“The times are tough now, just getting tougher. This old world is rough, it’s just getting rougher. Cover me, come on baby, cover me.”[i] – Bruce Springsteen

Indemnity agreements are not exactly what the Boss refers to in his 1984 hit “Cover Me”, but more and more defendants are looking for another party to cover them when named in a lawsuit alleging bodily injury. Under Georgia law, indemnity agreements contained in contracts are enforceable … sometimes.

Georgia honors freedom of contract. “[A] party may contract away liability to the other party for the consequences of his own negligence without contravening public policy, except when such agreement is prohibited by statute. [ii] The public-policy limits set by statute are:

• Construction/maintenance contracts cannot require indemnity/defense for the sole negligence of the indemnitee; [iii]
• Design-professional agreements (architects/engineers/land surveyors) may only require indemnity to the extent of the indemnitor’s own negligence/recklessness/intentional misconduct; [iv]
• Motor carrier transportation contracts may not require indemnity/defense for the negligence or intentional acts of the promisee. [v]

Construction-context applications – O.C.G.A. § 13-8-2(b)

To be prohibited under this statute, “an indemnification [and defense] provision must (1) relate in some way to a contract for ‘construction, alteration, repair, or maintenance of certain property and (2) promise to indemnify [or defend] a party for damages arising from that own party’s sole negligence.” [vi]

The Georgia Supreme Court has held that the “purpose of O.C.G.A. 13-8-2(b) is to prevent a building contractor, subcontractor, or owner from contracting away liability for accidents caused solely by his negligence.” [vii] However, Georgia Courts have consistently construed O.C.G.A. § 13-8-2(b) broadly, more broadly than courts in other jurisdictions have construed analogous statutes.[viii]

This statute has been applied to a variety of traditional construction contracts such as:

• A contract between developer and civil engineers for design of stormwater drainage system for apartment complex;[ix] and
• A contract between construction contractor and drywall subcontractor.[x]

However, it has also been applied to commercial and residential lease agreements bearing little or no relationship with any ostensible building construction:

• A commercial lease; [xi]
• A residential lease agreement;[xii]
• A management agreement between commercial property owner and property manager;[xiii]
• The lease of booth space at trade show;[xiv] or
• A property maintenance and rental agreement.[xv]

In addition to being related to construction, to fall under this limitation, the provision must promise to indemnify a party for damages arising from that party’s sole negligence. An indemnification provision is invalid under this section where it contains language “to the effect that a party will indemnify and hold harmless the other party as to ‘any’ or ‘all’ claims, damages, losses, injuries, or the like arising from the subject of the parties’ contractual relationship, ‘no matter the origin of the claim or who is at fault’.”[xvi] However, while clauses trying to shift sole negligence fail, clauses addressing shared fault may survive if they clearly state the same.[xvii]

Under certain circumstances, when a contract includes an insurance clause that shifts risk of loss to an insurer, this limitation does not apply. Georgia courts permit the enforcement of an indemnity clause when the contractual terms “unequivocally express the mutual intent” of the parties “to shift the risk of loss and to look solely to insurance coverage for loss or damages incurred by either party.” [xviii]

Design-Professional Agreements – O.C.G.A. § 13-8-2(c)

Georgia law sharply limits indemnity in architect/engineer/land-survey agreements. Such clauses are unenforceable “except for indemnification for damages, losses, or expenses to the extent caused by or resulting from the negligence, recklessness, or intentionally wrongful conduct of the indemnitor … in the performance of the contract.”[xix] Even well-drafted “own negligence” indemnity will be void beyond the indemnitor’s share of fault.[xx]

Motor Carrier Transportation Contract – O.C.G.A. § 40-1-113

Under Georgia law, hold harmless, indemnification, and/or defense clauses in motor carrier transportation contracts are void as against public policy.

Notwithstanding any provision of law to the contrary, a provision, clause, covenant, or agreement contained in … a motor carrier transportation contract that purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the promisee from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the promisee is against the public policy of this state and is void and unenforceable.[xxi]

The promisee is defined as a person, and anyone responsible to that person, promising to provide transportation of property.[xxii] If the contract is a transportation agreement covered by this statute, indemnitee-negligence risk transfer is off the table.

At Common Law – Indemnity for an Indemnitee’s Own Negligence

Outside of these statutes, Georgia allows parties to shift risk so that an indemnitor covers the indemnitee’s own negligence if—and only if—the contract expresses that intent in “plain, clear, and unequivocal” terms. [xxiii] Georgia follows a strict-construction approach: an indemnity will not be read to cover the indemnitee’s own negligence unless that result is expressed “plainly, clearly, and unequivocally.” [xxiv]Judicial decisions have underscored that silence about “negligence” typically defeats an attempt to shift the indemnitee’s own negligence. Drafting that names “the indemnitee’s negligence (in whole or in part)” is the usual way to satisfy the standard.

Settlements and Duty to Defend

Where indemnity is otherwise available, an indemnitee that tenders the defense and then reasonably settles after notice may recover under the indemnity, subject to proving the settlement was reasonable and within the clause’s scope.[xxv]

Georgia courts also distinguish the duty to defend from the duty to indemnify in contractual clauses. A defense obligation can arise based on the allegations fitting “arguably” within the clause, while actual indemnity depends on proven facts within the clause’s scope.[xxvi] Treat these as separate promises when drafting/litigating.

Practical Takeaways

• Generally valid: Indemnity for bodily injury is enforceable in Georgia except where a specific statute overrides it. When drafting indemnity clauses, keep these statutory exceptions in mind—including specific intent that a loss will be covered by an insurance policy to avoid public policy arguments.
• Construction: This exception is construed very broadly. You can allocate shared-fault risk, but you cannot require indemnity/defense for the indemnitee’s sole negligence.
• Design services: Indemnity can only reach the indemnitor’s fault—no broader.
• Transportation: Motor carrier transportation contracts cannot shift the promisee’s negligence.
• Indemnifying for one’s own negligence is possible at common law, but only with explicit, unmistakable wording that references the indemnitee’s negligence. Otherwise, courts will not infer it.

Keeping these limitations in mind, you can ask someone to “Cover Me.”

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Sources

[i] Bruce Springsteen, Cover Me, on Born in the U.S.A., at 0:09-0:21 (Columbia Jun. 4, 1983).

[ii]     Milliken & Co. v. Georgia Power Co., 306 Ga. 6, 8 (1), 829 S.E.2d 111, 113 (2019).

[iii]    O.C.G.A. § 13-8-2(b).

[iv]    O.C.G.A. § 13-8-2(c).

[v]        O.C.G.A. § 40-1-113.

[vi]    O.C.G.A. § 13-8-2(b).

[vii]   Lanier at McEver, L.P. v. Planners and Engineers Collaborative, Inc., 284 Ga. 204, 206, 663 S.E.2d 240 (2008).

[viii]   Federal Paper Bd. Co. v. Harbert–Yeargin, Inc., 53 F.Supp.2d 1361, 1370 (N.D.Ga.1999).

[ix]    Lanier at McEver, L.P., 284 Ga. at 206-207 (2), 663 S.E.2d 240 (2008).

[x]     Federated Dept. Stores v. Superior Drywall & Acoustical, Inc., 264 Ga.App. 857(1), 592 S.E.2d 485 (2003).

[xi]    May Dept. Store v. Center Developers, Inc., 266 Ga. 806(1), 471 S.E.2d 194 (1996).

[xii]   Country Club Apartments, Inc. v. Scott, 246 Ga. 443, 271 S.E.2d 841 (1980).

[xiii]   Terrace Shopping Center Joint Venture v. Oxford Group, Inc., 192 Ga.App. 346, 384 S.E.2d 679 (1989).

[xiv]   Nat. Candy Wholesalers, Inc. v. Chipurnoi, Inc., 180 Ga.App. 664, 350 S.E.2d 303 (1986).

[xv]   Big Canoe Corp. v. Moore & Groover, Inc., 171 Ga.App. 654(1), 320 S.E.2d 564 (1984).

[xvi]   Kennedy Dev. Co. v. Camp, 290 Ga. 257, 260, 719 S.E.2d 442 (2011).

[xvii] Federal Paper Bd. Co. v. Harbert–Yeargin, Inc., 53 F.Supp.2d 1361 (N.D.Ga.1999).

[xviii] May Dep’t Store v. Ctr. Devs., Inc., 471 S.E.2d 194, 197 (1996).

[xix]      O.C.G.A. § 13-8-2(c)

[xx]      Lanier at McEver, L.P., 284 Ga. at 206-207 (2), 663 S.E.2d 240 (2008).

[xxi]   O.C.G.A. § 40-1-113.

[xxii] Id.

[xxiii][xxiii]    E.g. Batson-Cook Co. v. Georgia Marble Setting Co., 112 Ga.App. 226, 144 S.E.2d 547 (1965).

[xxiv]  Id.

[xxv] See Ryder Integrated Logistics Inc. v. BellSouth Telecommunications, Inc., 281 Ga. 736, 737 (2007), see also Doss & Associates v. First Am. Title Ins. Co., Inc., 325 Ga. App. 448, 465-66 (2013)

[xxvi] Ashton Park Trace Apartments, LLC v. City of Decatur, 2015 WL 11618243 (N.D. Ga. Oct. 21, 2015).