“Indemnify From” Versus “Indemnify For”

Another of the speakers at last week’s CLE session in Boise organized by the Idaho State Bar (see this post) was Brian Buckham, of IDACORP, Inc. and Idaho Power Company.

Brian told me about a basic issue relating to indemnification language that I hadn’t thought of previously, and he was kind enough to follow up with a couple of citations. So here goes:

Here was the language at issue in a case before the Supreme Court of Oregon, Jacobson v. Crown Zellerbach Corp., 273 Or. 15, 539 P.2d 641 (1975) (copy here):

INDEMNITY: Each party hereto, agrees to hold and save harmless and indemnify the other party From any claim or cause of action arising from injury, damage, death arising or growing out of this occupancy hereunder, or use and occupancy of same by an employee, contractor, guest or invitee of either party during the term of this agreement.

And here’s what the court had to say about it:

This indemnity clause is similar to the usual one inserted in contracts to protect the parties from claims of third parties. If the parties had intended the clause to apply to damages suffered by one party directly from the activity of the other, the provision would have read ‘* * * For any claim * * *,’ rather than ‘* * * From any claim * * *.’ Also, the agreement purports to protect plaintiffs not from damage but from claims or causes of action which necessarily must be asserted by others.

I agree with the third sentence (the one beginning “Also”). But I don’t share the Jacobson court’s confidence that if Acme indemnifies WidgetCo for any claim as opposed to from any claim, it’s clear that Acme is indemnifying WidgetCo with respect to claims brought by WidgetCo against Acme (presumably in addition to indemnifying WidgetCo with respect to claims brought by nonparties). A lot is riding on a frail distinction, particularly as use of prepositions in indemnification language is rather erratic. (For more about that, see this post.)

Now let’s consider the indemnification language at issue in a case before the Court of Appeals of Arizona, Cecil Lawter Real Estate Sch., Inc. v. Town & Country Shopping Ctr. Co., Ltd., 143 Ariz. 527, 694 P.2d 815 (Ct. App. 1984) (copy here(added emphasis omitted):

With respect to said subleases, Assignor shall indemnify and hold Assignee harmless from and against all loss or damage, including reasonable attorneys’ fees, resulting from claims or causes of action arising prior to the date of recordation of this Assignment; …

Here’s what the court had to say about it:

As we read the above indemnity provision, it is designed to protect Town & Country from claims of third parties arising prior to their acquisition of the Town & Country shopping center. See Jacobson v. Crown Zellerbach Corporation, 273 Or. 15, 539 P.2d 641 (1975). It is not designed to permit Town & Country to seek damages for Transamerica’s failure to inform it of an “amendment” to the lease.

The court then went on to quote the Jacobson court’s analysis quoted above.

But the Cecil Lawter language is crucially different from that in Jacobson: whereas the Jacobson language refers to “any claim,” the Cecil Lawter language refers to “loss or damage.” If I protect you from any claim, necessarily that claim has to be brought by someone else. But if I protect you from loss or damage, that could include loss or damage that I caused. The Cecil Lawter court was oblivious to that nuance.

What should the drafter take from these cases? Well, despite the apparent endorsement by the Jacobson court, simply saying shall indemnify for any claim is nowhere near clear enough to express that claims brought by one party against the other fall within the scope of the indemnification provision.

And given Cecil Lawter, you shouldn’t assume that by itself, shall indemnify from any loss conveys that meaning.

Instead of playing games with prepositions, be explicit whether indemnification covers just nonparty claims or also claims between the parties. That’s something discussed in this 2012 post. So I find it a little alarming that, according to Brian, Jacobson and Cecil Lawter have worked their way into Arizona legal opinion practice

Whatever language you use, you still need a preposition. Which should you use? Given that usage is all over the place, I think it’s safe to say that there’s no right or wrong. After all, indemnification connotes both protection (which uses from and against) and reimbursement (which uses for).

I’ve tended to use against, but I can’t say that it’s superior to the alternatives. For now, I’m undecided; let’s see what the peanut gallery has to say.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.