News & Press: Capitol Report

Capitol Report - Support Limits on Duty to Defend

Monday, May 11, 2015  
Posted by: Michael Hancock
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CAPITOL REPORT

  

May 9, 2015

LIMITS ON DUTY TO DEFEND - CONTACT YOUR SENATOR

The House of Representatives on Monday passed HB 2409 by Rep. Drew Darby by a vote of 132-6. HB 2049, sponsored by Sen. Kevin Eltife in the Senate, has been referred to the Senate Business and Commerce Committee, chaired by Sen. Eltife. The bill (as it will be substituted in the Senate Committee) clarifies limitations on duty to defend provisions in local government contracts. It provides that any provision in a contract that requires an engineer or architect to defend a contracting governmental entity against liability that grows out of the entity's own negligence, fault, or breach of contract is void and unenforceable. (There is an exclusion for defense provided to additional insureds under general liability policies.)

 

Certain large urban counties in particular mounting strong opposition against this bill. Initially, their argument was that they are never, or rarely, very involved in projects and cannot be at fault. Rep. Wayne Smith, the chairman of the House committee in which the bill was heard, suggested that his own experience was contrary to that. Their more recent argument is that, by some strange standard of fairness, an engineer or architect should be required to pay the County's legal fees, even for a claim that is related to the County's negligence, fault or breach of contract, and that this is part of the services purchased even if it is not insurable.

 

We began to see these onerous duty to defend provisions in contracts a couple of years ago. Arguably they are illegal under current law, but the law is a bit ambiguous and should be clarified. It is only a matter of time until these provisions proliferate further and ultimately are enforced, as they have been in other states. The results, especially for a small firm, will be disastrous.

 

If you are worried about this risk, we need your help - as quickly as possible - in communicating the need for the bill to members of the Senate, particularly the members of the Senate Business and Commerce Committee and particularly if you live in one of these districts or know the Senator. These are

 

Sen. Kevin Eltife, Tyler

Sen. Brandon Creighton, Conroe

Sen. Rodney Ellis, Houston

Sen. Don Huffines, Dallas

Sen. Charles Schwertner, Georgetown

Sen. Kel Seliger, Amarillo

Sen. Larry Taylor, Friendswood

Sen. Kirk Watson, Austin

Sen. John Whitmire, Houston

 

The message to the senators should be that "duty to defend" provisions in government contracts that require you to defend a governmental entity against the entity's negligence are uninsurable and unfair and to please support HB 2409.

 

If you are unsure of your Senator, you can find out at www.capitol.state.tx.us and use the "Who Represents Me" box.

 

IN THE NEWS

Go to www.acectx.org for current articles on construction, engineering, public works, transportation, politics and more including:

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Follow ACEC Texas on Twitter - @acectx

1001 Congress Ave., Suite 200 - Austin, Texas 78701

512-474-1474 - fax 512-474-1490

www.acectx.org

 



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