With strong backing and support from the professional design community, the Washington State Legislature approved (with only one dissenting vote) Substitute House Bill 1559 related to indemnification provisions in public contracts. Governor Christine Gregoire signed the bill.
Current Law: The purpose of the current law in RCW 4.24.115 is to establish a standard of concurrent negligence in indemnification clauses. In other words, a public agency may not require a contractor to indemnify the public agency against liability for damages "caused by or resulting from the sole negligence" of the public agency. Instead, it establishes that indemnification is valid and enforceable only to the extent of the concurrent negligence of the contractor and public agency.
Three Changes in Law: SHB 1559 will amend RCW 4.24.115 in the following three areas:
- Clarification of covered parties: The existing law states that it applies to a contract "relative to the construction, alteration, repair, addition to, subtraction from, improvement to, or maintenance of, any building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate, including moving and demolition in connection..." [emphasis added] Many agencies interpreted the phrase "relative to" to include contracts for architectural, engineering, landscape architectural, and land surveying services, even though the language is not explicit. SHB 1559 specifically adds contracts for these four disciplines to the protections provided for in the law.
- No duty to defend: One of the regular sticking points in negotiating contracts with designers relates to whether the indemnification provided by the designer covers their duty to defend the public agency in the event of a claim. SHB 1559 explicitly prohibits language in public contracts that includes the duty to defend and the cost of such defense.
- Extent of indemnification: The current concurrent negligence standard is only applicable to liability for damages related to bodily injury and property damage. Thus, for any other type of liability, a public agency could apply a sole negligence standard. SHB 1559 changes this. The concurrent negligence framework will expand to cover any liability arising out of any services performed on the contract.
Contracts will change: The bill, which becomes effective on
June 7, 2012, will require public agencies to review and change
indemnification language included in both construction contracts and
contracts for architectural, engineering, landscape architectural, and
land surveying services. Indemnification is a complicated area and attorneys are best suited to
sort through and develop appropriate contract language. Public agencies
should consult with their attorneys for what language may need to
change in their contracts.
More Information: Two Seattle area law firms have recently written helpful articles about SHB 1559 that may help in understanding this new legislation:
- April 5, 2012 article by Stan Beck and Grant Degginger from Lane Powell PC in the Seattle Daily Journal of Commerce: Design professionals win big in revised anti-indemnity statute.
- April 17, 2012 blog by John P. Ahlers of Ahlers & Cressman PLLC: Washington's Anti-Indemnification Statute (RCW 4.24.115) is Amended to Include Design Professionals and Contractors Receive a "Kiss"
Mike Purdy's Public Contracting Blog© 2012 by Michael E. Purdy Associates, LLChttp://PublicContracting.blogspot.com
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