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Legal - Review of 85th Legislature on the construction industry

image JD Holzheauser, Associate Peckar & Abramson, Austin, TX

HOUSTON - The Texas Senate and the House of Representatives (the “Legislature”) meets every two years. The Legislature convenes on the second Tuesday in January of every odd numbered year. The session ends 140 nights later. The Legislature is required to pass a state budget for the next biennium.

 

 

 

    But the Legislature also addresses issues that are important to industry in Texas, the construction industry in particular. The 85th Texas Legislature adjourned sine die on May 29, 2017, and the Legislature is not scheduled to reconvene until the start of the 86th Legislature in January 2019. So a review of some of the important issues addressed by the 85th Legislature is important to keep the construction industry informed and involved.
    House Bill (“HB”) 2121 relates to the recovery of attorney’s fees by a contractor in a lawsuit against the state. A contractor may receive attorney’s fees from the state if the contractor prevails on its breach of contract claim pursuant to Chapter 2260 of the Government Code and if the breach of contract claim is valued at less than $250,000. The word “may” is important because that indicates that awarding attorney’s fees is at the discretion of the administrative law judge.
    HB 3021 relates to indemnity provisions in architectural and engineering contracts. Essentially, the law prohibits broad and intermediate indemnity provisions against architects and engineers in contracts with state agencies. A “state agency” is defined in section 2052.101 of the Government Code.
    HB 3270 clarifies the requirements for mandatory background checks for persons working on school construction projects. Some people who meet certain requirements in the law are not subject to background checks.
    Senate Bill (“SB”) 807 changed Chapter 272 of the Business and Commerce Code. It stated that certain choice of law and venue provisions were voidable if the provisions are in a contract “principally for the construction or repair of an improvement to real property located in [Texas].” This wording created confusion among practitioners, so, in an effort to create more clarity and predictability, this bill strikes “principally for construction or repair” and broadly defines the term “construction contract.” Now the treatment of choice of law and venue provisions is clearer for everyone.
    SB 1877 relates to notifications from TxDOT related to notifications of proposed contracts. A law allowing individuals to sign up for notice from TxDOT of proposed contracts already existed. But this bill expanded that law to allow those same notices to be received via e-mail if the so indicated on the form filed with TxDOT.
    Those bills represent the highlights of what the passed into law out of the 85th Legislative Session. But there are some other bills of equal importance that did not make it to the finish line in 2017.
    HB 2343 would have allowed a contractor an opportunity to investigate and cure any alleged construction defects on one of the contractor’s projects before the property owner could file a claim to recover damages for the defect.
    Chapter 38 of the Civil Practice and Remedies Code says that a party who prevails in a breach of contract claim against an individual or corporation may receive attorney’s fees from that individual or corporation. However, its application in breach of contract lawsuits for contractors has been affected by recent appellate court decisions that have held that LLCs, LLPs, and LPs are not “corporations.” That essentially means a contractor who wins a breach of contract lawsuit against a LLC, LLP, or LP cannot receive attorney’s fees under Chapter 38. The House tried to fix that loophole through HB 744 and HB 2457, but failed.
    Mechanic’s lien law in Texas can be confusing and time consuming, especially for subcontractors. Several bills were filed in 2017 to change the mechanic’s lien law. HB 2668 and 2073 would have changed language in the lien law regarding retained funds. And HB 3065 and SB 1506 were identical bills that were wholesale revisions of the mechanic’s lien law. None of these bills made it to the Governor’s desk.
    Despite these failures, the bills that did not pass represent important issues in the construction industry. Therefore, it is likely they will reemerge in the next legislative session.


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Author Info
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Tanya Erickson houstoneditor@constructionnews.net