By: Leach, et al. (Senate Sponsor - Creighton) H.B. No. 1999
(In the Senate - Received from the House April 26, 2019;
May 7, 2019, read first time and referred to Committee on State
Affairs; May 15, 2019, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 9, Nays 0;
May 15, 2019, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 1999 By: Creighton
A BILL TO BE ENTITLED
AN ACT
relating to certain construction liability claims concerning
public buildings and public works.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 10, Government Code, is
amended by adding Chapter 2272 to read as follows:
CHAPTER 2272. CERTAIN CONSTRUCTION LIABILITY CLAIMS
Sec. 2272.001. DEFINITIONS. In this chapter:
(1) "Action" means a court or judicial proceeding or
an arbitration. The term does not include an administrative
action.
(2) "Construction" includes:
(A) the initial construction of an improvement to
real property;
(B) the construction of an addition to an
improvement to real property; or
(C) the repair, alteration, or remodeling of an
improvement to real property.
(3) "Construction defect" means a deficiency in the
construction of an improvement to real property, including a
deficiency in or arising out of the design, specifications,
surveying, planning, or supervision of the construction, that is
the result of:
(A) the use of defective materials, products, or
components in the construction;
(B) a violation of a building code applicable by
law to the construction;
(C) a failure of the design of an improvement to
real property to meet the professional standards of care applicable
at the time of governmental approval of the design or as otherwise
applicable if no governmental approval of the design was required
or obtained; or
(D) a failure to perform the construction in
accordance with the accepted trade standards for good and
workmanlike construction.
(4) "Contractor" means a person engaged in the
business of developing, constructing, fabricating, repairing,
altering, or remodeling improvements to real property.
(5) "Design professional" means an individual
registered as an architect under Chapter 1051, Occupations Code, or
a person licensed as an engineer under Chapter 1001, Occupations
Code.
(6) "Governmental entity" means:
(A) the state;
(B) a municipality, county, public school
district, or special-purpose district or authority;
(C) a district, county, or justice of the peace
court;
(D) a board, commission, department, office, or
other agency in the executive branch of state government, including
an institution of higher education as defined by Section 61.003,
Education Code;
(E) the legislature or a legislative agency; or
(F) the Supreme Court of Texas, the Texas Court
of Criminal Appeals, a court of appeals, or the State Bar of Texas
or another judicial agency having statewide jurisdiction.
(7) "Subcontractor" means a contractor directly
retained and compensated by another contractor to perform labor or
perform labor and supply materials in the construction.
(8) "Supplier" means a person who provides only
materials, equipment, or other supplies for the construction.
Sec. 2272.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to a claim:
(1) for:
(A) damages arising from damage to or loss of
real or personal property caused by an alleged construction defect
in an improvement to real property that is a public building or
public work; or
(B) indemnity or contribution for damages
described by Paragraph (A);
(2) asserted by a governmental entity with an interest
in the public building or public work affected by the alleged
construction defect; and
(3) asserted against a contractor, subcontractor,
supplier, or design professional.
(b) This chapter does not apply to:
(1) a claim for personal injury, survival, or wrongful
death;
(2) a claim involving the construction of residential
property covered under Chapter 27, Property Code;
(3) a contract entered into by the Texas Department of
Transportation;
(4) a project that receives money from a state or
federal highway fund; or
(5) a civil works project as defined by Section
2269.351, Government Code.
Sec. 2272.003. REPORT. (a) Before bringing an action
asserting a claim to which this chapter applies, the governmental
entity must provide each party with whom the governmental entity
has a contract for the design or construction of an affected
structure a written report by certified mail, return receipt
requested, that clearly:
(1) identifies the specific construction defect on
which the claim is based;
(2) describes the present physical condition of the
affected structure; and
(3) describes any modification, maintenance, or
repairs to the affected structure made by the governmental entity
or others since the affected structure was initially occupied or
used.
(b) Not later than the fifth day after the date a contractor
receives a report under Subsection (a), the contractor must provide
a copy of the report to each subcontractor retained on the
construction of the affected structure whose work is subject to the
claim.
Sec. 2272.004. OPPORTUNITY TO INSPECT AND CORRECT. (a)
Before bringing an action asserting a claim to which this chapter
applies, the governmental entity must allow each party with whom
the governmental entity has a contract for the design or
construction of an affected structure and who is subject to the
claim and any known subcontractor or supplier who is subject to the
claim:
(1) a reasonable opportunity to inspect any
construction defect or related condition identified in the report
for a period of 30 days after sending the report required by Section
2272.003; and
(2) at least 120 days after the inspection to:
(A) correct any construction defect or related
condition identified in the report; or
(B) enter into a separate agreement with the
governmental entity to correct any construction defect or related
condition identified in the report.
(b) The governmental entity is not required to allow a party
to make a correction or repair under Subsection (a) if:
(1) the party:
(A) is a contractor and cannot provide payment
and performance bonds to cover the corrective work;
(B) cannot provide liability insurance or
workers' compensation insurance;
(C) has been previously terminated for cause by
the governmental entity; or
(D) has been convicted of a felony; or
(2) the governmental entity previously complied with
the process required by Subsection (a) regarding a construction
defect or related condition identified in the report and:
(A) the defect or condition was not corrected as
required by Subsection (a)(2)(A) or an agreement under Subsection
(a)(2)(B); or
(B) the attempt to correct the construction
defect or related condition identified in the report resulted in a
new construction defect or related condition.
Sec. 2272.005. TOLLING OF LIMITATIONS AND REPOSE PERIODS.
If the report and opportunity to correct required by Sections
2272.003 and 2272.004 are provided during the final year of a
limitations or repose period applicable to the claim, the
limitations or repose period is tolled until the first anniversary
of the date on which the report is provided.
Sec. 2272.006. DISMISSAL. (a) If a governmental entity
brings an action asserting a claim to which this chapter applies
without complying with Sections 2272.003 and 2272.004, the court,
arbitrator, or other adjudicating authority shall dismiss the
action without prejudice.
(b) If an action is dismissed without prejudice under
Subsection (a) and the governmental entity brings a second action
asserting a claim to which this chapter applies without complying
with Sections 2272.003 and 2272.004, the court, arbitrator, or
other adjudicating authority shall dismiss the action with
prejudice.
Sec. 2272.007. RECOVERY OF REPORT COSTS. If a report
provided by a governmental entity under Section 2272.003 identifies
a construction defect that is corrected under Section 2272.004 or
for which the governmental entity recovers damages, the party
responsible for that construction defect shall pay the reasonable
amounts incurred by the governmental entity to obtain the report
with respect to identification of that construction defect.
Sec. 2272.008. EMERGENCY REPAIRS BY GOVERNMENTAL ENTITY.
This chapter does not prohibit or limit a governmental entity from
making emergency repairs to the property as necessary to protect
the health, safety, and welfare of the public or a building
occupant.
Sec. 2272.009. INSURANCE TREATMENT OF CLAIM. If a party, in
connection with a potential claim against the party, receives a
written notice of an alleged construction defect or a report under
Section 2272.003 identifying a construction defect and provides the
notice or report to the party's insurer, the insurer shall treat the
provision of the notice or report to the party as the filing of a
suit asserting that claim against the party for purposes of the
relevant policy terms.
SECTION 2. (a) Chapter 2272, Government Code, as added by
this Act, applies only to a cause of action that accrues on or after
the effective date of this Act.
(b) Section 2272.009, Government Code, as added by this Act,
applies only to an insurance policy delivered, issued for delivery,
or renewed on or after January 1, 2020.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2019.
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