Exclusive Remedy Defense Protects Some Employers In Spite of Express Indemnification Agreement

Landlord Could Not Implead Tenant/Employer In Injured Employee’s Suit Where Employer Was Not Negligent

The exclusive remedy provision of the Delaware Workers’ Compensation Act [Del. Code Ann. tit. 19, § 2304] is so strong, held a state superior court, that it negates—at least in some circumstances—an express indemnity clause contained in a real estate lease [Verbitski v. Diamond State Port Corp., 2019 Del. Super. LEXIS 163 (Apr. 4, 2019)]. Accordingly, where an employee sued his employer’s landlord for work-related injuries sustained in an accident that occurred in the parking lot of the leased premises, the landlord could not maintain a third-party claim against the employer in spite of the fact that the employer had expressly agreed to indemnify the landlord. The court stressed that public policy demanded the indemnity provision be inapplicable to claims made by the employee against landlord which were not attributed to the employer’s negligence.

Background

Following his injury, the employee and his spouse sued the employer’s landlord in tort, alleging that the employee’s injury was the result of negligence by the landlord (the employee fell when his foot caught on an uncovered open pipe in the parking lot). The landlord, in turn, filed a third-party complaint for indemnity against the employer as tenant on the grounds that the employer’s lease required the employer to indemnify and defend the landlord.

The employer sought dismissal on the grounds that workers’ compensation benefits had been provided to the employee and, therefore, any claims against the employer were barred by the exclusivity doctrine of workers’ compensation law. The landlord responded that its claims were not barred because the Lease provided an express provision for indemnity and the Lease imposed on the employer, not the landlord, an obligation to maintain the parking lot.

Earlier Delaware Supreme Court Decisions

The superior court, citing Bar Steel Constr. Corp. v. Read, 277 A.2d 678, 680 (Del. 1971), acknowledged that an employer may expressly agree to indemnify another even when the employer cannot be sued directly by its employee. There, the Delaware high court emphasized that contract law, and not workers’ compensation law, directed the result.

The high court modified its position somewhat in Precision Air, Inc. v. Standard Chlorine of Del., 654 A.2d 403 (Del. 1995), stating that public policy is not violated by such indemnity agreements as long as the indemnity is based on the employer’s own negligence [emphasis added]. In Precision Air, however, the court held that an employer cannot be held liable for indemnification, where there is no allegation that the employer acted improperly, for in such a scenario an indemnification obligation predicated on such improper conduct never becomes applicable.

Employer Not Responsible for Parking Lot Maintenance

In the instant case, the superior court examined the lease and observed that the employer was not responsible for maintenance of the parking lot. Accordingly, since it had no such duty, any dangerous condition existing in the parking lot could not be attributed to the employer’s negligence. Therefore, even though the employer contracted to indemnify the landlord, public policy demanded that the indemnity provision not be applicable to claims made by the employee against the landlord and which were not attributed to the employer’s negligence. Having provided worker’s compensation benefits to the employee, the employer was entitled to the protections of the Workers’ Compensation exclusivity doctrine. For additional discussion of this issue, see Larson’s Workers’ Compensation Law, § 121.04.