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.