BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 972
                                                                  Page  1


          SENATE THIRD READING
          SB 972 (Wolk)
          As Amended August 2, 2010
          Majority vote 

           SENATE VOTE  :30-3  
           
           JUDICIARY           9-1                                         
           
           -------------------------------------- 
          |Ayes:|Feuer, Tran, Brownley,    |     |
          |     |Evans, Hagman, Huffman,   |     |
          |     |Jones, Monning, Saldana   |     |
          |     |                          |     |
          |-----+--------------------------+-----|
          |Nays:|Knight                    |     |
          |     |                          |     |
           -------------------------------------- 
           SUMMARY :  Makes a technical nonsubstantive change to the design  
          professional indemnity statute.  Specifically,  this bill   
          cross-references the duty to defend, in addition to the cost of  
          defense, as an element of contractual indemnity under existing  
          law.

           EXISTING LAW  :

          1)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.  

          2)Provides that specified rules are to be applied in the  
            interpretation of a contract of indemnity, unless a contrary  
            intention appears.  Pursuant to these rules, the person  
            indemnifying is bound, on request of the person indemnified,  
            to defend actions or proceedings brought against the latter in  
            respect to the matters embraced by the indemnity.  However,  
            the person indemnified has the right to conduct those  








                                                                  SB 972
                                                                  Page  2


            defenses, if he or she chooses to do so.  

          3)Interprets, under existing case law, the above-described  
            provisions to provide that, unless otherwise provided, a duty  
            to defend arises out of an indemnity obligation as soon as the  
            litigation commences, and regardless of whether the indemnitor  
            (the person indemnifying) is ultimately found negligent.   
            (Crawford v. Weather Shield (2008) 44 Cal.4th 541; see also  
            UDC-Universal Development, L.P. v. CH2M Hill (2010) 181  
            Cal.App.4th 10.) 

           FISCAL EFFECT  :  None
           
          COMMENTS  :  This bill proposes a non-substantive change to the  
          statute regulating contractual indemnity provisions between  
          public agencies and design professionals.  

          In describing contractual indemnity provisions, the statute  
          indicates that these provisions include terms relating to the  
          cost of defense.  The inclusion of defense costs is clarifying  
          but technically unnecessary in this statute because another  
          provision of law specifies that the indemnity includes the costs  
          of defense.  This bill would add to that phrase the further  
          clarification that not only the cost of defense but the duty to  
          defend is likewise included.  Of course, there could be no cost  
          of defense unless there was an existing duty to defend, so the  
          added language is merely technical and explicatory.


           Analysis Prepared by  :    Kevin G. Baker / JUD. / (916) 319-2334 


                                                               FN:  0005352