Kaleel Builders, Inc. v. Ashby Is Still The Seminal North Carolina Case Interpreting Indemnity Claims

• Jurisdiction: North Carolina,United States
• Law Firm: Cranfill Sumner
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Professional Negligence, Construction & Planning
• Author: Elizabeth Leonard
• Published date: 25 July 2023

If you are handling a construction case or other matter involving any sort of indemnity claim, you should be familiar with Kaleel Builders, Inc. v. Ashby. 161 N.C. App. 34, 587 S.E.2d 470 (2003). Kaleel may have been decided twenty years ago, but it is still the pre-eminent North Carolina case interpreting the three different types of indemnity claims. (If you need a refresher on the different types of indemnity, see Different Types of Indemnity and Their Relative Enforceability in Construction Litigation.)

In Kaleel, homeowners Paula Andretta and Pier Giorgio ("the Andrettas") hired Kaleel Builders, Inc. to serve as the general contractor to construct a house for them in Mecklenburg County, North Carolina. Subsequently, Kaleel Builders contracted with several subcontractors, including Kent Ashby, d/b/a Superior Exteriors, ("Subcontractors") to perform various scopes of work in connection with construction of the Andrettas' residence. The Andrettas also contracted directly with Don Duffy to provide architectural services.

In the fall of 1996, the Andrettas, unhappy with some allegedly defective construction work on their residence, including work performed by the Subcontractors and Duffy, demanded arbitration against Kaleel Builders. Kaleel Builders, in turn, filed a lawsuit against the Subcontractors seeking indemnification or, alternatively, contribution, based upon breach of contract, breach of warranty, and negligence causes of action. Kaleel Builders also sued Duffy alleging negligence.

The trial court dismissed Kaleel Builders' claims against the Subcontractors and granted Duffy's Motion for Summary Judgment. On appeal, the Court of Appeals affirmed the lower court's ruling, holding that Kaleel Builders had no right to indemnity or contribution from the Subcontractors based on a negligence claim, nor did they have a valid negligence claim against Duffy. In coming to its decision, the Court of Appeals analyzed the three different types of indemnity: express, indemnity implied-in-fact, and indemnity implied-in-law.

Kaleel Builders' Claims Against its Subcontractors

Regarding express indemnity, the Court reasoned that the Complaint filed by Kaleel Builders against the Subcontractors did not allege an express contractual right of indemnity in the written (or oral) agreements between Kaleel Builders and its Subcontractors; thus, Kaleel Builders failed to state a claim for express indemnity.

Regarding indemnity implied-in fact (also called contract...