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Stickovich v. City of Cleveland8/2/2001
ployees, or indemnities against liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the negligence of the promisee, its independent contractors, agents, employees, or indemnities is against public policy and is void.
Nothing in this section shall prohibit any person from purchasing insurance from an insurance company authorized to do business in the state of Ohio for his own protection or from purchasing a construction bond. (Emphasis added.)
The language, structure, and purpose of R.C. 2305.31, the General Assembly's use of these terms, and the history of cases interpreting this provision reveal that it does not apply to any aspect of the public works bridge contract in the case at bar.
Language of R.C. 2305.31
R.C. 2305.31 does not state that it applies to public agencies. Use of the terms highway and road in the statute reveal such a legislative intent, because the statute otherwise applies by its own terms to subsequent transactions between private parties, such as contractors and subcontractors on such projects. Even if the statute were deemed to apply to public agencies, however, it does not expressly mention bridge projects.
R.C. 2305.31 is narrowly drawn and contains other limitations relevant to the case at bar. For example, by its own terms, the statute does not prohibit a construction contractor from indemnifying others for its non-negligent intentional torts. The statute prohibits only construction indemnity agreements which indemnify liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the negligence of the promisee. (Emphasis added.)
A mere allegation of negligence is not sufficient to defeat a construction indemnity agreement. Even if there were proof that the party seeking indemnity were negligent, such conduct must still be the proximate cause of the injury . Finally, the statute applies only to voluntary agreements, but not when indemnity arises by operation of law in favor of parties with passive or secondary conduct.
Liability Insurance v. Indemnity Agreements
The argument that R.C. 2305.31 bars liability insurance in the case at bar requires confusing two different contracts (an insurance contract and the construction agreement), two different parties (a commercial insurer and the contractor- promissor ), and two different duties (the duty to defend and pay on liability contract and the duty to indemnify). Even if R.C. 2305.31 applied to invalidate any terms of the public works construction contract in the case at bar, this appeal involves a claim against an insurer on a commercial liability insurance policy. (Commercial Union Policy No. ASR124769.) The case does not raise a claim against a contractor on a construction indemnity agreement.
A commercial liability insurance policy is not a construction indemnity agreement within the scope of R.C. 2305.31 and is valid and enforceable under its own terms. See e.g., Schneier, Construction Accident Law: A Comprehensive Guide to Legal Liability and Insurance Claims 473-475 (ABA 1999); Analysis, Anti-Indemnity Statutes Do Not Invalidate Agreements to Procure Liability Insurance Protecting the Promisee, 14 Construction Law Reporter 9 (1993).
The business of insurance is different from other risk allocation contracts. E.g., Griffin Systems, Inc. v. Ohio Dept. of Ins. (1991), 61 Ohio St.3d 552 (distinguishing insurance regulated by R.C. 3905.42 from other agreements). Indemnity agreements among those participating in construction projects are different from l
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