Ambiguous Indemnification Provision Leaves Supplier Footing The Bill

ScaffoldingLast week, the Massachusetts Appeals Court rendered an important decision in Fraco Products, Ltd. v. Bostonian Masonry Corporation concerning indemnity obligations for construction site injuries.  The case highlights for contractors, subcontractors and suppliers the importance of carefully drafted indemnification provisions in construction and equipment contracts.

Fraco Products, Ltd. (Fraco) manufactures industrial mast-climbing platforms, which are used in construction instead of scaffolding.  Fraco sold platforms to Bostonian Masonry Corporation (Bostonian).  Bostonian used them on a dormitory construction project at Emerson College in Boston.  While Bostonian employees were dismantling the platform, it collapsed, killing three people, including a Bostonian employee.

The estate of the Bostonian employee sued Fraco for negligent design, manufacture, installation, service, and inspection of the platform.  Fraco filed a third-party complaint against Bostonian alleging that Bostonian’s employees negligently used the platform.  Fraco sought from Bostonian (1) contribution and (2) indemnification on theories of common law and contractual indemnity.  The Superior Court granted summary judgment in favor of Bostonian on both counts.  Fraco appealed only from the judgment on the indemnification claims.

The estate had not sued Bostonian because the exclusivity provision in the workers’ compensation statute bars a third-party sued by the employee from recovering against the negligent employer who has paid workers’ compensation benefits.  The courts have created two exceptions to this rule.  The first is when the employer has a contractual obligation to indemnify the third-party.  The second is when the third-party is not alleged to have committed negligent acts but rather is being held vicariously responsible for the employer’s negligent acts.

Neither exception applied in this case.  The contract between Fraco and Bostonian was ambiguous as to the parties’ indemnity obligations.  Also, the estate was claiming that Fraco, as manufacturer, was independently liable, not vicariously or derivatively liable, for the wrongful acts of Bostonian.

This case is another reminder to seek counsel and carefully review “boilerplate” indemnification provisions in construction and construction-related contracts.  A more clearly drafted indemnification provision might have allowed Fraco’s claim against Bostonian to survive summary judgment and proceed to trial.

About David Fine

David is an partner in the firm's Litigation Group and is chair of the Construction Law Group. David serves as litigation counsel for contractors, subcontractors, suppliers and other business concerns within the construction industry. He regularly advises his clients on matters such as contract drafting and dispute resolution, surety bond claims, mechanics liens and bid protests. David works closely with a number of local and regional trade organizations, and he often lectures and writes about topics pertinent to the construction industry.
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