July/August 2017

PE Report
California Design Professionals Get ‘Duty to Defend’ Relief

Professional engineers will soon get more liability risk protections after California Governor Jerry Brown signed legislation in April that will limit design professionals’ duty to defend, whether the contract is for a public or private project.

The bill (S.B. 496) was enacted to increase fairness for licensed engineers and other design professionals when sharing the costs in a lawsuit. When the law takes effect on January 1, costs will be proportional to the design professional’s percentage of fault, and it will ensure that there is no gap in the payment of the defense costs when other parties are insolvent. The legislation was backed by the California Society of Professional Engineers and the state chapters of the American Council of Engineering Companies, the American Institute of Architects, and the Geotechnical Engineering Association.

The new law specifies that a design professional should only have the duty to defend an indemnitee for claims against the indemnitee that arise out of the design professional’s negligence, recklessness, or willful misconduct. The law also specifies the following:

• Provisions in contracts for design professional services that require a design professional to indemnify or defend claims against an indemnitee are unenforceable, except in cases involving the design professional’s negligence, recklessness, or willful misconduct.
• A design professional’s cost to defend an indemnitee shall not exceed the design professional’s proportionate percentage of fault. If one or more defendants is unable to pay his or her share of defense costs, however, the design professional would be required to confer with the other parties regarding those unpaid costs.
• The provisions must pertain to contracts where a project-specific general liability policy insures all project participants or to written design-build joint venture agreements.

NSPE supports legislation that provides a reasonable degree of protection for engineers in the performance of their professional services. The Society believes that engineers should be expected to assume reasonable duties and responsibilities in rendering professional services for which they have professional competence and expertise as well as legal and contractual authority. An engineer should have appropriate liability insurance and other protections; however, clients and contractors should understand the role of the engineer in the design and construction process and not seek to impose unjustifiable liability that undermines the engineer’s responsibility as a licensed professional whose legal and ethical obligation is to protect the public health and safety.