Four Star Electric, Inc. v. F & H CONSTRUCTION

In June 1987, the California Department of Corrections (CDC) contracted with F & H Construction (F & H) for a construction project at CDC’s Jamestown facility. In October of that year, F & H subcontracted with Four Star Electric, Inc. (Four Star) for electrical work on the prison project.

The subcontract contained an indemnification clause which provided in pertinent part: “The Sub-Contractor . . . agrees to protect and fully indemnify the Owner and Contractor against all liability for claims and liens for labor, materials, equipment and supplies, including attorneys fees, resulting therefrom which may accrue from labor employed by, or materials, equipment and supplies ordered by the Sub-Contractor.”

Four Star failed to pay three of its suppliers, who then filed stop notices with CDC and filed superior court actions against both Four Star and F & H. In each supplier’s action, F & H cross-complained against Four Star for indemnification. The cross-complaints alleged that F & H “has complied with all the terms, covenants and conditions of its Subcontract with [Four Star] and has paid [Four Star] any and all monies due [Four Star] on account of any work, labor or material…