State Supreme Court: Subcontractors With Good Work May Still Have to Indemnify Contractors for Defense Costs By Thomas D. Long, David Graeler and John W. Kim September 26, 2008 A recent state supreme court decision leaves residential construction subcontractors on the hook for certain construction defect litigation costs, even if the subcontractor is found not to have been negligent in its work. As the housing market continues to plummet, the court's ruling may encourage potentially costly construction defect litigation - already pervasive in California - against parties that have agreed to indemnity clauses. Subcontractors should take careful note of indemnity clauses in their new and existing contracts in light of a ten year statue of limitations for certain types of construction defect claims. The California Supreme Court ruled in Crawford et al. v. Weather Shield Mfg. Inc., (2008) 44 Cal.4th 541, that the duty to defend imposed by an indemnity provision in a construction subcontract agreement is triggered by the tender of defense. It further ruled that a subcontractor's duty to defend exists as long as allegations of damages encompassed within the scope of an indemnity agreement exist. The duty to defend is irrespective of whether the subcontractor is ultimately found to be negligent in its work or not. The Court's analysis focused on the precise subcontract language that created the duty to defend. Regarding a pre-2006 residential subcontract, the Court phrased the issue in Crawford as follows: "Did a contract under which a subcontractor agreed 'to defend any suit or action against a developer 'founded upon' any claim 'growing out of the execution of the work' require the subcontractor to provide a defense to a suit against the developer even if the subcontractor was not negligent." CLICK HERE TO CONTINUE | 
