Georgia Supreme Court Addresses Anti-Indemnity Statute

In prior blog posts, we addressed Georgia’s anti-indemnity statute. One of the posts addressed the statute in the context of an electric utility easement near an airport. That case made its way to the Supreme Court Georgia, which provided some additional clarity to the statute. Milliken & Co. v. Georgia Power Co., — Ga. –, 829 S.E.2d 111 (2019).

When a plane crashed and several passengers and crew died or were injured, their representatives sued several defendants, including a nearby plant owner, Milliken & Company (“Milliken”), based on claims that transmission lines on Milliken’s property were too close to the runways, were too high, and encroached on the airport easements. Milliken cross claimed against Georgia Power Company (“GPC”). Milliken’s claim was based on an easement it granted to GPC, which required GPC to indemnify it for any claims arising out of GPC’s construction or maintenance of the transmission lines.

On appeal, the Supreme Court considered whether the clause was unenforceable under O.C.G.A. § 13-8-2(b). In general, “a party may contract away liability to the other party for the consequences of his own negligence without contravening public policy, except when such agreement it prohibited by statute.” Id. at 113 citing Lanier at McEver v. Planners & Eng’rs Collaborative, 284 Ga. 204, 205 (2008). As one such statute, O.C.G.A. § 13-8-2(b) applies when an indemnification provision (i) “relates in some way to a contract for construction, alteration, repair, or maintenance of certain property” and (ii) “promises to indemnify a party for damages arising from that own party’s sole negligence.” Id. at 114 (internal punctuation omitted).

Since the easement required GPC to “construct, erect, install, operate, maintain, inspect, reconstruct, repair, rebuild, renew and replace” a substation on Milliken’s property, the Supreme Court ruled that it was within the scope of provisions governed by the anti-indemnity provision. As to whether it violated the “sole negligence” prong, the Supreme Court ruled that it did not. In contrast to the statutory prohibition, the easement did not require GPC (the indemnitor) to indemnify Milliken (the indemnitee) for damages resulting from Milliken’s sole negligence. Instead, it required GPC to indemnify Milliken for GPC’s negligence – which is not prohibited by the statute.

GPC cited cases that invalidated indemnity provisions that required indemnification without regard to fault and were thus broad enough to include the indemnitee’s negligence. Relying on these cases, GPC cited Milliken’s pleadings which sought indemnification from GPC ostensibly without regard to fault. The Supreme Court rejected this argument because, even though Milliken’s pleadings sought such broad indemnification, the underlying indemnity provision did not.