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A BILL TO BE ENTITLED
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AN ACT
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relating to indemnification provisions in construction contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The Civil Practice and Remedies Code is amended |
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by adding Title 10 to read as follows: |
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TITLE 10. ADDITIONAL MISCELLANEOUS PROVISIONS |
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CHAPTER 502. INDEMNITY PROVISIONS IN CONSTRUCTION CONTRACTS |
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Sec. 502.001. DEFINITIONS. In this chapter: |
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(1) "Claim" includes a loss or liability for a claim, |
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damage, or expense. |
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(2) "Construction contract" means a contract, |
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subcontract, or agreement, or a performance bond assuring the |
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performance of any of the foregoing, entered into or made by an |
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owner, contractor, construction manager, subcontractor, supplier, |
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or equipment lessor for the construction, alteration, renovation, |
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remodeling, repair, or maintenance of a building, structure, |
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appurtenance, or other improvement to or on public or private real |
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property, including moving, demolition, and excavation connected |
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with the real property. The term includes an agreement to which a |
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contractor and an owner's lender are parties regarding an |
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assignment of the construction contract or other modifications to |
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the construction contract. |
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(3) "Indemnitor" means a party to a construction |
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contract that is required to provide indemnification or additional |
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insured status to another party to the construction contract or to a |
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third party. |
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Sec. 502.002. AGREEMENT VOID AND UNENFORCEABLE. A |
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provision in a construction contract is void and unenforceable as |
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against public policy if it requires an indemnitor to indemnify, |
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hold harmless, or defend another party to the construction |
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contract, or a third party, against a claim to the extent that the |
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claim is caused by the negligence, fault, breach or violation of a |
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statute, ordinance, or governmental regulation or rule, or |
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contractual breach of the indemnitee, its agent or employee, or any |
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third party under the control or supervision of the indemnitee, |
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other than the indemnitor, its agent, employee, or subcontractor of |
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any tier, and the claim arises from: |
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(1) bodily injury or death, except for the bodily |
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injury or death of an employee of the indemnitor, its agent, or |
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subcontractor of any tier; |
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(2) damage to property; |
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(3) any other type of damage; or |
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(4) a fine, penalty, administrative action, or other |
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action assessed by a governmental entity directly against the |
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indemnitee. |
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Sec. 502.003. UNENFORCEABLE ADDITIONAL INSURANCE |
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PROVISION. A provision in a construction contract that requires |
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the purchase of additional insured coverage, and any coverage |
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endorsement or provision within an insurance policy providing |
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additional insured coverage, is void and unenforceable to the |
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extent that it exceeds the scope of indemnity allowed by this |
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chapter. |
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Sec. 502.004. EXCLUSIONS. This chapter does not affect: |
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(1) a cause of action for breach of contract or |
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warranty that exists independent of an indemnity obligation; |
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(2) a provision in a construction contract that |
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requires the indemnitor to purchase or maintain insurance covering |
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the acts or omissions of the indemnitor; |
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(3) indemnity provisions contained in loan and |
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financing documents, other than construction contracts to which the |
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contractor and owner's lender are parties as provided in Section |
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502.001(2); |
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(4) general agreements of indemnity required by |
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sureties as a condition of execution of bonds for construction |
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contracts; |
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(5) the benefits and protections under the workers' |
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compensation laws of this state; |
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(6) the benefits or protections under the governmental |
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immunity laws of this state; and |
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(7) agreements subject to the provisions of Chapter |
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127. |
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Sec. 502.005. LIABILITY INSURANCE. This chapter does not |
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otherwise affect a construction contract provision that requires a |
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party to the contract to purchase owners and contractors protective |
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liability insurance or railroad protective liability insurance. |
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Sec. 502.006. PROHIBITION OF WAIVER. The provisions of |
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this chapter may not be waived by contract or otherwise. Any |
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purported waiver is void and unenforceable. |
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Sec. 502.007. PERMISSIBLE CONTRACT PROVISION. Parties may |
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agree in a construction contract upon an indemnity or additional |
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insured provision that is not prohibited by this chapter. |
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Sec. 502.008. APPLICABILITY OF TEXAS LAW. Under this |
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chapter, the law of the state, exclusive of the state's |
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choice-of-law rules that would apply the laws of another |
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jurisdiction, shall apply to every construction contract agreement |
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affecting improvements to real property within the state of Texas. |
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SECTION 2. Section 2252.902, Government Code, is repealed. |
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SECTION 3. This Act applies only to liability under a |
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construction contract entered into on or after the effective date |
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of this Act. Liability under a construction contract entered into |
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before the effective date of this Act is governed by the law in |
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effect immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2009. |