South-Western Legal Studies in Business

Two Decades Later, Indemnity Clause in Contract Still Applies
Description Appeals court held that a general indemnity clause in a contract, which covered all legal matters arising from performance of the contract, applied when there was litigation more than 20 years later that related to the contract work done.
Topic Contracts
Key Words Indemnification; Interpretation; Environmental Liability
C A S E   S U M M A R Y
Facts In 1975, Delaware County, Pennsylvania, paid Mascaro, a disposal company, to haul away the residue that remained at an old garbage incinerator that was no longer used. Mascaro hauled the waste to a landfill in New Jersey. Many years later, Delaware was sued for environmental problems caused by the waste. Mascaro refused to participate in these matters, which Delaware settled. The costs of the settlement and legal fees were over $300,000. Delaware sued Mascaro for indemnification under the original contract and the trial court held for Delaware. Mascaro appealed.

Affirmed. The contract stated that Mascaro "shall defend, indemnify and save harmless Delaware County from and against all suits for claims that may be based upon any alleged injury to any person or property that may be alleged to have occurred in the course of the performance of this contract." Mascaro says that limits indemnification to events that occurred at the time the work was done, not environmental matters many years later. "The ultimate goal of interpreting a contract is to ascertain and give effect to the intent of the parties as reasonably manifested by the language of their written agreement. A contract is not rendered ambiguous by the mere fact that the parties do not agree upon its proper construction. … In interpreting the scope of an indemnification clause, the court must consider the four corners of the agreement and its surrounding circumstances." The clause here says Mascaro will indemnify against "all suits" related to the performance of the contract. Since it made the decision where to dump the residue, it is responsible for indemnity in this case.

Citation County of Delaware v. J.P. Mascaro & Sons, Inc., 830 A.2d 587 (Super. Ct., Pa., 2003)

Back to Contracts Listings

©1997-2003  SW Legal Studies in Business. All Rights Reserved.