Can an Oregon construction agreement make one party indemnify another for the indemnitee's own negligence?
No. Except as subsections (3) and (4) provide, a provision in a construction agreement that requires a person or that person's surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnitee is void; the section does not affect a provision requiring indemnity to the extent the death, injury or damage arises out of the fault of the indemnitor or its agents, representatives or subcontractors (ORS 30.140(2)-(3)). 'Construction agreement' means any written agreement for the planning, design, construction, alteration, repair, improvement or maintenance of any building, highway, road excavation or other structure, project, development or improvement attached to real estate, including moving, demolition or tunneling in connection with it (30.140(1)(b)). A public body may not require, in a contract for architectural, engineering, photogrammetric mapping, transportation planning or land surveying services or related services, a duty to defend it against a claim for professional negligence relating to those services, except to the extent the provider's liability or fault is determined by adjudication or alternative dispute resolution or resolved by settlement, and not beyond its proportionate fault; a contractual provision that violates that subsection is unenforceable (30.140(4)). The section does not apply to a real property lease or rental agreement whose predominant purpose is not construction-type work, a personal property lease or rental agreement, or a design-build contract (30.140(5)), or to a railroad as defined in ORS 824.200 (30.140(6)). The Oregon Supreme Court held that the Court of Appeals had correctly assessed the statute's meaning and adopted an excerpt of its opinion, authored by Presiding Judge Haselton, which concluded that the statute prohibits not only direct indemnity arrangements but also additional-insurance arrangements by which one party must procure insurance for losses arising in whole or in part from the other's fault (Walsh Construction Co. v. Mutual of Enumclaw). A provision in a construction agreement is also void to the extent it requires a party or its surety or insurer to waive a right of subrogation, indemnity or contribution for amounts paid because of death, bodily injury or property damage caused in whole or in part by another person's negligence, but that section does not reach a waiver of subrogation, indemnity or contribution in an insurance policy issued under ORS 737.602 or one applying to the proceeds of a property insurance policy, in a real property lease whose predominant purpose is not construction-type work, in a personal property lease, or in a construction agreement in which one party is a railroad as defined in ORS 824.200 (ORS 30.145(1)-(5)).
The trap
Requiring a subcontractor to name the contractor as an additional insured for the contractor's own negligence is within the prohibition (Walsh). How far the prohibition reaches was raised and left open: amici argued the additional insured provision should be void only to the extent it would require a party to indemnify another for the indemnitor's own fault, and the court did not resolve it because Walsh never contended its subcontractor was negligent. ORS 30.140 also carries a second version, operative January 1, 2035 and applying to construction agreements and contracts entered into or renewed on or after that date. Two things change in it: its exclusions list no longer includes design-build contracts, and its voiding provision is excepted only by the indemnitor-fault subsection, because that version as published carries no public-body duty-to-defend subsection at all.
13 authorities
- statuteORS 30.140enactment date not established
The words that state the rule
Except to the extent provided under subsections (3) and (4) of this section, any provision in a construction agreement that requires a person or that person’s surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnitee is void. (3) This section does not affect any provision in a construction agreement that requires a person or that person’s surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property to the extent that the death or bodily injury to persons or damage to property arises out of the fault of the indemnitor, or the fault of the indemnitor’s agents, representatives or subcontractors.
- statuteORS 30.140enactment date not established
The words that state the rule
“Construction agreement” means any written agreement for the planning, design, construction, alteration, repair, improvement or maintenance of any building, highway, road excavation or other structure, project, development or improvement attached to real estate including moving, demolition or tunneling in connection therewith.
- statuteORS 30.140enactment date not established
The words that state the rule
This section does not apply to: (a) Any real property lease or rental agreement between a landlord and tenant whether or not any provision of the lease or rental agreement relates to or involves planning, design, construction, alteration, repair, improvement or maintenance as long as the predominant purpose of the lease or rental agreement is not planning, design, construction, alteration, repair, improvement or maintenance of real property; (b) Any personal property lease or rental agreement; or (c) Any design-build contract.
- statuteORS 30.140enactment date not established
The words that state the rule
No provision of this section shall be construed to apply to a “railroad” as defined in ORS 824.200.
- statuteORS 30.140enactment date not established
The words that state the rule
This section does not apply to: (a) Any real property lease or rental agreement between a landlord and tenant whether or not any provision of the lease or rental agreement relates to or involves planning, design, construction, alteration, repair, improvement or maintenance as long as the predominant purpose of the lease or rental agreement is not planning, design, construction, alteration, repair, improvement or maintenance of real property; or (b) Any personal property lease or rental agreement.
- statuteORS 30.140enactment date not established
The words that state the rule
Except to the extent provided under subsection (3) of this section, any provision in a construction agreement that requires a person or that person’s surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnitee is void.
- statuteORS 30.140enactment date not established
The words that state the rule
A public body as defined in ORS 174.109, including a public body acting as part of an intergovernmental entity formed with another state or with a political subdivision of another state, may not require in a contract with a person or entity providing architectural, engineering, photogrammetric mapping, transportation planning or land surveying services or related services a duty to defend the public body or intergovernmental entity against a claim for professional negligence and relating to the professional services provided by the person or entity providing architectural, engineering, photogrammetric mapping, transportation planning or land surveying services or related services, except to the extent that the person’s or entity’s liability or fault is determined by adjudication or alternative dispute resolution or otherwise resolved by settlement agreement, and not to exceed the proportionate fault of the person or entity. A contractual provision that violates this subsection is unenforceable.
The words that state the rule
Our evaluation of the interpretive question that this case presents leads us to conclude that, with respect to the text and context of the wording at issue, the Court of Appeals’ discussion in this case correctly assessed the statute’s meaning. Further, we perceive no benefit in attempting to reshape that analysis for purposes of our own disposition. Accordingly, we adopt the following excerpt from the Court of Appeals decision, which Presiding Judge Haselton authored:
- statuteORS 30.140enactment date not established
The words that state the rule
The amendments to 30.140 by section 2, chapter 112, Oregon Laws 2024, become operative January 1, 2035, and apply to construction agreements and contracts entered into or renewed on or after January 1, 2035.
The words that state the rule
Amici argue that, in light of subsection (2) of ORS 30.140, the Court of Appeals should have held that the additional insured provision was void “only to the extent that, in a given case, it would require a party ‘to indemnify another’ for ‘the fault of the indemnitor.’ ” As noted above, however, Walsh did not contend that its subcontractor Rust was negligent, either in whole or in part, with respect to the employee’s injury. Therefore, even assuming that amici are in a position to raise that issue, see, e.g., Finney v. Bransom, 326 Or 472 , 481 n 8, 953 P2d 377 (1998) (declining to consider argument that amicus advanced, “because it was never presented in any recognizable form to the Court of Appeals”), the Court of Appeals correctly decided this case within the scope that the parties chose to litigate it. The decision of the Court of Appeals and the judgment of the circuit court are affirmed.
The words that state the rule
In sum, the text of ORS 30.140, and its historic evolution, strongly suggests that the statute prohibits not only ‘direct’ indemnity arrangements between parties to construction agreements but also ‘additional insurance’ arrangements by which one party is obligated to procure insurance for losses arising in whole or in part from the other’s fault.
- statuteORS 30.145enactment date not established
The words that state the rule
Except as provided in this section, a provision in a construction agreement is void to the extent that the provision requires a party or the party’s surety or insurer to waive a right of subrogation, indemnity or contribution for amounts paid by reason of death or bodily injury, or damage to property, caused in whole or in part by the negligence of another person.
- statuteORS 30.145enactment date not established
The words that state the rule
This section does not apply to a provision for waiver of subrogation, indemnity or contribution in an insurance policy issued pursuant to ORS 737.602 or to a provision for waiver of subrogation, indemnity or contribution that applies to proceeds of a property insurance policy. (3) This section does not apply to a provision for waiver of subrogation, indemnity or contribution in a real property lease or rental agreement between a landlord and tenant, whether or not any provision of the lease or rental agreement relates to or involves planning, designing, constructing, altering, repairing, improving or maintaining, as long as the predominant purpose of the lease or rental agreement is not planning, designing, constructing, altering, repairing, improving or maintaining real property. (4) This section does not apply to a provision for waiver of subrogation, indemnity or contribution in a personal property lease or rental agreement. (5) This section does not apply to a provision for waiver of subrogation, indemnity or contribution in a construction agreement in which one of the parties is a railroad as defined in ORS 824.200.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.