Present: Hassell, C.J., Lacy, Keenan, Koontz, Lemons, and Agee,
JJ., and Stephenson, S.J.
W. R. HALL, INC.
OPINION BY
v. Record No. 060717 JUSTICE LAWRENCE L. KOONTZ, JR.
March 2, 2007
HAMPTON ROADS SANITATION DISTRICT
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Charles D. Griffith, Jr., Judge
The sole issue in this appeal is whether two indemnification
provisions in a construction contract are void as against public
policy insofar as they entitle the indemnitee to be reimbursed by
the indemnitor for costs and expenses incurred in the defense of
a personal injury claim by a third party.
BACKGROUND
The relevant facts are undisputed. W. R. Hall, Inc.
(“W. R. Hall”), a construction company, entered into a contract
with the Hampton Roads Sanitation District (“HRSD”) whereby
W. R. Hall would install or replace various sewer lines in the
City of Norfolk. One of these sewer lines crossed under a set
of railroad tracks owned by the Norfolk and Portsmouth Belt Line
Railroad Company (“Belt Line”). HRSD had previously obtained
the authority to install this sewer line on Belt Line’s property
by means of a utility line agreement between HRSD and Belt Line.
The utility line agreement contained an indemnity provision
whereby HRSD agreed to “be responsible for and save harmless
Belt Line from and against any and all detriment, damages,
losses, claims, demands, suits, costs, or expenses” arising by
reason of the installation of the sewer line on Belt Line’s
property.
On the morning of December 8, 2003, W. R. Hall’s crew was
in the process of completing the installation of the sewer line
passing under Belt Line’s railroad tracks. At that time, a Belt
Line train was stopped on the tracks separating certain members
of W. R. Hall’s crew on one side of the tracks from members on
the other side. A member of W. R. Hall’s crew, Joshua G.
Collins, attempted to cross over the tracks between two train
cars. The train lurched forward and crushed Collins’ foot
between two couplings.
Collins filed a personal injury negligence action against
Belt Line. Pursuant to the indemnity provision in the utility
line agreement between HRSD and Belt Line described above, which
is not at issue in this appeal, HRSD assumed Belt Line’s defense
against Collins’ lawsuit, along with all costs and expenses
attendant thereto. Subsequently, HRSD demanded that W. R. Hall
pay the costs and expenses HRSD incurred in defending Collins’
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suit against Belt Line.1 HRSD cited two provisions in its
contract with W. R. Hall that HRSD claimed entitled it to
indemnification. The first of these provisions is set forth in
Article 6.162 of the contract and states, in relevant part, that:
[W. R. Hall] shall assume full responsibility for
any damage to any such land or area [on which the work
is to be done], or to the owner or occupant thereof or
of any adjacent land or areas, resulting from the
performance of the Work. Should any claim be made by
any such owner or occupant because of the performance
of the Work, [W. R. Hall] shall promptly settle with
such other party by negotiation or otherwise resolve
the claim by arbitration or other dispute resolution
proceeding or at law. [W. R. Hall] shall, to the
fullest extent permitted by Laws and Regulations,
indemnify and hold harmless [HRSD] and anyone directly
or indirectly employed by any of them from and against
all claims, costs, losses and damages arising out of
or resulting from any claim or action, legal or
equitable, brought by any such owner or occupant
against [HRSD] or any other party indemnified
hereunder to the extent caused by or based upon [W. R.
Hall’s] performance of the Work.
The second provision HRSD cited is set forth in Article 6.31
of the contract and states, in relevant part, that:
1
Collins’ lawsuit against Belt Line was stayed pending the
resolution of HRSD’s indemnity proceeding against W. R. Hall.
2
HRSD did not refer to Article 6.16 in its original
pleading, but the trial court permitted such a reference by a
subsequent order.
3
[W. R. Hall] shall indemnify and hold harmless
[HRSD] against all claims, costs, losses and damages
. . . caused by, arising out of or resulting from the
performance of the Work, provided that any such claim,
cost, loss or damage: (i) is attributable to bodily
injury, sickness, disease or death . . . and (ii) is
caused in whole or in part by any negligent act or
omission of [W. R. Hall], any Subcontractor, any
Supplier, any person or organization directly or
indirectly employed by any of them to perform or
furnish any of the Work or anyone for whose acts any
of them may be liable, regardless of whether or not
caused in part by any negligence or omission of a
person or entity indemnified hereunder.
After W. R. Hall refused HRSD’s demand for indemnity, HRSD
filed a petition in the trial court requesting a declaratory
judgment that these contractual indemnity provisions obligated
W. R. Hall to indemnify and hold harmless HRSD for any and all
expenses arising from Collins’ lawsuit. In a responding trial
brief, W. R. Hall maintained that Articles 6.16 and 6.31 of the
parties’ contract are not applicable under the facts of this
case. W. R. Hall also maintained that these provisions are void
as against public policy insofar as they apply to personal
injuries, citing Johnson v. Richmond & Danville R.R. Co., 86 Va.
975, 978, 11 S.E. 829, 829 (1890) and Hiett v. Lake Barcroft
Community Ass’n, 244 Va. 191, 196, 418 S.E.2d 894, 897 (1992).
The trial court held a hearing on the issues of whether the
contractual indemnity provisions were triggered in this case and,
if so, whether they were nonetheless void as against public
policy. Finding that Article 6.16 and Article 6.31 were
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triggered by the facts and circumstances of this case and that
neither was void as against public policy, the trial court ruled
that HRSD was entitled to indemnity from W. R. Hall under both
provisions.3
Accordingly, the trial court entered an order on January 12,
2006 requiring that W. R. Hall indemnify HRSD for all expenses,
damages, attorneys’ fees and costs arising out of Collins’ suit
against Belt Line. This appeal followed.
DISCUSSION
W. R. Hall’s sole assignment of error asserts that “[t]he
trial court erred by finding that the indemnification provisions
contained within the contract between HRSD and [W. R.] Hall are
not contrary to public policy insofar as they apply to future
acts of negligence that result in bodily injury.” Thus, the
3
In discussing whether HRSD’s damages were “caused in whole
or in part by a negligent act or omission of [W. R. Hall]” for
purposes of Article 6.31, the trial court indicated that Collins
was negligent for crossing the railroad tracks between the train
cars and that W. R. Hall was negligent for failing to take
adequate safety precautions. Because we are not concerned here
with the negligence issues that ultimately will be determined in
Collins’ suit against Belt Line, we express no opinion on these
issues.
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applicability of these indemnification provisions to the facts of
this case are not at issue in this appeal. Our analysis of the
enforceability of indemnity provisions pertaining to losses
arising from personal injury in Estes Express Lines, Inc. v.
Chopper Express, Inc., 273 Va. ___, ___ S.E.2d ___ (2007) (this
day decided) is instructive.
In that case, the plaintiff, Estes Express Lines, was a
vehicle leasing company that had leased a number of trucks to
Chopper, a trucking company. A Chopper employee was subsequently
injured while using one of the leased trucks and sued Estes and
another party for negligence. Estes reached a mediated
settlement with the injured party. Id. at ___, ___ S.E.2d at
___.
Estes then sought indemnity from Chopper under a provision
in the lease agreement whereby Chopper agreed to indemnify Estes
for:
Any and all loss, cost, claim, expense, cause of
action, loss of use and liability by reason of injury
(including death) to persons or damage to property
arising out of the use, operation, ownership,
maintenance or control of a [leased] Vehicle whether
covered by insurance or not, including claims in
excess of insurance limits and all claims determined
not to be covered by insurance irrespective of who,
among [Chopper] or its insurance carrier or others,
may be the cause for such failure of coverage or
recovery in excess of coverage.
Id. at ___, ___ S.E.2d at ___.
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The trial court sustained a demurrer filed by Chopper,
accepting Chopper’s contention that, under Johnson and Hiett, an
indemnity provision whereby a party indemnifies itself against
liability for personal injury caused by its own future negligence
is void as against public policy. We reversed, holding that such
provisions are not void as against public policy and are
enforceable. In doing so, we concluded that since indemnity
provisions do not bar the injured party from recovery from the
tortfeasor and that it was unlikely that a party would fail to
exercise ordinary care based on the mere possibility of
indemnity, such provisions do not implicate the same public
policy concerns that counsel against enforcement of the pre-
injury release provisions addressed in Johnson and Hiett. Id. at
___, ___ S.E.2d at ___. Estes, therefore, establishes that a
contractual provision whereby a party indemnifies itself against
losses incurred as the result of personal injury caused by its
own future negligence is enforceable and does not violate the
public policy of the Commonwealth.
The only distinction between the principal assertion made by
the indemnitor in Estes and this case is that here, W. R. Hall
contends that any indemnity provision entitling a party to be
indemnified for losses resulting from the negligent infliction of
personal injuries, even those not caused by or otherwise related
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to the indemnitee’s own negligence, are void. In light of our
holding in Estes, to accept W. R. Hall’s argument we would have
to hold that it is not acceptable for a party to indemnify itself
against losses from personal injury for which it was not at fault
but is acceptable when the party’s own negligence caused the
injury. We will not adopt such an inconsistent position. Thus,
we reject W. R. Hall’s argument.
Turning to the specific indemnity provisions at issue in
this case, we hold that they are not in violation of any public
policy of the Commonwealth. In Article 6.16, W. R. Hall agreed
to indemnify HRSD for any losses incurred as a result of damage
to Belt Line or Belt Line’s property. Clearly, this provision
was based in part on the fact that W. R. Hall was the party
actually performing the construction work on Belt Line’s property
and, thus, was in the best position to prevent damage to Belt
Line and its property.
In this case, Collins’ lawsuit against Belt Line caused Belt
Line to seek indemnity under the utility line agreement in the
form of HRSD assuming the defense of the lawsuit. Consequently,
HRSD sought indemnity from W. R. Hall for the costs and expenses
of defending the lawsuit. This series of events was predicated
upon contractual indemnity provisions negotiated at arm’s length
and agreed to by the parties. To the extent that Article 6.16 of
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the contract between HRSD and W. R. Hall has been determined to
be applicable to this factual scenario, it is not repugnant to
the public policy of the Commonwealth. See Shuttleworth, Ruloff
& Giordano, P.C. v. Nutter, 254 Va. 494, 498, 493 S.E.2d 364, 366
(1997) (“the law looks with favor upon the making of contracts
between competent parties upon valid consideration and for lawful
purposes”).
Article 6.31 of the parties’ contract is also clearly not in
violation of public policy. In that provision, W. R. Hall agreed
to indemnify HRSD for any loss arising out of or resulting from
the performance of the construction work if such loss was
attributable to bodily injury and caused, in whole or in part, by
W. R. Hall’s negligence. This provision operates to place the
ultimate burden for a personal injury upon the negligent party
causing that injury. The trial court found that negligence by
W. R. Hall, at least in part, led to Collins’ injury, thus
triggering Article 6.31 when HRSD subsequently assumed the costs
and expenses of defending the lawsuit filed by Collins against
Belt Line. The operation of Article 6.31 in this manner does not
constitute a violation of public policy.
CONCLUSION
For these reasons, as well as the reasons stated in Estes,
we reject W. R. Hall’s assertion that a contractual
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indemnification provision is void as against public policy
insofar as it indemnifies a party against liability for future
acts of negligence causing personal injury. Accordingly, the
trial court correctly ruled that the indemnity provisions in
Article 6.16 and Article 6.31 are not void as against public
policy and are enforceable. The judgment of the trial court will
therefore be affirmed.
Affirmed.
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