By: Duncan S.B. No. 361
(In the Senate - Filed January 18, 2011; February 2, 2011,
read first time and referred to Committee on State Affairs;
March 8, 2011, reported favorably by the following vote: Yeas 8,
Nays 1; March 8, 2011, sent to printer.)
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. Subsection (a), Section 130.002, Civil Practice
and Remedies Code, is amended to read as follows:
(a) A covenant or promise in, in connection with, or
collateral to a construction contract is void and unenforceable if
the covenant or promise provides for a person [contractor] who is to
perform the work that is the subject of the construction contract to
indemnify or hold harmless a registered architect, licensed
engineer or an agent, servant, or employee of a registered
architect or licensed engineer from liability for damage that:
(1) is caused by or results from:
(A) defects in plans, designs, or specifications
prepared, approved, or used by the architect or engineer; or
(B) negligence of the architect or engineer in
the rendition or conduct of professional duties called for or
arising out of the construction contract and the plans, designs, or
specifications that are a part of the construction contract; and
(2) arises from:
(A) personal injury or death;
(B) property injury; or
(C) any other expense that arises from personal
injury, death, or property injury.
SECTION 2. 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, expense, or governmentally imposed fine, penalty,
administrative action, or other action.
(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, architect, engineer, contractor, construction manager,
subcontractor, supplier, or material or equipment lessor for the
design, construction, alteration, renovation, remodeling, repair,
or maintenance of, or for the furnishing of material or equipment
for, 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 an architect, engineer, or
contractor and an owner's lender are parties regarding an
assignment of the construction contract or other modifications
thereto.
(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. 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. 502.003. AGREEMENT VOID AND UNENFORCEABLE. Except as
provided by Section 502.004, a provision in a construction
contract, or in an agreement collateral to or affecting a
construction contract, is void and unenforceable as against public
policy to the extent that it requires an indemnitor to indemnify,
hold harmless, or defend another party to the construction contract
or a third party against a claim caused by the negligence or fault,
the breach or violation of a statute, ordinance, governmental
regulation, standard, or rule, or the breach of contract of the
indemnitee, its agent or employee, or any third party under the
control or supervision of the indemnitee, other than the indemnitor
or its agent, employee, or subcontractor of any tier.
Sec. 502.004. EXCEPTION FOR EMPLOYEE CLAIM. Section
502.003 does not apply to a provision in a construction contract
that requires a person to indemnify, hold harmless, or defend
another party to the construction contract or a third party against
a claim for the bodily injury or death of an employee of the
indemnitor, its agent, or its subcontractor of any tier.
Sec. 502.005. UNENFORCEABLE ADDITIONAL INSURANCE
PROVISION. A provision in a construction contract that requires
the purchase of additional insured coverage, or any coverage
endorsement or provision within an insurance policy providing
additional insured coverage, is void and unenforceable to the
extent that it requires or provides coverage the scope of which is
prohibited under this chapter for an agreement to indemnify, hold
harmless, or defend.
Sec. 502.006. EXCLUSIONS. This chapter does not affect:
(1) an insurance policy, including a policy issued
under an owner-controlled or owner-sponsored consolidated
insurance program or a contractor-controlled or
contractor-sponsored consolidated insurance program, except as
provided by Section 502.005;
(2) a cause of action for breach of contract or
warranty that exists independently of an indemnity obligation;
(3) a provision in a construction contract that
requires the indemnitor to purchase or maintain insurance covering
the acts or omissions of the indemnitor;
(4) indemnity provisions contained in loan and
financing documents, other than construction contracts to which the
contractor and owner's lender are parties as provided under Section
502.001(2);
(5) general agreements of indemnity required by
sureties as a condition of execution of bonds for construction
contracts;
(6) the benefits and protections under the workers'
compensation laws of this state;
(7) the benefits or protections under the governmental
immunity laws of this state;
(8) agreements subject to Chapter 127; or
(9) a license agreement between a railroad company and
a person that permits the person to enter the railroad company's
property as an accommodation to the person for work under a
construction contract that does not primarily benefit the railroad
company.
Sec. 502.007. OTHER INSURANCE. This chapter does not
otherwise affect a construction contract provision that requires a
party to the contract to purchase:
(1) owners and contractors protective liability
insurance;
(2) railroad protective liability insurance;
(3) contractors all-risk insurance; or
(4) builders all-risk or named perils property
insurance.
Sec. 502.008. PROHIBITION OF WAIVER. The provisions of
this chapter may not be waived by contract or otherwise. Any
purported waiver is void and unenforceable.
Sec. 502.009. APPLICABILITY OF TEXAS LAW. Under this
chapter, the law of this state, exclusive of this 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 this state.
SECTION 3. Section 2252.902, Government Code, is repealed.
SECTION 4. The changes in law made by this Act apply only to
an original construction contract with an owner of an improvement
or contemplated improvement that is entered into on or after the
effective date of this Act. If an original construction contract
with an owner of an improvement or contemplated improvement is
entered into on or after the effective date of this Act, the changes
in law made by this Act apply to a related subcontract, purchase
order contract, personal property lease agreement, and insurance
policy. If an original construction contract with an owner of an
improvement or contemplated improvement is entered into before the
effective date of this Act, that original construction contract and
a related subcontract, purchase order contract, personal property
lease agreement, and insurance policy are 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 5. This Act takes effect September 1, 2011.
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