Enforceability of Contractual Proportional Indemnity Clauses Against the Backdrop of Wrongful-Death Remedies

Introduction

This commentary examines JohnsonKreis Construction Company, Inc. v. Howard Painting, Inc., decided by the Supreme Court of Alabama on March 21, 2025. At issue was a dispute between a general contractor (JohnsonKreis) and its subcontractor (Howard Painting) over the enforceability of a contractual provision requiring indemnity on a “proportional‐fault” basis. Both companies’ insurers (Cincinnati Insurance Company for JohnsonKreis, and Auto-Owners/Owners Insurance for Howard) became embroiled when a subcontractor’s employee was killed on site and JohnsonKreis had to settle wrongful-death claims. The trial court granted summary judgment for Howard and its insurers, holding that Alabama law bars apportionment of wrongful-death damages and, thus, renders the indemnity provision unenforceable. On appeal, the Supreme Court of Alabama reversed, holding that parties may contractually agree to proportional indemnity even if statutory damages in a wrongful-death action cannot be apportioned by a jury.

Summary of the Judgment

The Supreme Court of Alabama reversed the Jefferson County Circuit Court’s grant of summary judgment to Howard Painting and its insurers. Key holdings:

• The subcontract’s proportional‐fault indemnity clause is valid and enforceable under Alabama law.
• General rules barring contribution or indemnity among joint tortfeasors in wrongful-death cases do not override a clear contractual agreement allocating liability proportionally.
• The parties are entitled to further proceedings to determine the extent of Howard’s proportional liability and the insurers’ obligations under the “additional insured” endorsements.

Analysis

Precedents Cited

• Industrial Tile, Inc. v. Stewart (388 So. 2d 171, Ala. 1980): Contracts that indemnify an indemnitee against its own negligence are enforceable if expressed in “clear and unequivocal language.”
• Black Belt Wood Co. v. Sessions (514 So. 2d 1249, Ala. 1986): Wrongful-death damages are punitive and cannot be apportioned by a jury among joint tortfeasors.
• Parker Towing Co. v. Triangle Aggregates, Inc. (143 So. 3d 159, Ala. 2013): In the absence of statutory or contractual provisions, there is no contribution or indemnity among joint tortfeasors.
• Holcim (US), Inc. v. Ohio Cas. Ins. Co. (38 So. 3d 722, Ala. 2009): Parties may agree to a formula allocating liability between them; such agreements are enforceable.
• Mobile Infirmary Ass’n v. Quest Diagnostics (381 So. 3d 1133, Ala. 2023): Reaffirmed that “a contractual agreement providing a form of otherwise barred joint-tortfeasor contribution” is valid; specifically cited proportional indemnity obligations between contracting parties.

Legal Reasoning

The Court began by distinguishing the statutory scheme governing wrongful-death actions from the separate contract at issue. Although Alabama’s Wrongful Death Act provides a punitive, non-apportionable recovery, that limitation applies to suits between a plaintiff and tortfeasors. Here, JohnsonKreis and Howard are contracting parties who expressly agreed that Howard “shall … indemnify … to the proportional extent of Subcontractor’s responsibility.” Under longstanding Alabama precedent, parties may contractually allocate liability—even for claims arising solely from one party’s negligence—so long as the indemnity language is clear and unequivocal.

The trial court erred by relying solely on the non-apportionment rule for wrongful-death damages. That rule does not invalidate private agreements to divide liability. Consequently, the proportional-indemnity provision in the subcontract remains binding. The case is remanded to determine (1) the percentage of fault attributable to Howard, and (2) the insurers’ corresponding indemnity obligations under the “additional insured” endorsements.

Impact

This decision clarifies that in Alabama:

• Contractual indemnity provisions may override statutory limitations on apportionment in wrongful-death actions.
• Contract drafters should carefully craft indemnity and additional-insured clauses, knowing they will be enforced as written.
• Insurers must pay close attention to reservation-of-rights letters and coverage disputes, since failure to pursue contractual remedies can affect subrogation and bad-faith claims.

Going forward, parties in construction and other high-risk industries will likely incorporate proportional indemnity clauses more frequently, confident of their enforceability under Alabama law.

Complex Concepts Simplified

• Wrongful-Death Damages Are “Punitive”: Under Alabama law, wrongful-death recoveries are considered punitive and are paid in a lump sum; juries cannot assign percentages of fault to multiple defendants.
• Indemnity vs. Contribution: Contribution is a court-imposed mechanism allowing one tortfeasor to share another’s liability. Indemnity is a contractual commitment by one party to reimburse another for certain liabilities.
• Additional Insured Endorsement: A subcontractor’s insurance policy can be extended to cover the contractor, making the contractor an “additional insured” for liabilities arising out of the subcontractor’s work.
• Reservation of Rights Letter: A carrier’s notice that it will defend under its policy but reserves its right to deny coverage later if it concludes the policy does not apply.

Conclusion

JohnsonKreis Construction Co. v. Howard Painting, Inc. resolves a recurring tension in Alabama law between statutory limitations on wrongful-death recoveries and parties’ freedom to contract. By reaffirming that proportional-fault indemnity clauses are enforceable even when wrongful-death damages cannot be apportioned by statute, the Supreme Court of Alabama has confirmed that sophisticated parties may allocate risk among themselves in private agreements. Insurers, general contractors, and subcontractors should heed this ruling when negotiating indemnity and additional-insured provisions, as the Court will enforce clear contractual promises regardless of statutory non-apportionment rules.