THE CHARLES MACHINE WORKS, INC. v. BUTLER RENTAL & SALES, INC.--Appeal from 94th District Court of Nueces County
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NUMBER 13-09-00103-CV COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG THE CHARLES MACHINE WORKS, INC., Appellant, v. BUTLER RENTAL AND SALES, INC., Appellee. On appeal from the 94th District Court of Nueces County, Texas. OPINION Before Justices Yañez, Benavides, and Vela Opinion by Justice Yañez Appellant, Charles Machine Works, Inc. ( Charles ), appeals the trial court s order denying its motion for summary judgment and granting summary judgment in favor of appellee, Butler Rental and Sales, Inc. ( Butler ), on Butler s statutory claim for indemnity for losses arising out of a products liability suit.1 By four issues, Charles contends that the trial court erred in granting summary judgment on Butler s chapter 82 indemnity claim because Charles owed no duty to indemnify Butler for sums that Butler paid in settlement of claims for which Butler was independently liable.2 We affirm. I. Background In April 2006, while inspecting a ditch being dug at a construction site, Manuel Aldape Duron Jr. was killed by a Ditch Witch trencher manufactured by Charles and leased to Duron s company by Butler. In April 2007, Duron s survivors ( the plaintiffs ) sued Charles and Butler, alleging several products-liability and negligence theories against 1 See T EX . C IV . P R AC . & R EM . C OD E A N N . § 82.002 (Vernon 2005). 2 Specifically, Charles characterizes its issues as follows: 1. The [j]udgm ent appealed requires Charles to indem nify Butler for sum s Butler paid the Plaintiffs to settle claim s based on Butler s negligence, intentional m isconduct or other acts or om issions for which Butler is independently liable, that is, claim s that the statute specifically exem pts from the obligation to indem nify. 2. Charles [s] settlem ent of all claim s against Butler except those for which Butler is independently liable (language of 82.002) fully redeem s Charles[ s] obligation as a m anufacturer to indem nify a seller of the m anufacturer s product when seller is sued both in product liability and negligence. 3. Charles settled all claim s asserted by the Durons against Butler except claim s defined in Section 82.002 as those for which Butler was independently liable. Therefore, when Butler, thereafter, paid the Durons $75,000.00 in settlem ent[,] it could not have been to settle any claim for which Charles was obligated to indem nify Butler, such claim s having been previously settled by Charles. Butler has not, and can not, prove a loss for which it is entitled to indem nity. 4. Charles [s] partial satisfaction of the Judgm ent by paying all of the attorney s fees and costs incurred by Butler in defense of Plaintiffs suit fully satisfies any possible indem nity obligation Charles m ay have to Butler since the rem ainder of the Judgm ent is for sum s paid by Butler in settlem ent of Butler s independent liability and its fees and costs incurred in this suit to enforce an indem nity obligation that is not owed. Each of these issues appears to be sub-points in a single argum ent: that Charles had no duty to indem nify Butler for the am ount Butler paid in settlem ent because the settlem ent was to release claim s for which Butler was independently liable. 2 Charles and negligence theories against Butler.3 In its original answer, Butler asserted a cross-claim against Charles for statutory indemnity pursuant to chapter 82 of the civil practice and remedies code.4 The plaintiffs filed an amended petition on May 29, 2007. By a letter dated January 4, 2008, Charles offered to indemnify Butler for claims that the trencher was defective, but refused to provide indemnity for any negligence claims against Butler. The letter offered to reimburse Butler for its reasonable attorneys fees in defending the negligence claims successfully by obtaining a defense verdict or a dismissal with prejudice. Charles did not receive a response to its offer. On March 14, 2008, Charles executed a confidential settlement agreement with the plaintiffs, by which the plaintiffs settled and released all product liability claims against both Charles and Butler. However, the agreement expressly did not release the plaintiffs claims based on Butler s negligence, intentional misconduct or other act[s] or omission[s] 3 The negligent acts and om issions alleged by the plaintiffs against Butler included: renting the Ditch W itch without the proper accessories and equipm ent; failing to provide adequate operational instructions and training to the renters; and failing to properly train and/or supervise its own em ployees. 4 See T EX . C IV . P R AC . & R EM . C OD E A N N . § 82.002, which provides, in pertinent part: (a) A m anufacturer shall indem nify and hold harm less a seller against loss arising out of a products liability action, except for any loss caused by the seller s negligence, intentional m isconduct, or other act or om ission, such as negligently m odifying or altering the product, for which the seller is independently liable. .... (e) The duty to indem nify under this section: (1) applies without regard to the m anner in which the action is concluded; and (2) is in addition to any duty to indem nify established by law, contract, or otherwise. Id. 3 for which Butler is independently liable. 5 On March 24, 2008, Butler filed a supplemental answer, in which it (1) re-asserted its cross-claim against Charles for statutory indemnity and (2) asserted the affirmative defense of release, contending that the March 14, 2008 settlement agreement released all claims against it.6 On May 29, 2008, Butler sent a letter to Charles, advising that it had settled with the plaintiffs for $75,000, without admitting any fault. Butler s letter sought indemnity from Charles for the $75,000 settlement amount, plus attorneys fees and costs, pursuant to chapter 82 of the civil practice and remedies code.7 On August 4, 2008, the trial court issued an Agreed Order of Dismissal in Butler s favor, dismissing with prejudice all of the [plaintiffs ] claims that have been asserted, or may have been asserted by the plaintiffs against Butler. Thus, as of August 4, 2008, none of the plaintiffs claims against Butler remained pending. On August 19, 2008, Charles filed a traditional motion for summary judgment, arguing that it was not obligated to indemnify Butler for the $75,000 in settlement monies because those funds were paid to release Butler for its own independent negligence. According to Charles s motion, there is evidence to suggest Butler was independently liable for Plaintiffs damages. The payment of $75,000 to obtain a release from any further liability is evidence that a portion of Plaintiffs loss is attributable to Butler s independent 5 The March 4, 2008 settlem ent agreem ent is not included in the record. Attached as evidence to Charles s m otion for sum m ary judgm ent is a docum ent designated as Exhibit A to Settlem ent Agreem ent Executed March 14, 2008. Exhibit A states that it is hereby incorporated into the settlem ent agreem ent. As noted, it states that the plaintiffs are settling and releasing the products liability claim s against Charles and Butler, but states that it does not apply to the plaintiffs claim s against Butler for Butler s independent negligence or liability. 6 There is no indication in the record that the trial court was ever provided a copy of the settlem ent agreem ent. 7 See T EX . C IV . P R AC . & R EM . C OD E A N N . § 82.002. 4 negligence. Charles also cited, as evidence of Butler s independent liability, a statement taken from the plaintiffs safety expert report asserting that Butler failed to properly train and warn customers of the dangers associated with using the Ditch Witch.8 In support of its motion, Charles attached the following summary judgment evidence: (1) its January 4, 2008 letter offering to indemnify Butler for products-liability claims; (2) an affidavit by Robert D. Tomlinson, Charles s counsel, which verified that the January 4, 2008 letter offered to indemnify Butler for products-liability claims, but not for Butler s own negligence; stated that the only response was Butler s May 29, 2008 demand letter; and verified Exhibit D, describing the claims released by the settlement agreement, as an exhibit incorporated into the March 14, 2008 settlement agreement; (3) an excerpt from the plaintiffs expert report; (4) Exhibit D to the motion, entitled Exhibit A to Settlement Agreement Executed March 14, 2008, releasing all products-liability claims against Charles and Butler; and (5) the May 29, 2008 letter from Butler demanding indemnity. On September 2, 2008, Butler filed a traditional and no-evidence motion for summary judgment,9 which included a response to Charles s motion and objections to (1) 8 The statem ent in the report apparently, an excerpt from the report of plaintiff s safety expert, Dr. Gary Nelson is attached as sum m ary judgm ent evidence to Charles s m otion and states as follows: 19. Regarding Butler Rental, they failed to recognize the dual purpose the trench cleaner serves as discussed above and [failed to] install such option on all their trenchers for the protection of their custom ers[,] and in accordance with the third rule of hazard control, failed to properly train their rental custom ers in the safe use of the rented equipm ent, and warn them of any potential dangers associated with its use. W e note that Exhibit C, attached to Charles s m otion, consists only of the first page of the report and what appears to be page 18, containing the paragraph referencing Butler. The paragraphs im m ediately preceding paragraph 19 on Page 18 appear to address various alleged inadequacies in the Operating Manual. Thus, it is im possible to determ ine, on the record, what alleged failure[s] to recognize . . . and install Dr. Nelson was referring to in paragraph 19. 9 See T EX . R. C IV . P. 166a(c), (i). 5 Nelson s report as summary judgment evidence and (2) the characterization of Butler s settlement as evidence of its independent culpability. In its motion, Butler asserted that (1) it was entitled to statutory indemnity unless Charles could prove the statutory exception that Butler s independent negligence caused the plaintiffs injuries and (2) Charles could not prove that Butler s independent negligence caused the plaintiffs injuries. Butler argued that Charles had the burden to prove Butler s independent culpability, and that the evidence fails to establish any such independent culpability. In support of its motion for summary judgment, Butler attached the following as evidence: (1) an affidavit by its counsel, Will W. Pierson, which (a) verified Exhibits 1A through 1E; (b) explained why Butler s $75,000 settlement of the plaintiffs claims was reasonable; and (c) outlined and explained Butler s attorneys fees and expenses in defending against the plaintiffs claims; (2) copies of the plaintiffs original and first amended petitions; (3) a copy of Charles s designation of experts;10 (4) excerpts from the deposition of Rich Lambert, an employee of Charles and designated as an expert witness by Charles;11 (5) Pierson s curriculum vitae; and (6) a copy of Charles s objections and responses to discovery requests sent by Butler. Butler s motion asserts that it is entitled to judgment on both traditional and noevidence grounds. Butler argues that to avoid its duty to indemnify, Charles was required to prove Butler s independent culpability in causing the plaintiffs injuries. In the section of its motion urging judgment on traditional grounds, Butler points to statements made by 10 W e note that m any pages of the attached exhibits appear to be out of order in the clerk s record, and som e pages are apparently m issing. 11 In the excerpted testim ony, Lam bert testified that Butler did not alter or m odify the Ditch W itch, did not participate in the content or placem ent of the warning decals on the m achine, and did not participate in determ ining the content of the operator s m anual for the m achine. 6 Charles s own experts, Dr. Way Johnston and Rich Lambert. Specifically, Butler cites a statement in Johnston s report that there is no evidence of any negligence on the part of Butler Rental and Sales that caused the accident and resulting death of Manuel Duron. Butler also cites a section in Lambert s report noting that the Ditch Witch was in excellent condition, operating normally, and that the operator s manual was on the machine. In the no-evidence section of its motion, Butler argues that Charles has no evidence that any independent culpability by Butler caused the plaintiffs injuries, and thus, Charles does not meet the exception provided in section 82.002(a).12 Butler argues that Charles s evidence the statement of Dr. Nelson that Butler was guilty of two omissions and Butler s settlement with the plaintiffs is not competent evidence. Butler contends that the excerpts from Dr. Nelson s report are not competent summary judgment evidence because, among other reasons, the report is unauthenticated and unsworn and Dr. Nelson s statements are conclusory and lack a reliable foundation. With respect to Butler s settlement with the plaintiffs, Butler cites this Court s opinion in Oasis Oil Corp. v. Koch Refining Co.13 and the Texas Supreme Court s opinion in General Motors Corp. v. Hudiburg Chevrolet14 in support of its position that its settlement with the plaintiffs did not terminate its indemnity claims. Thus, Butler argues, because Charles s evidence of Butler s independent culpability is not competent summary judgment evidence, Charles has no evidence to support its affirmative defense. 12 See T EX . C IV . P R AC . & R EM . C O D E A N N . § 82.002(a). 13 60 S.W .3d 248, 255 (Tex. App. Corpus Christi 2001, pet. denied) ( Clearly, if a statutory seller s pretrial settlem ent of a qualifying products liability action is reasonable, then the statutory seller is entitled to indem nification from the statutory m anufacturer. ). 14 199 S.W .3d 249, 255-56 (Tex. 2006) ( This follows from section 82.002(e)(1), which states that the duty to indem nify under this section . . . applies without regard to the m anner in which the action is concluded whether by judgm ent, settlem ent, or dism issal. ). 7 On September 16, 2008, Charles filed a response to Butler s motion for summary judgment. As evidence of Butler s independent culpability, Charles offered the following summary judgment evidence: (1) excerpts from Nelson s deposition testimony; (2) an excerpt from Nelson s expert safety report (the same statement earlier submitted by Charles as summary judgment evidence); (3) a redacted Exhibit A to Settlement Agreement dated March 14, 2008; and (4) Tomlinson s affidavit identifying the exhibits. Charles attached only eight pages from Nelson s deposition testimony. The testimony established that Nelson had not conducted any interviews at other companies that rent trenchers to determine whether those companies provide any training to customers that rent trenchers. Nelson testified, in pertinent part: Q [Butler s counsel]: Now, you reviewed the deposition testimony of the [trencher] operator in this case, Alfonso Cardenas, correct? A [Nelson]: Yes. Q: And he in fact had been operating trenchers for Duron & Duron for over 15 years. A: That s my understanding, yes. Q: Okay. So you would expect someone with that length of time operating trenchers to have a lot of service hours with an RT 40 trencher, or similar trencher [Unidentified counsel]: Object to form. Q [Butler s counsel]: prior to the accident? A: Yes. Q: And you would agree that someone in that position would be an experienced operator of a trencher. 8 [Unidentified counsel]: Object to form. A: He s got a lot of hours in, let s put it that way. Q: And you would agree that someone with that much experience wouldn t need any type of basic training on how to operate a trencher. A: I would disagree. Sometimes, you know, somebody could have 1,500 hours worth of experience, or they could have one hour of experience repeated 1,500 times. In other words, just because he s got time in doesn t mean that he s been properly trained. .... Q: That really wasn t my question, but I ll get into that. My question was, [y]ou agree that Mr. Cardenas had about 15 years of experience using trenchers similar to the RT 40 prior to the accident. A: Yes. Q: He was not a first time user A: Correct. Q: of the RT 40 at the time of the accident. A: That s my understanding, yes. Q: He wasn t even a relatively new user of the RT 40 at the time of the accident. A: That s correct. Q: So you would agree with me that any training that Butler would have provided to him prior to the accident wouldn t have made any difference, [15] 15 Em phasis added. 9 [Unidentified counsel]: Q [Butler s counsel]: Objection, form. correct? Inexplicably, the excerpt ends with this question from Butler s counsel as to whether any training by Butler would have made a difference the only question in the record that arguably addresses whether the plaintiffs loss was caused by Butler s alleged failure to train. Charles chose not to include Nelson s answer to the question. On September 23, 2008, the trial court apparently heard both motions for summary judgment.16 On December 18, 2008, the court signed an Agreed Order of Dismissal, by which the plaintiffs dismissed all products-liability claims against Charles and Butler pursuant to a settlement agreement. The order notes that prior to entry of this Order of Dismissal, the plaintiffs had settled all their claims against Butler and that an order of dismissal against Butler was entered on August 4, 2008. On January 22, 2009, the trial court issued its Final Summary Judgment, by which the court: (1) overruled Butler s objections to Charles s summary judgment evidence; (2) denied Charles s motion for summary judgment; (3) granted Butler s motion for summary judgment on all issues ; (4) found that Butler is entitled to recover $75,000 in reasonable damages, $83,923.25 in reasonable attorneys fees and expenses incurred in defending against the plaintiffs claims, and $7,786.19 in reasonable attorneys fees and expenses to enforce its right to indemnification, for a total of $166,709.44 awarded to Butler; and (5) awarded Butler post-judgment interest and specified amounts for appellate costs in the 16 The record before us does not include a reporter s record of the hearing. However, the docket sheet reflects an entry for Motion for Sum m ary Judgm ent Hearing on Septem ber 23, 2008 and the court s final sum m ary judgm ent recites that the court heard the m otions on Septem ber 23, 2008. 10 event of an unsuccessful appeal by Charles.17 This appeal followed. II. Standard of Review and Applicable Law Here, Charles s motion was a traditional motion for summary judgment and Butler s motion was a combined traditional and no-evidence motion. We review the trial court's grant of summary judgment de novo.18 When, as here, both parties file a motion for summary judgment with the trial court, and one is granted and one is denied, the reviewing court determines all questions presented and renders the judgment that should have been rendered by the trial court. 19 When the trial court does not specify the basis for its ruling, it is the appellant's burden on appeal to show that none of the independent grounds that were asserted in support of summary judgment is sufficient to support the judgment.20 Thus, when the trial court's order granting summary judgment does not specify the grounds on which it was granted, we will affirm the summary judgment if any of the advanced theories support the judgment.21 When a party moves for summary judgment under both rules 166a(c) and 166a(i) of the Texas Rules of Civil Procedure, we will first review the trial court's judgment under the standards of rule 166a(i).22 If the appellant fails to produce more than a scintilla of 17 Charles has m ade partial paym ent to Butler of $83,923.25 in attorneys fees and expenses, and the court approved a supersedeas bond filed by Charles in the am ount of $114,565.19. 18 D.R. Horton-Tex., Ltd. v. Markel Int l Ins. Co., 300 S.W .3d 740, 743 (Tex. 2009). 19 HC Beck, Ltd. v. Rice, 284 S.W .3d 349, 352 (Tex. 2009). 20 Coffey v. Singer Asset Fin. Co., 223 S.W .3d 559, 562-63 (Tex. App. Dallas 2007, no pet.) (citing Star-Telegram, Inc. v. Doe, 915 S.W .2d 471, 473 (Tex. 1995)). 21 Browning v. Prostok, 165 S.W .3d 336, 344 (Tex. 2005) (citing Provident Life Ins. Co. v. Knott, 128 S.W .3d 211, 216 (Tex. 2003)); Coffey, 223 S.W .3d at 563. 22 Ford Motor Co. v. Ridgway, 135 S.W .3d 598, 600 (Tex. 2004). 11 evidence under that burden, then there is no need to analyze whether appellee's summary judgment proof satisfies the less stringent rule 166a(c) burden.23 Section 82.002(a) of the civil practice and remedies code imposes a duty on manufacturers to indemnify sellers for a loss arising out of a products liability action. 24 It provides an exception for any loss caused by the seller s negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable. 25 Thus, to escape its duty to indemnify, the manufacturer must establish that the seller s independent culpable conduct caused the plaintiffs loss.26 Until the manufacturer establishes that a seller s independent conduct caused the plaintiff s injury, a mere allegation of negligence in the plaintiff s pleadings is sufficient to invoke the manufacturer s duty to indemnify the seller for all theories properly joined to a products liability claim.27 As the Texas Supreme Court recently clarified, what matters is not merely whether but why a seller is independently liable. 28 [T]he duty to indemnify under this section . . . applies without regard to the manner in which the action is concluded whether by judgment, settlement, or dismissal. 29 23 Id. 24 See T EX . C IV . P R AC . & R EM . C O D E A N N . § 82.002(a); Fresh Coat, Inc. v. K-2, Inc., 53 Tex. Sup. Ct. J. 1046, No. 08-0592, 2010 Tex. LEXIS 610, at *13 (Tex. Aug. 20, 2010). 25 Fresh Coat, Inc., 2010 Tex. LEXIS 610, at *13 (quoting T EX . C IV . P R AC . & R EM . C O D E A N N . § 82.002(a)). 26 Id. at **16-17, 19 ( To escape this duty to indem nify, the indem nitor m ust prove the indem nitee s independent culpability. ) (quoting Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W .3d 249, 255 (Tex. 2006) (em phasis in Fresh Coat)). 27 Owens & Minor, Inc. v. Ansell Healthcare Prods., 251 S.W .3d 481, 484 (Tex. 2008). 28 Fresh Coat, Inc., 2010 Tex. LEXIS 610, at *19. 29 Hudiburg, 199 S.W .3d at 256 (quoting T E X . C IV . P R AC . & R EM . C O D E A N N . § 82.002 (e)(1)); see Oasis Oil Corp., 60 S.W .3d at 255. 12 III. Discussion We begin by addressing Butler s no-evidence motion that Charles had no evidence that any independent culpability by Butler caused the plaintiffs injuries.30 As noted above, in response to Butler s motion, Charles offered: (1) excerpts from Nelson s deposition testimony; (2) paragraph 19 from Nelson s expert report; and (3) Exhibit A to the March 14, 2008 settlement agreement. We conclude that none of Charles s evidence established that the plaintiffs injuries were caused by Butler s independent culpability.31 As noted, Charles was required to prove that Butler s independent culpability caused the plaintiffs injuries.32 Nelson s deposition testimony established only that: (1) Nelson had not contacted other local companies that rent construction equipment to determine whether those companies provide training to their customers; and (2) in Nelson s opinion, although Cardenas had extensive experience operating trenchers and did not believe he needed training, he may not have been properly trained. The only question in the excerpted portions of Nelson s testimony which arguably addressed whether the plaintiffs loss was caused by Butler s alleged failure to train and therefore, might have raised a fact question as to causation was not answered in the excerpted testimony. As to paragraph 19 in Nelson s report, the only identifiable alleged failure attributable to Butler is the alleged failure to properly train [its] rental customers in the safe use of the rented equipment, and failure to warn [its customers] of any potential dangers associated 30 See Ford Motor Co., 135 S.W .3d at 600. 31 Butler objected to Nelson s expert report and deposition testim ony, but the trial court overruled those objections and considered the evidence. Because the trial court considered it, we consider it also; however, we need not, and do not, state any opinion as to the propriety of the trial court s decisions regarding Butler s objections. 32 Fresh Coat, Inc., 2010 Tex. LEXIS 610, at **16-17, 19. 13 with its use. This evidence does not raise a fact question as to whether the plaintiffs injuries were caused by Butler s alleged failure to train or failure to warn. With regard to the offer of Exhibit A to the March 14, 2008 settlement agreement, Charles argues that because the March 14, 2008 settlement agreement settled all products-liability claims against it and Butler, we must necessarily infer that Butler s subsequent settlement with the plaintiffs could only have been to release claims for which Butler was independently liable.33 It is clear, however, that Texas law does not support Charles s argument. An inference is insufficient to establish the exception to a manufacturer s duty to indemnify; instead, to invoke the exception, a manufacturer must prove: (1) that the seller was independently culpable and (2) that the seller s conduct caused the loss.34 As the supreme court explained its decision in Meritor, In Meritor, we again refused to limit the indemnity obligation by holding that Section 82.002(a) s exception to a manufacturer s general indemnity obligation is established only by a finding that a seller s independent conduct caused the plaintiff s injury. Until such a finding is made, a mere allegation of negligence in the plaintiff s pleadings is sufficient to invoke the manufacturer s duty to indemnify the seller for all theories properly joined to a products liability claim.[35] 33 This argum ent was asserted in Charles s third issue. 34 See Meritor Automotive, Inc. v. Ruan Leasing Co., 44 S.W .3d 86, 91 (Tex. 2001) ( [I]t m ust be established that seller s conduct caused the loss. ); Hudiburg, 199 S.W .3d at 255 ( To escape this duty to indem nify, the indem nitor m ust prove the indem nitee s independent culpability. ); see also Emplrs. Ins. Co. v. Penn-America Ins. Co., No. G-08-0069, 2010 U.S. Dist. LEXIS 32654, at *42 (S.D. Tex. Mar. 31, 2010) ( [T]o invoke the exception to the statutory duty to indem nify, a m anufacturer m ust prove the seller s independent culpability ); Dean s Campin Co. v. Hardsteen, No. 01-00-1190-CV, 2002 Tex. App. LEXIS 6256, at *13 (Tex. App. Houston [1st Dist.] 2002, pet. denied) (m em . op.) ( This holding im poses on the m anufacturer the burden to prove that the exception to the m anufacturer s duty to indem nify the seller applies. ) . 35 Owens & Minor, Inc., 251 S.W .3d at 484 (em phasis added) (internal citations om itted) (citing Meritor, 44 S.W .3d at 88-91); see also Toyota Indus. Equip. Mfg. v. Carruth-Doggett, Inc., No. 01-09-399-CV, 2010 Tex. App. LEXIS 2322, at **16-17 (Tex. App. Houston [1st Dist.] Apr. 10, 2010, pet. filed) (m em . op.) ( Thus, Meritor held that a negligence claim that is properly joined to a products liability action is to be considered part of the products liability action in term s of a m anufacturer s duty to indem nify an innocent seller, and the m anufacturer is required to indem nify the seller for any loss arising out of the action except 14 The Texas Supreme Court recently clarified several issues concerning the applicability of section 82.002's exception to a manufacturer s duty to indemnify.36 In Fresh Coat, Inc. v. K-2, Inc., numerous homeowners sued: (1) K-2, the manufacturer of allegedly defective synthetic stucco components; (2) Fresh Coat, the contractor that installed the product on several homes; and (3) Life Forms, the homebuilder.37 Life Forms sought indemnity from K-2 and Fresh Coat; Fresh Coat sought indemnity from K-2.38 As the court explained: K-2, Life Forms, and Fresh Coat settled with the homeowners. Fresh Coat paid the homeowners just over $ 1 million. Fresh Coat also settled with Life Forms, paying $ 1.2 million to cover part of Life Forms' payment to the homeowners. The case proceeded to trial on various claims the defendants brought against each other. This appeal concerns claims Fresh Coat asserted against K-2. Fresh Coat sought indemnity from K-2 for its settlements with the homeowners and Life Forms, as well as $ 726,642 in attorney fees. The claims were tried to a jury, and Fresh Coat received a judgment for all the damages requested. The court of appeals affirmed the trial court's judgment except with regard to the settlement payment Fresh Coat made to Life Forms. The court rejected K-2's arguments that its EIFS[39 ] was not a "product" and that Fresh Coat was not a "seller," and upheld the indemnity award as to the payment to the homeowners. However, with respect to Fresh Coat's settlement with Life Forms, the court agreed with K-2 that it owed Fresh Coat no statutory indemnity duty because Fresh Coat would have been liable to Life Forms under the contract between the two regardless of whether either of them caused a defect in the EIFS.[40] when there is a finding that the seller independently caused the loss. ) (citing Meritor, 44 S.W .3d at 87) (em phasis added). 36 See T EX . C IV . P R AC . & R EM . C O D E A N N . § 82.002(a). 37 Fresh Coat, Inc., 2010 Tex. LEXIS 610, at **1-2. 38 Id. at *2. 39 EIFS is an acronym for exterior insulation and finishing system . Id. at *1. 40 Id. at **2-3 (internal footnotes om itted). 15 The supreme court held that: (1) synthetic stucco is a product; (2) Fresh Coat, the contractor that installed it, is a seller ; and (3) the manufacturer s statutory obligation to indemnify the contractor covers a settlement payment made by the contractor to the homebuilder where the contractor may have been independently obligated by contract to indemnify the homebuilder. 41 K-2 argued that it should not have to indemnify Fresh Coat for the settlement payment that Fresh Coat made to Life Forms because Fresh Coat s contract with Life Forms contained an indemnity provision which required Fresh Coat to indemnify and hold Life Forms harmless for any homeowner claims regardless of any fault by Life Forms.42 The supreme court concluded that Fresh Coat was entitled to indemnity from K-2 for its settlement payment to Life Forms because K-2 had not proven that section 82.002(a) s exception was applicable.43 The court reasoned: The court of appeals focused solely on Fresh Coat's independent liability, and did not find the reason for that liability relevant. Fresh Coat argues that Section 82.002(a) creates an exception for the manufacturer's duty to indemnify that only applies when the seller tortiously causes a loss. We agree with Fresh Coat that K-2 has not proven that Fresh Coat caused the loss via the type of act or omission contemplated in the statute. Section 82.002(a) excepts the manufacturer from indemnity only when it proves that a loss was caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable. K-2 argues it should not be liable for contractual obligations that it was not a party to, namely, any losses Fresh Coat suffered solely as a result of its contract with Life Forms rather than as a result of Fresh Coat's products-liability obligations. But Section 82.002(a) does not exempt manufacturers from their indemnity obligations for any loss . . . for which the seller is independently liable. Such a reading disregards the 20 words between any loss and for which . . . . 41 Id. at *1. 42 Id. at **13-14. 43 Id. at *16. 16 .... The 20 words in Section 82.002(a) that K-2 ignores make clear that what is important is not merely whether a seller is independently liable, but why. Otherwise, all of those intervening words in Section 82.002(a) would be needless. Although we have not previously held that what matters is not merely whether but why a seller is independently liable, this Court has suggested as much: To escape this duty to indemnify, the indemnitor must prove the indemnitee s independent culpability. Section 82.002(a) exempts from indemnity a seller's own negligence, intentional misconduct, or act such as negligently modifying or altering the product for which the seller would be independently liable. Section 82.002(a) does not always exempt losses arising from a contractual indemnity obligation. We express no opinion as to whether a loss need always be tortious to fit within the ambit of Section 82.002(a) the statute includes other act[s] or omission[s] that may not necessarily be tortious. On today's facts, though, K-2 has not conclusively established a loss for which it is exempt from indemnity.[44] In the present case, even if we accepted Charles s argument that Butler s subsequent settlement with the plaintiffs could only have been to release claims for which Butler was independently liable, Charles has presented no evidence raising a fact issue as to why Butler is independently liable. As in Fresh Coat, Charles s argument urges us to ignore the twenty words in section 82.002(a) that make clear that what is important is not merely whether a seller is independently liable, but why. 45 IV. Conclusion We hold that Charles presented no evidence raising a genuine issue of fact that any independent culpability by Butler caused the plaintiffs injuries.46 Accordingly, the trial court did not err in granting summary judgment in Butler s favor and in denying Charles s motion 44 Id. at **16-20 (internal footnotes and citations om itted). 45 Id. at *18-19. 46 See T EX . R. C IV . P. 166a(i); T EX . C IV . P R AC . & R EM . C O D E A N N . § 82.002(a). 17 for summary judgment.47 We overrule all of Charles s issues and affirm the trial court s judgment. LINDA REYNA YAà EZ, Justice Delivered and filed the 14th day of October, 2010. 47 Because of our disposition, we need not address Butler s traditional m otion for sum m ary judgm ent or Charles s argum ents challenging it. See Browning, 165 S.W .3d at 344 (noting we m ay affirm sum m ary judgm ent if any of the advanced theories support the judgm ent). 18
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