A Recent Colorado Court Case Serves to Remind Washington State Contractors of the Importance of Indemnity Provisions and RCW 4.24.115

A case decided in United States District Court of Colorado, BKV Barnett, LLC v. Electric Drilling Technologies, LLC, reminds us of the importance of indemnity provisions in construction contracts and the interplay between those provisions and Washington’s anti-indemnity statue (RCW 4.24.115).  The BKV Barnett court ruled that the indemnification and defense provisions in the Master Service Contract (MSC) between BKV and EDT were void under Colorado’s Anti-Indemnification Statute (which is very similar to Washington’s statute). The court found that the MSC required EDT to indemnify and defend BKV against claims arising from BKV’s own negligence, which is prohibited by C.R.S. § 13-21-111.5. As a result, the court denied BKV’s motion for summary judgment declaring entitlement to indemnity, ordered that the indemnity provisions were void, and ordered BKV to show cause why summary judgment should not be entered in favor of EDT.

What is RCW 4.24.115?

In the construction industry, understanding indemnification and insurance obligations is crucial. Washington State’s Anti-Indemnification Statute, RCW 4.24.115, plays a significant role in shaping these obligations. This blog will serve as a refresher to contractors in Washington State on the complexities of RCW 4.24.115 and ensure their contracts comply with state law.

RCW 4.24.115 is a statute that limits the enforceability of indemnity provisions in construction contracts. Specifically, it prohibits clauses that require one party to indemnify or defend another party for claims arising from that party’s own negligence. This statute aims to promote fairness and accountability in the construction industry by preventing the shifting of financial responsibility for negligence through contract provisions.

Key Provisions of RCW 4.24.115

  1. Sole Negligence: Any agreement that requires a contractor to indemnify or defend another party for damages caused by the indemnitee’s sole negligence is void and unenforceable.
  2. Concurrent Negligence: Indemnification for concurrent negligence (where both parties are at fault) is only enforceable to the extent of the indemnitor’s negligence. The agreement must specifically and expressly state this, and any waiver of the indemnitor’s immunity under industrial insurance must be mutually negotiated.
  3. Duty to Defend: The statute also limits the duty to defend, ensuring that contractors are not unfairly burdened with defense costs for claims arising from the indemnitee’s negligence.

Practical Implications for Contractors

  1. Review Contracts Carefully: Contractors should meticulously review indemnity clauses in their contracts to ensure they do not violate RCW 4.24.115. Clauses that require indemnification for the indemnitee’s sole negligence should be avoided.
  2. Negotiate Terms: When negotiating contracts, ensure that any indemnity provisions for concurrent negligence are clearly defined and mutually agreed upon. This includes any waivers of industrial insurance immunity (i.e. Title 51 waivers).
  3. Insurance Coverage: Adequate insurance coverage is essential. Since contractual indemnity provisions may not always provide the desired protection, having comprehensive insurance can help mitigate risks.
  4. Seek Legal Counsel: Given the complexities of indemnification laws, it is advisable to consult with legal professionals when drafting or entering into construction contracts. Legal counsel can help ensure compliance with RCW 4.24.115 and avoid costly disputes.

Conclusion Understanding and complying with RCW 4.24.115 is vital for contractors in Washington State. It is also common for owners and/or contractors to overreach when asking for indemnity and defense from other contractors in other parts of these provisions not related to the protections afforded by RCW 4.24.115. By carefully reviewing and negotiating contract terms, ensuring adequate insurance coverage, and seeking legal advice, contractors can protect themselves from potential liabilities and ensure fair risk allocation in their construction agreements.  The lawyers at ACS can help you with these indemnification complexities.

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