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ACEC Fighting California Court Decision

As you may know, ACEC/California is waging an important legislative effort to reverse a flawed California Supreme Court decision of 2008 (Crawford v. Weather Shield Mfg. Inc.) that can require engineering firms to pay the legal fees of their clients when these clients are sued by a third party, even when the engineering firm was not negligent in any way. At the request of ACEC/California, ACEC’s Minuteman Fund supported an amicus brief in a case seeking to overturn Crawford, but the state Supreme Court declined to hear the case. ACEC/CA is now turning to a legislative solution in the California legislature (SB 972), which we hope will at least mitigate the damage caused by the two court rulings, but which has gained opposition from many client organizations. To download a copy of SB 972 or any other California bill go to www.leginfo.ca.gov.

We urge that letters for support of SB972 be sent from member firms with California offices to California legislators through the ACEC/California link: http://www.acec-ca.org/?pid=297. ACEC/California Executive Director Paul Meyer is spearheading this campaign and can be turned to for guidance (pmeyer@acec-ca.org).

California courts have issued two court cases Crawford v. Weather Shield in July 2008 and UDC v. CH2M Hill in January 2010, which together impose on engineering and surveying firms dramatically expanded duties to defend indemnitees (i.e. clients).  ACEC/CA had mounted a strong effort to attempt to persuade the California Supreme Court to either de-publish or review the Appeals Court ruling in UDC.  Unfortunately the Supreme Court declined to either de-publish or review the case and so allowed the Appeal Court ruling in UDC to stand.  

Meanwhile, Crawford the California Supreme Court interpreted the provisions of a broadly-drafted indemnification clause and defense clause in an agreement between a general contractor and a subcontractor to hold that the subcontractor had a duty to defend litigation arising from the subcontractor’s work, even though the subcontractor was later found not to be negligent. 

A recent intermediate Appellate Court decision has interpreted and applied Crawford against a design professional in UDC-Universal Development, L.P. v. CH2M Hill (181 Cal.App.4th 10) and reaffirmed that a design professional will have an immediate defense obligation to defend a contractual indemnitee from liability, even though the design professional was held to have no liability when the matter was tried to a jury.

The recent decision by the Sixth District Court of Appeal is troubling for several reasons.  First, there was an express finding by the jury that CH2M Hill was not negligent.  Further, the contractual defense provision provided that CH2M Hill owed no defense obligation to its client unless CH2M Hill was negligent.  Third, the underlying claims filed by a homeowners’ association did not contain factual allegations that CH2M Hill was negligent.