Case Law Summaries

Pepe v. Township of Plainsboro

• Opinion Date: February 26, 2001
• Business Law
• E-Mail

TORT CLAIMS ACT; INDEMNIFICATION—A municipality’s independent contractor may be entitled to protection under a contract that extends immunity to it and its agents, but not where the indemnity only protects against the indemnitor’s negligence.

A municipality retained an architect to prepare plans and specifications and an engineer to perform soil testing. It then awarded a contract to a general contractor and also retained a contract administrator. A contract administrator is the owner’s representative at a job site to ensure the proper and timely execution of a job. The contractor engaged an excavation subcontractor and an employee of the excavation contractor was severely injured while working in an unshored pit. The injured worker sued the municipality and its “agents, servants, and employees.” The worker also sued the architect, the engineer, the contract administrator, and others. The cause of action against the contract administrator was “evidently predicated upon its improper inspection of the pit that had collapsed.” The contract administrator sought dismissal of the complaint against it, claiming it was entitled to derivative immunity under the Tort Claims Act as an independent contractor of a municipality. It also claimed that since it was acting as the municipality’s on-site representative, it was its agent, and therefore was entitled to the benefit of a provision of its contract with the municipality by which the contractor agreed to indemnify the municipality, its officers, agents, and employees. The lower court would not dismiss the complaint, but ruled that the contractor was required to indemnify the contract administrator. In so holding, the lower court believed that the contract administrator was “an independent contractor liable to third parties for its own negligence and for whose negligence [the municipality] would not be vicariously liable. ...nevertheless, that [the contract administrator] was, at the same time, an agent of [the municipality] entitled to the benefit of the indemnification agreement.” On appeal, the issue before the Court was whether the contract administrator, “as a conceded independent contractor [was] nonetheless entitled, as a municipal agent, to the benefit of the indemnity in favor of [the municipality].” The Court held that it was not because it was “guided by the principle that an indemnity provision is ordinarily required to be construed with the general rules of the construction of contracts, and hence the judicial task is to determine intent of the parties from the language used, the surrounding circumstances, and the objectives sought to be achieved thereby.” Also, an indemnity agreement is construed strictly against the indemnitee and indemnification “will not be construed to indemnify the indemnitee against losses resulting from his own negligence unless such an intention has been unequivocally expressed.” The contract’s language provided indemnification to the municipality for “any injury or damage sustained or alleged to have been sustained by a party ... on account of any omission or commission of any contractor, its agents, or employees.” The Court construed this indemnification as limited to protecting against the indemnitee’s risk of loss resulting from the fault of the indemnitor or other specified person or both, “a limitation ordinarily expressed by reference to the acts or omissions of the indemnitor or other persons.” Hence, the Court believed that the contract’s indemnification clause protected the municipality “not from its negligence and hence not from its officers, employees, and agents, but rather from claims made against it and obligations ensuing therefrom resulting from the negligence of any contractor on the job, its agents and employees.” Therefore, even thought the contract administrator was an independent contractor and, for that reason, one of the contractors on the job against whose negligence the construction contractor indemnified the municipality, the municipality would not be protected against its concurrent negligence, and the contract administrator would not be entitled to the benefit of the indemnification. Further, the contract administrator’s “status as an independent contractor preclude[d] its status, at the same time and for purposes of the agreement,” as an agent of the municipality. To the Court, “the evident intent of the agreement was to assure the [municipality] that the benefit of the indemnity would embrace those for whose actions it would be liable in respondeat superior.” The contract administrator conceded “that as an independent contractor, no such liability would attach to the [municipality]” for its conduct. The Court also pointed to the Restatement (Second) of Agency, section 14N, for the position that “independent contractors not acting as fiduciaries or under the supervision of the party retaining them are non-agent independent contractors.”

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