Legislative Alert! Support SB368/HB681

Support Maryland SB368 / HB681 - Courts - Prohibited Indemnity and Defense Liability Agreements

 
Hearings have been held in both the Senate Judicial Proceedings Committee (SB 368) and House Judiciary Committee (HB 681) on the ACEC/MD-initiated Duty to Defend legislation.  While both conversations with committee leadership and questions during the hearings have been positive, that will not be enough!   We very much need your assistance to help get this legislation across the finish line.  With a vote on this legislation expected as early as this week, it is imperative that you, and your employees, contact your elected officials to encourage them to vote favorably on this legislation.
 
Utilizing the sample letter below, whether your elected officials serve on the aforementioned committees, please contact them today to request their support.  If possible, please personalize your correspondence.   For contact information on your elected officials, please utilize the ACEC/MD Legislative Action Center under Advocacy on the ACEC/MD website – www.acecmd.org.  If you have any questions, please contact the ACEC/MD office.

Text of Maryland Senate Bill 368

Text of Maryland House Bill 681

Senate Committee on Judicial Proceedings

House Committee on Judiciary


 

Sample Letter

 
(To My Elected Representative)
 
I strongly support Senate Bill 368/House Bill 681 - Courts - Prohibited Indemnity and Defense Liability Agreements, and we urge the General Assembly to pass this important correction to poor public policy.  Expecting an engineering firm to pay all the indemnity and all the defense costs for all claims, where they bear no responsibility for the proximate cause, is not a fair business practice.

Both the Virginia and North Carolina legislatures recently passed similar provisions to what is included in this bill. Not only is the North Carolina example noteworthy because of its recent enactment that also ties a duty to defend to a court determined proximate cause, but also because the provision changed is nearly identical to the current Maryland law. 

The engineering profession is being saddled with an unfair practice of being strong-armed into accepting an uninsurable and inequitable level of liability that could easily cause a small firm to go out of business.  We simply cannot take on liability and indemnity for things that we did not cause and cannot control, and are often required to defend our clients through uninsurable duty to defend clauses prior to, devoid of, and independent of being proven negligent or assigned any portion of negligence.

Design professionals are willing to stand behind their services and understand the unique responsibilities and duties they owe in connection with their professional services.  The intent of this legislation is not to negate responsibility or to avoid liability for losses or damages that are caused by the fault or negligence of the design professional; but as a matter of public policy, there must be limits. The legislation recognizes that rather than an upfront duty to defend, the design professional’s duty to indemnify and pay legal fees and defense costs should be tied to the proximate cause, and is best attributed once fault and legal liability has been established.

It is important to note that the professional liability insurance covers the design professional’s legal fees, but not the fees associated with defending the owner; and these fees can be significant. Therefore, we believe, that instead of requiring the design professional to pay for upfront duty to defend costs for the owner before fault has been established through a legal process, that the financial responsibility be tied to the extent to which the design professional was the proximate cause of the losses or damages. If the design professional was found to be responsible at the end of the legal process, we would at that point reimburse the owner for the legal fees and defense costs, which our insurance would cover. 

Thank you for your consideration of our opinion on this important matter, and respectfully ask for your support.
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For additional information, please contact
Jim Otradovec, Executive Director
American Council of Engineering Companies/Maryland
8254 Bayside Drive
Pasadena, MD  21122
Phone 410-539-1592



 
 
 


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