on Indemnity Clause
by Ron Davis
A Louisiana shopping center owner is off the hook for an injury suffered by an employee of one of the centerís tenant stores.
The shopping center, located in New Orleans, is owned by Cigna Corp., and the site of the employeeís mishap is a Mervynís department store. The employee fell down a flight of stairs there, sustaining injuries that required extensive medical treatment.
In Louisiana, an employee cannot sue his or her employer for such injuries. An employeeís exclusive remedy is restricted to workerís compensation, in exchange for which the employer is immune from any other liability resulting from the injury. As a result, the Mervynís employee simply filed a claim for workerís compensation, and Mervynís eventually paid her medical benefits totaling $26,824.
Unable to sue Mervynís, the injured woman decided to sue Cigna, charging it with negligence in constructing an unsafe building. Cigna in turn sued Mervynís on grounds that the lease agreement between the two parties required Mervynís to defend Cigna against lawsuits such as that of the injured woman.
In fact, the lease did state that Mervynís would "indemnify," or assume responsibility, for any liability lawsuits involving the store property. Mervynís replied, however, that workerís compensation laws limit the amount an injured employee can collect from an employer.
A Louisiana appellate court, in ruling in favor of Cigna, explained, "Mervynís contractually assumed responsibility for liability resulting from defects in the leased premises.... There is no law that prohibits the indemnification agreement entered into between Mervynís and Cigna.... Mervynís voluntarily agreed to defend Cigna for all claims filed by third parties injured on the leased premises. Mervynís cannot relinquish this obligation solely because the third party who made the claim against Cigna happened to be a Mervynís employee." (Brown v. Connecticut General Life Ins. Co., 793 So.2d 211 [La.App. 4 Cir. 2001])
Decision: October 2001
Published: January 2002