Date: 02/26/2015

Final
BILL SUMMARY for HB15-1197

HOUSE COMMITTEE ON JUDICIARY

Votes: View--> Action Taken:
Adopt amendment L.001 (Attachment G). The motion p
Refer House Bill 15-1197, as amended, to the Commi		Pass Without Objection
PASS



05:16 PM -- HB15-1197

The committee recessed.


05:28 PM

The committee returned to order. Representative Tate, prime sponsor, presented House Bill 15-1197, concerning limitations on indemnity obligations in public construction contracts. Representative Tate read a statement in support of the bill. Committee members received copies of the statement (Attachment E). Representative Tate responded to questions regarding the ease with which general contractors can attain liability insurance, and a hypothetical situation where a contractor may have a duty to defend.

15HouseJud0226AttachE.pdf15HouseJud0226AttachE.pdf

05:40 PM

Representative Tate responded to questions regarding whether individual companies are responsible for paying expenses based on indemnity of public contracts, or whether public entities are responsible.


05:43 PM

The following persons testified regarding HB 15-1197:

05:43 PM -- Ms. Marilen Reimer, representing ACEC, testified in support of the bill. Committee members received a packet of information in support of the legislation (Attachment F). Ms. Reimer explained how the bill would equalize indemnity laws between private sector and public sector contracts, and discussed the due process and fairness aspects of the bill. Ms. Reimer responded to questions regarding the duty to defend on the part of general contractors, while other parties are not subject to this duty. Ms. Reimer responded to further questions regarding the reasonableness of placing indemnity clauses in contracts of some parties and not others.

15HouseJud0226AttachF.pdf15HouseJud0226AttachF.pdf

05:52 PM -- Ms. Helga Grunerud, representing the Hispanic Contractors of Colorado, testified in support of the bill. Ms. Grunerud explained how small companies are required to defend public entities in lawsuits under current law. Ms. Grunerud responded to questions regarding certain companies not bidding on certain public contracts based on this requirement.

05:56 PM -- Ms. Deanne Durfee, representing the Denver City Attorney and the Special District Association, testified in opposition to the bill. Ms. Durfee expressed concerns about the determination of the duty to defend or indemnify at the time of adjudication under the bill, and the potential for taxpayers to be burdened with the costs of the duty to defend, driving up the costs of public projects. Ms. Durfee responded to questions regarding a forthcoming amendment, and the potential for including the allocation of costs associated with liability during contract negotiations. Ms. Durfee responded to questions regarding the potential for removing the duty to defend for contractors to reduce public construction contract costs, and the potential for further amending the bill. Ms. Durfee responded to questions regarding requiring contractors to indemnify public entities for problems caused by the public entity.


06:08 PM

Ms. Durfee responded to questions regarding whether imposing a duty to defend on a professional services contract constitutes an adhesion contract, and whether duty to defend clauses are removed from contracts executed by Denver. Ms. Durfee responded to questions regarding the potential impact of the bill on the city's contract negotiations.

06:13 PM -- Mr. Andy Karsian, representing the Department of Transportation and Colorado Counties, Inc., testified in opposition to the bill. Mr. Karsian expressed concern with a provision in a forthcoming amendment that would require public contracts to go before a dispute resolution board under certain circumstances. Mr. Karsian responded to questions regarding the duty to defend in Department of Transportation contracts, and the impact of the bill on the department. Discussion returned to the department's concerns about the impact of the bill on contract mediation. Discussion ensued regarding the potential for further amending a forthcoming amendment to address the department's concerns.

06:25 PM -- Mr. Mark Radtke, representing the Colorado Municipal League, testified in opposition to the bill. Mr. Radtke discussed the prevalence of the use of duty to defend clauses in public contracts. Mr. Radtke responded to questions regarding how public entities use these clauses for contract negotiation purposes.

06:28 PM -- Mr. Bill Seafoorce, representing himself, testified in support of HB 15-1197. Mr. Seafoorce explained that the bill institutes fairness in the design component of construction contracts, and discussed the nature of alternative dispute resolution in a forthcoming amendment. Mr. Seafoorce responded to questions regarding the inability of professional services contractors to obtain liability insurance.

06:34 PM -- Mr. Phil Cardi, representing himself, testified in support of the bill. Mr. Cardi explained how public entities are losing good engineering firms for its projects under current law, and discussed the alternative dispute resolution process contemplated under amendment L.001 (Attachment G). Mr. Cardi responded to questions regarding the frequency with which firms will not sign contracts containing duty to defend clauses, and the prevalence of the problem to be solved by the bill.

15HouseJud0226AttachG.pdf15HouseJud0226AttachG.pdf

06:40 PM -- Mr. Ed Hayes, representing himself, made himself available to answer questions.

06:42 PM -- Ms. Lisa Goodbee, representing Goodbee and Associates, testified in support of HB 15-1197. Ms. Goodbee discussed the use of duty to defend clauses in contracts to which she has been a party, and the placement of small firms in a disadvantageous position by such clauses.

06:44 PM -- Ms. Melissa Rosas, representing Apex Design, testified in support of the bill. Ms. Rosas explained the process by which she negotiates away duty to defend clauses in contracts.

06:46 PM -- Mr. Robert Refvem, representing Felsburg, Holt, and Ullevig, testified in support of the bill. Mr. Refvem discussed the percentage of public entities that include duty to defend clauses in contracts. Mr. Refvem rebutted previous testimony.

06:49 PM -- Ms. Linda Purcell, representing herself and AIA Colorado, testified in support of the bill. Ms. Purcell discussed some recent contracts she has been involved with that contained duty to defend contracts, and explained the multi-tiered aspect public works contracts.

06:55 PM -- Mr. Bill Green, representing himself, testified in support of HB 15-1197. Mr. Green discussed the work of his engineering firm, and the risks associated with signing a contract containing a duty to defend clause. He explained that municipalities are shifting risks using these clauses.

06:59 PM -- Mr. Kevin Heronimus, representing AIA Colorado, testified in support of the bill. Mr. Heronimus explained how the bill may cause utilities to bypass certain professional services contractors, resulting in the loss of value.

07:01 PM -- Ms. Cathy Rosset, representing AIA Colorado, testified in support of the bill. Ms. Rosset discussed the number of firms that are subject to building contracts with duty to defend clauses, and the proper indemnification process for municipalities. Ms. Rosset responded to questions regarding the number of member firms in AIA Colorado.

07:03 PM -- Mr. Nikolaus Remus, representing DCA Architects and Engineers and the American Institute of Architects, testified in support of the bill. Mr. Remus discussed a contract containing a duty to defend that his firm was asked to sign, and the liability exposure that would have resulted had they signed it. He explained that his firm has been wrongly named in lawsuits in the past, and explained that duty to defend clauses are unfair. Mr. Remus responded to questions regarding the potential for certain parties to be named in negligence lawsuits. Discussion ensued on this point.

07:08 PM -- Mr. David Sprunt, representing the American Society of Landscape Architects, testified in support of HB 15-1197. Mr. Sprunt discussed the work of the society's member firms, and explained that the bill would level the playing field among contractors. He explained that the bill is fair and provides for due process.
BILL:HB15-1197
TIME: 07:12:31 PM
MOVED:Willett
MOTION:Adopt amendment L.001 (Attachment G). The motion passed without objection.
SECONDED:Salazar
VOTE
Buckner
Court
Dore
Foote
Lawrence
Lundeen
Neville P.
Pettersen
Salazar
Van Winkle
Willett
Lee
Kagan
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


07:12 PM

Representative Tate provided closing remarks in support of HB 15-1197.
BILL:HB15-1197
TIME: 07:13:27 PM
MOVED:Salazar
MOTION:Refer House Bill 15-1197, as amended, to the Committee of the Whole. The motion passed on a vote of 13-0.
SECONDED:Dore
VOTE
Buckner
Yes
Court
Yes
Dore
Yes
Foote
Yes
Lawrence
Yes
Lundeen
Yes
Neville P.
Yes
Pettersen
Yes
Salazar
Yes
Van Winkle
Yes
Willett
Yes
Lee
Yes
Kagan
Yes
Final YES: 13 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS



07:17 PM

The committee adjourned.