MGS Secures Settlement in Construction Case - Third Parties and Their Insurers Pay It All
MGS partners Dan Mohan and Mallory Sanzeri recently concluded a lawsuit on behalf of a transportation-industry client by securing a mid-seven figure settlement paid entirely by a licensee, its contractors and their insurers. Plaintiff was an employee who fell at a construction project near the client’s premises. Although the client was the only direct defendant, MGS asserted third-party claims for indemnity and insurance coverage against the licensee company whose underground facilities were the subject of the project and the contractors performing the work.
On the eve of trial and after years of fighting a two-front battle - defending the plaintiff’s claim and pursuing contractual indemnity - MGS secured summary judgment on its indemnity claims. Having been determined to be solely responsible for the potential jury verdict, the licensee company, its contractors and their insurers settled the case on behalf of the MGS client and paid all attorney’s fees and defense costs incurred by MGS on behalf of the client.
The Underlying Case
Plaintiff was working a job servicing an industrial facility owned by a customer of the MGS client. The licensee company maintained facilities under the client’s property near the customer facility, pursuant to a license. The licensee company and its contractors were performing maintenance and repair work on the underground facilities at the time of the accident, resulting in uneven ground conditions that were covered with light snow.
Plaintiff was crossing the construction area to get to the customer’s property when he fell and injured his ankle. Plaintiff underwent multiple surgeries, eventually including a total ankle replacement. Plaintiff sued the client and the client filed third-party claims against the licensee company and the contractors for contribution and contractual indemnity.
The Indemnity Claim
The licensee company had permission to install and maintain its facilities under the client’s property pursuant to a 1957 license agreement. The agreement was amended over the years but always included a provision that the licensee company would indemnify the client for personal injuries to any person “caused by or growing out of” the presence, construction or maintenance of the underground facilities.
As in all construction and industrial accident cases, MGS conducted a deep dive into the client’s historical files to determine the basis for the existence of the underground facilities and the allocation of responsibility between the client and the owner of the facilities.
Upon locating the license, MGS called upon the licensee to honor its agreement to indemnify. After initially indicating it would defend the MGS client, the licensee company chose to contest the validity of the indemnity provision in the license - arguing primarily that it was void under the Illinois statute that prohibits an agreement to indemnify a party for its own negligence in a construction contract. In granting summary judgment for the client, the court held that the license only provided access to the client’s property. “Where an indemnitee is merely accommodating an indemnitor and the indemnitee does not assume responsibility for any construction activities, the operation of the Anti-Indemnity Act is not triggered.”
“Many construction-related matters involve dissecting the contractual and insurance responsibilities of the parties, often based on contracts entered many decades ago.”
Key Takeaway
Even difficult liability and damage cases can have favorable outcomes if you can shift responsibility to other parties. Step one is to review every agreement you can find that could even arguably relate to the work in question, and tender defense to every available entity. Places to look for indemnity rights include:
Access Agreement
Master Services Agreement
Sidetrack Agreement
Shipping Agreement
Construction Agreement
Lease/Sublease
