., and The Travelers Indemnity Company of Connecticut, the Minnesota Supreme Court reaffirmed the principle that a subcontractor cannot be required to indemnify a contractor for the negligence of others, absent an agreement to procure specific insurance coverage. In doing so, the Court rejected an exception that the Court of Appeals previously determined had swallowed the rule.
Minnesota Statute § 337.02 prohibits indemnification for the indemnitee’s own negligence, but Minnesota Statute § 337.05 contains an exception to this rule for agreements whereby a promisor agrees to procure insurance for the benefit of others. The Minnesota Court of Appeals found the exception swallowed the rule, and held that a subcontractor absolved of any negligence by a jury verdict still had to indemnify a general contractor for property damage.
The Minnesota Court reversed the court of appeals and made two significant holdings. First, the Court confirmed that Minnesota Statute § 337.02 protects a subcontractor from liability for the obligations of the general contractor, absent a contractual agreement to procure specific insurance. Additionally, the Court found that the phrase “acts or omissions,” when used in a CGL policy without any further clarification or qualification, refers to wrongful acts or omissions. Hence the jury determination’s that a subcontractor was not negligent extinguished the subcontractor’s indemnification obligations.
Bolduc is an important case to the future of construction law in Minnesota. It ensures that the anti-indemnity provisions of Minnesota Statute § 337.02 still have teeth, and it protects subcontractors from liability for the fault of the general contractor.
June 2012 – Court of Appeals Affirmed District Court’s Approval of Summary Judgment
Attorney Frank Rajkowski
recently received a favorable decision from the Court of Appeals. The court affirmed an Otter Tail district court decision granting our client summary judgment in a wrongful death case brought by the next of kin of a 25 year old male. The decedent was killed when an ATV he was driving left a township road in Otter Tail County and allegedly struck a fencepost in a ditch on property owned by the defendant. The plaintiff’s attorney had retained an accident reconstructionist who reached that conclusion. It was further claimed that the fencepost was in the township road right-of-way in violation of Minnesota statutes. Based on the testimony of our client and records from the township, we were able to establish conclusively that the township road, which was acquired by use, never extended into the area of the fence line. Because the township had never used that area for road purposes, we argued that based on Minnesota case law and the statutes concerning township roads, the plaintiff’s expert had reached the wrong legal conclusion in his determination that it was in the right of way.
A secondary issue involved the defendant’s lack of duty. The testimony showed that there had been no history of trespassing in that area, either by ATVs or snowmobiles, and that there was never any permission, implied or express, given by the defendant for recreational vehicles to use his property. Based on the lack of knowledge of trespassers, the district court concluded that the defendant as a landowner had no duty to trespassers for any potential hazards on his property. The Court of Appeals in its decision agreed with the district court finding, as a matter of law, that there was no basis to conclude that the fencepost was in the right of way or that the defendant had any duty to the decedent under the circumstances.
This case represents a good example of how the variety of our firm’s practice and expertise can have a major impact in the defense of personal injury actions. Because we have done a substantial amount of work for municipalities and townships, we were able to immediately identify the flaw in the plaintiff’s reconstructionist’s conclusion that the fencepost was in the right-of-way. While there is a Minnesota statute that does indicate that township roads are dedicated to a width of four rods, the Minnesota Supreme Court decisions in the past have indicated that that statute would be unconstitutional if applied to township roads that were acquired by use rather than dedication. The Supreme Court’s holdings in those cases indicated that when a township road is acquired by use, the township only acquires what it uses for roadway purposes and nothing more. Based on that knowledge, we immediately focused on that issue and were able to obtain a dismissal in a case that from a damage perspective had a large potential.
January 2012 - No Liability in Crow Wing County Rear-end Accident
Attorney Kevin Gray recently obtained a defense verdict in a personal injury trial venued in Crow Wing County. Plaintiff was rear ended by Kevin's client when she stopped at a crosswalk near a hospital in Crosby, Minnesota. The Defendant, who was sixteen years old at the time of the accident, testified that she did everything she could to stop, but was unable to avoid colliding with the back of Plaintiff's vehicle. The jury found that neither party was negligent in the liability issue, the trial involved extensive medical testimony. Plaintiff treated extensively chiropractic care, epidural steroid injections and radiofrequency neurotomies. Plaintiff called four expert witnesses for testimony at trial including her treating chiropractor, a neurologist, a pain specialist and a neurosurgeon who testified that Plaintiff required a three level fusion. Plaintiff sought $633,000 in damages. The jury found that Plaintiff had not sustained a permanent injury or 60 day disability as a result of the accident and awarded $1,000 in past medical expense and $500 for past diagnostic studies. Although there was no evidence of pretreatment and her next medical care when she was seen by the neurologist. There was evidence of moderate degenerative changes in Plaintiff's cervical spine and the independant medical examiner opined that all of the Plaintiff's medical treatment other than the initial emergency room visit and x-ray was related to the degenerative changes.
December 21, 2011 - Summary Judgment
Attorneys Kevin Gray and Kristi Stanislawski successfully defended an operator of a golf course in a dram shop action. The case involved a woman claiming serious injuries as a result of a motor vehicle accident involving a drunk driver. The Plaintiff sued the driver as well as the owner of the golf course alleging an illegal sale of alcohol. Plaintiff claimed the golf course had served the driver of the vehicle while he was "obviously intoxicated" in violation of Minn. Stat. § 340.502. Gray and Stanislawski brought a motion for summary judgment on behalf of the owner of the golf course on the basis that Plaintiff had failed to produce any evidence of intoxication during the time the driver was at the clubhouse attending a wedding reception. The district court in Benton County agreed and dismissed Plaintiff's claims. Plaintiff's cause of action against the driver and a second bar that had allegedly made an illegal sale is pending.
September 20th, 2011 - Summary Judgment Win
Attorneys Kevin Gray and Victoria Lupu successfully drafted and argued a summary judgment motion on behalf of an insurance company regarding the validity of an appraisal provision in its homeowner's insurance policy. It was undisputed that the appraisal process was followed in accordance with the policy. Rather, the Plaintiff, a homeowner's association, attempted to argue that the appraisal provision itself was ambiguous and unconscionable, and therefore should not be binding. The basis for Plaintiff's argument was the interplay between two sentences in the provision. The first of these stated that the appraisal process was a binding and final decision on the amount of damage. The second sentence stated that the insurance company retained its right to deny coverage. In granting the Defendant's motion for summary judgment, the Court found that the meaning of the provision was not ambiguous and that it is well settled law that appraisal provisions do not determine coverage. Furthermore, the Court emphasized the significance of the fact that coverage in this case was not denied, making Plaintiff's claim wholly unmeritorious.