Hoffman Construction Co. of Alaska v. U.S. Fabrication & Erection, Inc.
32 P.3d 346 | Alaska Supreme Court | 2001
What This Case Means for Subcontractors
Workers exposed to asbestos at Providence Hospital sued, and Hoffman Construction settled. Hoffman then tried to shift defense and indemnity costs to subcontractor U.S. Fabrication & Erection under their contract. The Alaska Supreme Court ruled that Hoffman must defend U.S. Fabrication (pay legal costs) because the asbestos claims arose from the project work, but Hoffman doesn't have to indemnify (reimburse) them since Providence had no actual liability and causation was unclear. This matters because it shows courts will require contractors to pay for defense even when they may not ultimately owe indemnity.
Key Takeaways
- •A broad indemnity clause can trigger a duty to defend (pay legal bills) even before liability is proven—this is a major cost exposure for contractors
- •Removing work from your contract scope (like asbestos abatement here) doesn't eliminate your defense obligations if you still coordinate that work
- •Indemnity and defense are separate: you might have to pay for someone's legal defense without ever owing them money for damages
The duty to defend is triggered merely by claims of injury that fall within the scope of the indemnity clause.
Frequently Asked Question
Do I have to pay a contractor's legal bills even if they might not be liable?
Yes, under a broad indemnity clause. Courts separate the duty to defend (pay legal costs) from the duty to indemnify (pay damages). You can be required to cover defense costs immediately, even if liability is later disputed or denied. This is why careful contract language and insurance are critical.
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