Texas Civil Justice League

ISSUES

03/07/2007
Preserve Private Property Owner Rights: Oppose SB 346 and HB 1152

SB 346 and HB 1152 bar property owners from protecting themselves against lawsuits. If enacted, these bills will (1) eliminate the ability of a property owner to require in a construction contract that a person performing construction-related work on the property defend the owner from a lawsuit based on the contractor’s conduct; (2) subject property owners to a substantial new risk of liability and dramatic increases in litigation costs; and (3) provide a disincentive for safety on a construction site by immunizing certain contractors for liability for their conduct.

The effects of SB 346 and HB 1152 can best be explained by the following example:

Homeowner A hires Contractor B to remodel A’s house. During work on the project, Contractor B’s employee falls through the roof onto A’s kitchen table, sustaining serious injuries. Contractor B is immune from a lawsuit brought by the employee because of workers’ compensation. Homeowner A, however, is sued by B’s employee, claiming Homeowner A failed to provide a safe premises for the employee.

Under SB 346 and HB 1152, Homeowner A cannot require Contractor B to provide an indemnity agreement and additional insured endorsement to protect A from B’s employee’s lawsuit. Homeowner A’s homeowner insurance policy must therefore absorb the lawsuit, adversely affecting A’s ability to obtain affordable insurance in the future. Moreover, even if Contractor B is at fault for the employee’s accident, SB 346 and HB 1152 effectively prevent Homeowner A from requiring B to provide indemnity and insurance for B’s fault.

This hypothetical situation is equally true for all other property owners, from cities, counties, and school districts, to large and small businesses. Indemnity and additional insurance agreements are nothing more than insurance policies paid for by property owners. SB 346 and HB 1152 will have the absurd result of requiring property owners to pay for insurance that they do not receive. The bills will also generate litigation where none now exists; interfere unjustly in a property owner’s right to contract; and create upward pressure on already high insurance premiums for property owners.

SB 346 and HB 1152 are bad public policy and should be rejected.

The following organizations OPPOSE SB 346 and HB 1152:

• Texas Civil Justice League
• Texas Association of Builders
• Texas Association of Manufacturer
• Texas Chemical Council
• Texas Municipal League
• Texas Oil and Gas Association