b' BUSINESS TIPThe Moorman Doctrinefacing legal liability and exposure, reaffirmedit would be logical to expect that In overruling Minton, the SiennaIWH liability would be passed on court also reaffirmed the economicto the lower-tier contractor (absent lossrule,whichisineffectinspecificcontractuallanguageto many states, including Illinois. Thethecontrary). Theupper-tiercon-economiclossruleprovidesthattractor may also be protected as an claimsforclassicbreachofcon- additional insured under the lower-tractcasesmustbeassertedonlytiercontractorsinsurancepolicy betweenpartiestothatcontractfortheactionsornon-actionsof (and thus an owner cannot direct- the lower-tier contractor. But even lysueasubcontractorforIWHunder such risk-transfer scenarios, claimswhentheownerdidnotwhichmayincludeacontractual directly engage the subcontractor).responsibilitytomakewholean The economic loss doctrine makesupper-tiercontractorthatsustains it very difficult for homeowners toa loss or incurs a financial liability, successfully bring claims for eco- itwouldseemlogicaltoexpect nomiclossesforrepairingdefec- thatiftheupper-tiercontractor tiveworkagainstcontractorsandcannotbeheldliableinthefirst suppliers who were not in privityplaceundertheIWHasspelled with the owner.outinSienna(meaningthatthe general contractor did not contract Exploring vicarious liabilitydirectly with owner), that there can for lower-tier contractors be no claim for the homeowner to In light of Sienna, subcontractorspass through for recovery from the arenowlargelyprotectedfromlower-tier contractor. direct claims by owners, but whatHowever,therearealsosce-about general contractors who findnariosthatpotentiallymaycre-themselves liable to the homeown- ateexceptionstotheprotections er by contract? No doubt the gen- underSiennasuchaswhenan eral contractor will almost alwaysexpresswarrantyisgivenbythe seek a defense, indemnification orsubcontractor and is then assigned contributionfromtheirlower-tierto the buyer. But it will remain to anddownstreamcontractorswhobe seen whether the subcontractor wereresponsiblefortheclaimedandbyextensiontheindemnify-defectspursuanttotheirsubcon- ing lower tier contractor can avoid tracts. If their contractual risk trans- IWH liability in such a scenario. fer and indemnification agreementsEventhoughSiennawould require the lower-tier contractor toappeartoprotectlower-tierand indemnifyandholdharmlessthedownstream contractors from IWH upper-tiergeneralcontractornowliability when, like the subcontrac-TileLetter | May 201941'