In the recently concluded 2015 session, the Texas Legislature amended the anti-indemnity statute pertaining to engineers and architects performing work for certain types of governmental entities. The amendment prohibits a governmental entity from requiring an engineer or architect to defend it for claims based in whole or in part on the fault, breach or negligence of the governmental entity. The purpose of the amendment is to prevent governmental entities from requiring architects and engineers to muster a defense that otherwise falls outside of their professional liability insurance policies. The impacted governmental entities include municipalities, counties, school districts, conservation or reclamation districts, hospital districts or other political subdivisions of the state. The Governor signed the Bill on June 17, 2015 and the amended statute is effective September 1, 2015.
The modified anti-indemnity provision, Texas Local Government Code section 271.904, splits out an architect’s and engineer’s indemnification and defense obligations, allows a governmental entity to seek recovery of attorney’s fees in proportion to the design professional’s liability, and imposes a statutory standard or care for design professionals performing work for governmental entities.
The current, already codified anti-indemnity statute voids and renders unenforceable any promise or covenant from a licensed engineer or registered architect to indemnify, hold harmless or defend the governmental entity against liability for damage other than liability for damage caused by or resulting from the engineer’s or architect’s negligence, intentional tort, intellectual property infringement, or failure to pay a subcontractor or supplier committed by the architect or engineer, its consultant or another entity over which it exercises control.
The amended statute eliminates “defend” from the current version and provides the following provision dealing with defense obligations.
(b) Except as provided by Subsection (c), a covenant or promise in, in connection with, or collateral to a contract for engineering or architectural services to which a governmental agency is a party is void and unenforceable if the covenant or promise provides that a licensed engineer or registered architect whose work product is the subject of the contract must defend a party, including a third party, against a claim based wholly or partly on the negligence of, fault of, or breach of contract by the governmental agency, the agency s agent, the agency s employee, or other entity, excluding the engineer or architect or that person’s agent, employee, or subconsultant, over which the governmental agency exercises control. A covenant or promise may provide for the reimbursement of a governmental agency’s reasonable attorney’s fees in proportion to the engineer’s or architect’s liability.
The amended statute also includes a provision relating to provision of additional insured provisions, as follows.
(c) Notwithstanding Subsection (b), a governmental agency may require in a contract for engineering or architectural services to which the governmental agency is a party that the engineer or architect name the governmental agency as an additional insured under the engineer’s or architect’s general liability insurance policy and provide any defense provided by the policy.
Finally, the amended statute codifies the case-law definition of standard of care for architects and engineers performing work for a governmental entity, as follows.
(d) A contract for engineering or architectural services to which a governmental agency is a party must require a licensed engineer or registered architect to perform services: (1) with the professional skill and care ordinarily provided by competent engineers or architects practicing in the same or similar locality and under the same or similar circumstances and professional license; and (2) as expeditiously as is prudent considering the ordinary professional skill and care of a competent engineer or architect.
(e) In a contract for engineering or architectural services to which a governmental agency is a party, a provision establishing a different standard of care than a standard described by Subsection (d) is void and unenforceable. If a contract contains a void and unenforceable provision, the standard of care described by Subsection (d) applies.
As the extent of indemnity and defense obligations is a creature of contract, we recommend careful review of the professional services and consulting agreements prior to their execution. Please let us know how we can assist you in that endeavor.