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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, expense, or governmentally imposed fine, penalty, |
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administrative action, or other action. |
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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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material or equipment lessor, for the construction, alteration, |
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renovation, remodeling, repair, or maintenance of, or for the |
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furnishing of material or equipment for, 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. 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. 502.003. AGREEMENT VOID AND UNENFORCEABLE. |
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(a) Except as provided by Section 502.004, a provision in a |
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construction contract, or in an agreement collateral to or |
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affecting 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 contract |
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or a third party against a claim to the extent that the claim is |
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caused by the negligence or fault, breach or violation of a statute, |
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ordinance, governmental regulation, standard, or rule, or breach of |
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contract of the indemnitee, its agent or employee, or any third |
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party under the control or supervision of the indemnitee, other |
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than the indemnitor or its agent, employee, or subcontractor of any |
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tier. |
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Sec. 502.004. EXCEPTION FOR EMPLOYEE CLAIM. Section |
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502.003 does not apply to a provision in a construction contract |
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that requires a person to indemnify, hold harmless, or defend |
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another party to the construction contract or a third party against |
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a claim for the bodily injury or death of an employee of the |
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indemnitor, its agent, or its subcontractor of any tier. |
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Sec. 502.005. 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, or 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 requires or provides coverage, the scope of which is |
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prohibited under this chapter for an agreement to indemnify, hold |
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harmless, or defend. |
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Sec. 502.006. EXCLUSIONS. This chapter does not affect: |
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(1) an insurance policy, including a policy issued |
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under an owner-controlled or owner-sponsored consolidated |
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insurance program or a contractor-controlled or |
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contractor-sponsored consolidated insurance program, except a |
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policy under Sections 502.003 and 502.005; |
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(2) a cause of action for breach of contract or |
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warranty that exists independently of an indemnity obligation; |
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(3) 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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(4) 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 under Section |
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502.001(2); |
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(5) 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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(6) the benefits and protections under the workers' |
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compensation laws of this state; |
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(7) the benefits or protections under the governmental |
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immunity laws of this state; or |
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(8) agreements subject to the provisions of Chapter |
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127. |
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Sec. 502.007. 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: |
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(1) owners and contractors protective liability |
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insurance; |
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(2) railroad protective liability insurance; |
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(3) contractors all-risk insurance; or |
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(4) builders all-risk insurance. |
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Sec. 502.008. 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. 502.009. APPLICABILITY OF TEXAS LAW. Under this |
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chapter, the law of this state, exclusive of this 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. The changes in law made by this Act apply only to |
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an original construction contract with an owner of an improvement |
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or contemplated improvement that is entered into on or after the |
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effective date of this Act. If an original construction contract |
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with an owner of an improvement or contemplated improvement is |
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entered into on or after the effective date of this Act, the changes |
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in law made by this Act apply to a related subcontract, purchase |
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order contract, personal property lease agreement, and insurance |
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policy. If an original construction contract with an owner of an |
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improvement or contemplated improvement is entered into before the |
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effective date of this Act, that original construction contract and |
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a related subcontract, purchase order contract, personal property |
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lease agreement, and insurance policy are 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. |
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