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.