BILL ANALYSIS                                                                                                                                                                                                    Ķ



                                                                     SB 885


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          Date of Hearing:  June 28, 2016


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          SB  
          885 (Wolk) - As Amended June 16, 2016


          SENATE VOTE:  26-4


          SUBJECT:  DESIGN PROFESSIONALS:  INDEMNITY AND DUTY TO DEFEND


          KEY ISSUE:  SHOULD DEFENSE COSTS ASSOCIATED TO DEFEND BE SHIFTED  
          TO OWNERS?

                                      SYNOPSIS


          


          Over the last decade, the Legislature has enacted a number of  
          measures aimed at addressing the issue of liability-shifting in  
          residential and commercial construction contracts. [See SB 972  
          (Wolk, Chap. 510, Stats. 2010); AB 2738 (Jones, Chap. 467,  
          Stats. 2008); SB 138 (Calderon, Chap. 32, Stats. 2007); AB 573  
          (Wolk, Chap. 455, Stats. 2006); AB 758 (Calderon, Chap. 394,  
          Stats. 2005).]  It seems safe to say that the general intent  
          behind all of these bills was to prevent a party to a  
          construction contract from being held liable for harms caused by  
          a third party.  The author and sponsors of this bill assert that  
          this bill falls into the same category as those previous  








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          indemnity bills.  Proponents contend that this bill prevents  
          parties, such as public agencies and contractors, from shifting  
          unfair legal defense costs onto design professions (e.g.  
          architect, landscape architect, professional engineer, or  
          professional land surveyor) where the design professional may  
          not be at fault.  Additionally, proponents argue that since  
          design professionals cannot obtain insurance coverage to cover  
          the claims of third parties (unlike general contractors), design  
          professionals should be treated differently from those other  
          construction-contract-parties who are also required in  
          construction contracts to defend the owner.





          Although the Committee is sympathetic to the concerns raised by  
          the proponents of this bill, it is unclear whether this  
          bill-which simply appears to shift costs away from design  
          professional to other parties, including public agencies and  
          ultimately taxpayers-is the correct solution.  Additionally,  
          should this bill become law, it is safe to assume that the costs  
          and insurance premiums of other parties-particularly, public  
          agencies-will increase.  Furthermore, it is easy to predict the  
          kinds of legislative efforts that will come next should this  
          bill become law: other construction-contract-parties will ask  
          the Legislature for the same burden-relieving measure provided  
          under this bill.  Of course, whether this parade of horribles  
          ever comes to pass remains to be seen; however, we do know that  
          this bill and that ugly parade will force public entities to  
          bear additional legal defense and insurance costs at the expense  
          of taxpayers and future projects.  Besides, even if the  
          worst-case scenarios do not materialize, this bill might deter  
          the arrival of a true solution to the problem posed by this  
          bill: the availability of insurance.


           









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          As this Committee is well-aware, the nature of construction  
          projects creates litigation exposure.  The availability of  
          insurance allows parties to a construction project - the owner,  
          the contractor, the subcontractor, the builder, the manager, the  
          design professional - to collectively share and offset the risks  
          associated with a project.  Indeed, the purpose of insurance is  
          to "transfer the risk of loss from entities that do not want, or  
          cannot afford, to absorb the financial losses that arise from  
          natural and unnatural events to well-capitalized insurers that  
          are able to spread the risk of loss across large pools of  
          policyholders."  (French, The Role of the Profit Imperative in  
          Risk Management (2015) 17 U. Pa. J. Bus. L. 1081, 1084.)   
          Additionally, when we consider traditional tort principles of  
          deterrence, compensation, economic productivity, and efficiency,  
          we understand that insurance facilitates these principles by  
          allowing one party to spread the risk of loss to other parties  
          in the community.


          Instead of shifting cost burdens from one [potentially  
          not-at-fault] party to another [potentially not-at-fault] party  
          to resolve a policy problem in a complex high-risk business  
          transaction where fault may not be easily determined, this bill  
          should focus on finding a solution that fairly spreads the risk  
          of loss.  This Committee has offered the author a possible  
          solution by allowing a design professional to be able to name a  
          public entity as an additional named insured on a design  
          professional's insurance.  Additionally, this solution also  
          requires public entities-during the bidding process for public  
          works projects-to require the design professional to have an  
          insurance policy that names the public entity as an additional  
          named insured.  Although this Committee acknowledges the market  
          difficulties associated with this approach, this proposal  
          tackles the problem head-on, rather than veering around it for  
          the time being.  Indeed, this Committee has learned that the  
          proposed solution removes significant opposition, and would even  
          garner support from general contractors, subcontractors, and  
          some local public entities if the bill were to be amended.








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          With all that being said, this bill provides that in all  
          contracts entered into on or after January 1, 2017, a design  
          professional shall only have the duty to defend himself or  
          herself from claims that arise out of, pertain to, or relate to  
          the negligence, recklessness, or willful misconduct of the  
          design professional; any contract that purports to require a  
          design professional to defend claims against another party shall  
          be unenforceable.  The bill is sponsored by the American Council  
          of Engineering Companies of California, and supported by  
          countless design professionals across the state and by the  
          Department of Insurance.  Opponents include local public  
          entities, general contractors, builders, and subcontractors,  
          including the State Building and Construction Trades Council.


          SUMMARY:  Provides that in all contracts entered into on or  
          after January 1, 2017, a design professional shall only have the  
          duty to defend himself or herself from claims that arise out of,  
          pertain to, or relate to the negligence, recklessness, or  
          willful misconduct of the design professional.  Specifically,  
          this bill:


          1)Provides that commencing with all contracts, and amendments  
            thereto, entered into on or after January 1, 2017, a design  
            professional shall only have the duty to defend himself or  
            herself from claims that arise out of, pertain to, or relate  
            to the negligence, recklessness, or willful misconduct of the  
            design professional. 


          2)Provides that all provisions, clauses, covenants, and  
            agreements contained in, collateral to, or affecting any such  
            contract that purport to require a design professional to  
            defend claims against another party shall be unenforceable.










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          3)Establishes that the act does not prohibit a design  
            professional from mutually agreeing with another party to the  
            timing or immediacy of a defense and provisions for  
            reimbursement of defense fees and costs, so long as that  
            subsequent agreement after a claim is made does not waive or  
            modify the provisions of this act.


          4)States that the act shall not be construed to affect any duty  
            of a design professional to defend any claims brought against  
            him or her on an ongoing basis during their pendency.


          5)States that the act shall not be construed to affect the  
            design professional's obligation to reimburse reasonable  
            defense costs incurred by other persons or entities, limited  
            to the design professional's degree of fault, as determined by  
            a court, arbitration, or negotiated settlement.


          6)Provides that all contracts and all solicitation documents,  
            including requests for proposal, invitations for bid, and  
            other solicitation documents, are deemed to incorporate by  
            reference the provisions of the act.


          7)Excludes the following from the act: 


             a)   A claim, lawsuit, or arbitration demand where a  
               project-specific general liability policy insures all  
               project participants for general liability exposures on a  
               primary basis and also covers all design professionals for  
               their legal liability arising out of their professional  
               services on a primary basis.


             b)   A design professional who is a party to a written  
               design-build joint venture agreement.








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          8)Provides that the provisions of this act shall not be waived  
            or modified by contract.  Contract provisions in violation of  
            this subdivision are void and unenforceable.


          9)Removes the duty and the cost to defend from provisions of law  
            that provide that contracts that purport to indemnify 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.


          10)Makes various legislative findings and declarations.


          EXISTING LAW:   


          1)Defines indemnity as a contract by which one engages to save  
            another from a legal consequence of the conduct of one of the  
            parties, or of some other person.  (Civil Code Section 2772.   
            Unless otherwise stated, all further statutory references are  
            to the Civil Code.)


          2)Establishes that, among other things, in the interpretation of  
            a contract of indemnity, the following rules are to be applied  
            unless a contrary intention appears:


             a)   An indemnity against claims, or demands, or liability,  
               expressly, or in other equivalent terms, embraces the costs  
               of defense against such claims, demands, or liability  
               incurred in good faith, and in the exercise of a reasonable  
               discretion.  (Section 2778.)








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             b)   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, but the person indemnified has  
               the right to conduct such defenses, if he chooses to do so.  
                (Ibid.)


             c)   If, after request, the person indemnifying neglects to  
               defend the person indemnified, a recovery against the  
               latter suffered by him in good faith, is conclusive in his  
               favor against the former.  (Ibid.)


          3)Interprets 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.) 



          4)Provides, except as specified, that provisions, clauses,  
            covenants, or agreements contained in, collateral to, or  
            affecting any construction contract and that purport to  
            indemnify the promisee against liability for damages for death  
            or bodily injury to persons, injury to property, or any other  
            loss, damage or expense arising from the sole negligence or  
            willful misconduct of the promisee or the promisee's agents,  
            servants, or independent contractors who are directly  
            responsible to the promisee, or for defects in design  
            furnished by those persons, are against public policy and are  
            void and unenforceable.  Existing law provides that this  
            section does not affect the validity of any insurance  
            contract, workers' compensation, or agreement issued by an  
            admitted insurer as defined by the Insurance Code.  (Section  








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            2782 (a).)
          5)Provides, except as specified, that provisions, clauses,  
            covenants, or agreements contained in, collateral to, or  
            affecting any construction contract with a public agency that  
            purport to impose on the contractor, or relieve the public  
            agency from, liability for the active negligence of the public  
            agency are void and unenforceable.  (Section 2782 (b).)


          6)Provides separate indemnity and duty to defend restrictions  
            and requirements regarding residential construction contracts.  
             (Section 2782 (c)-(e).)


          7)Provides that 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.  Further provides that  
            these provisions shall not be waived or modified by  
            contractual agreement, act, or omission of the parties.   
            (Section 2782.8.)


          8)Defines public agency, under 7) to include 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.  (Ibid.)


          9)Defines design profession, under 7), to include an individual  
            licensed or registered as an architect, landscape architect,  








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            professiona engineer, or professional land surveyor, as  
            provided.  (Ibid.)


          FISCAL EFFECT:  As currently in print this bill is keyed  
          non-fiscal.


          COMMENTS:  Over the last decade, the Legislature has enacted a  
          number of measures aimed at addressing the issue of  
          liability-shifting in residential and commercial construction  
          contracts. [See SB 972 (Wolk, Chap. 510, Stats. 2010); AB 2738  
          (Jones, Chap. 467, Stats. 2008); SB 138 (Calderon, Chap. 32,  
          Stats. 2007); AB 573 (Wolk, Chap. 455, Stats. 2006); AB 758  
          (Calderon, Chap. 394, Stats. 2005).]  It seems safe to say that  
          the general intent behind all of these bills was to prevent a  
          party to a construction contract from being forced to be held  
          liable for harms caused by another third party.  The author and  
          sponsors of this bill assert that this bill falls in the same  
          category as those previous indemnity bills.  Proponents contend  
          that this bill prevents parties (like public agencies and  
          contractors) from shifting unfair legal defense costs onto  
          design professions (e.g. architect, landscape architect,  
          professional engineer, or professional land surveyor) where the  
          design professional may not be at fault.  Additionally,  
          proponents argue that since design professional professionals  
          cannot obtain insurance coverage to cover the claims of third  
          parties (unlike general contractors), design professionals  
          should be treated differently from those other  
          construction-contract-parties who are also required in  
          construction contracts to defend the owner.





          Although the Committee is sympathetic to the concerns raised by  
          the proponents of this bill, it is unclear whether this  
          bill-which simply appears to shift costs away from design  








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          professional to other parties-is the correct solution.   
          Additionally, should this bill become law, it is safe to assume  
          that the costs and insurance premiums of other  
          parties-particularly, public agencies-will increase.   
          Furthermore, it is easy to predict the kinds of legislative  
          efforts that will come next should this bill become law: other  
          construction-contract-parties will ask the Legislature for the  
          same burden-relieving measure provided under this bill.  Of  
          course, whether this parade of horribles ever comes to pass  
          remains to be seen; however, we do know that this bill and that  
          ugly parade will force public entities to bear additional legal  
          defense and insurance costs at the expense of taxpayers and  
          future projects.  Besides, even if the worst-case scenarios do  
          not materialize, this bill might deter the arrival of a true  
          solution to the problem posed by this bill: the availability of  
          insurance.





          With all that being said, this bill provides that in all  
          contracts entered into on or after January 1, 2017, a design  
          professional shall only have the duty to defend himself or  
          herself from claims that arise out of, pertain to, or relate to  
          the negligence, recklessness, or willful misconduct of the  
          design professional; any contract the purports to require a  
          design professional to defend claims against another party shall  
          be unenforceable.  Additionally, this bill states that the above  
          provisions shall not be construed to affect (1) any duty of a  
          design professional to defend claims brought against the design  
          professional on an ongoing basis during their pendency; and (2)  
          the design professional's obligation to reimburse reasonable  
          defense costs incurred by other persons or entities, limited to  
          the design professional's degree of fault, as determined by a  
          court, arbitration, or negotiated settlement.


          The problem this bill seeks to resolve:  According to the  








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          author:


            Senate Bill 885 prohibits contracts that require state  
            licensed design professionals, including engineers, land  
            surveyors, architects, and landscape architects, to defend  
            claims made against other persons or entities involved in  
            construction projects.  A design professional's Errors &  
            Omissions professional liability insurance does not provide  
            coverage for the defense of claims against other persons and  
            entities involved in construction projects.  It only covers  
            claims related to the negligent acts of the design  
            professional.  A first-dollar expense obligation essentially  
            converts the design professional's firm into the functional  
            equivalent of an unlicensed insurance company.  It is in the  
            public's best interest for all persons and entities in  
            projects to defend themselves against claims of negligence or  
            error.  Design professionals will pay their proportional share  
            of defense costs.  However, when insurance coverage is not  
            available, it is unfair to obligate them to defend lawsuits  
            against other persons or entities.  (Senate Judiciary  
            Committee analysis of SB 885; May 3, 2016.)  


          How did we get here?  Generally, indemnity is when one party  
          (the indemnitor) agrees to be held liable for damages caused by  
          the party, or another third person.  As previously mentioned,  
          the Legislature has enacted a number of measures aimed at  
          addressing the issue of liability-shifting in residential and  
          commercial construction contracts.  [See SB 972 (Wolk, Chap.  
          510, Stats. 2010); AB 2738 (Jones, Chap. 467, Stats. 2008); SB  
          138 (Calderon, Chap. 32, Stats. 2007); AB 573 (Wolk, Chap. 455,  
          Stats. 2006); AB 758 (Calderon, Chap. 394, Stats. 2005).]  It  
          seems safe to say that the general intent behind all of these  
          bills was to prevent a party to a construction contract from  
          being held liable for harms caused by a third party.


          Of those measures that was most recently enacted, SB 972  








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          provided that contracts that require a design professional to  
          indemnify, including the duty and cost to defend, a public  
          agency 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.  SB 972 was sponsored by the American  
          Council of Engineering Companies-who are the sponsors of this  
          bill.  According to this Committee's analysis of SB 972, the  
          bill was responding to Crawford v. Weather Shield (2008) 44  
          Cal.4th 541, a 2008 California Supreme Court decision.   
          (Assembly Judiciary Committee analysis of SB 972; August 25,  
          2010.)  


          Crawford v. Weather Shield.  In Crawford v. Weather Shield, the  
          California Supreme Court generally held that in every indemnity  
          contract (unless provided otherwise), the duty to defend does  
          not depend on the outcome of the litigation, as long as the  
          defense claim that has been tendered falls into claims embraced  
          by the indemnity.  (Id. at 558.)  In other words, as long as the  
          indemnitee (e.g., the party seeking reimbursement) tenders a  
          defense claim that is embraced by the indemnity agreement, the  
          indemnitor (e.g., the party providing reimbursement) bears the  
          duty to defend the claim even if the indemnitor is not found to  
          be liable.  (Id. at 563.)  Accordingly, if SB 972 was a response  
          to Crawford, it appears that the intent behind SB 972 was to  
          limit a design professional's indemnity to only certain types of  
          claims arising out of the negligence of the design professional.


          The sponsors of this bill-who sponsored SB 972-believe that SB  
          972 has failed, even though it appears the law is operating the  
          way it was written.  The sponsor asserts that public agencies  
          continue to force design professionals to defend claims made  
          against the public agency for the negligence of either the  
          public entity or other third parties (like general contractors  
                                                                                or subcontractors).  This is because design professionals who  
          bid on public works contracts must sign contractual terms that  
          "trigger an immediate duty to defend claims against other  








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          parties, particularly in complex, multi-party actions."   
          However, it is unclear whether public entities are doing  
          anything wrong.  From the public entity's perspective, SB 972  
          allows the public entity to tender a claim to a design  
          professional for claims that "arise out of, pertain to, or  
          relate to the negligence?of the design professional" when there  
          is an indemnity agreement between the public entity and the  
          design professional.  Accordingly, the public entity is (or at  
          least should be) only tendering claims where there are factual  
          allegations that the design professional might be at fault.


          The crux of this bill is about who must pay the defense costs  
          for claims that arise from the work of one of the parties to a  
          construction contract.  Given the complexity of the issue, a  
          concrete example is instructive.  Imagine the following  
          fictional scenario: 


            On a sunny day, Paul Plaintiff has gone to the roof top of a  
            school building, located in ABC School District, to observe  
            the skyline.  While Paul is standing there, the floor gives  
            way, and Paul falls through the floor and suffers multiple  
            injuries.  ABC School District obtained the design plans from  
            Artie Architect, and had the building built according to  
            design specifications by Connie Contractor.  Who does Paul  
            sue?  Did the School fail to maintain the building?  Did Artie  
            Architect draw bad plans?  Did Connie Contractor construct the  
            roof poorly?  Obviously, the answer is unclear.  In regular  
            civil practice, Paul will name ABC School District on the  
            civil complaint, and will make various allegations about who  
            was negligent in order to capture all of the possible  
            defendants.  


          In the scenario described above, we will assume that the  
          architect and the general contractor, when bidding and entering  
          into a contract with a local public entity to design and build  
          the building, have both signed indemnity clauses agreeing to  








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          indemnify the local public entity for claims arising out of  
          their negligence.  Currently, general contractors are able to  
          purchase general liability insurance, and are usually able to  
          name a local public entity as an additional insured (for an  
          additional premium).  Thus, when a local entity is served with a  
          lawsuit, the local entity will tender the defense to the general  
          contractor, whose insurer will hire independent counsel to  
          separately represent the local public entity.  The same is not  
          true for design professionals.  Currently, design professionals  
          cannot obtain the same kind of insurance available to general  
          contractors.  Rather, design professionals purchase errors and  
          omissions (E&O) policies that only cover the professional  
          negligence of the design professional, not the negligence of  
          third parties.  Thus, under current practice, when ABC School  
          District tenders the defense to Artie Architect, Artie's  
          insurance will not cover the costs of either (1) hiring  
          independent counsel for ABC School District; or (2) contributing  
          to the defense costs of ABC School District.  Accordingly,  
          because of the duty to defend under existing law, design  
          professionals must contribute to the local entity's defense  
          costs, and pay for it out of pocket.


          This bill would change this scenario.  Essentially, this bill  
          provides that a design professional shall only have the duty to  
          defend himself or herself - and not third party claims - for  
          claims that arise out of, pertain to, or relate to the  
          negligence, recklessness, or willful misconduct of the design  
          professional.  Accordingly, under this scenario, Artie Architect  
          would only have to defend himself - and not contribute to the  
          defense of the school district (who was originally sued).  This  
          bill would require Artie to reimburse "reasonable defense costs  
          incurred by other persons or entities, limited to the design  
          professional's degree of fault, as determined by a court,  
          arbitration, or negotiated settlement."  At issue is whether  
          this bill is fair.  Well, it depends.  


          The issue of fairness depends on who is at fault, which usually  








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          cannot be determined until the end of the litigation.  As the  
          imaginary scenario described above indicates, it is unclear who  
          is at fault.  Indeed, it is possible that (1) only one of the  
          parties is completely at fault, (2) none of the parties are at  
          fault, or even (3) all of the parties are comparatively at  
          fault.  The following analysis looks at how this bill would  
          apply, depending on who is at fault.


          First: what if Artie was completely at fault?  If Artie was  
          completely at fault, it seems reasonable to say that we would  
          have less sympathy for him, and we would expect him to pay ABC  
          School District's defense costs.  Although this bill would  
          require Artie to reimburse ABC School District, it is unclear  
          whether the reference to "reasonable" defense costs would allow  
          Artie to challenge ABC School District's legal fees if they were  
          interpreted to be unreasonable.  If Artie can challenge the  
          defense costs as being "unreasonable," this would expose ABC  
          School District and Connie Contractor to additional litigation  
          (since Connie Contractor's insurer paid for the ABC's counsel).   
          Moreover, what happens if Artie is not brought into the lawsuit  
          (nothing in this bill requires it), and the court later  
          determines that Artie's bad designs caused the injury?  Could  
          Artie challenge the defense costs, arguing that he was not  
          brought into the lawsuit and should not have to pay for the  
          judgment?  Coalition for Adequate School Housing (C.A.S.H.)  
          raises the following argument:


            No design professional or its insurer will pay the back-end  
            defense costs without a fight, creating a second legal  
            challenge for the public entity?to extricate the  
            "reimbursement" of public funds spend defending the design  
            professional's deficient design. [Additionally] other partners  
            on the project, such as contractors, shoulder a larger burden  
            of the up-front defense costs but are ultimately not found  
            liable for some or all of those costs.










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          If Artie cannot challenge the defense costs, the C.A.S.H. raises  
          the following argument:


            In this scenario, the design professionals and their insurance  
            companies sit on the sidelines and wait, while schools  
            shoulder the costs.  Fronting public money for private costs  
            is not an appropriate use of taxpayer dollars, tying up funds  
            that would otherwise be spent to construct, renovate, and  
            repair schools.


          Second: what if none of the parties are at fault?  If none of  
          the parties are at fault (because Paul was comparatively  
          negligent), this bill allows Artie to avoid all defense costs.   
          While this does seem fair on the surface, it is not very  
          equitable.  First, one must remember that in complex  
          construction cases, litigation will go on for a long time before  
          a court issues a judgment.  Thus, there will inevitably be some  
          defense costs that would have been incurred, even if no one is  
          found to be at fault.  Under this bill, those legal defense  
          costs would be borne by the general contractor (and the insurer)  
          and/or the local public entity because this bill only requires  
          the design professional to reimburse the other parties if the  
          design professional bears a sufficient degree of fault.   
          Furthermore, this bill would seem to increase costs (aside from  
          the legal defense costs).  This is true because in order for ABC  
          School District to have independent counsel, a general  
          contractor pays a higher insurance premium to be able to name  
          ABC School District as an additional named insured.   
          Additionally, it seems likely that Connie Contractor passes off  
          some of these costs onto ABC School District during the  
          procurement or bidding process.  If this bill becomes law, not  
          only would legal defense costs be disproportionally-placed on  
          the local entity and the general contractor, but would likely  
          increase costs for general contractors and for public works  
          projects. 










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          Third: what if all of the parties are partially at fault?  If  
          all of the parties are at fault, the concerns seem less  
          heightened, but remain.  Although this bill does not prevent a  
          public entity from filing a cross-complaint to bring the design  
          professional into the lawsuit, there is still the issue over the  
          cost-sharing of defense costs described above.  An interesting  
          issue also arises when only the design professional and the  
          general contractor are at fault.  Given that the public entity  
          still needs independent counsel (since they are the named  
          defendant), is it fair to require the public entity or the  
          general contractor to pay for the entire defense cost of the  
          public entity's independent counsel from the start, when the  
          design professional doesn't and who could also challenge those  
          defense costs?    


          The trouble with not knowing who is at fault.  Under the various  
          outcomes of fault outlined above, one common thread runs through  
          them all: we do not know who is at fault until the end of the  
          case.  It must be remembered that existing law allows a public  
          entity to seek indemnity (and the duty to defend) for claims  
          that "arise out of, pertain to, or relate to the negligence,  
          recklessness, or willful misconduct of the design professional."  
           As illustrated above, it is easy to imagine a scenario where  
          fault is unclear, and where all the parties therefore need to  
          come together to resolve the suit.  Surely, it would be unfair  
          for a local public entity to tender a defense claim for a  
          standard slip-and-fall case over to a design professional merely  
          because the plaintiff alleged design defect (unless there was a  
          factual scenario where a design defect led to the pooling of  
          water, for example, which caused the slip-and-fall).  However,  
          this doesn't appear to be the problem.  The problem lies in the  
          fact that there will be claims that arise that could be the  
          fault of the design professional, but ultimately, it turns out  
          they are not.  But is this really a problem, given that this  
          premise is also true for all of the other parties involved?  And  
          even if this Committee determines that this is indeed the  
          problem, the question remains: is this bill the solution?  The  
          complexity behind the problem presented is not resolved by  








                                                                     SB 885


                                                                    Page  18





          extracting parties from it - it is resolved by forcing parties  
          to come together to share the burden collectively.

          This Committee has offered the author a possible solution that  
          tackles the problem head-on.  If there is any agreement between  
          the proponents and the opponents of the bill, it is that the  
          market lacks an insurance product for design professionals to  
          defend third party claims.  As this Committee is well-aware, the  
          nature of construction projects creates litigation exposure.   
          The availability of insurance allows parties to a construction  
          project - the owner, the contractor, the subcontractor, the  
          builder, the manager, the design professional - to collectively  
          share and offset the risks associated with a project.  Indeed,  
          the purpose of insurance is to "transfer the risk of loss from  
          entities that do not want, or cannot afford, to absorb the  
          financial losses that arise from natural and unnatural events to  
          well-capitalized insurers that are able to spread the risk of  
          loss across large pools of policyholders."  (French, The Role of  
          the Profit Imperative in Risk Management (2015) 17 U. Pa. J.  
          Bus. L. 1081, 1084.)  Additionally, when we consider traditional  
          tort principles of deterrence, compensation, economic  
          productivity, and efficiency, we understand that insurance  
          facilitates these principles by allowing one party to spread the  
          risk of loss to other parties in the community.


          Instead of shifting cost burdens from one [potentially  
          not-at-fault] party to another [potentially not-at-fault] party  
          to resolve a policy problem in a complex, high-risk, business  
          transaction where fault may not be easily determined, this bill  
          should focus on finding a solution that fairly spreads the risk  
          of loss - which means insurance.  Indeed, insurance is often  
          viewed as a kind of safety net:


            "As originally conceived and implemented in America in the  
            mid-1700s, insurance functioned as a social safety net through  
            which a community or group as a whole acted for the benefit of  
            the unlucky few who suffered losses?To address the problem of  








                                                                     SB 885


                                                                    Page  19





            insurers refusing to cover the most common types of  
            catastrophic risks?legislation could be passed that prevents  
            insurers from excluding coverage for such risks."  (Id. at  
            1086-87.)


          This Committee has offered the author a possible solution by  
          allowing a design professional to be able to name a public  
          entity as an additional named insured on a design professional's  
          insurance.  Additionally, this solution also requires public  
          entities-during the bidding process for public works projects-to  
          require the design professional to have an insurance policy that  
          names the public entity as an additional named insured.   
          Although this Committee acknowledges the market difficulties  
          associated with this approach, this proposal tackles the problem  
          head-on, rather than veering around it for the time being.


          The Committee's proposed solution will remove opposition, and  
          garner support for the bill.  This Committee has learned that  
          the proposed solution removes significant opposition, and even  
          garners support by general contractors, subcontractors, and some  
          local public entities were the bill to be amended.  


          The Construction Employers Association (CEA), which represents  
          commercial and industrial building contractors, and opposes the  
          bill in print, will support the bill if it is amended to include  
          the Committee's suggested amendments.  CEA writes:


            [If amended], SB 885 effectively addresses the underlying  
            insurance deficiency for design professionals that prompted  
            Senator Wolk to introduce the measure in the first place.   
            Rather than simply shift liability onto other parties, which  
            is what the measure does in its current form, the bill as  
            proposed to be amended directs the insurance industry to  
            create a more comprehensive product for design professionals  
            that will enable them to provide additional insured  








                                                                     SB 885


                                                                    Page  20





            endorsements to project owners that will cover their defense  
            obligations.  This is a reasonable and effective solution.


          Additionally, the State Building and Construction Trades Council  
          of California, AFL-CIO agrees with CEA, and will support the  
          bill if amended.  It writes:


            SB 885 as currently written would upend the decades old first  
            dollar defense process that is followed when a construction  
            defect is found at a construction project by removing design  
            professionals from that adjudicatory process.  This would lead  
            to unnecessary costs and delay for public agencies,  
            contractors, and subcontractors by requiring them to bear an  
            unreasonable amount of new risk.  This will inevitably lead to  
            new projects being delayed while issues with past projects are  
            dealt with in the new and inefficient model that SB 885 would  
            create.  [The Committee's] proposed amendments would ensure  
            that those issues would not arise and would keep intact the  
            current first dollar defense process that has worked so well  
            for so many years.


          Parade of Horribles?  Notwithstanding the initial concerns that  
          have been raised about this bill, concededly, it is easy to feel  
          sympathy for design professionals who lack the ability to obtain  
          insurance and must pay third party defense costs out-of-pocket.   
          Indeed, this Committee has received hundreds of letters from  
          design professionals across the State informing the Committee  
          about a design professional's inability to obtain a professional  
          liability policy that "covers an agreement to defend a third  
          party, and does not afford additional insured status to a design  
          professional's client."  Be that as it may, this bill raises  
          several questions about what will happen should this bill become  
          law.  


          First and foremost, the enactment of the bill would deter the  








                                                                     SB 885


                                                                    Page  21





          insurance market from producing an insurance product that would  
          fix this problem-which is the best solution to tackle this  
          policy issue.  Next, will this bill significantly increase  
          insurance premiums for general contractors, who will likely pass  
          on the costs onto local public entities?  Based on this  
          Committee's analysis, this seems likely.  Furthermore, will this  
          bill force local public entities to obtain additional insurance  
          coverage, or trigger other parties in the construction industry  
          to seek burden-relieving bills, similar to this bill, which  
          would force public entities to obtain insurance coverage to the  
          detriment of taxpayers?  Although this bill may provide some  
          relief to design professionals, the consequences (both  
          short-term and long-term) result in additional burdens on all  
          parties in a construction contract.


          ARGUMENTS IN SUPPORT:  The American Council of Engineering  
          Companies, California, the sponsor of this bill, writes that  
          this bill is supported by numerous individual architects,  
          engineers, and other design professions.  ACEC writes:


            Requiring a design professional to provide an immediate  
            defense to a third party creates an uninsured exposure that  
            places the public at risk, and the individual's personal  
            assets at risk, and it sets a false expectation for a public  
            agency or private developer that it will be defended in a  
            lawsuit.  Frequently, parties who are afforded a free defense  
            have little incentive to settle a case, which further drives  
            up the skyrocketing cost of litigation in California, and has  
            a chilling effect on business overall.  In addition, parties  
            who benefit from a free defense to a lawsuit may have little  
            incentive to minimize mistakes in the future.  This in turn  
            can lead to shortcuts by developers and compromise public  
            health and safety.


            If the status quo continues, design professionals may seek to  
            charge higher fees to cover their exposure, driving up the  








                                                                     SB 885


                                                                    Page  22





            cost of public and private projects, and whittling down the  
            number of design firms willing to take the risk.  All of this  
            creates a poor business environment in a state that already  
            poses significant challenges to small businesses.  Over time,  
            this will result in a loss of jobs and tax revenue and an  
            increased cost of projects that will be borne by taxpayers.   
            The uninsured exposure places regular working class people at  
            an unnecessary risk of bankruptcy, and serves to undermine  
            small, minority and disadvantage businesses.  This risk is not  
            the same for construction contractors.


            SB 885 seeks to create less risk for the public through a more  
            balanced contractual landscape, albeit one in which the design  
            professional still faces personal liability and still has to  
            be responsible for its mistakes.  By eliminating the immediate  
            defense obligations, and instead creating an obligation to  
            reimburse defense costs based on the design professional's  
            proportionate share of liability, the immediate uninsurable  
            burden is mitigated, and in some cases brings the  
            reimbursement obligation within the coverage parameters of  
            professional liability insurance?SB 885 is not an effort to  
            seek immunity or avoid liability.  It's really about putting  
            design professionals on an even footing with construction  
            trades who have access to insurance that the design  
            professional does not have.


          ARGUMENTS IN OPPOSITION:  A coalition of opponents of public  
          agencies, including the California Special Districts  
          Association, the League of California Cities, and California  
          State Association of Counties, asserts that this bill creates an  
          exception to long-standing and wide-reaching California  
          indemnity law for one specific industry that happens to have an  
          unsecured risk.  In opposition, they write:


            The sponsors argue that their errors and omissions insurance  
            policies do not provide coverage for the defense of claims  








                                                                     SB 885


                                                                    Page  23





            against other entities involved in construction projects. This  
            bill is not the appropriate response to that purported issue,  
            nor do we believe that it solves that problem.  Case law has  
            well established that the duty to defend is inherent in the  
            obligation to indemnify.  SB 885 forces taxpayers and  
            ratepayers to front the legal costs for the private sector,  
            even for claims where the design professional is ultimately  
            deemed to be 100 percent at fault.  Requiring the public  
            agency to defend the actions of the design professional  
            creates a "reimbursement only" process that results in the  
            public agency defending the actions of the design professional  
            and shouldering upfront all of the associated costs.  The  
            public agency would then have to seek reimbursement from the  
            design professional, to the extent the design professional is  
                                                                        found negligent, once a settlement is reached or the claim is  
            fully litigated and a court or arbitrator renders a final  
            decision.  This process not only requires a public entity to  
            front the costs for a private entity, it also creates conflict  
            within the public-private partnership, effectually eliminating  
            the incentive to work together towards a swift settlement.  SB  
            885 stipulates a "one-size fits all" solution to contractual  
            negotiations by establishing a reimbursement-only system, with  
            public entities paying defense costs until a final  
            determination of degree of fault is determined by a court,  
            arbitration or settlement.  The bill specifies that these  
            provisions may not be waived or modified by contract.  This  
            precludes public entities and their design professional  
            partners from negotiating other contractual arrangements that  
            may better suit the particulars of a project.





          Author's Technical Amendment:  At the Committee's suggestion,  
          the author wishes to take the following amendment to ensure that  
          the bill in print does not interfere with existing contracts:










                                                                     SB 885


                                                                    Page  24








               On page 9, line 25, after the period, insert: "(f) The  
          amendments made to this section by the act adding this  
          subdivision shall apply to services offered pursuant to a design  
          professional contract entered into on or after January 1, 2017."


          


               On page 9, line 26, strike (f), and insert (g).


          


          REGISTERED SUPPORT / OPPOSITION:




          Support


          American Council of Engineering Companies (sponsor)


          AD Architects, Inc.


          Adobe Associates, Inc. 


          AECOM


          Alan Burr, Murphy Burr Curry Inc.








                                                                     SB 885


                                                                    Page  25







          Albert Costa, Costa Brown Architecture


          Alex Kiam, National Engineering & Consulting, Inc.


          Align Architecture, LLP


          Allied Geotechnical Engineers, Inc.


          AllWest Environmental, Inc.


          Alta Vista


          AMA Inc.


          American Institute of Architects California Council


          American Society of Landscape Architects


          Amor Architectural Corporation


          Anderson Penna


          Anissa Wong, CSDA Design Group


          Archetype International








                                                                     SB 885


                                                                    Page  26







          Archi|Logix


          ARCSL Architecture Inc.


          Associated Transportation Engineers


          Athalye Consulting engineering Services, Inc.


          Atkins


          Avila and Associates


          Axiom Engineers


          Baker Nowicki Design Studio


          Baker-Williams Engineering Group


          Beazley Group


          Bedrock Engineering


          Benner and Caprenter, Inc.


          Bennett Engineering Services








                                                                     SB 885


                                                                    Page  27







          BergerABAM


          BFK Engineers Surveyors Planners


          Bhatia Associates, Inc.


          Biggs Cardosa Associates Inc.


          Bisbee Architecture + Design


          Blackbird Designs


          Blackburn Consulting


          Blair, Church & Flynn


          Blitz Design


          Brian Foust Architecture


          Brian J. Brown, architect


          Britt Lindberg, AIA


          Bror Monberg Architects








                                                                     SB 885


                                                                    Page  28







          Buehler & Buehler Structural Engineers, Inc.


          Burns McDonnell


          Burohappold Engineering


          Calhoun + Associates, Inc.


          California Department of Insurance 


          California Geotechnical Engineering Association


          California Professional Association of Specialty Contractors


          California Society of Professional Engineers


          Callas Architects


          Calpo, Hom & Dong Architects


          CALTROP


          CASC Engineering & Consulting


          CBC Geospatial Consulting, Inc.








                                                                     SB 885


                                                                    Page  29







          CEI Engineering Associates, Inc.


          Cesar A. Sifuentes, P.E.


          Charles M Salter & Associates


          Chaudhary & Associates, Inc.


          Christensen Engineering & Surveying


          Christian Wheeler Engineering


          Civil Design Consultants


          Civil Engineering Associates 


          Clark, Richardson and Biskup Consulting Engineers, Inc.


          CNC Engineering


          Coast Surveying, Inc.


          Coffman Engineers


          Coleman Engineering








                                                                     SB 885


                                                                    Page  30







          Converse Consultants


          Cornerstone Earth Group


          Cornerstone Structural Engineering Group


          Costa Brown Architecture, Inc.


          CPC Architects


          Craig Atkinson, IBI Group


          Craig Hiett, Advanced Structural Design, Inc.


          Crane Architectural Group


          Creegan + D'Angelo


          CSDA Design Group


          CSW/Stuber-Stroeh Engineering Group, Inc.


          Cullen-Sherry & Associates, Inc.


          CYS Structural Engineers








                                                                     SB 885


                                                                    Page  31







          D. Woolley & Associates


          Dahlin Group


          Dale Jendsbee, Mesiti-Miller Engineering Inc.


          Dane Hansen, BWE Structural Engineering


          Daniel D. White, architect


          Danielian Associates


          Danville Councilmember Newell Arnerich


          Darden Architects


          David Cocke, Structural Focus


          David Goldstien Architect, Inc.


          David H. Lee & Associates, Inc.


          DC Architects


          Dealey, Renton & Associates








                                                                     SB 885


                                                                    Page  32







          Degenkolb Engineers


          Derek Leavitt, AIA


          DES Architects + Engineers, Inc.


          DGA Planning Architecture Interiors


          Diaz, Yourman & Associates


          DL Smith Design Studio


          DLR Group


          Donald Shintani & Co.


          Dorothy Howard, AIA


          Drake Haglan and Associates


          Earth Systems, Inc. 


          EC Moore, architect


          Edwin Bruce Associates








                                                                     SB 885


                                                                    Page  33







          EFS Engineering, Inc.


          EHDD


          Element Structural Engineers, Inc.


          ENGEO Incorporated


          Environmental Science Associates


          ESA Associates


          FOG Studios


          Fougeron Architecture


          Francis Lo, Miyamoto International


          FTF Engineering, Inc.


          Gang Chen, architect


          Gast Architects


          GEI Consultants








                                                                     SB 885


                                                                    Page  34







          Gekko Engineering, Inc.


          GEOCON Incorporated


          Geoprofessional Business Association (GBA)


          Geotechnical Professionals, Inc. (GPI)


          Gereard M. Nieblas, S.E.


          Ghirardelli Associates


          Glenn T. Fearon, architect


          Gouvela Engineering, Inc. 


          Greenbank Associates


          Gregory P. Luth & Associates


          Group Delta


          Guida Surveying, Inc. 


          Gwynne Pugh Urban Studio








                                                                     SB 885


                                                                    Page  35







          Haney Station, Inc.


          Harris & Associates


          Harris & Sloan Consulting Engineers, Inc.


          Harris Design


          Hartzog & Crabill, Inc.


          Hatch Mott MacDonald


          Hayes Group Architects


          HDR


          Henry Liang-AECOM


          Hermann Design Group


          Heston Chau Architect


          Higginson Architects Inc.


          HMC Architects








                                                                     SB 885


                                                                    Page  36







          HMH


          HNTB


          Hogan Land Services


          Hope Amundson, Inc.


          Huitt-Zollars


          Huntsman Architectural Group


          IBI Group


          In Studio Architecture


          IFLAND Engineers, INC. 


          Infrastructural Engineering Corporation


          Inland Foundation Engineering, Inc. 


          Insight Structural Engineers


          IOA Insurance Services








                                                                     SB 885


                                                                    Page  37







          Island Architects


          Izor & Associates, Inc.


          J. Peter Devereaux, HED Design


          Jack Brewer, Advanced Structural Design, Inc.


          James A. Adams, S.E.


          James C. Corcoran


          James Hill Architect


          Jason Horwedel


          Jeff Sultan, P.E.


          Jeffery M. Fuller, CSDA Design Group


          Jerry Penrose, IBI Group


          John Corless, Nichols Melburg & Rossetto


          John Valle Architecture








                                                                     SB 885


                                                                    Page  38







          Jon P. Anderson, DLR Group


          Joseph C. Truxaw and Associates, Inc. 


          Joseph P. Paoluccio


          Josephson Werdowatz & Associates


          Kal Krishnan Consulting Services, Inc. 


          Kalban Architects


          Keary Gregg & Associates


          Keir & Wright


          Ken Okamoto & Associates, Inc. 


          Kennedy and Associates


          Kennedy/Jenks Consults


          Kenneth Luttrell, CYS Structural Engineers Inc.


          Kevin Perry, Pacific Cornerstone Architects








                                                                     SB 885


                                                                    Page  39







          KFA, LLP


          Kimley Horn


          Kirk Shimazu, IBI Group


          Kister, Savio & REI, Inc.


          Kjedlsen, Sinnock & Neudeck, Inc.


          Kleinfelder


          Klopf Architecture


          KMA Architecture


          KNA Consulting Engineers, Inc.


          KOA Corporation


          Konet Architecture


          Koning Eizenberg Architecture, Inc.


          KPF








                                                                     SB 885


                                                                    Page  40







          KPFF Consulting Engineers, Inc. 


          Krong Design Inc.


          KSA Design Studio


          L & L Bridges


          L.A. Paul & Associates


          Land Concern


          Lane Engineers, Inc. 


          Latitude 33 Planning & Engineering


          Laugenour and Keikle


          LCC Engineering & Survey, Inc.


          Lee & Pierce, Inc. 


          Lee Engelmeier, Smith Structural Group, LLP


          Lehrer Architects








                                                                     SB 885


                                                                    Page  41







          Leighton Consulting, Inc.


          Leppert Engineering Corporation


          Lescure Engineers, Inc.


          Lexington Insurance Company


          Liftech Consultancts Inc.


          Lopez Engineering, Inc.


          Lucinda Tay, architect


          Lynn Capouya, Inc.


          Madrone


          Marguerite Bello, S.E.


          Mark Bozzo, Advanced Structural Design, Inc. 


          Mark Davis Design


          Mark English Architects








                                                                     SB 885


                                                                    Page  42







          Mark Froemsdorf, AIA


          Mark Melzer, Melzer Deckert & Ruder Architects Inc.


          Mark Thomas & Company


          Martin & Libby Structural engineers 


          Mason Architects


          Matthew Knusten, Peoples Associates Structural engineers


          Max Moheb, S.E.


          Melineh Zamorrodian, Structural Focus


          Melissa Sanchez, Structural Focus


          Mesiti-Miller Engineering, Inc.


          Meyer & Allen Associates


          Michael Baker International


          Michael Caley, architect








                                                                     SB 885


                                                                    Page  43







          Michael Parolini, Smith Structural Group, LLP


          Michael Schoen, CSDA Design Group


          Michael Smith, Smith Structural Group, LLP


          Michael Woods, P.E.


          Mike Kaszpurenko, S.E.


          Miller Pacific Engineering Group


          MNS


          Monterey Bay Engineers, Inc.


          Monterey Peninsula Chamber of Commerce


          Morton Pitalo


          Murtaugh, Meyer, Nelson & Treglia, LLP


          Naslund


          Naslund Engineering








                                                                     SB 885


                                                                    Page  44







          Neil H. Perimutter, architect


          Neil Rinella, AIA


          Neri Landscape Architecture


          Ninyo & Moore


          Northwest Hydraulic Consultants


          NV5


          O'Day Consultants, Inc.


          OLMM Consulting Engineers


          One Option Consulting Engineers


          Ordiz Melby Architects, Inc.


          Pacific Cornerstone Architects


          Palmer & Company


          Pam Touschner, DLR Group








                                                                     SB 885


                                                                    Page  45







          Parikh


          Patel Burica & Associates Inc.


          Paul Merdoch Architects


          Peter Carlson, Miyamoto International


          Peterson Brustad Engineering Consulting


          Philip Overbaugh, architect


          Praxis


          Precision Civil Engineering, Inc.


          Professional Liability Agents Network


          Project Design Consultants


          Provost & Pritchard Consulting Group


          Prunuske Chatham, Inc.


          Psomas








                                                                     SB 885


                                                                    Page  46







          PZSE, Inc.


          Quad Knopf, Inc. 


          Quattrocchi Kwak Architects


          Quincy Engineering


          R.E.D. Architectural Group


          R2H Engineering, Inc.


          Rainforth Grau Architects


          Ralph Stone and Company, Inc.


          Randall B. Devoto, CSDA Design Group


          Randall Lamb


          Rania Alomar - Design and Architecture


          Raymond Fox & Associates


          ReSquare Architecture and Construction








                                                                     SB 885


                                                                    Page  47







          RFD


          Richard McKenzie, AIA


          Rick Engineering Company


          Riggs Architecture


          RJM Design Group


          RMW Architecture & Interiors


          Robert Dack, Advanced Structural Design, Inc.


          Robert Gravano, Advanced Structural Design, Inc.


          Ross Yamamoto, P.E.


          Rossington Architecture


          RRM Design Group


          RSA+ Consulting Civil Engineers & Surveyors


          RSPE Inc. 








                                                                     SB 885


                                                                    Page  48







          RT  Engineering & Associates, Inc. 


          Rutherford + Chekene


          S Design Group


          SA Associates


          Sage engineers


          Salinas Valley Chamber of Commerce


          Saunders + Wiant Architects


          Sauter Architecture


          Schaaf & Wheeler


          Scott P. Bartley, AIA


          Scott Wallace Structural Engineers


          Sean Tracy, Pacific Cornerstone Architects


          SESOL, Inc.








                                                                     SB 885


                                                                    Page  49







          SGPA Architecture and Planning


          Shannon & Wilson, Inc. 


          Skidmore, Owings & Merrill LLP


          Smith Architects


          Smith Structural Group, LLP


          Snipes-Dye Associates


          Sprotte Watson Architecture + Planning


          Standard


          Stephen Gonsalves, Nichols Melburg & Rossetto


          Stephen L. Ball Architect, Inc.


          Steve H. Nakashima Consulting Civil Engineer


          Stevens Cresto Engineering, Inc.


          Stoney-Meyer consultants, Inc.








                                                                     SB 885


                                                                    Page  50







          Stover Engineering


          Stratos Form


          Strening Architects


          Structural Engineers Association of California 


          Stuart Engineering


          Studio Carver


          Studio Robbins Cortina


          Sukow Engineering


          Sven Lavine Architecture


          SW Structural, Inc.


          Syska Hennessy


          T.Y. Lin International


          Taylor Design








                                                                     SB 885


                                                                    Page  51







          Terra Insurance Company


          TerraCosta Consulting Group, Inc.


          The Covello Group


          The Hold Group, Inc.


          Tim Schulze, Pacific Cornerstone Architects


          Tipping Structural Engineers


          Tory R. Walker Engineering


          Towill, Inc.


          Transpedia Consulting Engineers


          Transpogroup


          Travelers


          TSAC Engineering


          Tuan and Robinson Structural Engineers, Inc.








                                                                     SB 885


                                                                    Page  52







          Turpin & Rattan Engineering, Inc.


          Twining


          Utility Specialists


          Vali Cooper & Associates, Inc.


          Van Meter Williams Pollack LLP


          Vasilis Papadatos, AIA


          VER Consultants


          Verdon Architects


          Victor D. Schinnerer & Company, Inc.


          Victor Garcia-Delgado


          Victor O. Schinnerer & company


          Wagner Engineering & Survey, Inc.


          Wallace Group








                                                                     SB 885


                                                                    Page  53







          Walter P Moore


          Weatherby-Reynolds-Fritson


          Weil & Drage


          West Consultants, Inc.


          Whitson Engineers


          William Fisher Architecture, Inc.


          William Gilmore Architect


          Wood Rogers


          XL Catlin


          Yagade Consulting, Inc.


          Yamabe & Horn engineering, Inc. 


          Yeh and Associates, Inc. 


          YEI Engineers, Inc.








                                                                     SB 885


                                                                    Page  54







          ZFA Structural Engineers


          Zurich




          Opposition




          Air Conditioning Sheet Metal Association


          Alpine Village-Sequoia Crest Community Services District


          American Canyon Fire Protection District


          Apple Valley Fire Protection District


          Associated General Contractors


          Associated General Contractors of America


          Association of California Healthcare Districts


          Association of California School Administrators










                                                                     SB 885


                                                                    Page  55





          Big Bear Area Regional Wastewater Agency 


          Big Bear Community Services District


          Bighorn-Desert View Water Agency


          Buckingham Park Water District


          California Association of Joint Powers Authorities


          California Association of School Business Officials


          California Association of Sheet Metal and Air Conditioning  
          Contractors 


          California Building Industry Association


          California Chapters of National Electrical Contractors  
          Association


          California Legislative Conference of the Plumbing, Heating and  
          Piping Industry


          California Special Districts Association


          California State Association of Electrical Workers










                                                                     SB 885


                                                                    Page  56





          California State Council of Laborers


          California State Pipe Trades Council 


          California State University


          California-Nevada Conference of Operating Engineers 


          Calleguas Municipal Water District


          Carpinteria Sanitary District


          Chino Valley Fire District


          City of American Canyon


          City of Burbank


          City of Camarillo


          City of Glendale


          City of Murrieta


          City of San Bruno










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          City of Tulelake


          City/County Association of Governments of San Mateo County


          Coachella Valley Water District


          Coalition for Adequate School Housing


          Community College Facility Coalition


          Construction Employers Association 


          Consumnes Community Services District


          Contra Costa Water District


          County School Facilities Consortium


          California School Boards Association


          Cucumonga Valley Water District


          Dublin San Ramon Services District


          Eastern Municipal Water District 










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          Eastside Rural County Fire Protection District


          El Dorado Irrigation District


          Fallbrook Public Utility District 


          Fresno Metropolitan Flood Control District


          Fulton-El Camino Recreation & Park District


          Garberville Sanitary District


          Georgetown Divide Recreation District 


          Goleta Sanitary District


          Goleta West Sanitary District


          Granada Community Services District


          Greater Vallejo Recreation District


          Grizzly Flats community Services District


          Grossmont Healthcare District










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                                                                    Page  59





          Hayward Area Recreation and Park District


          High Valleys Water District


          Hilmar County Water District


          Independent Special Districts of Orange County


          Indian Valley Community Services District 


          Indian Wells Valley Water District


          Inland Empire Utilities Agency


          International Brotherhood of Electrical Workers


          International Union of Operating Engineers


          Irvine Ranch Water District


          Kern County Cemetery District No. 1


          Lake Arrowhead Community Services District


          Las Gallinas Valley Sanitary District










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                                                                    Page  60





          League of California Cities


          Los Angeles Unified School District Board of Education


          Los Rios Community College District


          Lower Lake County Waterworks District No. 1


          Malaga County Water District


          Manila Community Services District


          Mckinleyville Community Services District 


          Merced County


          Metropolitan Transportation Commission


          Midpeninsula Regional Open Space District


          Midway City Sanitary District


          Mission Resource Conservation District


          Modesto Irrigation District










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                                                                    Page  61
                                                                             




          Mojave Water Agency


          Monterey County Business Council 


          Monterey Regional Airport


          Monterey-Salinas Transit 


          Mt. View Sanitary District


          Murphys Sanitary District


          National Electrical Contractors Association


          North County Fire Protection District


          North of the River Recreation & Park District


          Northern California Allied Trades


          Novato Sanitary District


          Oakdale Irrigation District


          Oceano Community Services District










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                                                                    Page  62





          Olivehain Municipal Water District


          Orange County Cemetery District


          Orange County Transportation Authority


          Palos Verdes Library District


          Phelan Piņon Hills Community Services District


          Placer County Water Agency


          Pleasant Hill Recreation & Park District


          Rincon del Diablo Municipal Water District


          Riverside County Office of Education


          Riverside county Transportation Commission


          Rosamond Community Services District


          Rowland Water District


          Rural County Representatives of California










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                                                                    Page  63





          Sacramento Municipal Utility District


          San Diego Assocation of Governments


          San Francisco Transportation Authority


          San Juan Water District


          San Lorenzo Valley Water District


          San Ramon Valley Fire Protection District


          Santa Barbara County Association of Governments


          Santa Clara Board of Supervisors 


          Santa Clara County Board of Supervisors


          Santa Clara Valley Water District


          Santa Margarita Water District 


          Self-Help Counties Coalition


          Sheet Metal Workers International Association










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                                                                    Page  64





          Silver Creek Valley Country Club, Geologic Hazard Abatement  
          District


          Silverado-Modjeska Recreation and Park District


          Sacramento Municipal Utility District


          South Orange County Wastewater Authority


          South San Joaquin Irrigation District


          South Tahoe Public Utilities District


          Southern California Contractors Association


          Squaw Valley Public Service District


          State Building and Construction Trades Council of California


          Stege Sanitary District


          Stockton East Water District


          Sutter Community Services District


          Tahoe City Public utility district









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                                                                    Page  65






          The California State University


          Three Valleys Municipal Water District


          Town of Discovery Bay


          Tuolumne Fire District


          Tuolumne Utilities District


          Union Sanitary District


          United Contractors


          Urban Counties of California


          Vallecitos Water District


          Vista Irrigation District


          Wall and Ceiling Alliance


          West County Wastewater District


          West Valley Sanitation District









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                                                                    Page  66






          Western States Council of Sheet Metal Worker


          Yuima Municipal Water District





          Analysis Prepared by:Eric Dang / JUD. / (916)  
          319-2334