On April 28, 2017, the California Legislature passed Senate Bill No. 496, which limits the defense and indemnity obligations of design professionals who enter into contracts to perform design professional services on or after January 1, 2018. Existing law limits design professional defense and indemnity obligations for contracts entered into with public agencies to claims that arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of the design professional. SB 496 makes these provisions applicable to all contracts entered into for design professional services. The bill also prohibits the cost to defend charged to the design professional from exceeding the design professional’s proportionate percentage of fault, except in the event that one or more defendants is unable to pay its share of defense costs due to bankruptcy or dissolution of its business.
There are two exclusions to the provision which are (1) a contract for design professional services where a project specific general liability policy insures all project participants on a primary basis including all design professionals (which is rare) and (2) a design professional who is a party to a written design-build joint venture agreement.
SB 496 amends Section 2782.8 of the Civil Code. A copy of the bill is available here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB496.