November 29, 2021

Volume XI, Number 333

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The New Rules (Part 2): Restrictions on the Duty to Defend for Architects and Engineers

In part two of our series on Texas’ recently passed construction law legislation, we focus on risk shifting provisions relating to construction engineering and/or architectural services.  The new risk shifting provisions in HB 2116, now codified in the amended Chapter 130 of the Texas Civil Practices and Remedies Code, provide additional protections for construction engineers and architects and directly impact how project owners should negotiate their construction contracts.  Proponents of HB 2116 argued it was necessary to curtail project owners’ demands for contract provisions that imposed an unreasonable, uninsurable, and unfair duty to defend.  Opponents of the legislation maintained that architects and engineers were free to negotiate their contracts as they saw fit, and that the existing Chapter 130 provided sufficient protections by invalidating contract provisions that required architects or engineers to indemnify an owner for the owner’s own negligence.  The bill that ultimately passed undoubtedly expands protections for architects and engineers by making void any construction contract provision that imposes upon an architect or engineer a duty to defend a party for liability based in whole or in part on a project owner’s negligence or breach of contract.  The amendment also contains certain limitations and exceptions for the benefit of project owners.  Chapter 130’s amendments went into effect on September 1, 2021 and apply to construction contracts entered into on or after September 1, 2021.

Limits on Risk-Shifting Provisions and the Duty to Defend

Under Section 130.002(c), any construction contract provision that imposes upon an architect or engineer a duty to defend a claim based in whole or in part on a project owner’s negligence, fault, or breach of contract is void and unenforceable.  See Tex. Civ. Prac. & Rem. Code Ann. § 130.002(c).  Interestingly, Section 130.002(c) also expressly allows contractual provisions requiring reimbursement of an owner’s attorneys’ fees so long as the reimbursement is in proportion to the engineer’s or architect’s liability.  Id.  And, Section 130.002(d) expressly allows contract provisions that require an architect or engineer to name the project owner as an additional insured on the architect’s or engineer’s professional liability insurance policy (and to provide a defense, if needed) to the extent additional insureds are allowed under the policy.  Id. § 130.002(d).

Section 130.002(c)’s restrictions on a contractual duty to defend do not apply to construction contracts in which an owner contracts with an entity to provide both design and construction services.  Id. § 130.002(e).  And, there is no prohibition against contract provisions imposing a duty to defend on an architect or engineer if the claim being defended is for negligent hiring of the architect or engineer.  Id. § 130.002(f). 

New Standard of Care for Engineers and Architects

Section 130.0021(a) creates a new and specific standard of care for architectural or engineering services related to the repair or construction of improvements to real property.  Architectural or engineering services must be “performed with the professional skill and care ordinarily provided by competent architects or engineers practicing under the same or similar circumstances and professional license.”  Id. 130.0021(a).  For contracts entered into on or after September 1, 2021, provisions containing a standard of care deviating from this new statutory definition are deemed void and unenforceable.  Id. § 130.0021(b).  Readers may recall that this standard of care was also adopted by Chapter 59 with respect to design-build and EPC arrangements.

Conclusion

Chapter 130 as amended clearly offers construction architects and engineers broader protections against risk-shifting provisions.  But the amendments also provide some balance by preserving a project owner’s right to require contract provisions allowing for reimbursement of a proportionate amount of the owner’s attorneys’ fees or requiring an architect or engineer to add the owner as an additional insured on relevant professional liability insurance policies.  Owners can also still negotiate for contract provisions requiring engineers and architects to indemnify and defend for their own actions.  Through the amendments, the Texas legislature took steps to eliminate the uninsurable duty to defend often shouldered by engineers and architects in circumstances where they are not at fault, while also preserving a means of recovery and protection for owners when architects and engineers are wholly or partially at fault.

© 2021 Bracewell LLPNational Law Review, Volume XI, Number 280
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About this Author

Phillip Sampson, Bracewell Law Firm, Texas, Construction and Litigation Attorney
Partner

Phillip Sampson is a member of the firm's management committee and co-chair of the firm's construction litigation practice group. He has experience trying cases for both plaintiffs and defendants in state and federal courts, as well as before arbitration panels. He has also successfully handled a number of appeals at the state and federal level. Phillip represents clients and tries cases involving a diverse range of industries and matters, with a focus on complex commercial litigation, personal injury, and mass tort. He has prosecuted and defended cases involving complex...

713-221-1307
Richard Whiteley, Bracewell Law Firm, Construction and Real Estate Litigation Attorney
Partner

Richard Whiteley, co-chair of the firm's construction litigation practice group, enjoys solving complex problems for his clients in an adversarial context, and believes an aggressive strategy of always preparing a case like it will ultimately go to trial is the best way to achieve the most favorable outcome. Richard has a wide range of experience in trial work and arbitration, with an emphasis on construction litigation, intellectual property litigation, products liability litigation, real estate litigation, and other types of commercial litigation. Richard has tried and...

713-221-1123
Associate

Stacianne (Staci) Wilson represents and counsels clients regarding various commercial litigation matters. She represents clients in a variety of cases, including patent and trademark litigation, contractual disputes, construction litigation, real estate matters and disputes, and products liability litigation. Staci has represented clients in both state and federal courts, as well as in arbitration proceedings. She has been a member of trial teams who have obtained favorable jury verdicts in both state and federal court.

Staci is also a member of Bracewell’s...

713.221.3323
Paula Toro Complex Commercial Litigation and Trial Litigation Attorney Bracewell Houston, TX
Associate

Paula Toro focuses her practice on matters related to complex commercial litigation and trial litigation. She represents plaintiffs and defendants in state and federal courts across the country. 

Prior to joining Bracewell, Paula was a legal intern with the Texas Innocence Network and the Fort Bend District Attorney’s Office.

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