Indemnity Clauses and Subcontracted Defendants

Submitted by New Jersey Civil Lawyer, Jeffrey Hark.

Let’s say you slip and fall walking to your car on a sidewalk belonging to Target because there was ice all over and nobody cleared it or bothered to put down salt. If you sustain injuries who do you sue? Most people would answer Target. That could be true. But readers need to remember that in the age of contracting and subcontracting there may be several other liable parties behind the scenes. This is just what happened in Walczak v. Target et. al. decided April 1. The other parties in this case include Lipinski Snow Services, Inc., and Lore Sweeping Company, Inc.

Defendant Identification and Statute of Limitations

It is crucial that before the statute of limitations expires your attorney identifies all potential defendants. A statute of limitations is the time frame you have to bring a claim against someone. This is especially important if one of the defendants who cause you harm is insolvent (broke) but there may be other parties liable. In the Walczak case, Target obviously was not insolvent, but it also was not liable. This is because Target had contracted Lipinski Snow Services to clear the snow/ice on their premises and they in turn contracted with Lore Sweeping. Each contract included an indemnity clause. An indemnity clause means that the party being contracted with takings on the legal obligation to pay for litigation of damages of the other party arising out of the contract. So if A contracts with B to remove ice and C slips on A’s property then B becomes responsible for the costs associated with C’s injuries.

The Importance of Clearly Written Contracts

In this particular case the real controversy was whether Lore was responsible for Target’s litigation costs as well as Lipinski’s. In the indemnity clause between Lipinski and Lore the word used for Target was “Client” and stated that Lore was responsible for their costs too. Lore disagreed with this interpretation of “client.” But since the other parties were mentioned by name and Target was the only conceivable client of Lipinski, a plain reading of the contract tells us that Lore is responsible for Target’s costs too. This teaches us that contracts should be written as clearly as possible, reviewed by attorneys, but when in doubt a common sense reading prevails.