On January 28, 2016, the Indiana Supreme Court decided the case of Mid-America Sound Corporation v. Indiana State Fair Commission, et. al. This litigation resulted from a roof collapse at the Indiana State Fair in August 2011 that killed seven people and injured many more.
Subsequent to the state fair tragedy, Mid-America Sound Corporation (Mid-America) sent to the Indiana State Fair Commission an invoice for the lease of the collapsed roof. The invoice submitted by Mid-America included broad indemnification language that required the Indiana State Fair Commission to indemnify Mid-America for all personal injury and property damage claims resulting from the use of the rented equipment, even if such claims resulted from the sole negligence of Mid-America.
The Indiana Supreme Court, in evaluating this indemnity provision, noted that Indiana courts strictly construe indemnity provisions and treat them as disfavored under the law. The Indiana Supreme Court went on to state that “indemnity is permissible only if the contract language shows in clear and unequivocal terms that the obligated party knowingly and willingly agrees to such indemnification.”
In this case, Mid-America argued that this broad indemnification clause also applied to the injuries and deaths that had already occurred at the time that the Indiana State Fair Commission accepted this invoice.
In ruling against Mid-America’s claim for indemnification protection, the Indiana Supreme Court again reiterated that Indiana contract law does not favor enforcing an indemnification clause that applies to another party’s negligence, especially retroactively. The Indiana Supreme Court went on to state that it “will not infer that obligation from a course of dealing when, as here, the parties’ contract does not expressly call for it in clear and unequivocal terms.”
The primary take away from this decision is that construction companies need to make sure that their indemnification clauses used in construction contracts contain clear and unequivocal language expressing the intent of the parties. If a construction company intends to use broad indemnification protection in an attempt to protect it against claims, you need to make sure that you clearly state under what circumstances the indemnification clause will apply.