April 22nd, 2019
CB Contractors Instructs that Section 725.06, Florida Statutes, Serves to Void Certain Portions of an Indemnity Provision without Necessarily Rendering the Entire Provision Unenforceable
By, Esther A. Zuccaro, Esq.
In CB Contractors, LLC v. Allens Steel Products, Inc., et al., 261 So.3d 711 (Fla. 5th DCA 2018), the Florida Fifth District Court of Appeal clarified the interpretation of Section 725.06, Florida Statutes, governing indemnification limits in construction contracts. Specifically, the statute only served to void the portions of the indemnity provision of the construction contract that attempted to impose indemnity obligation for the acts or omissions of the general contractor Appellant, rather than rendering the entire indemnity provision void. The Court also concluded that a special relationship existed between general contractors and subcontractors, allowing general contractors to bring actions for common law indemnity.
The Fifth District consolidated appeals to answer common questions of law in actions between a general contractor Appellant and subcontractor Appellees for contractual and common law indemnification with respect to a condominium construction defect claim. The lower court below determined that the general contractor Appellant’s contractual indemnity claims were established on the basis of a void and unenforceable contractual provision and that the general contractor Appellant failed to allege the elements for common law indemnity, ultimately granting summary judgment in favor of the subcontractor Appellees.
The lower court held that the contractual indemnity provision at issue was void and unenforceable under Section 725.06, Florida Statutes (2004). The statutory language provides that any portion of a construction contract between a general contractor and subcontractor, where any party promises to indemnify the other for liability for damages caused by any act, omission, or default of the indemnitee arising from the contract or its performance, is void and unenforceable, unless the contract provides a monetary limit as to the extent of indemnification which bears a reasonable commercial relationship to the contract.
The Fifth District determined that the lower court erred in holding that the indemnity provision was entirely void and unenforceable, distinguishing that the subject indemnity provision is only void and unenforceable as to the particular “portion” of the subject provision which attempts to impose indemnity for the general contractor Appellant’s acts or omissions, citing Cuhaci & Peterson Architects, Inc. v. Huber Constr. Co., 516 So.2d 1096 (Fla. 5th DCA 2013). As such, the Fifth District explained that the lower court erred in denying the general contractor Appellant’s claim for contractual indemnity based on the statute. Accordingly, the remainder of the indemnity provision between the parties would remain enforceable.
The Court next determined whether the general contractor Appellant was entitled to bring a claim for common law indemnity. With respect to the issue of common law indemnity, the lower court found that such claims were unavailable due to the lack of a special relationship existing between the parties. The Fifth District disagreed, citing CC-Aventura, Inc. v. Weitz Co., No. 06-21598-CIV, 2009 WL 2136527 (S.D. Fla. July 13, 2009). Accordingly, a special relationship exists between general contractors and subcontractors, where common law indemnity is available to general contractors sued for construction defects attributable to subcontractor’s work. In Weitz, the Southern District of Florida explained that common law indemnity is an equitable remedy arising out of obligations imposed through special relationships. In Florida, a general contractor owes a duty of care to a property owner, subjecting the general contractor to liability for the subcontractor’s negligence. Florida law further entitles the general contractor to indemnification by the subcontractor, in the event that a general contractor is liable to a property owner due to a subcontractor’s negligence.