California Senate Bill SB972 Amended / Bill

 BILL NUMBER: SB 972AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 2, 2010 AMENDED IN ASSEMBLY JUNE 23, 2010 AMENDED IN SENATE MAY 12, 2010 AMENDED IN SENATE APRIL 5, 2010 INTRODUCED BY Senator Wolk FEBRUARY 8, 2010 An act to amend  Sections 2778 and   Section  2782.8 of the Civil Code, relating to indemnity. LEGISLATIVE COUNSEL'S DIGEST SB 972, as amended, Wolk. Indemnity: design professionals. Existing law  contains specified rules that are to be applied in the interpretation of a contract for indemnity. Pursuant to these rules, the person that is required to provide indemnification is bound, upon the request of the person that is required to be indemnified, to defend actions or proceedings brought against the person that is required to be indemnified prior to a finding of liability. Existing law further  provides, for all contracts, and amendments to contracts, entered into on or after January 1, 2007, with a public agency for design professional services, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting these contracts, that purport to indemnify, including the cost to defend, the public agency by a design professional against liability for claims against the public agency, are unenforceable, except for claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. This bill would  further  provide  , for   with respect to  all contracts and amendments to contracts entered into  on or after January 1, 2011, with   by  a public agency  , as defined,  for design professional services,  that  all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting these contracts or amendments to contracts that purport to require  an immediate defense under an indemnity agreement  the duty defend to under an indemnity agreement  are unenforceable.  This bill would provide that the obligations of a design professional to indemnify a public agency for damages determined to be caused by negligence, recklessness, or willful misconduct to be proportionate to the actual liability of the design professional. This bill would provide that if a public agency includes indemnity language in a contract for the services of a design professional, those provisions shall only be enforceable if the language of the contract is in conformance with these provisions.  Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 2782.8 of the   Civil Code   is amended to read:  2782.8. (a) For all contracts, and amendments thereto, entered into on or after January 1, 2007, with a public agency for design professional services, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any such contract, and amendments thereto, that purport to indemnify, including the  duty and the  cost to defend, the public agency by a design professional against liability for claims against the public agency, are unenforceable, except for claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties. (b) For purposes of this section, the following definitions apply: (1) "Public agency" includes any county, city, city and county, district, school district, public authority, municipal corporation, or other political subdivision, joint powers authority, or public corporation in the state. Public agency does not include the State of California. (2) "Design professional" includes all of the following: (A) An individual licensed as an architect pursuant to Chapter 3 (commencing with Section 5500) of Division 3 of the Business and Professions Code, and a business entity offering architectural services in accordance with that chapter. (B) An individual licensed as a landscape architect pursuant to Chapter 3.5 (commencing with Section 5615) of Division 3 of the Business and Professions Code, and a business entity offering landscape architectural services in accordance with that chapter. (C) An individual registered as a professional engineer pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, and a business entity offering professional engineering services in accordance with that chapter. (D) An individual licensed as a professional land surveyor pursuant to Chapter 15 (commencing with Section 8700) of Division 3 of the Business and Professions Code, and a business entity offering professional land surveying services in accordance with that chapter. (c) This section shall only apply to a professional service contract, or any amendment thereto, entered into on or after January 1, 2007.  SECTION 1.   Section 2778 of the Civil Code is amended to read: 2778. In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: (a) Upon a finding of indemnity against liability, expressly, or in other equivalent terms, the person that is to be indemnified is entitled to recover upon becoming liable. (b) Upon a finding of indemnity against claims, demands, damages, or costs, expressly, or in other equivalent terms, the person that is to be indemnified is not entitled to recover, without payment of the underlying claims, demands, damages, or costs. (c) An indemnity action or proceeding against claims, demands, or liability, expressly, or in other equivalent terms, embraces the costs of defense against the claims, demands, or liability incurred in good faith, and in the exercise of a reasonable discretion. (d) The person that is responsible for indemnifying is bound, on request of the person that is to be indemnified, to defend actions or proceedings brought against the person that is to be indemnified in respect to the matters embraced by the indemnity contract, but the person that is to be indemnified has the right to conduct those defenses, if he or she chooses to do so. This subdivision does not apply to contracts for design professional services, as defined in Section 2782.8. (e) If, after a request for indemnification, the person responsible for indemnifying neglects to defend the person that is to be indemnified, a recovery against the person that is to be indemnified, is conclusive against the person that is responsible for indemnification. (f) If the person that is responsible for indemnification, whether a principal or a surety in the agreement, has not received reasonable notice of the action or proceeding against the person that is to be indemnified, or is not allowed to control its defense, judgment against the person that is to be indemnified is only presumptive evidence against the person that is responsible for indemnification. (g) A stipulation that a judgment against the person indemnified shall be conclusive upon the person indemnifying, is inapplicable if he or she had a good defense upon the merits, which by want of ordinary care he or she failed to establish in the action.   SEC. 2.  Section 2782.8 of the Civil Code is amended to read: 2782.8. (a) For all contracts, and amendments thereto, entered into on or after January 1, 2007, with a public agency for design professional services, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any such contract, and amendments thereto, that purport to indemnify, including the cost and duty to defend, the public agency by a design professional against liability for claims against the public agency, are unenforceable, except for claims that are caused by the negligence, recklessness, or willful misconduct of the design professional. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties. (b) For purposes of this section, the following definitions apply: (1) "Public agency" includes any county, city, city and county, district, school district, public authority, municipal corporation, or other political subdivision, joint powers authority, or public corporation in the state. Public agency does not include the State of California. (2) "Design professional" includes all of the following: (A) An individual licensed as an architect pursuant to Chapter 3 (commencing with Section 5500) of Division 3 of the Business and Professions Code, and a business entity offering architectural services in accordance with that chapter. (B) An individual licensed as a landscape architect pursuant to Chapter 3.5 (commencing with Section 5615) of Division 3 of the Business and Professions Code, and a business entity offering landscape architectural services in accordance with that chapter. (C) An individual registered as a professional engineer pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, and a business entity offering professional engineering services in accordance with that chapter. (D) An individual licensed as a professional land surveyor pursuant to Chapter 15 (commencing with Section 8700) of Division 3 of the Business and Professions Code, and a business entity offering professional land surveying services in accordance with that chapter. (c) A design professional that enters into a contract, which is subject to this section, that contains an indemnity provision has no duty to provide a defense for a claim against a public agency for damages unless the damages are determined to be caused by the negligence, recklessness, or willful misconduct of the design professional. (d) If there is an adjudication that the design professional engaged in negligent, reckless, or willful misconduct, the design professional's duty to indemnify the public agency for damages or liabilities, including the cost of providing a defense, caused by the negligence, recklessness, or willful misconduct of the design professional shall be proportionate to the actual liability of the design professional. (e) If a public agency elects to include an indemnity provision in a request for proposal, an invitation to bid, or other solicitation document as part of the procurement of the services of a design professional, the indemnity language of the contract shall only be enforceable if the language is in compliance with this section. (f) (1) This section shall only apply to a professional service contract, or any amendment thereto, entered into on or after January 1, 2007. (2) The amendments made to this section by the bill amending this subdivision shall only apply to a professional service contract, or any amendment thereto, entered into on or after January 1, 2011.