By:  Duncan                                   S.B. No. 530

         97S0361/1                           

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to indemnity provisions in certain agreements for services

 1-2     relating to real property.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Title 6, Civil Practice and Remedies Code, is

 1-5     amended by adding Chapter 145 to read as follows:

 1-6               CHAPTER  145.  INDEMNITY PROVISIONS IN CERTAIN

 1-7                    AGREEMENTS RELATING TO REAL PROPERTY

 1-8           Sec. 145.001.  DEFINITIONS.  In this chapter:

 1-9                 (1)  "Loss" includes any part of a loss arising from a

1-10     suit or other claim, including:

1-11                       (A)  the costs of defense of the suit or claim;

1-12     and

1-13                       (B)  any damages or other loss or liability

1-14     arising with respect to the suit or claim.

1-15                 (2)  "Real property" includes an improvement to real

1-16     property.

1-17                 (3)  "Real property services" means any services

1-18     provided in connection with the construction, maintenance, or

1-19     repair of real property, including:

1-20                       (A)  design services;

1-21                       (B)  building services;

1-22                       (C)  services to rework, remodel, repair, or

1-23     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)  providing other goods, materials, or

 3-1     services furnished in connection with the services.

 3-2           Sec. 145.003.  AGREEMENT VOID AND UNENFORCEABLE.  A real

 3-3     property services indemnity agreement is void and unenforceable to

 3-4     the extent the agreement purports to indemnify a person against

 3-5     loss related to or arising out of:

 3-6                 (1)  the sole negligence of:

 3-7                       (A)  the person;

 3-8                       (B)  an agent or employee of the person; or

 3-9                       (C)  a person who is directly responsible to a

3-10     person described by Paragraph (A), other than the person who is

3-11     obligated to make the indemnification;

3-12                 (2)  the gross negligence or wilful misconduct of any

3-13     person described by Subdivision (1); or

3-14                 (3)  a fine, penalty, or administrative or other action

3-15     assessed by a governmental entity directly against the person who

3-16     is to be indemnified under the agreement.

3-17           Sec. 145.004.  LIMITED INDEMNIFICATION PERMITTED.  (a)  A

3-18     real property services indemnity agreement may indemnify a person

3-19     only for:

3-20                 (1)  a loss, whether based on contract, tort, statute,

3-21     or otherwise, related to or arising out of an act or omission of

3-22     the person obligated to make the indemnification or an agent or

3-23     contractor of the person; or

3-24                 (2)  subject to Sections 145.003 and 145.005, a loss

3-25     that:

 4-1                       (A)  is associated with bodily injury to or death

 4-2     of an employee or agent of the person obligated to make the

 4-3     indemnification or of a contractor of the person obligated to make

 4-4     the indemnification; and

 4-5                       (B)  relates to or arises out of an act or

 4-6     omission of the person to be indemnified.

 4-7           (b)  In a real property services indemnity agreement

 4-8     authorized under Subsection (a)(1), the liability of a person for

 4-9     indemnity may not exceed the percentage of responsibility for the

4-10     harm caused by the person.  In this subsection, "percentage of

4-11     responsibility" has the meaning assigned by Section 33.011.

4-12           (c)  This section does not require a person to assume a

4-13     liability or obligation described by Subsection (a).

4-14           Sec. 145.005.  INSURANCE LIMITATIONS.  (a)  Liability for

4-15     indemnity under a real property services indemnity agreement

4-16     authorized under Section 145.004(a)(2) may not exceed the lesser

4-17     of:

4-18                 (1)  the amount of liability insurance that is

4-19     available for purchase by the person obligated to make the

4-20     indemnification, subject to this section, regardless of whether

4-21     insurance is actually obtained; or

4-22                 (2)  the coverage and dollar limits of insurance,

4-23     including qualified self-insurance acceptable to the person to be

4-24     indemnified under the agreement, that the person obligated to make

4-25     the indemnification has agreed to provide under the agreement.

 5-1           (b)  A real property services indemnity agreement that

 5-2     requires a liability insurance policy held by the person obligated

 5-3     to make the indemnification to name the person to be indemnified as

 5-4     an additional insured may not require coverage for liability other

 5-5     than the liability assumed under the agreement.  This subsection

 5-6     applies without regard to whether the person to be indemnified is

 5-7     named in the policy by endorsement or otherwise.

 5-8           (c)  A policy provision or agreement described by Subsection

 5-9     (b), or a different policy provision or endorsement intended to

5-10     accomplish the same purpose, that imposes obligations on the

5-11     insurer that are greater than the indemnity obligations authorized

5-12     by this chapter is void and unenforceable.

5-13           (d)  A provision in a real property services indemnity

5-14     agreement that requires a person to provide insurance coverage is

5-15     void and unenforceable to the extent that the required coverage

5-16     exceeds the limitations of this section.

5-17           Sec. 145.006.  EFFECT ON INSURANCE CONTRACT.  Except as

5-18     provided by Section 145.005, this chapter does not affect the

5-19     applicability, validity, or enforceability of an insurance

5-20     contract.

5-21           Sec. 145.007.  WAIVER PROHIBITED.  The provisions of this

5-22     chapter may not be waived by contract or otherwise.

5-23           Sec. 145.008.  APPLICATION OF CHAPTER.  This chapter does not

5-24     apply to indemnity provisions in mineral agreements governed by

5-25     Chapter 127.

 6-1           SECTION 2.  This Act takes effect September 1, 1997.

 6-2           SECTION 3.  Chapter 145, Civil Practice and Remedies Code, as

 6-3     added by this Act, applies only to a real property services

 6-4     indemnity agreement entered into on or after the effective date of

 6-5     this Act.  A real property services indemnity agreement entered

 6-6     into before the effective date of this Act is governed by the law

 6-7     as it existed immediately before the effective date of this Act,

 6-8     and that law is continued in effect for that purpose.

 6-9           SECTION 4.  The importance of this legislation and the

6-10     crowded condition of the calendars in both houses create an

6-11     emergency and an imperative public necessity that the

6-12     constitutional rule requiring bills to be read on three several

6-13     days in each house be suspended, and this rule is hereby suspended.