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Wednesday, January 02, 2013 04:26 am


Liability -- Indemnity

Tippman Construction, Inc. v. Professional Service Industries, Inc., 2012 U.S. Dist. Lexis 152018 (N.D. Tex. Oct. 23, 2012)

A subcontractor explicitly incorporated a $25,000 liability cap in to each of its project proposals, and, signature or no, that cap stood up against a contractor's blanket indemnity clause.

On a project to design and construct a cold-storage facility, general contractor Tippman Construction, Inc. (Tippman) subcontracted with Professional Service Industries, Inc. (PSI) to perform various engineering tests. After project completion, the owner discovered cracks and differential movement in the facility's floor. Tippman repaired the floor and then sought reimbursement from PSI, whom it blamed for the floor movement. (Tippman claimed that PSI had failed to properly consider ice-rich soil samples and that its under-floor fill recommendation was therefore inadequate.) PSI responded that Tippman had agreed to limit any damages it incurred as a result of PSI's work to $25,000. Tippman countered that the parties' subcontract contained no limitation of liability. To settle the dispute, a district court interpreted two different contractual documents with seemingly conflicting indemnity/liability clauses.

The first document was PSI's General Conditions (GC), which contained a limitation-of-liability clause such that: "... the maximum aggregate amount of the liability of PSI, its officers, employees and agents shall be limited to $25,000.00 ...." The GC also contained an indemnity clause that provided PSI would hold Tippman harmless from "any and all claims ... arising out of PSI's negligence," but that clause was subject to "the foregoing limitations," including the limitation-of-liability clause. Finally, the GC contained [...]

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