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LEGISLATION COMMITTEE

Meeting Date:	03/14/2016
Subject: Oppose position on SB 885 (Wolk) Construction Contracts: Indemnity
Submitted For:	LEGISLATION COMMITTEE
Department:	County Administrator
Referral No.:	2016-10
Referral Name:	Oppose position on SB 885 (Wolk) Construction Contracts: Indemnity
Presenter:	Lara DeLaney	Contact:	L. DeLaney, 925-335-1097

Information

Referral History:

This bill was referred to the Legislation Committee by Fire Chief Jeff Carman.

Referral Update:

Senate Bill (SB) 885 would specify, for construction contracts, that a design professional only the has the duty to defend claims that arise out of, or pertain or relate to, negligence, recklessness, or willful misconduct of the design professional. The bill provides that a design professional would not have a duty to defend claims against any other person or entity arising from a construction project, except that person or entity's reasonable defense costs arising out of the design professional's degree of fault.

Status: 01/28/2016 To SENATE Committee on JUDICIARY.

This bill would greatly limit special districts’ freedom to contract and place undue burden on all local agencies who contract with design professionals for public works projects.

Specifically, SB 885 would eliminate the right of a public agency to contract with architects and engineers for up-front legal defense against claims related to these design professionals’ work. Instead, public agencies could only ask for reimbursement from the design professionals if the claim is fully litigated and a decision is rendered by a court. As a result:

SB 885 favors litigation over negotiation – SB 885 actually encourages new litigation and manufactures unnecessary conflict in public works projects.
SB 885 forces taxpayers and ratepayers to front the costs to defend the private sector even for claims that allege the negligence, recklessness, or willful misconduct on the part of a private business.
Every dollar spent on litigation spawned by SB 885 will be one less dollar to support vital public services and infrastructure (water, fire protection, police, parks, libraries, etc.). Infrastructure funding that employs hard-working Californians will go toward high-paid attorneys.
SB 885 circumvents market conditions and the freedom to contract, and simply forces taxpayers to insure the defense of private entities, even when they are 100 percent liable to the claim.

In summary, SB 885 would shift responsibility and risk from design professionals to the public and result in taxpayer dollars funding new unnecessary litigation.

The bill text can be found in Attachment A

Recommendation(s)/Next Step(s):

CONSIDER recommending to the Board of Supervisors a position of "Oppose" on SB 885 (Wolk), as introduced: Construction contracts: Indemnity, as recommended by Fire Chief Jeff Carman.

Fiscal Impact (if any):

Attachments
Attachment A - SB 885 bill text