• New Louisiana Statute Limits Indemnity in “Construction Contracts” (La. R.S. 9:2780.1)
  • December 2, 2010 | Author: Mark A. Lowe
  • Law Firm: Liskow & Lewis A Professional Law Corporation - Lafayette Office
  • The Louisiana Legislature enacted Act 492 of the 2010 Regular Session invalidating certain indemnity agreements within motor carrier transportation contracts and construction contracts.  Significant to the refinery industry, a “Construction Contract,” under the Act, “shall mean any agreement for the design, construction, alteration, renovation, repair, or maintenance of a building, structure, highway, road, bridge, waterline, sewer line, oil line, gas line, appurtenance or other improvement to real property.”  The new law renders null and void any provision that requires a party to indemnify, defend or hold harmless another from liability for damage not caused by the fault or negligence of the indemnifying party.
    Act 452, which will be codified at La. R.S. 9:2780.1, also provides that any provision contained in a “Construction Contract” that requires an indemnitor to procure liability insurance covering the negligent acts or omissions of the indemnitee is contrary to the public policy of the State of Louisiana and is therefore null, void, and unenforceable.  However, this Act does not apply to contracts executed prior to January 1, 2010 and does not prevent the indemnitee from requiring the indemnitor to provide proof of insurance for obligations covered by the contract.
    The definition of “Construction Contract” expressly excludes any design, construction, alteration, renovation, repair, or maintenance of “[o]il flow lines or gas gathering lines used in association with the transportation of production from oil and gas wells from the point that oil and gas becomes comingled for transportation to oil storage facilities for gas transmissions lines.”  La. R.S. 9:2780.1(A)(1)(b).  Accordingly, the 2010 Act comports with the Louisiana Oilfield Indemnity Act (LOIA), La. R.S. 9:2780, which similarly voids indemnity provisions in oilfield contracts, but not where the contract pertains to oil or gas comingled from several separate wells.  Indeed, Act 452 expressly states that it is not intended to amend or otherwise affect the provisions of the LOIA.