75R11994 DLF-F By Holzheauser, Eiland, Jackson, Elkins, H.B. No. 961 Merritt, et al. Substitute the following for H.B. No. 961: By Zbranek C.S.H.B. No. 961 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to indemnity provisions in certain agreements for services 1-3 relating to real property. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 6, Civil Practice and Remedies Code, is 1-6 amended by adding Chapter 145 to read as follows: 1-7 CHAPTER 145. INDEMNITY PROVISIONS IN CERTAIN 1-8 AGREEMENTS RELATING TO REAL PROPERTY 1-9 Sec. 145.001. DEFINITIONS. In this chapter: 1-10 (1) "Loss" includes any part of a loss arising from a 1-11 suit or other claim, including: 1-12 (A) the costs of defense of the suit or claim; 1-13 and 1-14 (B) any damages or other loss or liability 1-15 arising with respect to the suit or claim. 1-16 (2) "Real property" includes an improvement to real 1-17 property. 1-18 (3) "Real property services" means any services 1-19 provided in connection with the construction, maintenance, or 1-20 repair of real property, including: 1-21 (A) design services; 1-22 (B) building services; 1-23 (C) services to rework, remodel, repair, or 1-24 improve the real property; 2-1 (D) testing services; 2-2 (E) services to treat the real property; 2-3 (F) services relating to purchasing goods or 2-4 materials for the real property; and 2-5 (G) cleaning services. 2-6 (4) "Real property services contract" means an 2-7 agreement to which this chapter applies under Section 145.002. 2-8 (5) "Real property services indemnity agreement" means 2-9 a written or oral agreement contained in, collateral to, or 2-10 affecting a real property services contract in which a party agrees 2-11 to indemnify another party for a loss. 2-12 Sec. 145.002. SCOPE OF CHAPTER. This chapter applies only 2-13 to: 2-14 (1) a written or oral agreement or understanding 2-15 concerning the provision of real property services; or 2-16 (2) a written or oral agreement or understanding under 2-17 which a person will perform: 2-18 (A) a part of real property services that are to 2-19 be performed; or 2-20 (B) an act collateral to those real property 2-21 services, including providing: 2-22 (i) rental equipment; 2-23 (ii) incidental transportation; or 2-24 (iii) other goods, materials, or services 2-25 furnished in connection with the real property services. 2-26 Sec. 145.003. AGREEMENT VOID AND UNENFORCEABLE. A real 2-27 property services indemnity agreement is void and unenforceable to 3-1 the extent the agreement purports to indemnify a person against 3-2 loss related to or arising out of: 3-3 (1) the sole negligence of: 3-4 (A) the person; 3-5 (B) an agent or employee of the person; or 3-6 (C) a person who is directly responsible to a 3-7 person described by Paragraph (A), other than the person who is 3-8 obligated to make the indemnification; 3-9 (2) the gross negligence or wilful misconduct of any 3-10 person described by Subdivision (1); or 3-11 (3) a fine, penalty, or administrative or other action 3-12 assessed by a governmental entity directly against the person who 3-13 is to be indemnified under the agreement. 3-14 Sec. 145.004. LIMITED INDEMNIFICATION PERMITTED. (a) A 3-15 real property services indemnity agreement may indemnify a person 3-16 only for: 3-17 (1) a loss, whether based on contract, tort, statute, 3-18 or otherwise, related to or arising out of an act or omission of: 3-19 (A) the person obligated to make the 3-20 indemnification; 3-21 (B) an agent or contractor of the person 3-22 obligated to make the indemnification; or 3-23 (C) any person directly or indirectly employed 3-24 by a person described by Paragraph (A) or (B); or 3-25 (2) subject to Section 145.003 and Section 145.005, a 3-26 loss that: 3-27 (A) is associated with bodily injury to or death 4-1 of: 4-2 (i) an employee or agent of the person 4-3 obligated to make the indemnification; 4-4 (ii) a contractor of the person obligated 4-5 to make the indemnification; or 4-6 (iii) any person directly or indirectly 4-7 employed by a person described by Subparagraph (i) or (ii); and 4-8 (B) relates to or arises out of an act or 4-9 omission of the person to be indemnified. 4-10 (b) In a real property services indemnity agreement 4-11 authorized under Subsection (a)(1), the liability of a person for 4-12 indemnity may not exceed the percentage of responsibility for the 4-13 harm caused by the person. In this subsection "percentage of 4-14 responsibility" has the meaning assigned by Section 33.011. 4-15 (c) This section does not require a person to assume a 4-16 liability or obligation described by Subsection (a). 4-17 Sec. 145.005. INSURANCE LIMITATIONS. (a) Liability for 4-18 indemnity under a real property services indemnity agreement 4-19 authorized under Section 145.004(a)(2) may not exceed: 4-20 (1) the coverage and dollar limits of insurance, 4-21 including qualified self-insurance acceptable to the person to be 4-22 indemnified under the agreement, that the person obligated to make 4-23 the indemnification has agreed to provide under the real property 4-24 services contract or indemnity agreement; or 4-25 (2) $500,000, if no coverage and dollar limits of 4-26 insurance are specified in the real property services contract or 4-27 indemnity agreement. 5-1 (b) A real property services contract or indemnity agreement 5-2 that requires a liability insurance policy held by the person 5-3 obligated to make the indemnification to name the person to be 5-4 indemnified as an additional insured may not require coverage for 5-5 liability other than the liability assumed under the contract or 5-6 agreement. This subsection applies without regard to whether the 5-7 person to be indemnified is named in the policy by endorsement or 5-8 otherwise. 5-9 (c) A policy provision or agreement described by Subsection 5-10 (b), or a different policy provision or endorsement intended to 5-11 accomplish the same purpose, that imposes obligations on the 5-12 insurer that are greater than the indemnity obligations authorized 5-13 by this chapter is void and unenforceable. 5-14 (d) A provision in a real property services contract or 5-15 indemnity agreement that requires a person to provide insurance 5-16 coverage is void and unenforceable to the extent that the required 5-17 coverage exceeds the limitations of this chapter. 5-18 Sec. 145.006. EFFECT ON INSURANCE CONTRACT. Except as 5-19 provided by Section 145.005, this chapter does not affect the 5-20 applicability, validity, or enforceability of an insurance 5-21 contract. 5-22 Sec. 145.007. APPLICATION OF CHAPTER. This chapter does not 5-23 apply to: 5-24 (1) indemnity provisions in mineral agreements 5-25 governed by Chapter 127; 5-26 (2) contracts governed by Chapter 130; or 5-27 (3) indemnity provisions contained in financial or 6-1 surety bond agreements, unless the indemnity provisions are 6-2 directly related to real property services. 6-3 Sec. 145.008. WAIVER PROHIBITED. The provisions of this 6-4 chapter may not be waived by contract or otherwise. 6-5 SECTION 2. This Act takes effect September 1, 1997. 6-6 SECTION 3. Chapter 145, Civil Practice and Remedies Code, as 6-7 added by this Act, applies only to a real property services 6-8 contract or indemnity agreement entered into on or after the 6-9 effective date of this Act. A real property services contract or 6-10 indemnity agreement entered into before the effective date of this 6-11 Act is governed by the law as it existed immediately before the 6-12 effective date of this Act, and that law is continued in effect for 6-13 that purpose. 6-14 SECTION 4. The importance of this legislation and the 6-15 crowded condition of the calendars in both houses create an 6-16 emergency and an imperative public necessity that the 6-17 constitutional rule requiring bills to be read on three several 6-18 days in each house be suspended, and this rule is hereby suspended.