In a prior article, I discussed a recent case that held that Florida Statute s. 725.06–the statute that governs indemnification provisions where the indemnitor is required to indemnify the indemnitee for personal injury or property damage caused wholly or partially by the indemnitee–does not apply to a horizontal, utility project as it only applies to the “construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance” per the wording of the statute. (Please refer to the article regarding the facts of the case.) From a logic standpoint, the case did not make a whole lot of sense as there would be restrictions on indemnification provisions for vertical projects but not a horizontal project such as underground utility improvements. The reason this was an important issue in the case is because if s. 725.06 did govern the indemnification provision, it was not in compliance with the requirements of the statute. If it was not in compliance, then it was not an enforceable indemnification provision. The enforceability of an indemnification provision is a BIG deal!
Recently, the Fourth District substituted a new opinion, Block Builders, LLC v. Katryniok, 2018 WL 194095 (Fla. 4th DCA 2018), although I cannot say it is that helpful. The appellate court still maintained that Florida Statute s. 725.06 did not apply to the contract at-issue since the contract involved underground utility improvements and the wording of s. 725.06 only applied to the “construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance.” However, in this substituted opinion, the appellate court held that while s. 725.06 did not apply to the contract at-issue, this does not mean it can never apply to a utility contract. Whatever that specifically means is unknown.
Indemnification is a very importation provision in any construction contract. Very important. It is a provision that should never be overlooked and it should be drafted with an eye towards the requirements of s. 725.06. Parties need to understand the application of the indemnification provision, particularly in light of the liability insurance they maintain for purposes of the project. Irrespective of this appellate court’s opinion, parties really should make sure their indemnification provision complies with s. 725.06. Banking on the hopeful position that s. 725.06 does not govern their construction contract seems overly optimistic and quite unnecessary since a ruling that the provision is unenforceable can be damaging.
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