Texas Supreme Courts Holds Installer Entitled to Statutory Indemnity: Chapter 82 of the Texas Civil Practices and Remedies Code allows an innocent seller of a defective product to obtain indemnity, including defense costs, from the manufacturer of the defective product. Sellers frequently seek indemnity from manufacturers when sued for harm caused by the product.
Today, the Supremes were faced with the issue of whether a subcontractor, hired to mix and install an allegedly defective stucco product, is entitled to indemnification from the manufacturer of the stucco for a settlement with the homebuilder. In this case the homebuilder settled with the homeowners and sought indemnity from Fresh Coat (the installer) and K-2 (the manufacturer, also known as Finestone). Fresh Coat settled claims by the homebuilder and homeowner and cross-claimed for chapter 82 indemnity from Finestone. A jury awarded Fresh Coat its requested indemnity damages, but the court of appeals deleted the amount Fresh Coat paid the homebuilder in their settlement.
Today, the supreme court held that (1) the statutory definition of seller does not exclude a seller who is also an installer or service provider, nor does Chapter 82 require the seller to sell only the product and (2) section 82.002(a) does not except the manufacturer from its indemnity obligation whenever the seller is contractually liable to another. Chapter 82, like the Restatement (Third) of Torts, anticipates that a product seller may also provide services. When a company contracts to provide a product alleged to be defective — like the synthetic stucco in this case — the company’s installation services do not preclude it from also being a seller. Fresh Coat Inc. v. K-2 Inc. (Tex. Aug. 20, 2010).