Indemnification Law in South Carolina 101: Equitable Indemnification
Josh Bennett | Rogers Townsend
March 23, 2015
Now that we’ve looked at how a contractor can use a contractual indemnification provision to his advantage in a lawsuit, let’s take a look at what tools are available to a contractor when there is no such contractual provision.
Going back to our running scenario, if you recall, a general contractor has been sued by an owner alleging that the air conditioning unit in the attic was not installed correctly, has leaked, and caused thousands of dollars in damage. The general contractor knows that he hired an HVAC subcontractor to install that unit and he believes the subcontractor should be held responsible for any damage. However, the owner has only sued the general contractor and not the subcontractor. At this point, the general contractor would need to consider indemnification.
What if there was no written contract between the general contractor and HVAC subcontractor? Perhaps there was a mere handshake with no mention of indemnification. If so, contractual indemnification wouldn’t be an option and the general contractor would need to turn to equitable indemnification.
“South Carolina has long recognized the principle of equitable indemnification.” Toomer v. Norfolk S. Ry., 344 S.C. 486 (Ct. App. 2001). A party may maintain an equitable indemnification action if he was compelled to pay damages because of negligence imputed to him as the result of another’s tortious act. Fowler v. Hunter, 388 S.C. 355 (2010).
What must the general contractor prove in order to recover from the HVAC subcontractor in our scenario? A party asserting an equitable indemnification cause of action may recover damages if he proves:
(1) the indemnitor was liable for causing the plaintiff’s damages;
(2) the indemnitee was exonerated from any liability for those damages; and
(3) the indemnitee suffered damages as a result of the plaintiff’s claims against it, which were eventually proven to be the fault of the indemnitor.
Fowler v. Hunter, 388 S.C. 355 (2010).
Additionally, in order to sustain a claim for equitable indemnity, the existence of some special relationship between the parties must be established. Toomer v. Norfolk S. Ry., 344 S.C. 486 (Ct. App. 2001).
Based on the above, is the general contractor in our scenario entitled to be indemnified by the HVAC subcontractor? Perhaps. It will ultimately depend on whether the general contractor can prove the elements mentioned above, including showing that he is without fault and there is a special relationship between the parties. We’ll look closer at the “without fault” and “special relationship” requirements in our next post.
The content of this article is intended to provide general information and as a guide to the subject matter only. Please contact an Advise & Consult, Inc. expert for advice on your specific circumstances.