BILL ANALYSIS



S.B. 341
By: Armbrister (Lewis, Ron)
5-1-95
Committee Report (Unamended)


BACKGROUND

Most engineering design work associated with major construction
projects for public and private entities is performed under
negotiated contracts.  Recently, engineering firms have been asked
increasingly to agree to contractual provisions under which the
engineer would be required to indemnify the owner against the
owner's own negligent actions.

This type of contract is uninsurable for engineers.  Insurance
companies will respond only to claims or losses which are a direct
result of the insured's negligent acts, errors, or omissions.  All
professional liability policies sold today exclude liability
assumed under a contract, if the contract language indemnifies a
party for liabilities that are not a result of the insured's
professional acts, errors, or omissions.

Engineering firms view this policy as especially unfair due to the
fact that engineers are prohibited from seeking contractual
indemnification from other parties by Section 130.002 of the Civil
Practices and Remedies Code.  Under this statute, a contractor is
not allowed to require a contractor to indemnify the engineer
against the engineer's own negligence.  In summary, an engineer is
not permitted to pass his liability off onto another party (i.e.
the contractor), but the engineer may be required contractually to
accept the liability of the owner.

PURPOSE

The purpose of this bill is to prohibit owners from requesting or
requiring engineers (or architects) to accept the responsibility
for negligence that should belong solely to the owner.  The goal is
to make void and unenforceable any contract that requires an
engineer to indemnify an owner or owner's agent against the owner's
or agent's negligence, error, or omission.

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.

SECTION BY SECTION

     SECTION 1.  Amends Sections 130.001, 130.002. and 130.004,
Civil Practice and Remedies Code, to provide that a provision in a
construction agreement requiring an engineer or architect to hold
harmless the owner or agent against liability for any type of
damage incurred by the action or inaction of the owner or agent is
void end unenforceable, except as provided for in Section 130.002
(c), which states that an agreement is enforceable if it allows an
owner to be held harmless for liability that is the result of
injury to the architect or engineer or the employees of the
engineer or architect.  This chapter does not apply to owners of an
interest in real property or employees of such owners, except as
provided for by Sections 130.002 (b) and (c).

     SECTION 2.  Amends the caption of Chapter 130 to read:
        INDEMNIFICATION IN CERTAIN CONSTRUCTION CONTACTS
     SECTION 3.  Provides that the bill applies only to
construction contracts entered into after the effective date.  

     SECTION 4.  Emergency Clause  - Effective immediately.

SUMMARY OF COMMITTEE ACTION

S.B. 341 was considered by the Committee on Civil Practices in a
public hearing on April 26, 1995. The bill was reported favorably
without amendment with the recommendation that it do pass and be
printed, by a record vote of five ayes, zero nays, zero pnv and
four absent.