SF 1227

as introduced - 88th Legislature (2013 - 2014) Posted on 03/12/2013 08:41am

A bill for an act
relating to commerce; regulating indemnification agreements and agreements
to insure in building and construction contracts; amending Minnesota Statutes
2012, sections 337.02; 337.04; 337.05, subdivisions 2, 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 337.02, is amended to read:

337.02 UNENFORCEABILITY OF CERTAIN AGREEMENTS.

An indemnification agreement contained in, or executed in connection with, a
building and construction contract is unenforceable except to the extent that: (1) the
underlying injury or damage is attributable to the negligent or otherwise wrongful act or
omission, including breach of a specific contractual duty, of the promisor or the promisor's
independent contractors, agents, employees, or delegatees; or (2) an owner, a responsible
party, or a governmental entity agrees to indemnify a contractor directly or through another
contractor with respect to strict liability under environmental laws new text begin ; provided, however,
that if an indemnification agreement requires that a promisor indemnify or hold harmless a
promisee from the promisee's negligence, then the indemnification agreement covering
the promisee's negligence is valid to the extent the promisor promises to obtain the
specifically identified insurance types and limits specified by the promisee in a building
and construction contract between the promisor and promisee pursuant to section 337.05 new text end .

Sec. 2.

Minnesota Statutes 2012, section 337.04, is amended to read:

337.04 VALIDITY OF OTHER AGREEMENTS.

Sections 337.01 to 337.05 do not affect the validity of any insurance contract
new text begin including, without limitation, general liability insurance policies, professional liability
insurance policies, builders risk policies, property policies, workers' compensation
policies, owner or contractor controlled insurance programs or policies new text end , workers'
compensation deleted text begin agreement deleted text end new text begin agreements or insurance policies new text end , construction deleted text begin bond deleted text end new text begin bonds new text end , or
other agreement lawfully issued by an insurer or bonding company new text begin relating to or regarding
a building and construction contract new text end .

Sec. 3.

Minnesota Statutes 2012, section 337.05, subdivision 2, is amended to read:

Subd. 2.

Indemnification for breach of agreement.

If:

(a) a promisor agrees new text begin in a building and construction contract new text end to provide deleted text begin specific deleted text end new text begin the
new text end types and limits of insurance new text begin specified in the building and construction contract between
the promisor and the promisee new text end ; and

(b) a claim arises within the scope of the specified insurance; and

(c) the promisor did not obtain and keep in force the specified insurance;

then, as to that claim and regardless of section 337.02, the promisee shall have
deleted text begin indemnification from deleted text end new text begin recourse against new text end the promisor to the same extent as the specified
insurance new text begin , and indemnification from the promisor to the extent coverage would be
provided by the specifically identified types and limits of insurance specified by the
promisee in its building and construction contract with the promisor new text end .

new text begin For purposes of this subdivision, if the promisor claims that it obtained and kept in
force the specified insurance, but the insurance did not provide coverage for the claim
at issue, the promisor has the burden to show that the claim was not within the scope of
the specified insurance.
new text end

Sec. 4.

Minnesota Statutes 2012, section 337.05, subdivision 3, is amended to read:

Subd. 3.

When indemnification not available.

The indemnification stated in
subdivision 2 is not available if:

(a) the specified insurance was not reasonably available in the market; and

(b) the promisor so informed the other party to the agreement to insure new text begin in a written
notice new text end before signing the agreement new text begin and did not withdraw the written notice in the
indemnity agreement new text end , or signed the agreement subject to a written exception as to the
nonavailable insurance.