Volume 37, Issue 1, January 2002

ContractGlazing

ASA Says DOT Rule No Longer Threatens Subs
The American Subcontractors Association (ASA) says reports that claimed the end was near for the U.S. Department of Transportation’s “quick release” retainage rule “are greatly exaggerated.”

“The changes to the ‘quick release’ rule should be classified as minor, technical changes, not substantive. The interest of subcontractors remains unharmed,” said Jim Turpin, ASA director of government relations.

The “quick release” regulations require federally funded state Department of Transportation (DOT) projects to mandate retainage for subcontractors. ASA says that over the past 18 months the regulations have been challenged by the Associated General Contractors of America. 

In information issued by ASA, it applauds the DOT “for remaining steadfast in its support of the rights of subcontractors.” It is ASA’s hope that retainage reform will result in more affordable construction and improved business relationships among all involved in the building process.

Court Rules Subcontractors Not Required to Indemnify a General Contractor for Own Negligence
An Indiana appeals court has ruled that construing an indemnification clause in a subcontract, a subcontractor is not required to indemnify a general contractor for the latter’s own negligence, but does require the sub to indemnify the contractor for his own negligence. 

The suit arose when Hagerman Construction Corp. was the general contractor for a project on the campus of Indiana University-Purdue University in Fort Wayne, Ind., and Long Electric Co. was a subcontractor. One of Long’s employees, James Scott, was injured when he was struck in the head by a falling light pole. Scott received workers’ compensation and then sued Hagerman. In turn, Hagerman sued Long, based on an indemnity clause in the American Institute of Architects’ form contract between Hagerman and Long.

According to court documents, the form contract required Long to indemnify Hagerman against claims for injury or destruction of property caused by the work performance of the sub, “but only to the extent caused in whole or in part by negligent acts or omissions of the subcontractor … regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder.” 

The trial court found that Hagerman was not entitled to indemnification by Long for Hagerman’s negligence. While Hagerman appealed to the Indiana Court of Appeals, arguing that the indemnification clause required Long to indemnify Hagerman for its own negligence if Long was at fault, the appellate court disagreed. 


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