U.S. Court of Appeals Finds Duty to Indemnify in Construction Injury Case

The 7th Circuit Court of Appeals in Chicago has reversed a district court judge’s decision in a case involving an indemnification clause in a contract.

Robert Krien was an employee of Riley Construction.  Riley was the general contractor on a construction project located in Wisconsin.  Riley in turn, hired Harsco Corporation to supply the scaffolding for the construction work.  Krien was injured when he fell from the scaffolding after a plank broke beneath him.  The parties settled Krien’s injury claim for $900,000.

Before the settlement, Harsco had filed a third-party complaint against Riley seeking indemnification for any damages Harsco might pay by way of judgment or settlement.  Then the parties filed cross-motions for summary judgment, and the district court judge granted Riley’s motion.  Harsco took this appeal to the U.S. Court of Appeals in Chicago.

The appeals panel noted that the basis of Harsco’s claim was its contract with Riley.  Under the contract of each, the companies were permitted to use the other’s equipment only with written permission, and the using company was required to indemnify the equipment-owning company for any loss or damage that may arise from that use.

Both provisions in the contract refer to Article 9 of the contract for more details on the scope on the indemnity provisions.  The parties had crossed out the relevant paragraph of Article 9 and replaced it with a similar, but slightly broader, provision attached to the contract in an appendix.

The trial judge accepted Riley’s argument that the provision of the contract that required it to indemnify Harsco was voided because the original Article 9 paragraph had been deleted.  In addition, because the first portion of the contract did not reference the appendix, the district judge reasoned that Riley did not have to indemnify Harsco.

The appeals panel rejected that argument as implausible.  The panel noted that if the parties really had intended to remove indemnity protection for Harsco, they would have also deleted the paragraphs in the previous section of the contract in addition to the one in Article 9.

Also it was noted that Article 9 had other language in it that suggested that the parties had not intended to completely eliminate indemnity provisions from the contract.  The appellate panel then looked into whether the indemnity provisions applied to Krien’s accident.  It turned out that the plank that may have been a cause of Krien’s injury was placed onto Harsco’s scaffolding by another Riley employee and was obtained from a separate part of the construction site.  Therefore, the plank may or may not have been supplied by Harsco at all.

Riley also argued that it should not have to indemnify Harsco because doing so would make it as though Krien had sued Riley directly when the only remedy against an employer would be by way of a workers’ compensation claim. The court found that here was nothing in the law that would prevent an employer from waiving its workers’ compensation exemption, which Riley did.

Finally, the court of appeals concluded that Riley’s duty to indemnify Harsco included the legal fees that Harsco had spent while defending Krien’s lawsuit as well as those that were incurred as a result of litigating the third-party claim for indemnification.

Accordingly, the district court’s order granting Riley’s cross-motion for summary judgment was reversed and the case returned to the district court for further disposition.

Robert Krien, et al. v. Harsco Corporation v. Riley Construction Company, No. 13-2272 (7th Cir., March 13, 2014).

Kreisman Law Offices has been handling construction accident cases, car accident cases, nursing home abuse cases and truck accidents cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Long Grove, Morton Grove, Peoria, Wheeling, Vernon Hills, Matteson, Riverside, Bridgeview, Maywood, Mundelein, Niles and Des Plaines, Ill.

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