On March 29, 2012, Washington’s Governor signed into law SHB 1559, which amended the scope of the “anti-indemnity statute” (RCW 4.24.115). RCW 4.24.115 now specifically includes design professionals in its coverage. As previously written, the statute applied to “construction contracts,” but there was some question whether that broad reference included design professional contracts. The revised statute clears up any doubt that it applies to construction contracts and contracts for “architectural, landscape architectural, engineering and land surveying services.”
- When the statute was revised, the Legislature broadened the scope of the anti-indemnity law’s coverage to include the “duty to defend.” The hold harmless obligation in construction generally includes two duties: the “duty to indemnify” (the duty to pay the ultimate judgment) and the “duty to defend” (the duty to pay the defense costs until the matter is settled or a judgment is rendered). In many instances, the duty to defend (the cost of lawyer’s fees, court costs, arbitration costs, etc.) can exceed the ultimate judgment or settlement amount. The design professionals were able to modify the statute such that both the duty to indemnify and the duty to defend are now part of the anti-indemnity statute. Without the duty to defend, construction contractors and design professionals were often required to pay or provide the legal defense related to a particular claim arising out of the work or services provided, irrespective of whether the entity receiving the defense was negligent. The revised statute expressly limits the duty to defend and voids the indemnity provisions that require construction contractors and designers to defend customers for personal injury and property damage claims arising out of the customer’s negligence.
- The statute previous to the amendment had limited its application to liability for damages arising out of bodily injury or property damages only, but indemnity clauses often encompass a much broader scope of damages. As revised now, the statute expands the scope to include any damages arising out of the services (work) provided.
This amendment, adding designers to the anti-indemnity statute, has a side benefits for construction contractors who are already covered by the anti-indemnity statute. The amendments eliminate the duty to defend and make it clear that the anti-indemnity protection extends to the “services” (work) performed by the construction contractors and design professionals. As revised, the statute eliminates some of uninsurable risks created by broad, all encompassing indemnity clauses in construction contacts, and will allow contractors to better allocate these risks.