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