In Dewitt v. London Road Rental Center, Inc., 910 N.W.2d 412 (Minn. 2018), the Minnesota Supreme Court resolved the confusion surrounding the proper test for determining whether an indemnity clause is enforceable under Minnesota law.
In Dewitt, a rented picnic table collapsed on a restaurant patron causing severe injuries. Id. at 414. The injured patron filed suit against both the restaurant and the rental company. Id. The rental company filed a cross-claim against the restaurant, seeking the protection of an indemnity clause in the rental agreement. Id. The district court determined that “although the indemnity clause did not expressly include [the rental company’s] own negligence within its scope, the clause’s broad language necessarily included coverage for [the rental company’s] negligence.” Id. (emphasis in original).
The Minnesota Court of Appeals affirmed this decision, stating that “[t]he test is whether the language is so broad that it necessarily applies to negligence.” Dewitt v. London Rd. Rental Ctr., Inc., 899 N.W.2d 883, 891 (Minn. Ct. App. 2017). After applying this test to the indemnity clause in dispute, the court concluded that the indemnity clause was enforceable, and the restaurant had agreed to indemnify the rental company for the rental cpomnay’s neglience. Id. at 892.
The Minnesota Supreme Court expressly rejected the test used by the court of appeals, stating:
The test is therefore not whether the language of an indemnity clause is “so broad” that it necessarily includes the indemnitee’s own negligence…. Rather, the proper test is whether the clause includes specific language that expressly shows, in clear and unequivocal language, that the parties intended the clause to obligate the indemnitor to indemnify the indemnitee for the indemnitee’s own negligence.
Dewitt, 910 N.W.2d at 417 (internal citations omitted) (emphasis in original). Further, the court noted, “indemnity cannot be established by implication.” Id. at 418.
The court explained that the more broadly stated rule set forth in National Hydro Systems v. M.A. Mortenson Co., 529 N.W.2d 690 (Minn. 1995) and Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783 (Minn. 2005) has never been actually applied by the court. Dewitt, 910 N.W.2d at 417–18. “The only rule that [the Minnesota Supreme Court] ha[s] applied has been whether the parties expressed their intent in ‘clear and unequivocal terms….’” Id. at 418 (emphasis in original). Applying the proper legal test to the indemnity clause before it, the court ultimately found the indemnity clause inapplicable, “because it d[id] not include express language that clearly and unequivocally show[ed] the parties’ intent for [the restaurant] to be financially responsible to [the rental company] for [the rental company’s] own negligence.” Id. at 420.
Takeaway: When determining whether an indemnity clause is enforceable under Minnesota law, the test is “whether the clause includes specific language that expressly shows, in clear and unequivocal language, that the parties intended the clause to obligate the indemnitor to indemnify the indemnitee for the indemnitee’s own negligence.” Id. at 417. If the contract language does not require a franchisee (for example) to specifically indemnify a franchisor against the franchisor’s own negligence, then, under Minnesota law, the franchisee will have no implied obligation to do so.
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