Bill not drafted by TLC or Senate E&E. Line and page numbers may not match official copy. By Holzheauser 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 services, 2-21 including: 2-22 (i) providing or renting equipment; 2-23 (ii) providing incidental transportation; 2-24 or 2-25 (iii) other goods, materials, or services 2-26 furnished in connection with the services. 2-27 Sec. 145.003. AGREEMENT VOID AND UNENFORCEABLE. A real 2-28 property services indemnity agreement is void and unenforceable to 2-29 the extent the agreement purports to indemnify a person against 2-30 loss related to or arising out of: 3-1 (1) the sole negligence of: 3-2 (A) the person; 3-3 (B) an agent or employee of the person; or 3-4 (C) a person who is directly responsible to a 3-5 person described by Paragraph (A), other than the person who is 3-6 obligated to make the indemnification; 3-7 (2) the gross negligence or willful misconduct of any 3-8 person described by Subdivision (1); or 3-9 (3) a fine, penalty, or administrative or other action 3-10 assessed by a governmental entity directly against the person who 3-11 is to be indemnified under the agreement. 3-12 Sec. 145.004. LIMITED INDEMNIFICATION PERMITTED. (a) A 3-13 real property services indemnity agreement may indemnify a person 3-14 only for: 3-15 (1) a loss, whether based on contract, tort, statute 3-16 or otherwise, related to or arising out of an act or omission of 3-17 the person obligated to make the indemnification or an agent or 3-18 contractor of the person; or 3-19 (2) subject to Section 145.003 and Section 145.005, a 3-20 loss that: 3-21 (A) is associated with bodily injury to or death 3-22 of an employee or agent of the person obligated to make the 3-23 indemnification or of a contractor of the person obligated to make 3-24 the indemnification; and 3-25 (B) relates to or arises out of an act or 3-26 omission of the person to be indemnified. 3-27 (b) In a real property services indemnity agreement 3-28 authorized under Subsection (a)(1) the liability of a person for 3-29 indemnity may not exceed the percentage of responsibility for the 3-30 harm caused by the person. In this subsection "percentage of 4-1 responsibility" has the meaning assigned by Section 33.011. 4-2 (c) This section does not require a person to assume a 4-3 liability or obligation described by Subsection (a). 4-4 Sec. 145.005. INSURANCE LIMITATIONS. (a) Liability for 4-5 indemnity under a real property services indemnity agreement 4-6 authorized under Section 145.004(a)(2) may not exceed the lesser 4-7 of: 4-8 (1) the amount of liability insurance that is 4-9 available for purchase by the person obligated to make the 4-10 indemnification, subject to this section, regardless of whether 4-11 insurance is actually obtained; or 4-12 (2) the coverage and dollar limits of insurance, 4-13 including qualified self-insurance acceptable to the person to be 4-14 indemnified under the agreement, that the person obligated to make 4-15 the indemnification has agreed to provide under the agreement. 4-16 (b) A real property services indemnity agreement that 4-17 requires a liability insurance policy held by the person obligated 4-18 to make the indemnification to name the person to be indemnified as 4-19 an additional insured may not require coverage for liability other 4-20 than the liability assumed under the agreement. This subsection 4-21 applies without regard to whether the person to be indemnified is 4-22 named in the policy by endorsement or otherwise. 4-23 (c) A policy provision or agreement described by Subsection 4-24 (b), or a different policy provision or endorsement intended to 4-25 accomplish the same purpose, that imposes obligations on the 4-26 insurer that are greater than the indemnity obligations authorized 4-27 by this chapter is void and unenforceable. 4-28 (d) A provision in a real property services indemnity 4-29 agreement that requires a person to provide insurance coverage is 4-30 void and unenforceable to the extent that the required coverage 5-1 exceeds the limitations of this section. 5-2 Sec. 145.006. EFFECT ON INSURANCE CONTRACT. Except as 5-3 provided by Section 145.005, this chapter does not affect the 5-4 applicability, validity, or enforceability of an insurance 5-5 contract. 5-6 Sec. 145.007. WAIVER PROHIBITED. The provisions of this 5-7 chapter may not be waived by contract or otherwise. 5-8 SECTION 2. This Act takes effect September 1, 1997. 5-9 SECTION 3. Chapter 145, Civil Practice and Remedies Code, as 5-10 added by this Act, applies only to a real property services 5-11 indemnity agreement entered into on or after the effective date of 5-12 this Act. A real property services indemnity agreement entered 5-13 into before the effective date of this Act is governed by the law 5-14 as it exists immediately before the effective date of this Act, and 5-15 that law is continued in effect for that purpose. 5-16 SECTION 4. The importance of this legislation and the 5-17 crowded condition of the calendars in both houses create an 5-18 emergency and an imperative public necessity that the 5-19 constitutional rule requiring bills to be read on three several 5-20 days in each house be suspended, and this rule is hereby suspended.