Indemnification Tied to an Undefined Scope of Work Is Unenforceable

Introduction

Juarez v Avacon Mgt. LLC addresses whether a construction subcontractor must indemnify a general contractor under a written rider when the rider applies only to injuries arising from “the Work covered by” an underlying oral agreement, but the parties never defined that work.

Plaintiff Jose Manuel Juarez, an employee of Skittles Services Corp., was injured after falling from a scaffold while removing bricks from ceiling beams. He sued the premises owner, 45 John LLC, and general contractor Avacon Management LLC. Avacon then brought third-party claims against Skittles for contractual indemnification and failure to procure insurance.

Avacon and Skittles had orally arranged for Skittles to provide labor and later executed a written “Subcontract Agreement Rider” containing indemnification and insurance provisions. The central issue was whether the rider created an enforceable duty to indemnify when the oral agreement did not establish a mutually understood scope of work.

Summary of the Opinion

The First Department affirmed the order granting Skittles summary judgment, denying Avacon’s cross-motion, and dismissing the third-party complaint.

The majority held that:

• The prior summary judgment ruling involving 45 John did not establish law of the case concerning the rider’s enforceability.
• Avacon’s judicial-estoppel argument was unpreserved and, in any event, lacked merit.
• The indemnification clause was unenforceable because it applied only to liabilities arising from work covered by the parties’ agreement, yet the parties never reached a meeting of the minds concerning that work.
• The undefined scope was a material contractual term and prevented a finding of a clear and unmistakable intention to indemnify Avacon for plaintiff’s activity.
• Avacon abandoned its insurance-procurement argument on appeal. The record also showed that Skittles obtained the required insurance, and the insurer’s refusal to defend or indemnify Avacon did not itself establish Skittles’s breach.

Justice Rodriguez dissented in part. He would have denied summary judgment to both sides on contractual indemnification, finding the parties’ year-long course of performance sufficient to support an enforceable agreement but their conflicting evidence insufficient to determine whether plaintiff’s work fell within its scope.

Analysis

The Governing Rule

The decision establishes that an indemnification rider tied expressly to “work covered by” another agreement cannot impose indemnity for a particular accident when the parties never objectively defined or agreed upon the scope of that work. Because contractual indemnity requires a clear and unmistakable allocation of liability, uncertainty about the work triggering the obligation may render the indemnification provision unenforceable.

Procedural Doctrines

Law of the Case

Avacon argued that a prior ruling—denying 45 John summary judgment because of a factual dispute over plaintiff’s work—prevented Skittles from challenging the contract’s enforceability. Relying on Aspen Specialty Ins. Co. v RLI Ins. Co., Inc., the court rejected that argument. Law of the case applies only to an issue of law actually determined earlier in the same litigation. The validity of the rider had not been briefed, decided, or necessary to the earlier ruling.

Judicial Estoppel

The court held that Avacon failed to preserve its judicial-estoppel argument by raising it below, citing U.S. Bank N.A. v DLJ Mtge. Capital, Inc.. It also found the argument substantively defective because Skittles had never successfully adopted the definitive position that its agreement with Avacon was valid and enforceable. The court contrasted the circumstances with Becerril v City of N.Y. Dept. of Health & Mental Hygiene.

Contractual Indemnification and Definiteness

Under Hooper Assoc. v AGS Computers, a party has no contractual right to indemnification unless that right is stated clearly and unambiguously. Drzewinski v Atlantic Scaffold & Ladder Co. similarly requires the intent to indemnify to be clearly implied from the agreement’s language, purpose, and surrounding circumstances. The court also relied on Kozeli v Renali Realty, LLC for this strict approach.

The rider required Skittles to indemnify Avacon for injuries “arising out of or resulting from the Work covered by this Contract Agreement.” Thus, the scope of “the Work” defined the liabilities subject to indemnity. It was not a collateral detail; it was the contractual trigger.

Applying Stonehill Capital Mgt. LLC v Bank of the W., the majority found no meeting of the minds on that material term. Avacon’s principal testified that the scope was “never defined” and was intended to remain fluid throughout the project. Skittles’s manager understood the work as cleaning, painting, compounding, and limited sheetrock tasks—not demolition. Neither account demonstrated mutual agreement that brick demolition on the first floor was covered.

Millenium Holdings LLC v Glidden Co. supplied the requirement that a contract manifest a “clear and unmistakable intent” to indemnify for particular liabilities. Margolin v New York Life Ins. Co. and Dibrino v Rockefeller Ctr. N., Inc. supported the related proposition that the injury-producing work must fall within the work contemplated by the indemnitor’s undertaking. The court cited Tanksley v LCO Bldg. LLC by comparison.

The majority further relied on Matter of Express Indus. & Term. Corp. v New York State Dept. of Transp., which explains that definiteness concerning material terms is fundamental to contract formation. Because the indemnification obligation depended directly on the scope of work, “impenetrable vagueness” on that subject could not support liability.

Although Skittles had also argued that the rider lacked consideration, the appellate decision did not rest on that theory. Its holding turned on indefiniteness and the absence of a clear, unmistakable indemnification obligation.

Insurance Procurement

Citing People v DiTommaso, the court found that Avacon abandoned its insurance-procurement claim by failing to address it in its appellate brief. The court nevertheless explained that the record showed Skittles had maintained the insurance required by the rider.

Under Grala v Structural Preserv. Sys., LLC, a named insured’s contractual obligation to procure insurance is generally satisfied by obtaining the required policy. The insurer’s later refusal to recognize another party as an additional insured does not, without more, establish that the named insured breached the procurement agreement.

The Partial Dissent

Justice Rodriguez agreed that Avacon was not entitled to summary judgment but concluded that Skittles was not entitled to dismissal either. Citing Vega v Restani Constr. Corp., he emphasized that evidence on summary judgment must be viewed in the light most favorable to the nonmoving party.

The dissent focused on the parties’ conduct. For more than a year, Skittles performed work, submitted logs, and received payment. Under Brown Bros. Elec. Contrs. v Beam Constr. Corp. and Kolchins v Evolutions Mkts., Inc., contractual assent and definiteness may be established objectively through words and conduct; absolute precision is unnecessary.

The dissent also invoked Matter of 166 Mamaroneck Ave. Corp. v 151 E. Post Rd. Corp. for the principle that invalidating a contract as indefinite should be a last resort. In its view, the agreement had at least an undisputed core—cleaning, painting, and compound work—even if the parties disagreed about demolition.

Relying on Great N. Ins. Co. v Interior Constr. Corp. and Hooper Assoc. v AGS Computers, Justice Rodriguez concluded that the rider contained an express indemnification promise rather than one arising only by implication. The project-specific reference to 45 John as an additional insured further indicated an intent to allocate risk for this project.

The dissent found a factual dispute over whether plaintiff was “cleaning the beams” or performing prohibited demolition. Four Seasons Hotels v Vinnik and Kozeli v Renali Realty, LLC supported submitting that question to a factfinder based on the totality of the parties’ words, conduct, and objectives.

P.J. Carlin Constr. Co. v Whiffen Elec. Co. and Wu v Uber Tech., Inc. reinforced that mutual assent depends on objective manifestations rather than a party’s later characterization of its subjective intent. Thus, the dissent considered Avacon’s statement that the work was “never defined” less important than the parties’ sustained course of performance.

Finally, the dissent relied on Cobble Hill Nursing Home v Henry & Warren Corp., quoted in Matter of Express Indus. & Term. Corp. v New York State Dept. of Transp., to observe that almost every agreement contains some indefiniteness. Under Millenium Holdings LLC v Glidden Co., Kramer v Greene, and Focus on Sports v Newsweek Inc., conflicting evidence concerning the terms and application of an oral agreement ordinarily precludes summary judgment for either side.

Complex Concepts Simplified

Contractual indemnification

A contractual promise by one party to reimburse or protect another from specified claims or losses.

Meeting of the minds

Objective agreement on the contract’s essential terms. The parties need not share unspoken intentions, but their words and conduct must show mutual assent.

Material term

A term important enough that the parties cannot determine their principal obligations without it. Here, the scope of work determined when indemnification would apply.

Law of the case

A doctrine generally preventing relitigation of a legal issue already decided in the same case. It does not apply to an issue that was never actually decided.

Judicial estoppel

A doctrine preventing a party from prevailing on one position and later adopting a clearly inconsistent position to gain another advantage.

Summary judgment

A ruling without trial when no genuine dispute of material fact exists and one party is entitled to judgment as a matter of law.

Duty to procure insurance

A promise to obtain specified coverage. It is distinct from the insurer’s separate obligation to defend or indemnify an additional insured.

Course of performance

The parties’ conduct while carrying out an agreement, which may help establish or interpret contractual terms.

Impact

The decision warns construction participants that an indemnity rider cannot reliably transfer risk when it refers to an undefined oral scope of work. Contractors using flexible or design-build arrangements should identify covered tasks, locations, exclusions, and procedures for assigning additional work.

Future litigants may invoke the decision where an indemnification obligation depends on whether an accident arose from vaguely described work. The dissent, however, preserves a significant counterargument: an established course of performance may make an otherwise informal agreement sufficiently definite, leaving only the accident’s connection to the work for trial.

The insurance holding also reinforces the distinction between failing to obtain insurance and an insurer’s refusal to provide coverage. A coverage denial does not automatically establish breach by the party that procured the policy.

Conclusion

Juarez v Avacon Mgt. LLC confirms that contractual indemnification requires more than a written promise in the abstract. When indemnity is limited to liabilities arising from covered work, the parties must define that work sufficiently to demonstrate a clear and unmistakable allocation of risk.

The majority treated the deliberately undefined scope as fatal to Avacon’s indemnification claim. The dissent would instead have relied on the parties’ year-long performance and submitted the boundary between cleaning and demolition to a factfinder. The division highlights the tension between strict construction of indemnity clauses and the principle that commercial agreements should not be invalidated for uncertainty when conduct supplies practical meaning.