No Duty to Defend If the Underlying Indemnity Clause Is Void

Kegler Brown Construction Alert

In an important case with potential nationwide ramifications, the Second District Court of Appeals in Florida in the case of Barton-Malow Company v. Grunau, et al. issued an Opinion dated November 15, 2002, which found that when a subcontract clause requiring indemnity is void (because of Florida's Anti-Indemnity Statute) that there can also be no duty to defend. The contractor in that case had significant multi-million dollar liability arising from a "sick building." The indemnity provision in the relevant subcontracts was void in view of Florida's Anti-Indemnity Statute. Many states around the country have anti-indemnity statutes which prohibit one party from requiring the other to indemnify them from their own negligence.

Even though the general contractor admitted that the anti-indemnity statute made the subcontract clause void in Florida, it still tried to enforce a duty to defend so that it could recover its million dollar expense for legal fees in defending the underlying case. Subcontractors, including in an amicus brief filed by our office on behalf of the American Subcontractors Association, argued that if the underlying indemnity provision is void then the duty to defend is also unenforceable. Such an interpretation is important to subcontractors in that most of the anti-indemnity statutes around the country deal expressly with "indemnity," but do not specifically mention "defense."

The Court ruled that the duty to defend, which was included in the same sentence as the duty to indemnify, was not severable from the indemnity obligation and therefore both the indemnity and defense obligations were unenforceable. Therefore, subcontractors will not have to pay the general contractor's legal fees arising from the "sick building" case. Many other jurisdictions may follow this reasoning as they struggle with this important risk-shifting issue.