## Facts

- Mobil Chemical Company hired Blount Brothers Corporation under a fixed-price construction contract (about $37 million) to build a chemical plant; Blount acted as construction manager and general contractor, while subcontractors performed the work.
- The contract required “best efforts” to complete by January 1983 and included an insurance provision requiring Blount to maintain liability and workers’ compensation coverage.
- In the insurance section, Blount agreed to indemnify Mobil for losses and claims for death, personal injury, property damage, or “any other liability arising out of or in connection with the work,” except where the loss resulted from Mobil’s sole negligence.
- A separate clause stated Mobil and Blount would not be liable to each other for indirect or consequential damages arising out of the contract.
- The project fell substantially behind schedule; the trial court found both Mobil (owner-caused delays such as design changes and late approvals) and Blount (inadequate scheduling) contributed to delay.
- Mobil and Blount jointly decided to accelerate the project to meet the target date, pressing subcontractors to increase manpower and expedite work, generating substantial additional subcontractor costs.
- After completion, Blount submitted claims (including pass-through claims for subcontractors) seeking additional compensation for acceleration and related costs.
- Mobil sued seeking a declaration it owed no additional sums, and alternatively seeking indemnity from Blount for any amounts Mobil might owe subcontractors.

## Issues

1. Whether the indemnity phrase “any other liability arising out of or in connection with the work,” situated in an insurance provision, required Blount to indemnify Mobil for Mobil’s own breach of the construction contract.
2. Whether construing the indemnity clause to cover Mobil’s contractual liabilities would conflict with, or nullify, the parties’ waiver of indirect or consequential damages between themselves.
3. Whether the trial court properly held Mobil and Blount jointly responsible for subcontractors’ acceleration damages and allocated responsibility equally.

## Decision

- The Fifth Circuit affirmed in large part, reversed in part, and remanded for further proceedings on unresolved subsidiary matters.
- The court held the indemnity clause did not require Blount to indemnify Mobil for Mobil’s own contractual breaches; “any other liability” did not extend to Mobil’s contract liability arising from its own breach.
- The court agreed that subcontractors were entitled to additional compensation for acceleration-related underpayment and that both Mobil and Blount bore responsibility based on their joint conduct contributing to delays and acceleration.
- The court upheld the district court’s basic allocation (equal sharing) of subcontractor recovery between Mobil and Blount, subject to modifications and remand on certain details.

## Legal Principles

- Indemnity provisions are strictly construed; clear and unequivocal language is required to shift liability for the indemnitee’s own breach of contract (or comparable fault) to the indemnitor.
- Contract language must be construed in context; a general phrase like “any other liability” following specific categories (death, personal injury, property damage) is read to cover liabilities of the same general type (ejusdem generis), not an unlimited category including contract-breach damages.
- Seemingly competing provisions should be interpreted to give effect to both; an indemnity clause should not be read so broadly that it defeats a negotiated waiver of indirect or consequential damages between the contracting parties.
- Where owner and contractor jointly cause project acceleration and resulting subcontractor costs, both may be held responsible for subcontractors’ proven additional compensation, and allocation is reviewed for clear error.

## Conclusion

The Fifth Circuit construed an insurance-based indemnity clause to cover tort-like, third-party liabilities associated with construction risks, not the owner’s own contractual breaches, and it largely upheld joint owner-contractor responsibility for subcontractors’ acceleration damages while remanding for limited adjustments.


Mobil Chem. Co. v. Blount Bros. Corp., 809 F.2d 1175 (5th Cir. 1987)