Opinion ID: 456302
Heading Depth: 2
Heading Rank: 2

Heading: The Law Regarding Indemnity Provisions

Text: 15 In every state except Alabama, 2 indemnity provisions, such as the one at issue here, are enforceable. See Larson on Workmen's Compensation Sec. 76.43. The Paul Krebs & Assocs., supra, decision, which gave Alabama the distinction of being the only state to disallow indemnity provisions under these circumstances, itself overruled Eley v. Brunner-Lay Southern Corporation, Inc., 289 Ala. 120, 266 So.2d 276 (1972) which had followed the majority rule. In Paul Krebs & Assocs., the Alabama Supreme Court stated: 16 Squarely presented [in this case] is whether an employer's statutory immunity from suits on account of injury to employees under Sec. 25-5-53, 1975 Code, protects the employer from suits by third parties seeking indemnity (under contractual provisions) from claims arising out of injuries sustained by employees of the same employer. 356 So.2d at 638. 3 17 The Alabama Supreme Court answered the question as one of pure statutory interpretation stating: 18 The statute says that no employer shall be held civilly liable for injuries to workmen injured in the course of his employment. To allow a third-party tort-feasor to recover over against the employer for injury to an employee would be to allow indirectly what is prohibited directly. 356 So.2d at 639. The court went on to say: 19 We believe our statute compels this result. Sec. 25-5-53 says that no employer (under the Workmen's Compensation Act) shall be held civilly liable for personal injuries to workmen. Krebs would have us engraft an exception to this language which would permit a civil suit against the employer where the employer agrees to indemnify a third-party tort-feasor sued for causing the injury to the employee. This writes into the legislation an exception which is not there. 20 356 So.2d at 640. 21 Several relevant facts must again be noted as we turn to the question of whether the Alabama Supreme Court's ruling in Paul Krebs & Assocs. is evidence of such a strong public policy that the indemnity provision contracted to by GFFS and Mead should not be applied. First, at the time the indemnity provision of the sublicense agreement was entered into such provisions were enforceable in Alabama. Additionally, at the time that Mr. Goodwin was injured, the provisions were still enforceable in Alabama. The parties agreed in their sublicense agreement that the law of Michigan would apply. There is no dispute that under the laws of Michigan such provisions were and are enforceable. 22 It is virtually hornbook law that contracting parties can choose the law of the state to govern their contractual rights and duties. Alabama recognizes the right of contracting parties to choose the law of another state that governs the contract so long as the consequences of such provisions are not likely to be contrary to Alabama law or public policy. Craig v. Bemis Company, Inc., 517 F.2d 677 (5th Cir.1975). Thus the question now becomes, does the Paul Krebs & Assocs. decision indicate such a strong public policy that the parties' indemnity and choice of law provisions should be overridden. 4