In a recent decision disagreeing with the First Circuit, the Louisiana Court of Appeal, Fifth Circuit held that (subject to certain exceptions) the Louisiana Construction Anti-Indemnity Act (La. R.S. 9:2780.1) (the “LCAIA”) is applicable to contracts awarded pursuant to the Public Works Act and prohibits a public entity from requiring a contractor to purchase insurance that would provide coverage for the public entity’s own acts or omissions.   The LCAIA generally nullifies provisions in construction contracts that (1) require the indemnitor (i.e., the person required to indemnify the other) to indemnify the indemnitee (i.e., the person entitled to indemnity) for the indemnitee’s own negligence or fault and (2) require the indemnitor to purchase insurance covering the indemnitee’s acts or omissions.  In addition, a provision in the Louisiana Public Works Act (La. R.S. 38:2216(G)), among other things, nullifies any provision in a public contract (“other than a contract of insurance”) that requires the contractor to hold harmless or indemnify the public entity for damages arising from the negligence of the public entity (emphasis added).

In Salathe v. Parish of Jefferson through Dept. of Sewerage, 19-303 (La. App. 5th Cir. 7/15/20) ___ So. 3d ___ (2020 WL 3987985), a contractor entered into an agreement with the Jefferson Parish Department of Sewerage (the “Parish”) to perform work on a sewer line.  An employee of the contractor was injured on the job and sued the Parish, the Parish’s insurer, and the contractor’s insurers alleging that the Parish’s negligence caused the injury.  The contract at issue contained two relevant provisions.  The first required the contractor to indemnify the Parish for any damage occasioned by the Parish’s own fault or negligence.  The parties all agreed that this provision was clearly null and void under either or both Section 38:2216(G) or the LCAIA.

But the second relevant contractual provision required the contractor to purchase insurance naming the Parish as an additional insured and required insurance coverage for the contractor’s indemnity obligations.  The Parish argued that this second provision was enforceable because the LCAIA was inapplicable because Section 38:2216(G) provided the more specific legislative pronouncement by excepting “contract[s] of insurance” from its general prohibition of certain indemnity obligations.  But the Fifth Circuit disagreed, holding first that the LCAIA was generally applicable to contracts let under the Public Works Act.  It also specifically stated that to the extent Section 38:2216(G) would otherwise allow for such a contractual provision requiring the procurement of insurance, the LCAIA controlled and generally prohibited an insurance provision such as the one at issue here.  The Court noted that the LCAIA provided certain exceptions to this prohibition—primarily allowing certain indemnification and insurance procurement provisions in construction contracts if the indemnitor recovered the cost of the required insurance in the contract price—but found none to be applicable in this case.  In its ruling, the Fifth Circuit acknowledged its disagreement with the First Circuit’s holding in an earlier decision that Section 38:2216(G) provided the more specific pronouncement and allowed public bodies to require contractors to procure insurance that covered the acts and omissions of the public body (see Jeff Mercer, L.L.C. v. State, Dept. of Transp. and Development, 13-1108 (La. App. 1st Cir. 11/19/13), 2013 WL 12123235).[1]  The Salathe case creates a circuit split on the issue, which may ultimately lead to an opinion by the Louisiana Supreme Court or legislative amendment to specifically address the issue.


[1] This case involved a contract with the Department of Transportation and Development, which contracts are governed by certain provisions found in Title 48 of the Louisiana Revised Statutes and to which it is generally understood that the provisions in Title 38 do not apply.