Administración de la calidad total en procesos TQM

Contracts where Class I indemnification is generally preferred: All contracts should preferably contain a Class I indemnification of the public agency with the following exceptions: construction contracts, consultant contracts which are "collateral to" construction contracts, such as architecture and engineering contracts, "acquisition" leases (i.e., public agency as tenant), contracts for the purchase of goods, only, and contracts with other self-insured public entities. A form of Class I indemnification for use in such contracts is as follows:

"DEFENSE AND INDEMNITY. District shall not be liable for, and Contractor shall defend and indemnify District and its officers, agents, employees and volunteers (collectively "District Parties"), against any and all claims, deductibles, self-insured retentions, demands, liability, judgments, awards, fines, mechanics' liens or other liens, labor disputes, losses, damages, expenses, charges or costs of any kind or character, including attorneys’ fees and court costs (hereinafter collectively referred to as "Claims"), which arise out of or are in any way connected to the work covered by this [Agreement/Contract] arising either directly or indirectly from any act, error, omission, negligence, or willful misconduct of Contractor or its officers, employees, agents, contractors, licensees or servants, including, without limitation, Claims caused by the concurrent negligent act, error or omission, whether active or passive, of District Parties. Contractor shall have no obligation, however, to defend or indemnify District Parties from a Claim if it is determined by a court of competent jurisdiction that such Claim was caused by the sole negligence or willful misconduct of District Parties. This indemnification shall apply to all liability, as provided for above, regardless of whether any insurance policies are applicable, and insurance policy limits do not act as a limitation upon the amount of the indemnification to be provided by the Contractor."

Alternative Clauses Where Class I Indemnification is Refused: Generally, where a contractor refuses to accept a Class I indemnity for those contracts where a Class I is preferable, the public agency may wish to consider another contractor for the services. In circumstances where the public agency must contract with a particular contractor who refuses to accept a Class I indemnification that normally would be obtained, the drafter may first attempt to determine the nature of the objection to the clause. If the objection concerns only certain activities the contractor is to undertake, the drafter may attempt to remove those activities from the coverage

of the indemnification clause, while retaining the Class I indemnity as to all other activities of the contractor. This can be accomplished by adding a final sentence to the standard Class I indemnity. An example of such an additional sentence is as follows:

" . . . . In addition, Contractor shall have no obligation to defend or indemnify District from a Claim if said Claim arises out of or is connected with the performance by the District of those responsibilities set forth in the [Agreement/Contract] as "District Responsibilities" (Exhibit __, section __)."

Another alternative where the Public Agency must contract with a contractor who refuses to accept a normally-obtained Class I indemnity would be for the drafter to propose a "contingent" Class I indemnity, in which the contractor only provides a Class I indemnity if it fails to procure the insurance required by the contract, and otherwise provides a Class II indemnity. Again, language to accomplish this purpose could be added to the end of the standard Class I indemnity, as follows:

"Notwithstanding any provision of this Section to the contrary, however, Contractor’s indemnity obligation under this Section for District's concurrent active negligent act, error or omission shall be limited to the amount of its insurance coverage, so long as its coverage meets the requirements set forth in Exhibit '__,' 'Insurance Requirements,' attached hereto, including, without limitation, the requirements to (i) obtain contractual liability coverage for the liability assumed by Contractor under this Contract, (ii) name District as an additional insured and (iii) procure the specified minimum coverage amounts."20

If neither alternative is feasible, the drafter may propose a Class II indemnification, as described below.

Contracts in which it is appropriate to initially propose Class II Indemnification: Civil Code section 2782 et seq. precludes the public agency from proposing Class I indemnity clauses for construction contracts and those contracts, such as agreements with architects and engineers and other design professionals, which are "collateral" to construction contracts. Accordingly, such contracts should contain Class II indemnification clauses that conform to the applicable statutes. Also, contracts for the sale of goods only generally can employ Class II indemnification. A form of Class II indemnification clause follows:

"DEFENSE AND INDEMNITY. To the maximum extent permitted by Civil Code Section 2782 et seq., District shall not be liable for, and [Consultant/Contractor] shall defend and indemnify District and its officers, agents, employees and volunteers (collectively 'District Parties'), against any and all claims, deductibles, self-insured retentions, demands, liability, judgments, awards, fines, mechanics' liens or other liens, labor disputes, losses, damages, expenses, charges or costs of any kind or character, including attorneys' fees and court costs (hereinafter collectively referred to as 'Claims'), which arise out of

20 Because this clause limits recovery under a Class I indemnity to the amount of the required insurance coverage, a disadvantage to this approach is that it gives insurance companies a motivation to deny the claim by finding exclusions from coverage under the applicable policy.

or are in any way connected to the work covered by this [Agreement/Contract] arising either directly or indirectly from any act, error, omission or negligence of [Consultant/Contractor] or its officers, employees, agents, contractors, licensees or servants, including, without limitation, Claims caused by the concurrent negligent act, error or omission, of District Parties. However, [Consultant/Contractor] shall have no obligation to defend or indemnify District Parties against Claims caused by the active negligence, sole negligence or willful misconduct of District Parties. This indemnification shall apply to all liability, as provided for above, regardless of whether any insurance policies are applicable, and insurance policy limits do not act as a limitation upon the amount of the indemnification to be provided by the Contractor"

For contracts involving “design professionals,” Civil Code section 2782.8 is applicable, and limits the claims for which the public agency can require defense and indemnity to those arising out of, pertaining to, or relating to only the negligence, recklessness, or willful misconduct of the design professional. The statute defines “design professionals” as licensed, architects, landscape architects, professional engineers, and professional land surveyors. The following is a sample design-professional indemnification provision:

"DEFENSE AND INDEMNITY. To the maximum extent permitted by Civil Code Section 2782.8, District shall not be liable for, and [Design Professional] shall defend and indemnify District and its officers, agents, employees and volunteers (collectively 'District Parties'), against any and all claims, deductibles, self-insured retentions, demands, liability, judgments, awards, fines, mechanics' liens or other liens, labor disputes, losses, damages, expenses, charges or costs of any kind or character, including attorneys' fees and court costs (hereinafter collectively referred to as 'Claims'), which arise out of, pertain to, or relate to, the negligence, recklessness, or willful misconduct of [Design Professional] or its officers, employees, agents, contractors, licensees or servants, including, without limitation, Claims caused by the concurrent negligent act, error or omission, of District Parties. However, [Design Professional] shall have no obligation to defend or indemnify District Parties against Claims caused by the active negligence, sole negligence or willful misconduct of District Parties. This indemnification shall apply to all liability, as provided for above, regardless of whether any insurance policies are applicable, and insurance policy limits do not act as a limitation upon the amount of the indemnification to be provided by the [Design Professional].

Some design professionals request less strict language, claiming that insurance

coverage is not available to cover the defense and indemnity obligation under Civil

Code section 2782.8. However, others advise that the coverage does exist, it is just

more expensive, and the number of design professionals making this claim is

decreasing significantly.

Contracts with other self-insured or public agencies: When a public agency contracts with other self-insured or public agencies, it is usually not equitable to require a Class I or Class II indemnity. The following clauses are examples that might be used:

1. Claims Arising From Sole Acts or Omissions of District

The District hereby agrees to defend and indemnify the _________________ [OTHER PUBLIC AGENCY], its agents, officers and employees (hereinafter collectively referred to in this paragraph as 'OTHER PUBLIC AGENCY'), from any claim, action or proceeding against [OTHER PUBLIC AGENCY], arising solely out of the acts or omissions of District in the performance of this [NAME OF AGREEMENT]. At its sole discretion, [OTHER PUBLIC AGENCY] may participate at its own expense in the defense of any claim, action or proceeding, but such participation shall not relieve District of any obligation imposed by this Agreement. [OTHER PUBLIC AGENCY] shall notify District promptly of any claim, action or proceeding and cooperate fully in the defense.

2. Claims Arising From Sole Acts or Omissions of [OTHER PUBLIC AGENCY] The ________________ [OTHER PUBLIC AGENCY] hereby agrees to defend and indemnify the ________ District, its agents, officers and employees (hereafter collectively referred to in this paragraph as 'District') from any claim, action or proceeding against District, arising solely out of the acts or omissions of [OTHER PUBLIC AGENCY] in the performance of this Agreement. At its sole discretion, District may participate at its own expense in the defense of any such claim, action or proceeding, but such participation shall not relieve [OTHER PUBLIC AGENCY] of any obligation imposed by this Agreement. District shall notify [OTHER PUBLIC AGENCY] promptly of any claim, action or proceeding and cooperate fully in the defense.

3. Claims Arising From Concurrent Acts or Omissions

The ______________ (“District”) hereby agrees to defend itself, and the __________________ [OTHER PUBLIC AGENCY] hereby agrees to defend itself, from any claim, action or proceeding arising out of the concurrent acts or omissions of District and [OTHER PUBLIC AGENCY]. In such cases, District and [OTHER PUBLIC AGENCY] agree to retain their own legal counsel, bear their own defense costs, and waive their right to seek reimbursement of such costs, except as provided in paragraph 5 below.

4. Joint Defense

Notwithstanding paragraph 3 above, in cases where District and [OTHER PUBLIC AGENCY] agree in writing to a joint defense, District and [OTHER PUBLIC AGENCY] may appoint joint defense counsel to defend the claim, action or proceeding arising out of the concurrent acts or omissions of [OTHER PUBLIC AGENCY] and District. Joint defense counsel shall be selected by mutual agreement of District and [OTHER PUBLIC AGENCY]. District and [OTHER PUBLIC AGENCY] agree to share the costs of such joint defense and any agreed settlement in equal amounts, except as provided in paragraph 5 below. District and [OTHER PUBLIC AGENCY] further agree that neither party may bind the other to a settlement agreement without the written consent of both District and [OTHER PUBLIC AGENCY]."

5. Reimbursement and/or Reallocation

Where a trial verdict or arbitration award allocates or determines the comparative fault of the parties, District and [OTHER PUBLIC AGENCY] may seek reimbursement and/or reallocation of defense costs, settlement payments, judgments and awards, consistent with such comparative fault."

Things to consider when negotiating indemnity clauses:

(a) A "mutual" indemnity clause (i.e., where each party indemnifies the other "to the extent" of their negligence, etc.) does not obtain any protection for the public agency, as this "comparative negligence" adjudication would be made by a court in the event of a claim in any event. For third party contracts with contractors or other service providers, a mutual indemnity clause is not advised. The contractor/service provider should generally be required to provide one-way indemnification of the school district.

(b) Try not to limit a contractor's indemnity to any specific monetary amount, such as the value of the contract, or, with the exception of the alternative Class I indemnity discussed above, to the amount of an insurance recovery, etc.