BILL ANALYSIS



C.S.H.B. 2443
By: Hilbert
4-20-95
Committee Report (Substituted)


BACKGROUND

Currently, on construction projects, owners are requiring general
contractors to assume liability for the owner's negligence. 
Therefore, in case of an accident for which the owner is
responsible, the general contractor will be responsible for the
damages. Similarly, general contractors pass this liability to
subcontractors. Currently, a subcontractor can be held liable for
accidents even though the subcontractor was totally uninvolved in
the accident and may not have been on the construction site for
several months before the accident occurred. The net effect of this
system of "pass the buck" liability is that it requires those who
did not cause an accident and, who may be least able to afford it,
to be liable for another's mistake. Further, it makes the
subcontractor the "insurer" for the entire project and puts that
person's company and insurance carrier at risk for actions of
others.

PURPOSE

H.B. 2443 provides that each party that improves real property
shall be liable for its negligence and prohibits transfer of this
liability by contract or other means. The bill will not prohibit a
party from making a written agreement that provides for it being
liable for its own negligence.

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Title 6, Civil Practices and Remedies Code, by
adding Chapter 145.

 CHAPTER 145. LIABILITY ON CONTRACTS TO IMPROVE REAL PROPERTY.

     Section 145.001. TRANSFER OF LIABILITY PROHIBITED. A
contractor who has entered into a contract with a subcontractor to
make improvements to real property may not transfer through the
contract:

     (1) liability for damages arising from its own negligence; or
     (2) duty to defend against a claim or action.

     Section 145.002. APPLICABILITY. This chapter does not affect
the applicability, validity, and enforceability of:

     (1) Chapter 33, Civil Practices and Remedies Code (Comparative
     Responsibility);
     (2) Insurance contracts;
     (3) Workers' compensation benefits and protection; or
     (4) any right of contribution.

SECTION 2.  Effective Date - September 1, 1995. Applies only to
liability for an act of negligence under a contract entered into on
or after the effective date of the Act.

SECTION 3.  Emergency Clause.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute deletes the original Sect. 145.001 "PARTY LIABLE FOR
ITS OWN NEGLIGENCE" and renumbers remaining sections accordingly.
In Sect. 145.002, the substitute adds Chapter 33, Civil Practices
and Remedies Code (Comparative Responsibility), to the list of
items this chapter does not affect. Renumbers remaining subsection
accordingly. In Sect. 145.003, the substitute deletes the term
"statutory" from the original subsection (3) regarding right of
contribution.

SUMMARY OF COMMITTEE ACTION

H.B. 2443 was considered by the Civil Practices Committee in a
public hearing on March 22, 1995. The following people testified in
support of the bill: Jim Reynolds, representing the Mechanical
Contractors Association-Austin; Larry G. Scrivner, representing
himself; Richard Bruns, representing the American Subcontractors
Association and the Texas Terrazzo Contractors Association; James
N. Letsos, III, representing himself and Mechanical Contractors
Association; Raymond Risk, representing the American Subcontractors
Association, Associated Builders and Contractors, and the
Construction Association Roundtable; Stephanie Stromberg,
representing the Independent Electrical Contractors; and Steve
Stagner, representing the Consulting Engineers Council of Texas. No
one testified against or neutrally on the bill. The bill was
referred to a subcommittee consisting of Representatives Hilbert
(chair), Tillery, and Zbranek. After being recalled from
subcommittee, H.B. 2443 considered in a public hearing on April 12,
1995. The committee considered a complete substitute for the bill.
The substitute was adopted without objection. The bill was reported
favorably as substituted, with the recommendation that it do pass
and be printed, by a record vote of five ayes, zero nays, zero pnv
and four absent.