2009S0166-2 01/26/09
By: Eiland H.B. No. 818
A BILL TO BE ENTITLED
AN ACT
relating to indemnification provisions in construction contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Civil Practice and Remedies Code is amended
by adding Title 10 to read as follows:
TITLE 10. ADDITIONAL MISCELLANEOUS PROVISIONS
CHAPTER 502. INDEMNITY PROVISIONS IN CONSTRUCTION CONTRACTS
Sec. 502.001. DEFINITIONS. In this chapter:
(1) "Claim" includes a loss or liability for a claim,
damage, or expense.
(2) "Construction contract" means a contract,
subcontract, or agreement, or a performance bond assuring the
performance of any of the foregoing, entered into or made by an
owner, contractor, construction manager, subcontractor, supplier,
or equipment lessor for the construction, alteration, renovation,
remodeling, repair, or maintenance of a building, structure,
appurtenance, or other improvement to or on public or private real
property, including moving, demolition, and excavation connected
with the real property. The term includes an agreement to which a
contractor and an owner's lender are parties regarding an
assignment of the construction contract or other modifications to
the construction contract.
(3) "Indemnitor" means a party to a construction
contract that is required to provide indemnification or additional
insured status to another party to the construction contract or to a
third party.
Sec. 502.002. AGREEMENT VOID AND UNENFORCEABLE. A
provision in a construction contract is void and unenforceable as
against public policy if it requires an indemnitor to indemnify,
hold harmless, or defend another party to the construction
contract, or a third party, against a claim to the extent that the
claim is caused by the negligence, fault, breach or violation of a
statute, ordinance, or governmental regulation or rule, or
contractual breach of the indemnitee, its agent or employee, or any
third party under the control or supervision of the indemnitee,
other than the indemnitor, its agent, employee, or subcontractor of
any tier, and the claim arises from:
(1) bodily injury or death, except for the bodily
injury or death of an employee of the indemnitor, its agent, or
subcontractor of any tier;
(2) damage to property;
(3) any other type of damage; or
(4) a fine, penalty, administrative action, or other
action assessed by a governmental entity directly against the
indemnitee.
Sec. 502.003. UNENFORCEABLE ADDITIONAL INSURANCE
PROVISION. A provision in a construction contract that requires
the purchase of additional insured coverage, and any coverage
endorsement or provision within an insurance policy providing
additional insured coverage, is void and unenforceable to the
extent that it exceeds the scope of indemnity allowed by this
chapter.
Sec. 502.004. EXCLUSIONS. This chapter does not affect:
(1) a cause of action for breach of contract or
warranty that exists independent of an indemnity obligation;
(2) a provision in a construction contract that
requires the indemnitor to purchase or maintain insurance covering
the acts or omissions of the indemnitor;
(3) indemnity provisions contained in loan and
financing documents, other than construction contracts to which the
contractor and owner's lender are parties as provided in Section
502.001(2);
(4) general agreements of indemnity required by
sureties as a condition of execution of bonds for construction
contracts;
(5) the benefits and protections under the workers'
compensation laws of this state;
(6) the benefits or protections under the governmental
immunity laws of this state; and
(7) agreements subject to the provisions of Chapter
127.
Sec. 502.005. LIABILITY INSURANCE. This chapter does not
otherwise affect a construction contract provision that requires a
party to the contract to purchase owners and contractors protective
liability insurance or railroad protective liability insurance.
Sec. 502.006. PROHIBITION OF WAIVER. The provisions of
this chapter may not be waived by contract or otherwise. Any
purported waiver is void and unenforceable.
Sec. 502.007. PERMISSIBLE CONTRACT PROVISION. Parties may
agree in a construction contract upon an indemnity or additional
insured provision that is not prohibited by this chapter.
Sec. 502.008. APPLICABILITY OF TEXAS LAW. Under this
chapter, the law of the state, exclusive of the state's
choice-of-law rules that would apply the laws of another
jurisdiction, shall apply to every construction contract agreement
affecting improvements to real property within the state of Texas.
SECTION 2. Section 2252.902, Government Code, is repealed.
SECTION 3. This Act applies only to liability under a
construction contract entered into on or after the effective date
of this Act. Liability under a construction contract entered into
before the effective date of this Act is governed by the law in
effect immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
SECTION 4. This Act takes effect September 1, 2009.