The Subrogation Strategist

Effective April 26, 2016, Georgia amended its anti-indemnification statute, Ga. Code § 13-8-2, to cover not only construction contracts, but also contracts for engineering, architectural or land surveying services. The amended statute, however, does not apply equally to construction and professional services contracts.

The pre-amendment statute applied to, among other things, a “contract or agreement relative to the construction . . . or maintenance of a building structure . . . purporting to require that one party . . . indemnify, hold harmless, insure, or defend the other party . . . against liability or claims for damages . . . arising out of bodily injury to persons, death, or damage to property caused by . . . the sole negligence of the indemnitee” and deemed such contracts unenforceable as against public policy. Ga. Code § 13-8-2(b). The statute, however, did not affect any workers’ compensation obligation or any requirement that one party purchase project specific insurance.

The prohibition related to construction-related indemnification agreements remains in the amended statute. The amended statute, however, which adds Subsection (c), applies to contracts or agreements for “engineering, architectural, or land surveying services” and prohibits agreements that “require that one party . . . indemnify, hold harmless, insure, or defend the other party . . . against liability or claims for damages . . . except for indemnification for damages . . . to the extent caused by or resulting from the negligence, recklessness, or intentionally wrongful conduct of the indemnitor or other persons employed or utilized by the indemnitor in the performance of the contract.” Ga. Code § 13-8-2(c). Subsection (c), however, does not affect any workers’ compensation obligation or any requirement that one party purchase project-specific insurance.

A comparison of these two subsections reveals that the prohibitions against indemnification are not identical. Under Subsection (b), only agreements where the indemnitor (for example a subcontractor), agrees to indemnify the indemnitee (for example a general contractor) against the indemnitee’s sole negligence are unenforceable. In contrast, under Subsection (c), indemnification agreements in an architect’s, engineer’s or land surveyor’s contract are unenforceable, except for agreements wherein one party, the indemnitor, agrees to indemnify the other party, the indemnitee, for the wrongful conduct of the indemnitor or other persons employed or utilized by the indemnitor. Thus, under the revised statute, a general contractor who is only partially at fault can seek indemnification for its partial negligence from a subcontractor. In contrast, an architect, engineer, or land surveyor cannot seek indemnification for its fault even if the applicable professional is only partially at fault. Rather, an architect, engineer or land surveyor can only seek indemnification for that portion of damages caused by the other party’s wrongful conduct.

Another difference between the two sections in the revised statute is that Subsection (b), which applies to builders, prohibits agreements seeking indemnification for liability for damages causing bodily injury, death or property damage. In contrast, Subsection (c) applies to all indemnification agreements, not just those related to liability or claims for damages arising out of bodily injury, death or damage to property.

Based on the foregoing, although the new subsection of Georgia’s anti-indemnification statute extends the scope of the statute to architects, engineers or land surveyors, Georgia subrogation professionals should be aware that the anti-indemnification provisions for architects, engineers and land surveyors are different from the provisions for builders.