Indemnification Clauses after Safeway

On February 18, 2016, the New Mexico Supreme Court held in Safeway Inc. v. Rooter 2000 Plumbing & Drain SSS, 2016-NMSC-___ (No. 33,969, Feb. 18, 2016) that indemnification agreements in construction contracts are void and unenforceable under the state’s anti-indemnity statute to the extent that they require one party to pay for another’s negligence.  The Court first addressed whether traditional indemnity “co-exists with comparative negligence, several liability, and proportional indemnification in New Mexico.” Id. ¶ 33.  The Court ruled that traditional indemnification is available in cases of vicarious or derivative liability but is unavailable to an active tortfeasor.  Id. ¶¶ 33-34.  The Court then analyzed an indemnification clause which required Rooter to indemnify, defend, and hold Safeway harmless except where a claim was caused by the sole negligence of Safeway.  Id. ¶ 36.  New Mexico’s anti-indemnity statute, NMSA 1971, § 56-7-1, prohibits indemnification clauses in construction contracts that require one party to indemnify, insure, or defend another party who is negligent.  The Court held that the indemnification clause in this case was void and unenforceable under the state’s anti-indemnity statute because it required one party to defend another who was comparatively at fault.  Id. ¶ 45.

The Court’s ruling serves as a reminder that indemnification clauses must be narrowly tailored to account for the doctrine of comparative fault.  One who is at fault for an injury cannot contract away negligence.

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