BILL NUMBER: SB 972	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 2, 2010
	AMENDED IN ASSEMBLY  JUNE 23, 2010
	AMENDED IN SENATE  MAY 12, 2010
	AMENDED IN SENATE  APRIL 5, 2010

INTRODUCED BY   Senator Wolk

                        FEBRUARY 8, 2010

   An act to amend  Sections 2778 and   Section
 2782.8 of the Civil Code, relating to indemnity.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 972, as amended, Wolk. Indemnity: design professionals.
   Existing law  contains specified rules that are to be
applied in the interpretation of a contract for indemnity. Pursuant
to these rules, the person that is required to provide
indemnification is bound, upon the request of the person that is
required to be indemnified, to defend actions or proceedings brought
against the person that is required to be indemnified prior to a
finding of liability. Existing law further  provides, for
all contracts, and amendments to contracts, entered into on or after
January 1, 2007, with a public agency for design professional
services, all provisions, clauses, covenants, and agreements
contained in, collateral to, or affecting these contracts, that
purport to indemnify, including the cost to defend, the public agency
by a design professional against liability for claims against the
public agency, are unenforceable, except for claims that arise out
of, pertain to, or relate to the negligence, recklessness, or willful
misconduct of the design professional.
   This bill would  further  provide  , for
  with respect to  all contracts and amendments to
contracts entered into  on or after January 1, 2011, with
  by  a public agency  , as defined,
 for design professional services,  that  all
provisions, clauses, covenants, and agreements contained in,
collateral to, or affecting these contracts or amendments to
contracts that purport to require  an immediate defense under
an indemnity agreement  the duty defend to under an
indemnity agreement  are unenforceable.  This bill would
provide that the obligations of a design professional to indemnify a
public agency for damages determined to be caused by negligence,
recklessness, or willful misconduct to be proportionate to the actual
liability of the design professional. This bill would provide that
if a public agency includes indemnity language in a contract for the
services of a design professional, those provisions shall only be
enforceable if the language of the contract is in conformance with
these provisions. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 2782.8 of the   Civil
Code   is amended to read: 
   2782.8.  (a) For all contracts, and amendments thereto, entered
into on or after January 1, 2007, with a public agency for design
professional services, all provisions, clauses, covenants, and
agreements contained in, collateral to, or affecting any such
contract, and amendments thereto, that purport to indemnify,
including the  duty and the  cost to defend, the public
agency by a design professional against liability for claims against
the public agency, are unenforceable, except for claims that arise
out of, pertain to, or relate to the negligence, recklessness, or
willful misconduct of the design professional. This section shall not
be waived or modified by contractual agreement, act, or omission of
the parties. Contractual provisions, clauses, covenants, or
agreements not expressly prohibited herein are reserved to the
agreement of the parties.
   (b) For purposes of this section, the following definitions apply:

   (1) "Public agency" includes any county, city, city and county,
district, school district, public authority, municipal corporation,
or other political subdivision, joint powers authority, or public
corporation in the state. Public agency does not include the State of
California.
   (2) "Design professional" includes all of the following:
   (A) An individual licensed as an architect pursuant to Chapter 3
(commencing with Section 5500) of Division 3 of the Business and
Professions Code, and a business entity offering architectural
services in accordance with that chapter.
   (B) An individual licensed as a landscape architect pursuant to
Chapter 3.5 (commencing with Section 5615) of Division 3 of the
Business and Professions Code, and a business entity offering
landscape architectural services in accordance with that chapter.
   (C) An individual registered as a professional engineer pursuant
to Chapter 7 (commencing with Section 6700) of Division 3 of the
Business and Professions Code, and a business entity offering
professional engineering services in accordance with that chapter.
   (D) An individual licensed as a professional land surveyor
pursuant to Chapter 15 (commencing with Section 8700) of Division 3
of the Business and Professions Code, and a business entity offering
professional land surveying services in accordance with that chapter.

   (c) This section shall only apply to a professional service
contract, or any amendment thereto, entered into on or after January
1, 2007. 
  SECTION 1.    Section 2778 of the Civil Code is
amended to read:
   2778.  In the interpretation of a contract of indemnity, the
following rules are to be applied, unless a contrary intention
appears:
   (a) Upon a finding of indemnity against liability, expressly, or
in other equivalent terms, the person that is to be indemnified is
entitled to recover upon becoming liable.
   (b) Upon a finding of indemnity against claims, demands, damages,
or costs, expressly, or in other equivalent terms, the person that is
to be indemnified is not entitled to recover, without payment of the
underlying claims, demands, damages, or costs.
   (c) An indemnity action or proceeding against claims, demands, or
liability, expressly, or in other equivalent terms, embraces the
costs of defense against the claims, demands, or liability incurred
in good faith, and in the exercise of a reasonable discretion.
   (d) The person that is responsible for indemnifying is bound, on
request of the person that is to be indemnified, to defend actions or
proceedings brought against the person that is to be indemnified in
respect to the matters embraced by the indemnity contract, but the
person that is to be indemnified has the right to conduct those
defenses, if he or she chooses to do so. This subdivision does not
apply to contracts for design professional services, as defined in
Section 2782.8.
   (e) If, after a request for indemnification, the person
responsible for indemnifying neglects to defend the person that is to
be indemnified, a recovery against the person that is to be
indemnified, is conclusive against the person that is responsible for
indemnification.
   (f) If the person that is responsible for indemnification, whether
a principal or a surety in the agreement, has not received
reasonable notice of the action or proceeding against the person that
is to be indemnified, or is not allowed to control its defense,
judgment against the person that is to be indemnified is only
presumptive evidence against the person that is responsible for
indemnification.
   (g) A stipulation that a judgment against the person indemnified
shall be conclusive upon the person indemnifying, is inapplicable if
he or she had a good defense upon the merits, which by want of
ordinary care he or she failed to establish in the action. 

  SEC. 2.   Section 2782.8 of the Civil Code is
amended to read:
   2782.8.  (a) For all contracts, and amendments thereto, entered
into on or after January 1, 2007, with a public agency for design
professional services, all provisions, clauses, covenants, and
agreements contained in, collateral to, or affecting any such
contract, and amendments thereto, that purport to indemnify,
including the cost and duty to defend, the public agency by a design
professional against liability for claims against the public agency,
are unenforceable, except for claims that are caused by the
negligence, recklessness, or willful misconduct of the design
professional. This section shall not be waived or modified by
contractual agreement, act, or omission of the parties. Contractual
provisions, clauses, covenants, or agreements not expressly
prohibited herein are reserved to the agreement of the parties.
   (b) For purposes of this section, the following definitions apply:

   (1) "Public agency" includes any county, city, city and county,
district, school district, public authority, municipal corporation,
or other political subdivision, joint powers authority, or public
corporation in the state. Public agency does not include the State of
California.
   (2) "Design professional" includes all of the following:
   (A) An individual licensed as an architect pursuant to Chapter 3
(commencing with Section 5500) of Division 3 of the Business and
Professions Code, and a business entity offering architectural
services in accordance with that chapter.
   (B) An individual licensed as a landscape architect pursuant to
Chapter 3.5 (commencing with Section 5615) of Division 3 of the
Business and Professions Code, and a business entity offering
landscape architectural services in accordance with that chapter.
   (C) An individual registered as a professional engineer pursuant
to Chapter 7 (commencing with Section 6700) of Division 3 of the
Business and Professions Code, and a business entity offering
professional engineering services in accordance with that chapter.
   (D) An individual licensed as a professional land surveyor
pursuant to Chapter 15 (commencing with Section 8700) of Division 3
of the Business and Professions Code, and a business entity offering
professional land surveying services in accordance with that chapter.

   (c) A design professional that enters into a contract, which is
subject to this section, that contains an indemnity provision has no
duty to provide a defense for a claim against a public agency for
damages unless the damages are determined to be caused by the
negligence, recklessness, or willful misconduct of the design
professional.
   (d) If there is an adjudication that the design professional
engaged in negligent, reckless, or willful misconduct, the design
professional's duty to indemnify the public agency for damages or
liabilities, including the cost of providing a defense, caused by the
negligence, recklessness, or willful misconduct of the design
professional shall be proportionate to the actual liability of the
design professional.
   (e) If a public agency elects to include an indemnity provision in
a request for proposal, an invitation to bid, or other solicitation
document as part of the procurement of the services of a design
professional, the indemnity language of the contract shall only be
enforceable if the language is in compliance with this section.
   (f) (1) This section shall only apply to a professional service
contract, or any amendment thereto, entered into on or after January
1, 2007.
   (2) The amendments made to this section by the bill amending this
subdivision shall only apply to a professional service contract, or
any amendment thereto, entered into on or after January 1, 2011.