In our last post in this series, we looked at the form of indemnification available when there is no contract between the parties—equitable indemnification. However, there are two requirements that the party seeking indemnification must remember: (1) The party seeking indemnification must be “without fault” and (2) There must be a “special relationship” between the parties.
Going back to our running scenario, if you recall, a general contractor has been sued by an owner alleging that the air conditioning unit in the attic was not installed correctly, has leaked, and caused thousands of dollars in damage. The general contractor knows that he hired an HVAC subcontractor to install that unit and he believes the subcontractor should be held responsible for any damage. However, the owner has only sued the general contractor and not the subcontractor. At this point, the general contractor would need to consider indemnification and, specifically, equitable indemnification if there was no contract between the parties.
As stated above, if the party seeking indemnification is also at fault, he comes to court without equity and has no right to indemnity. Winnsboro v. Wiedeman-Singleton, Inc., 303 S.C. 52 (Ct. App. 1990). Additionally, in order to sustain a claim for equitable indemnity, the existence of some special relationship between the parties must be established. Toomer v. Norfolk S. Ry., 344 S.C. 486 (Ct. App. 2001).
What about the “without fault” requirement of equitable indemnification in our scenario above? Whatever the facts may be, the general contractor will most likely face some argument by the subcontractor that the general contractor bears some responsibility, perhaps as a result of providing improper materials.
The question then turns to the following: Is there a special relationship between the general contractor and subcontractor? Fortunately, courts in South Carolina have held that such a relationship is sufficient for equitable indemnity purposes. First Gen. Servs. v. Miller, 314 S.C. 439, 443, 445 S.E.2d 446, 448 (1994) (“We hold that the relationship of contractor/subcontractor is a sufficient basis to support a claim of equitable indemnification.”). Thus, the general contractor would most likely have that requirement covered.
If the general contractor is successful in its equitable indemnification claim, the issue will then turn to damages.