Will this indemnity cover the indemnitee's own negligence, and does the indemnitor have to fund the defence before anyone proves fault?
Two separate rules. (1) In a construction contract, a provision purporting to indemnify the promisee against liability for death, bodily injury, property injury or any other loss arising from the promisee's SOLE negligence or WILFUL MISCONDUCT, or for defects in design furnished by the promisee's people, is against public policy and void (Civ. Code § 2782(a)), and sole negligence is only the floor. Section 2782(b) voids provisions purporting to impose liability on a contractor (and, for contracts entered into on or after January 1, 2013, on any subcontractor or supplier) for the ACTIVE negligence of a public agency; § 2782(c) makes provisions in post-2012 construction contracts with a private property owner (not acting as a contractor or supplier) unenforceable to the extent of the owner's active negligence; for residential construction contracts entered into after January 1, 2009, § 2782(d) makes a subcontractor's obligation to insure or indemnify a builder or general contractor against residential construction-defect claims unenforceable to the extent the claims arise from the builder's or contractor's own negligence, defects in design furnished by them, or matters outside the subcontractor's scope of work; and § 2782.05(a) does the same for construction contracts entered into on or after January 1, 2013 generally, voiding a subcontractor's obligation to insure or indemnify a general contractor, construction manager or other subcontractor to the extent claims arise from that party's ACTIVE NEGLIGENCE OR WILFUL MISCONDUCT, defects in design furnished by those persons, or claims outside the subcontractor's scope of work, subject to the thirteen exclusions in § 2782.05(b). For design-professional contracts entered into on or after January 1, 2018, an indemnity (including the duty and cost to defend) is unenforceable except to the extent claims arise out of, pertain to or relate to the design professional's own negligence, recklessness or wilful misconduct, and the cost to defend charged to the design professional shall in no event exceed its proportionate percentage of fault, and the statute adds one duty "notwithstanding the previous sentence": if a defendant cannot pay its share of defence costs because of bankruptcy or dissolution, the design professional must meet and confer with the other parties about the unpaid costs: a conference, not a larger share (§ 2782.8(a)). Section 2782.8 cannot be drafted around or left out: every contract and every solicitation document for design professional services, including requests for proposal and invitations for bid, is “deemed to incorporate by reference the provisions of this section” (§ 2782.8(b)). (2) Unless the agreement provides otherwise, Civil Code § 2778(4) writes a duty to DEFEND into every indemnity: the indemnitor is bound, on request, to defend actions brought against the indemnitee in respect of the matters embraced by the indemnity, and that duty “arises immediately upon a proper tender of defense by the indemnitee, and thus before the litigation to be defended has determined whether indemnity is actually owed” (Crawford). Crawford's own result shows what that costs: the subcontractor had to fund the builder's defence of construction-defect suits even though a jury ultimately found the subcontractor NOT negligent and the builder therefore had no right of indemnity, and the Supreme Court affirmed the judgment of the Court of Appeal against the subcontractor, disapproving Regan Roofing Co. v. Superior Court to the extent it conflicted. Read the decision honestly, though: the subcontract there expressly promised “at [its] own expense to defend” the builder, so the holding rests on the express promise as well as on § 2778(4), and no California decision is quoted here for a contract that said nothing at all about defence. Subdivision (a) does not stand alone: it opens “Except as provided in Sections 2782.1, 2782.2, 2782.5, and 2782.6, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract and that purport to indemnify the promisee against liability for damages for death or bodily injury to persons, injury to property, or any other loss, damage or expense arising from the sole negligence or willful misconduct ...”, and those four sections are real exceptions, not cross-references. § 2782.5 is the one that reaches an ordinary negotiated contract: “Nothing contained in Section 2782 shall prevent a party to a construction contract and the owner or other party for whose account the construction contract is being performed from negotiating and expressly agreeing with respect to the allocation, release, liquidation, exclusion, or limitation as between the parties of any liability (a) for design defects, or (b) of the promisee to the promisor arising out of or relating to the construction contract.” § 2782.1 preserves a full indemnity given to a landowner who lets a contractor onto its property as an accommodation: “Nothing contained in Section 2782 shall prevent a contractor responsible for the performance of a construction contract, as defined in Section 2783, from indemnifying fully a person, firm, corporation, state or other agency for whose account the construction contract is not being performed but who, as an accommodation, enters into an agreement with the contractor permitting such contractor to enter upon or adjacent to its property for the purpose of performing such construction contract for others.” § 2782.2 and § 2782.6 permit indemnity of a professional engineer, and of an engineer or geologist doing hazardous-materials work, on conditions the sections set out, each with a $250,000 floor below which the indemnity does not apply (§ 2782.6 lets the parties agree a greater floor), neither reaching wilful misconduct, and § 2782.6 also excluding the promisee's gross negligence. Subdivision (a) also ends with a proviso that the four exception sections do not cover: “this section shall not affect the validity of any insurance contract, workers’ compensation, or agreement issued by an admitted insurer as defined by the Insurance Code.” Subdivision (d) carries its own: “This subdivision shall not affect the obligations of an insurance carrier under the holding of Presley Homes, Inc. v. American States Insurance Company (2001) 90 Cal.App.4th 571.” For the subcontracts § 2782.05 governs, the defence duty is not the bare § 2778(4) one: "A subcontractor shall owe no defense or indemnity obligation to a general contractor or construction manager for a claim unless and until the general contractor or construction manager provides a written tender of the claim" with the claimant's information and a written statement of how the allocated share of fees was determined; on such a tender the subcontractor ELECTS, within 30 days, either to defend with counsel of its choice (a complete defence of the claims alleged to be caused by it) or to pay, within 30 days of invoice, no more than a reasonable allocated share of the general contractor's defence fees on an ongoing basis, subject to reallocation (§ 2782.05(e)); § 2782(e) sets a parallel mechanism for Title 7 residential subcontracts, with a 90-day election; unlike § 2782.05(e) it requires only that the written tender carry the claimant's information (including information provided under § 910(a)), not a written fee-allocation statement. Section 2782.05 also applies California law to every contract within it notwithstanding any choice-of-law rule, and voids any waiver of it (§ 2782.05(c)-(d)). A WRAP-UP PROJECT IS NOT THE ESCAPE IT LOOKS LIKE: wrap-up policies are excluded from § 2782.05 by § 2782.05(b)(4), but for a residential construction project covered by a wrap-up policy or other consolidated insurance program, § 2782.9(a) makes a contract entered into after January 1, 2009 that requires an enrolled and participating subcontractor to indemnify, hold harmless or defend another for any claim covered by that program UNENFORCEABLE outright (not merely unenforceable to the extent of someone's negligence), and § 2782.9(b) leaves equitable indemnity as the fallback where the wrap-up does not cover the claim. Striking the clause does not strip the parties of equitable indemnity in the ordinary case either: § 2782(g) and (h) preserve the right of a builder, general contractor or subcontractor to seek equitable indemnity for any claim governed by that section, including against suppliers, design professionals and product manufacturers. For the subcontracts § 2782.05 governs, § 2782.05(j) and (k) do the same, and the preserved claim there reaches other independent contractors and subcontractors as well as suppliers, design professionals and product manufacturers. Under § 2778(5), an indemnitor that neglects to defend after request is bound by a recovery the indemnitee suffers in good faith. And § 2782.8's duty-to-defend limits do not apply where a project-specific general liability policy covers all participants and the design professionals on a primary basis, or to a design professional in a written design-build joint venture (§ 2782.8(e)); a state agency is not an indemnitee under that section (§ 2782.8(g)).
The trap
The California drafting mistake is silence. Say nothing about the defence and § 2778(4) supplies an immediate, pre-determination duty to defend that the indemnitor must fund out of pocket; the escape is to provide otherwise expressly: § 2778's rules apply "unless a contrary intention appears". On the other side, treating § 2782(a)'s SOLE-negligence line as the whole rule is the second mistake: in a subcontract entered into on or after January 1, 2013, § 2782.05(a) voids the subcontractor's indemnity (including the cost to defend) to the extent claims arise from the general contractor's or construction manager's ACTIVE negligence or wilful misconduct, and the section 'shall not be waived or modified by contractual agreement', so a clause carving out only the indemnitee's sole negligence still fails to that extent unless the contract is on the § 2782.05(b) exclusion list, which has exactly thirteen numbered items (Title 7 residential construction; direct public-agency contracts governed by § 2782(b); direct private-owner contracts governed by § 2782(c); wrap-up policies; independent breach-of-contract or warranty claims; insurance-procurement provisions; loan and financing documents; surety indemnity agreements; workers’ compensation benefits; governmental-immunity benefits; four named insurance products; contracts with design professionals; and promisor-surety agreements on bonds), and being on that list is not the same as being safe, because Title 7 contracts fall back into § 2782(d)-(e), design-professional contracts into § 2782.8, and residential wrap-up projects into § 2782.9. There is also a mistake in the other direction: reading § 2782(a) as an absolute ban. Its first words are ‘Except as provided in Sections 2782.1, 2782.2, 2782.5, and 2782.6’, and § 2782.5 lets the parties to a construction contract and the owner negotiate and expressly agree on the allocation, release, liquidation, exclusion or limitation of liability for DESIGN DEFECTS, which is one of the very things § 2782(a) otherwise voids. So a design-defect allocation is not dead on arrival in California; it has to be negotiated and express, between those parties, rather than dropped into an indemnity clause. Finally, the sections mostly do not reach insurance, and in California construction practice that is where the risk actually moves. § 2782(a)'s own closing proviso leaves the validity of an insurance contract, workers’ compensation, or an agreement issued by an admitted insurer untouched, and § 2782(d) says in terms that it does not affect an insurance carrier’s obligations under Presley Homes. So an additional-insured endorsement is not an indemnity clause for the purposes of this section, and a clause struck under § 2782 does not take the coverage with it. Presley Homes is the case the statute preserves, and it cuts in the indemnitee's favour: the developer was named an additional insured on its subcontractors' liability policies, Link's additional-insured endorsement excluded the developer's own sole negligence, wilful misconduct and design defects (Sunrise's covered the developer only “with respect to liability arising out of ‘your work’ for that insured by or for you”), and the Court of Appeal still held the insurer owed a defence of the ENTIRE construction-defect action, covered and uncovered claims alike, because that duty rests on public policy rather than on the terms of the policy, reversing a judgment for the insurer. THE INSURANCE SAVINGS ARE NOT ABSOLUTE, and the exception is the public-agency case: Insurance Code § 11580.04 says an additional insured endorsement for the benefit of a public agency on a construction contract governed by § 2782(b) shall not provide indemnity coverage for the additional insured's own active negligence where an indemnity agreement would be invalid under § 2782(b), and that any contract requirement to procure insurance invalid under that section is itself invalid. On a public-agency job § 11580.04 shuts the insurance route to the same extent the indemnity route is shut: the insurer's obligation is "limited to obligations permitted by this section", not extinguished. The immediate § 2778(4) duty also has a statutory gate in post-2012 subcontracts: until the general contractor makes a WRITTEN tender that includes the claimant's information and a written fee-allocation statement, the subcontractor owes no defence at all, and once tendered the subcontractor, not the general contractor, chooses between defending and paying an allocated share (§ 2782.05(e)). An oral tender does not start that clock; and a written tender that demands a defence beyond the subcontractor's scope does not enlarge the duty, which is a complete defence only "to the extent alleged to be caused by the subcontractor".
35 authorities
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(a) Except as provided in Sections 2782.1, 2782.2, 2782.5, and 2782.6, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract and that purport to indemnify the promisee against liability for damages for death or bodily injury to persons, injury to property, or any other loss, damage or expense arising from the sole negligence or willful misconduct of the promisee or the promisee’s agents, servants, or independent contractors who are directly responsible to the promisee, or for defects in design furnished by those persons, are against public policy and are void and unenforceable; provided, however, that this section shall not affect the validity of any insurance contract, workers’ compensation, or agreement issued by an admitted insurer as defined by the Insurance Code.
- statuteCal. Civ. Code § 2782.8enactment date not established
The words that state the rule
(a) For all contracts, and amendments thereto, entered into on or after January 1, 2018, for design professional services, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any such contract, and amendments thereto, that purport to indemnify, including the duty and the cost to defend, the indemnitee by a design professional against liability for claims against the indemnitee, are unenforceable, except to the extent that the claims against the indemnitee arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. In no event shall the cost to defend charged to the design professional exceed the design professional’s proportionate percentage of fault. However, notwithstanding the previous sentence, in the event one or more defendants is unable to pay its share of defense costs due to bankruptcy or dissolution of the business, the design professional shall meet and confer with other parties regarding unpaid defense costs. The duty to indemnify, including the duty and the cost to defend, is limited as provided in this section. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties.
- statuteCal. Civ. Code § 2778enactment date not established
The words that state the rule
In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: 1. Upon an indemnity against liability, expressly, or in other equivalent terms, the person indemnified is entitled to recover upon becoming liable; 2. Upon an indemnity against claims, or demands, or damages, or costs, expressly, or in other equivalent terms, the person indemnified is not entitled to recover without payment thereof; 3. An indemnity against claims, or demands, or liability, expressly, or in other equivalent terms, embraces the costs of defense against such claims, demands, or liability incurred in good faith, and in the exercise of a reasonable discretion; 4. The person indemnifying is bound, on request of the person indemnified, to defend actions or proceedings brought against the latter in respect to the matters embraced by the indemnity, but the person indemnified has the right to conduct such defenses, if he chooses to do so; 5. If, after request, the person indemnifying neglects to defend the person indemnified, a recovery against the latter suffered by him in good faith, is conclusive in his favor against the former; 6. If the person indemnifying, whether he is a principal or a surety in the agreement, has not reasonable notice of the action or proceeding against the person indemnified, or is not allowed to control its defense, judgment against the latter is only presumptive evidence against the former; 7. A stipulation that a judgment against the person indemnified shall be conclusive upon the person indemnifying, is inapplicable if he had a good defense upon the merits, which by want of ordinary care he failed to establish in the action.
The words that state the rule
Recently, City of Watsonville v. Corrigan (2007) 149 Cal.App.4th 1542 [ 58 Cal.Rptr.3d 458 ] observed once again that subdivision 4 of section 2778 “describes the indemnitor’s duty to defend . . . actions or proceedings brought against the indemnitee if the latter requests the defense.” (City of Watsonville, supra, at p. 1549 , original italics.) However, the Court of Appeal held that by failing to request a defense, or to notify the indemnitor of the third party action, and by unilaterally deciding to conduct its own defense, the indemnitee does not necessarily forfeit its contractual right to reimbursement of its defense costs under the indemnity provisions of subdivision 3 of the statute. Thus, as these decisions indicate, subdivision 4 of section 2778, by specifying an indemnitor’s duty “to defend” the indemnitee upon the latter’s request, places in every indemnity contract, unless the agreement provides otherwise, a duty to assume the indemnitee’s defense, if tendered, against all claims “embraced by the indemnity.” The indemnitor’s failure to assume the duty to defend the indemnitee upon request (§ 2778, subd. 4) may give rise to damages in the form of reimbursement of defense costs the indemnitee was *558 thereby forced to incur. But this duty is nonetheless distinct and separate from the contractual obligation to pay an indemnitee’s defense costs, after the fact, as part of any indemnity owed under the agreement. (Id., subd. 3.) Implicit in this understanding of the duty to defend an indemnitee against all claims “embraced by the indemnity,” as specified in subdivision 4 of section 2778, is that the duty arises immediately upon a proper tender of defense by the indemnitee, and thus before the litigation to be defended has determined whether indemnity is actually owed. This duty, as described in the statute, therefore cannot depend on the outcome of that litigation. It follows that, under subdivision 4 of section 2778, claims “embraced by the indemnity,” as to which the duty to defend is owed, include those which, at the time of tender, allege facts that would give rise to a duty of indemnity.
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(a) Except as provided in subdivision (b), provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any construction contract and amendments thereto entered into on or after January 1, 2013, that purport to insure or indemnify, including the cost to defend, a general contractor, construction manager, or other subcontractor, by a subcontractor against liability for claims of death or bodily injury to persons, injury to property, or any other loss, damage, or expense are void and unenforceable to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor, construction manager, or other subcontractor, or their other agents, other servants, or other independent contractors who are responsible to the general contractor, construction manager, or other subcontractor, or for defects in design furnished by those persons, or to the extent the claims do not arise out of the scope of work of the subcontractor pursuant to the construction contract. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties. This section shall not affect the obligations of an insurance carrier under the holding of Presley Homes, Inc. v. American States Insurance Company (2001) 90 Cal.App.4th 571, nor the rights of an insurance carrier under the holding of Buss v. Superior Court (1997) 16 Cal.4th 35.
- statuteCal. Civ. Code § 2782.5enactment date not established
The words that state the rule
Nothing contained in Section 2782 shall prevent a party to a construction contract and the owner or other party for whose account the construction contract is being performed from negotiating and expressly agreeing with respect to the allocation, release, liquidation, exclusion, or limitation as between the parties of any liability (a) for design defects, or (b) of the promisee to the promisor arising out of or relating to the construction contract.
- statuteCal. Civ. Code § 2782.1enactment date not established
The words that state the rule
Nothing contained in Section 2782 shall prevent a contractor responsible for the performance of a construction contract, as defined in Section 2783, from indemnifying fully a person, firm, corporation, state or other agency for whose account the construction contract is not being performed but who, as an accommodation, enters into an agreement with the contractor permitting such contractor to enter upon or adjacent to its property for the purpose of performing such construction contract for others.
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(e) Subdivision (a) does not prohibit a subcontractor and a general contractor or construction manager from mutually agreeing to the timing or immediacy of the defense and provisions for reimbursement of defense fees and costs, so long as that agreement does not waive or modify the provisions of subdivision (a) subject, however, to paragraphs (1) and (2). A subcontractor shall owe no defense or indemnity obligation to a general contractor or construction manager for a claim unless and until the general contractor or construction manager provides a written tender of the claim, or portion thereof, to the subcontractor that includes the information provided by the claimant or claimants relating to claims caused by that subcontractor’s scope of work. In addition, the general contractor or construction manager shall provide a written statement regarding how the reasonable allocated share of fees and costs was determined. The written tender shall have the same force and effect as a notice of commencement of a legal proceeding. If a general contractor or construction manager tenders a claim, or portion thereof, to a subcontractor in the manner specified by this subdivision, the subcontractor shall elect to perform either of the following, the performance of which shall be deemed to satisfy the subcontractor’s defense obligation to the general contractor or construction manager: (1) Defend the claim with counsel of its choice, and the subcontractor shall maintain control of the defense for any claim or portion of claim to which the defense obligation applies. If a subcontractor elects to defend under this paragraph, the subcontractor shall provide written notice of the election to the general contractor or construction manager within a reasonable time period following receipt of the written tender, and in no event later than 30 days following that receipt. Consistent with subdivision (a), the defense by the subcontractor shall be a complete defense of the general contractor or construction manager of all claims or portions thereof to the extent alleged to be caused by the subcontractor, including any vicarious liability claims against the general contractor or construction manager resulting from the subcontractor’s scope of work, but not including claims resulting from the scope of work, actions, or omissions of the general contractor or construction manager, or any other party. Any vicarious liability imposed upon a general contractor or construction manager for claims caused by the subcontractor electing to defend under this paragraph shall be directly enforceable against the subcontractor by the general contractor, construction manager, or claimant. All information, documentation, or evidence, if any, relating to a subcontractor’s assertion that another party is responsible for the claim shall be provided by that subcontractor to the general contractor or construction manager that tendered the claim. (2) Pay, within 30 days of receipt of an invoice from the general contractor or construction manager, no more than a reasonable allocated share of the general contractor’s or construction manager’s defense fees and costs, on an ongoing basis during the pendency of the claim, subject to reallocation consistent with subdivision (a), and including any amounts reallocated upon final resolution of the claim, either by settlement or judgment. The general contractor or construction manager shall allocate a share to itself to the extent a claim or claims are alleged to be caused by its work, actions, or omissions, and a share to each subcontractor to the extent a claim or claims are alleged to be caused by the subcontractor’s work, actions, or omissions, regardless of whether the general contractor or construction manager actually tenders the claim to any particular subcontractor, and regardless of whether that subcontractor is participating in the defense. Any amounts not collected from any particular subcontractor may not be collected from any other subcontractor.
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(c) Notwithstanding any choice-of-law rules that would apply the laws of another jurisdiction, the law of California shall apply to every contract to which this section applies. (d) Any waiver of the provisions of this section is contrary to public policy and is void and unenforceable.
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(e) Subdivision (d) does not prohibit a subcontractor and builder or general contractor from mutually agreeing to the timing or immediacy of the defense and provisions for reimbursement of defense fees and costs, so long as that agreement does not waive or modify the provisions of subdivision (d) subject, however, to paragraphs (1) and (2). A subcontractor shall owe no defense or indemnity obligation to a builder or general contractor for a construction defect claim unless and until the builder or general contractor provides a written tender of the claim, or portion thereof, to the subcontractor which includes all of the information provided to the builder or general contractor by the claimant or claimants, including, but not limited to, information provided pursuant to subdivision (a) of Section 910, relating to claims caused by that subcontractor’s scope of work. This written tender shall have the same force and effect as a notice of commencement of a legal proceeding. If a builder or general contractor tenders a claim for construction defects, or a portion thereof, to a subcontractor in the manner specified by this provision, the subcontractor shall elect to perform either of the following, the performance of which shall be deemed to satisfy the subcontractor’s defense obligation to the builder or general contractor: (1) Defend the claim with counsel of its choice, and the subcontractor shall maintain control of the defense for any claim or portion of claim to which the defense obligation applies. If a subcontractor elects to defend under this paragraph, the subcontractor shall provide written notice of the election to the builder or general contractor within a reasonable time period following receipt of the written tender, and in no event later than 90 days following that receipt. Consistent with subdivision (d), the defense by the subcontractor shall be a complete defense of the builder or general contractor of all claims or portions thereof to the extent alleged to be caused by the subcontractor, including any vicarious liability claims against the builder or general contractor resulting from the subcontractor’s scope of work, but not including claims resulting from the scope of work, actions, or omissions of the builder, general contractor, or any other party. Any vicarious liability imposed upon a builder or general contractor for claims caused by the subcontractor electing to defend under this paragraph shall be directly enforceable against the subcontractor by the builder, general contractor, or claimant. (2) Pay, within 30 days of receipt of an invoice from the builder or general contractor, no more than a reasonable allocated share of the builder’s or general contractor’s defense fees and costs, on an ongoing basis during the pendency of the claim, subject to reallocation consistent with subdivision (d), and including any amounts reallocated upon final resolution of the claim, either by settlement or judgment. The builder or general contractor shall allocate a share to itself to the extent a claim or claims are alleged to be caused by its work, actions, or omissions, and a share to each subcontractor to the extent a claim or claims are alleged to be caused by the subcontractor’s work, actions, or omissions, regardless of whether the builder or general contractor actually tenders the claim to any particular subcontractor, and regardless of whether that subcontractor is participating in the defense. Any amounts not collected from any particular subcontractor may not be collected from any other subcontractor.
- statuteCal. Civ. Code § 2782.8enactment date not established
The words that state the rule
(e) The provisions of this section pertaining to the duty and cost to defend shall not apply to either of the following: (1) Any contract for design professional services, or amendments thereto, where a project-specific general liability policy insures all project participants for general liability exposures on a primary basis and also covers all design professionals for their legal liability arising out of their professional services on a primary basis. (2) A design professional who is a party to a written design-build joint venture agreement. (f) Nothing in this section shall abrogate the provisions of Section 1104 of the Public Contract Code. (g) Indemnitee, for purposes of this section, does not include any agency of the state.
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(b) (1) Except as provided in Sections 2782.1, 2782.2, and 2782.5, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract with a public agency entered into before January 1, 2013, that purport to impose on the contractor, or relieve the public agency from, liability for the active negligence of the public agency are void and unenforceable. (2) Except as provided in Sections 2782.1, 2782.2, and 2782.5, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract with a public agency entered into on or after January 1, 2013, that purport to impose on any contractor, subcontractor, or supplier of goods or services, or relieve the public agency from, liability for the active negligence of the public agency are void and unenforceable.
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(c) (1) Except as provided in subdivision (d) and Sections 2782.1, 2782.2, and 2782.5, provisions, clauses, covenants, or agreements contained in, collateral to, or affecting any construction contract entered into on or after January 1, 2013, with the owner of privately owned real property to be improved and as to which the owner is not acting as a contractor or supplier of materials or equipment to the work, that purport to impose on any contractor, subcontractor, or supplier of goods or services, or relieve the owner from, liability are unenforceable to the extent of the active negligence of the owner, including that of its employees. (2) For purposes of this subdivision, an owner of privately owned real property to be improved includes the owner of any interest therein, other than a mortgage or other interest that is held solely as security for performance of an obligation. (3) This subdivision shall not apply to a homeowner performing a home improvement project on his or her own single family dwelling.
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(d) For all construction contracts, and amendments thereto, entered into after January 1, 2009, for residential construction, as used in Title 7 (commencing with Section 895) of Part 2 of Division 2, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any construction contract, and amendments thereto, that purport to insure or indemnify, including the cost to defend, the builder, as defined in Section 911, or the general contractor or contractor not affiliated with the builder, as described in subdivision (b) of Section 911, by a subcontractor against liability for claims of construction defects are unenforceable to the extent the claims arise out of, pertain to, or relate to the negligence of the builder or contractor or the builder’s or contractor’s other agents, other servants, or other independent contractors who are directly responsible to the builder, or for defects in design furnished by those persons, or to the extent the claims do not arise out of, pertain to, or relate to the scope of work in the written agreement between the parties. This section shall not be waived or modified by contractual agreement, act, or omission of the parties. Contractual provisions, clauses, covenants, or agreements not expressly prohibited herein are reserved to the agreement of the parties. Nothing in this subdivision shall prevent any party from exercising its rights under subdivision (a) of Section 910. This subdivision shall not affect the obligations of an insurance carrier under the holding of Presley Homes, Inc. v. American States Insurance Company (2001) 90 Cal.App.4th 571. Nor shall this subdivision affect the obligations of a builder or subcontractor pursuant to Title 7 (commencing with Section 895) of Part 2 of Division 2.
- statuteCal. Civ. Code § 2782enactment date not established
The words that state the rule
(g) A builder, general contractor, or subcontractor shall have the right to seek equitable indemnity for any claim governed by this section. (h) Nothing in this section limits, restricts, or prohibits the right of a builder, general contractor, or subcontractor to seek equitable indemnity against any supplier, design professional, or product manufacturer. (i) As used in this section, “construction defect” means a violation of the standards set forth in Sections 896 and 897.
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(b) This section does not apply to: (1) Contracts for residential construction that are subject to any part of Title 7 (commencing with Section 895) of Part 2 of Division 2. (2) Direct contracts with a public agency that are governed by subdivision (b) of Section 2782. (3) Direct contracts with the owner of privately owned real property to be improved that are governed by subdivision (c) of Section 2782. (4) Any wrap-up insurance policy or program. (5) A cause of action for breach of contract or warranty that exists independently of an indemnity obligation. (6) A provision in a construction contract that requires the promisor to purchase or maintain insurance covering the acts or omissions of the promisor, including additional insurance endorsements covering the acts or omissions of the promisor during ongoing and completed operations. (7) Indemnity provisions contained in loan and financing documents, other than construction contracts to which the contractor and a contracting project owner’s lender are parties. (8) General agreements of indemnity required by sureties as a condition of execution of bonds for construction contracts. (9) The benefits and protections provided by the workers’ compensation laws. (10) The benefits or protections provided by the governmental immunity laws. (11) Provisions that require the purchase of any of the following: (A) Owners and contractors protective liability insurance. (B) Railroad protective liability insurance. (C) Contractors all-risk insurance. (D) Builders all-risk or named perils property insurance. (12) Contracts with design professionals. (13) Any agreement between a promisor and an admitted surety insurer regarding the promisor’s obligations as a principal or indemnitor on a bond.
- statuteCal. Civ. Code § 2782.8enactment date not established
The words that state the rule
(b) All contracts and all solicitation documents, including requests for proposal, invitations for bid, and other solicitation documents for design professional services are deemed to incorporate by reference the provisions of this section.
- statuteCal. Civ. Code § 2782.9enactment date not established
The words that state the rule
(a) All contracts, provisions, clauses, amendments, or agreements contained therein entered into after January 1, 2009, for a residential construction project on which a wrap-up insurance policy, as defined in subdivision (b) of Section 11751.82 of the Insurance Code, or other consolidated insurance program, is applicable, that require an enrolled and participating subcontractor or other participant to indemnify, hold harmless, or defend another for any claim or action covered by that program, arising out of that project are unenforceable. (b) To the extent any contractual provision is deemed unenforceable pursuant to this section, any party may pursue an equitable indemnity claim against another party for a claim or action unless there is coverage for the claim or action under the wrap-up policy or policies. Nothing in this section shall prohibit a builder or general contractor from requiring a reasonably allocated contribution from a subcontractor or other participant to the self-insured retention or deductible required under the wrap-up policy or other consolidated insurance program, if the maximum amount and method of collection of the participant’s contribution is disclosed in the contract with the participant and the contribution is reasonably limited so that each participant may have some financial obligation in the event of a claim alleged to be caused by that participant’s scope of work. The contribution shall only be collected when and as any such self-insured retention or deductible is incurred by the builder or general contractor and in an amount that bears a reasonable and proportionate relationship to the alleged liability arising from the claim or claims alleged to be caused by the participant’s scope of work, when viewed in the context of the entirety of the alleged claim or claims. Any contribution shall only be collected from a participant after written notice to the participant of the amount of and basis for the contribution. In no event shall the total amount of contributions collected from participants exceed the amount of any self-insured retention or deductible due and payable by the builder or general contractor for the claim or claims. However, this requirement does not prohibit any legally permissible recovery of costs and legal fees to collect a participant’s contribution if the contribution satisfies the requirements of this subdivision and is not paid by the participant when due. (c) This section shall not be waived or modified by contractual agreement, act, or omission of the parties.
- statuteCal. Ins. Code § 11580.04enactment date not established
The words that state the rule
Any additional insured endorsement issued by an admitted or nonadmitted insurer for the benefit of a public agency in connection with, collateral to, or affecting any construction contract to which the provisions of subdivision (b) of Section 2782 of the Civil Code apply, shall not provide any duty of indemnity coverage for the active negligence of the additional insured in any case where an agreement to indemnify the additional insured would be invalid under subdivision (b) of Section 2782 of the Civil Code. In any case where a claim or loss encompasses the negligence of the original insured and the active negligence of the additional insured that is not covered because of this section, the insurer’s obligation shall be limited to obligations permitted by this section. Any contract requirement that requires a promisor to procure insurance that is invalid under this section shall be invalid.
- statuteCal. Pub. Cont. Code § 1104enactment date not established
The words that state the rule
No local public entity, charter city, or charter county shall require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications on public works projects, except on clearly designated design build projects. Nothing in this section shall be construed to prohibit a local public entity, charter city, or charter county from requiring a bidder to review architectural or engineering plans and specifications prior to submission of a bid, and report any errors and omissions noted by the contractor to the architect or owner. The review by the contractor shall be confined to the contractor’s capacity as a contractor, and not as a licensed design professional.
The words that state the rule
Here, however, we address issues concerning the contractual duty to defend in a noninsurance context. We consider whether, by their particular terms, the provisions of a pre-2006 residential construction subcontract obliged the subcontractor to defend its indemnitee—the developer-builder of the project—in lawsuits brought against both parties, insofar as plaintiffs’ complaints alleged construction defects arising from the subcontractor’s negligence, even though (1) a jury ultimately found that the subcontractor was not negligent, and (2) the parties have accepted an interpretation of the subcontract that gave the builder no right of indemnity unless the subcontractor was negligent. We conclude that the answer is yes. We will therefore affirm the judgment of the Court of Appeal.
The words that state the rule
We therefore conclude that the duty “to defend” IMP against claims “founded upon” damage or loss caused by Weather Shield’s negligent performance of its work, as set forth in Weather Shield’s subcontract, imposed such duties on Weather Shield as soon as a suit was filed against IMP that asserted such claims, and regardless of whether it was ultimately determined that Weather Shield was actually negligent. Accordingly, we affirm the judgment of the Court of Appeal. *569 CONCLUSION The judgment of the Court of Appeal is affirmed. The decision in Regan Roofing Co. v. Superior Court, supra, 24 Cal.App.4th 425 , is disapproved to the extent it conflicts with the conclusions set forth in this opinion.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
The action involves a dispute over the extent of defendant’s obligation under the additional insured endorsements of two insurance policies to provide plaintiff with a defense in a third party’s construction defects lawsuit.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
It is settled that where an insurer has a duty to defend, the obligation generally applies to the entire action, even though the suit involves both covered and uncovered claims, or a single claim only partially covered by the policy.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
Defendant contends that in this case nothing supports a finding plaintiff had an objectively reasonable expectation of a full and complete defense, and this court lacks the power to rewrite the policies. This argument lacks merit because an insurer’s duty to defend the entire action is based on public policy, not the terms of the parties’ contract.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
Since plaintiff was entitled to have defendant provide a defense to the entire action as a matter of public policy, we reverse the trial court’s decision.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
Disposition The judgment is reversed and the matter remanded to the superior court for further proceedings. Appellant shall recover its costs on appeal. Sills, P. J., and Beds worth, J., concurred. A petition for a rehearing was denied July 10, 2001, and respondent’s petition for review by the Supreme Court was denied September 19, 2001. Chin, J., did not participate therein. Kennard, J., was of the opinion that the petition should be granted.
The words that state the rule
Here, the subcontract at issue not only failed to limit or exclude Weather Shield’s duty “to defend” IMP, as otherwise provided by subdivision 4 of section 2778, it confirmed this duty. In language similar to that of the statute, the subcontract explicitly obligated Weather Shield both to indemnify IMP against certain claims, and “at [its] own expense to defend’ IMP against “any suit or action . . . founded upon” such claims. (Italics added.)
The words that state the rule
The questions we shall address, and the answers we shall give, are these: First, may the insurer seek reimbursement from the insured for defense costs? Yes, as to claims that are not even potentially covered, but no, as to those that are. Second, for what specific costs may the insurer obtain reimbursement? Those that can be allocated solely to claims that are not *40 even potentially covered. Third, when the insurer seeks reimbursement, which party must carry the burden of proof? The insurer. Fourth and final, what is the burden of proof? Proof by a preponderance of the evidence.
- statuteCal. Civ. Code § 2782.2enactment date not established
The words that state the rule
(a) Nothing contained in subdivision (a) of Section 2782 prevents an agreement to indemnify a professional engineer against liability for the negligence of the engineer, or the engineer’s agents or employees, in providing inspection services to plants or other facilities if all the following criteria are satisfied: (1) The promisor is the owner of the plants or facilities inspected. (2) The promisor is audited annually by an independent certified public accountant, public accountant, or accounting licentiate of another state authorized by the laws of that state to perform the audit. (3) The net worth of the promisor exceeds ten million dollars ($10,000,000), as determined by the promisor’s most recent annual independent audit. The requirement of this paragraph shall be satisfied at the time the contract for indemnification is entered, and a subsequent reduction of the promisor’s net worth shall not void the obligation to indemnify. (4) The promisor is self-insured with respect to liability arising from ownership of the plant or facility. (5) The indemnification shall not be applicable to the first two hundred fifty thousand dollars ($250,000) of liability. (b) Subdivision (a) does not authorize contracts for indemnification of liability arising from willful misconduct.
- statuteCal. Civ. Code § 2782.6enactment date not established
The words that state the rule
(a) Nothing in subdivision (a) of Section 2782 prevents an agreement to indemnify a professional engineer or geologist or the agents, servants, independent contractors, subsidiaries, or employees of that engineer or geologist from liability as described in Section 2782 in providing hazardous materials identification, evaluation, preliminary assessment, design, remediation services, or other services of the types described in Sections 78125 and 78135 of the Health and Safety Code or the federal National Oil and Hazardous Substances Pollution Contingency Plan (40 C.F.R. Sec. 300.1 et seq.), if all of the following criteria are satisfied: (1) The services in whole or in part address subterranean contamination or other concealed conditions caused by the hazardous materials. (2) The promisor is responsible, or potentially responsible, for all or part of the contamination. (b) The indemnification described in this section is valid only for damages arising from, or related to, subterranean contamination or concealed conditions, and is not applicable to the first two hundred fifty thousand dollars ($250,000) of liability or a greater amount as is agreed to by the parties. (c) This section does not authorize contracts for indemnification, by promisors specified in paragraph (2) of subdivision (a), of any liability of a promisee arising from the gross negligence or willful misconduct of the promisee.
- case90 Cal. App. 4th 571Presley Homes, Inc. v. American States Insurance Co.Cal. Ct. App.decided 2001read it at the source ↗
The words that state the rule
Link’s policy included an endorsement amendingAhe definition of an insured “to include [plaintiff] . . . subject to the following provisions. [^] 1. This insurance applies only with respect to liability: fl[] a. Arising out of ‘your work’ for that insured by or for you; or fl[] b. Arising from the general supervision of ‘your work’ by [plaintiff]. fl[] 2. This insurance does not apply to ‘bodily injury’ or ‘property damage’ arising out of the sole negligence or willful misconduct of, or for defects in design furnished by, [plaintiff].” The endorsement also modified Link’s policy to declare, “This insurance is primary, and our obligations are not affected by any other insurance carried by such additional insured whether primary, excess, contingent, or on any other basis.” The additional insured endorsement in *574 Sunrise’s policy stated as follows: “Who Is an Insured (Section II) is amended to include [plaintiff] as an insured . . . , but only with respect to liability arising out of ‘your work’ for that insured by or for you.”
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(j) A general contractor, construction manager, or subcontractor shall have the right to seek equitable indemnity for any claim governed by this section. (k) Nothing in this section limits, restricts, or prohibits the right of a general contractor, construction manager, or subcontractor to seek equitable indemnity against any supplier, design professional, product manufacturer, or other independent contractor or subcontractor.
- statuteCal. Civ. Code § 2782.05enactment date not established
The words that state the rule
(l) This section shall not affect the validity of any existing insurance contract or agreement, including, but not limited to, a contract or agreement for workers’ compensation or an agreement issued on or before January 1, 2012, by an admitted insurer, as defined in the Insurance Code.
- statuteCal. Civ. Code § 2783enactment date not established
The words that state the rule
As used in Sections 2782 and 2782.5, “construction contract” is defined as any agreement or understanding, written or oral, respecting the construction, surveying, design, specifications, alteration, repair, improvement, renovation, maintenance, removal of or demolition of any building, highway, road, parking facility, bridge, water line, sewer line, oil line, gas line, electric utility transmission or distribution line, railroad, airport, pier or dock, excavation or other structure, appurtenance, development or other improvement to real or personal property, or an agreement to perform any portion thereof or any act collateral thereto, or to perform any service reasonably related thereto, including, but not limited to, the erection of all structures or performance of work in connection therewith, electrical power line clearing, tree trimming, vegetation maintenance, the rental of all equipment, all incidental transportation, moving, lifting, crane and rigging service and other goods and services furnished in connection therewith.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.