Contractors, Subcontractors, and the Indemnity Trap — What the Ichapanta Case Teaches About Construction-Site Injury Liability
- Reza Yassi
- 3 days ago
- 5 min read
Construction sites in New York are some of the busiest—and most dangerous—workplaces in the country. When someone gets hurt, figuring out which company is legally responsible can feel like unraveling a maze of subcontract agreements, insurance policies, and multi-layered contracts.
A recent decision from the Appellate Division, First Department, sheds light on this tangled web. The case, Ichapanta v. East Side Home Stead LLC, focuses on a powerful contract tool called “contractual indemnification” —a clause that determines who ultimately pays when a worker is injured.
What Is Contractual Indemnification?
In plain English, an indemnity clause is a promise: if something goes wrong connected to your work, you’ll protect and reimburse the other party.
On construction projects, owners often hire a general contractor, and the general contractor brings in multiple subcontractors. Contracts between the general contractor and each subcontractor usually contain indemnity provisions. These clauses often say that if someone is hurt because of the subcontractor’s work, the subcontractor will defend and indemnify the general contractor and sometimes the owner.
That can include paying:
Settlements or judgments
Legal fees
Other costs tied to the claim
New York allows contractual indemnification, but with an important limit: a company cannot be indemnified for its own negligence. That limit comes from a statute called General Obligations Law § 5-322.1. Ichapanta is a good illustration of how courts enforce that limit while still honoring the parties’ agreements.
The Facts Behind Ichapanta
In Ichapanta, a worker was injured at a construction site. The worker sued the property owner and the general contractor, Taconic Builders. As is common in New York construction litigation, Taconic turned to its subcontractor, JVA Industries, and said, essentially, “If we’re on the hook here, you have to cover us. That’s what the contract says.”
The subcontract between Taconic and JVA had an indemnity clause. It required JVA to indemnify Taconic for claims “arising out of or resulting from the performance of this subcontract agreement.” This type of broad language is extremely common in construction contracts.
The trial court, however, refused to grant Taconic contractual indemnification. Taconic appealed — and the First Department reversed, giving Taconic conditional contractual indemnification against JVA.
The “Savings Clause” That Saved the Indemnity Agreement
Why did the appellate court side with Taconic? The answer lies in one key phrase in the subcontract: the indemnity applied “to the fullest extent permitted by law.”
That small piece of language is known as a “savings clause,” and it matters a lot in New York.
Under General Obligations Law § 5-322.1, an indemnification agreement is void if it tries to make a subcontractor indemnify a contractor for the contractor’s own negligence. Courts won’t enforce provisions that overreach like that.
But when a contract says something like “to the fullest extent permitted by law,” it signals that the parties intend the clause to be limited so that it complies with the statute. In other words, the subcontractor is agreeing to indemnify only to the extent the law allows — not beyond it.
In Ichapanta, the appellate court held that this savings clause meant the indemnity provision did not violate GOL § 5-322.1. That allowed the court to enforce the clause and award Taconic conditional indemnification.
What Does “Conditional” Indemnification Mean?
The court awarded Taconic “conditional contractual indemnification.” That phrase is important.
Conditional indemnification means that JVA’s duty to indemnify Taconic depends on how the facts ultimately shake out. If it is later determined that Taconic was free of negligence, and the injury arose out of JVA’s work, then JVA must indemnify Taconic. If Taconic is found partially negligent, the indemnity might be limited or not apply at all, depending on the wording and how the law is applied.
The takeaway: the indemnity obligation is real, but it tracks the boundaries of what the law allows. The clause does not give Taconic a free pass for its own wrongdoing, but it does shift risk downstream if the subcontractor’s work is the real source of the problem.
Why This Matters for Injured Workers
If you are a construction worker injured on a job site, this kind of case doesn’t usually change your ability to bring a claim. You can still sue the owner, the general contractor, and others under New York Labor Law and common-law negligence principles. Your rights as an injured worker stay intact.
Where Ichapanta matters is behind the scenes — in terms of who ultimately pays.
Once you file your case, the defendants often file cross-claims and third-party actions against each other, all based on indemnity provisions like the one in Ichapanta. The court’s ruling about indemnity affects:
Which company’s insurance policy responds
How settlement negotiations go
Who is ultimately writing the check
So while the worker’s right to recovery doesn’t depend on these contract clauses, the shape of the litigation and the willingness of different parties to settle often do.
Why This Matters for Contractors and Subcontractors
For general contractors, Ichapanta is a reminder of the value of carefully drafted subcontract agreements. If your indemnity clauses:
Use broad “arising out of” or “resulting from” language, and
Include a clear savings clause like “to the fullest extent permitted by law,”
then New York courts are likely to enforce them, at least conditionally.
For subcontractors, the case is a cautionary tale. Indemnity clauses are not boilerplate you can ignore. They can create substantial exposure, including duties to pay defense costs and judgments, even when you are not the only party sued.
Key practical lessons:
Read your subcontract carefully before signing.
Understand when and how you may be required to indemnify others.
Make sure your insurance coverage matches your contractual obligations.
Consider negotiating limits on indemnity, especially if you have little control over site-wide safety practices.
Risk Moves Downstream in Construction
Construction projects are built on layers:
The owner hires a general contractor.
The general contractor hires multiple subcontractors.
Subcontractors may hire sub-subcontractors.
Contracts between these parties often push risk downward. Owners and general contractors look for ways to shield themselves through indemnity and insurance requirements. Subcontractors, in turn, may try to push risk further down to their own subs.
Ichapanta confirms that New York courts will generally respect that structure — as long as the indemnity language complies with statutory limits.
This reinforces a hard truth of the industry: risk doesn’t disappear; it just gets reassigned.
How This Decision Fits into New York Construction Law
New York Labor Law already provides strong protections for construction workers, especially in areas like falls from heights and unsafe equipment. But cases like Ichapanta are about the relationships between the companies on the defense side rather than the worker’s direct rights.
Put differently:
Labor Law decides who can be held liable to the worker.
Contractual indemnity decides how those companies sort it out amongst themselves.
Ichapanta shows that courts will look closely at the exact wording of indemnity clauses but will enforce them when they include savings language and are not blatantly trying to shift responsibility for a party’s own negligence.
Final Takeaways
For injured workers: You don’t need to memorize case names or statutes. What matters is that New York law gives you strong tools to pursue compensation when you’re hurt on a construction site, and cases like Ichapanta won’t take that away from you. They just help decide which company’s insurance will ultimately fund the result.
For contractors and subcontractors: Your contracts are not just paperwork. They are risk maps. The Ichapanta decision is a clear reminder to:
Use careful indemnity language.
Include savings clauses to comply with New York law.
Align your insurance with your contractual duties.
Construction sites are complex, and so is the law that governs them. But one big message from Ichapanta is simple: in New York, well-drafted indemnity clauses still matter — and courts are paying close attention to every word.
Disclaimer:
This article is for information purposes only. Although I am an attorney, I am not your attorney, and reviewing or engaging with this article does not create an attorney-client relationship.
