Governor Schwarzenegger has now signed SB 972, a new law that clarifies when design professionals will owe a “duty to defend” to public agencies when lawsuits are filed that implicate the services provided by such professionals. The new statute, which will be effective on January 1, 2011, was adopted in response to two court decisions (Crawford v. Weather Shield Mfg., Inc. (2007) 44 Cal.4th 541 and UDC v. CH2M Hill (2010) 181 Cal.App.4th 10), which held that parties could be required to bear the costs of defense under common contractual indemnity provisions, even if they are not ultimately found to have been negligent.
This new law complements AB 573, adopted in 2006 and codified in Civil Code Section 2782.8, which limited the permissible scope of indemnity obligations that public agencies could obtain from design professionals to instances of negligence or intentional misconduct. Under the new law, which modifies Section 2782.8, the duty to defend will likewise only be implicated in instances of negligence or intentional misconduct.