Centerpoint Builders GP, LLC and Centerpoint Builders, Ltd. v. Trussway Ltd. ( 2014 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
________________
NO. 09-13-00332-CV
________________
CENTERPOINT BUILDERS GP, LLC AND CENTERPOINT BUILDERS,
LTD., Appellants
V.
TRUSSWAY LTD.,
Appellee
__________________________________________________________________
On Appeal from the 136th District Court
Jefferson County, Texas
Trial Cause No. D-183,385
__________________________________________________________________
OPINION
This is an agreed interlocutory appeal from the trial court’s order granting
the motion for partial summary judgment filed by appellants and cross-appellees,
Centerpoint Builders GP, LLC and Centerpoint Builders, Ltd. (“Centerpoint”) as to
Centerpoint’s status as a “seller,” Centerpoint’s eligibility to seek indemnity from
Trussway, Ltd. and the granting of full summary judgment in favor of Centerpoint
as to Trussway’s cross-action against Centerpoint for indemnity. See Tex. Civ.
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Prac. & Rem. Code Ann. § 51.014(d)(2) (West Supp. 2013). We reverse the trial
court’s summary judgment order to the extent it granted partial summary judgment
in favor of Centerpoint by determining that Centerpoint is a “seller” under Chapter
82 of the Civil Practice and Remedies Code and concluding that Centerpoint was
eligible to seek indemnity. We affirm the portion of the trial court’s summary
judgment order that granted summary judgment in favor of Centerpoint as to
Trussway’s cross-claim against Centerpoint for indemnity, and we remand the
cause for further proceedings consistent with this opinion.
BACKGROUND
The instant case began as a personal injury action filed by Merced
Fernandez against Centerpoint, Trussway, and other defendants for injuries
Fernandez sustained while installing drywall at an apartment complex construction
project for which Centerpoint was the general contractor and Fernandez was an
independent subcontractor. At the time of the injury, Fernandez was attempting to
install a piece of drywall above the second story of the building while standing on
top of trusses that were lying in a horizontal position and had not yet been
installed. Fernandez was injured when he stepped onto a truss that broke and
collapsed, causing him to fall approximately eight to ten feet and rendering him a
paraplegic. Fernandez contended that the trusses, which were manufactured by
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Trussway and purchased by Centerpoint directly from Trussway, were defective
and unreasonably dangerous.
Trussway filed a cross-action against Centerpoint. In its cross-action,
Trussway denied that Centerpoint was a seller under Chapter 82 and Trussway
contended that “as an innocent seller, it is entitled to indemnity from Centerpoint
under the provisions of Chapter 82[.]” Centerpoint also filed a cross-claim against
Trussway seeking indemnity. Both Centerpoint and Trussway ultimately settled
with Fernandez.
Trussway filed a traditional motion for summary judgment, in which it
contended that Centerpoint was not entitled to indemnity from Trussway under
Chapter 82, but did not argue the issue of whether Trussway was entitled to
indemnity from Centerpoint. Centerpoint filed a hybrid motion for partial summary
judgment as to its cross-action against Trussway, combined with a hybrid motion
for summary judgment as to Trussway’s cross-action against Centerpoint. The
parties entered into joint stipulations of fact. The trial judge signed an order
granting Centerpoint’s motion for partial summary judgment with respect to
whether Centerpoint is a “seller” and is eligible to seek indemnity under Chapter
82, denying Centerpoint’s motion for partial summary judgment with respect to
Centerpoint’s entitlement to indemnity, denying Trussway’s motion for summary
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judgment, and granting Centerpoint’s motion for summary judgment as to
Trussway’s cross-claim for indemnity. The parties then filed a joint notice of
agreed interlocutory appeal.
STANDARDS OF REVIEW
We review the trial court’s summary judgment order de novo. See Provident
Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). With a
traditional motion for summary judgment, the movant must establish that there is
no genuine issue of material fact and it is entitled to judgment as a matter of law.
Tex. R. Civ. P.166a(c); Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640,
644 (Tex. 1995). If the moving party produces evidence entitling it to summary
judgment, the burden shifts to the nonmovant to present evidence that raises a
material fact issue. Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). In
determining whether there is a disputed material fact issue precluding summary
judgment, evidence favorable to the nonmovant will be taken as true. Nixon v. Mr.
Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Every reasonable
inference must be indulged in favor of the nonmovant and any doubts resolved in
his favor. Id. at 549.
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ISSUES PRESENTED
In its brief as appellant, Centerpoint argues in its sole issue that the trial
court erred by denying its motion for partial summary judgment as to its
entitlement to Chapter 82 indemnity from Trussway. By cross-appeal, Trussway
asserts three issues which challenge the trial court’s granting of partial summary
judgment in favor of Centerpoint as to Centerpoint’s status as a “seller” and its
eligibility to seek indemnity from Trussway, as well as the granting of summary
judgment as to Trussway’s cross-claim against Centerpoint. Specifically, Trussway
argues that (1) the Legislature did not intend in Chapter 82 to broaden the scope of
defendants entitled to indemnity under the common law, a general contractor is not
entitled to indemnity from a manufacturer, and granting Centerpoint the status of a
“seller” under Chapter 82 would lead to absurd results “by transforming most
premises-liability cases against general contractors [in]to indemnity cases against
material suppliers[,]”; (2) a completed custom-built apartment complex is not a
“product” under Chapter 82; and (3) a general contractor owes “an offsetting
indemnity duty to the material supplier as a manufacturer[.]”
In its motion for summary judgment, Trussway argued that the purpose of
Chapter 82 is to provide further protection for innocent sellers who are drawn into
litigation solely because of their vicarious liability by shifting the burden of
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litigation to manufacturers, and the Legislature did not intend to expand the
common law to include a general contractor within the definition of “seller.” See
GMC v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 260 (Tex. 2006). According to
Trussway, Centerpoint only sold construction services; it did not sell trusses, and
since “Chapter 82 [did] not expand the scope of who is considered a seller,
Centerpoint is . . . not a seller under Chapter 82.” In addition, Trussway argued that
a custom-built apartment building is not a “product.”
Trussway discussed the Texas Supreme Court’s opinion in Fresh Coat, Inc.
v. K-2, Inc., 318 S.W.3d 893 (Tex. 2010), in which the Court noted that “builders
may be held liable as product sellers . . . when they sell prefabricated homes or
other cookie-cutter-type homes as part of a large development.” Id. at 898 n.7.
According to Trussway, because the accident occurred during construction,
Centerpoint had not sold the truss and could not be held liable as a seller at that
point. Trussway contended that although the Texas Supreme Court held that Fresh
Coat’s installation services did not preclude it from also being a seller and held
Fresh Coat liable as a seller for purchasing and installing an allegedly defective
stucco-type siding, Fresh Coat does not govern the instant case. Trussway further
asserted that taking Centerpoint’s position to its extreme would lead to absurd
results.
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As previously discussed, Centerpoint filed a combined motion, in which it
sought a partial summary judgment as to its cross-action against Trussway and a
full summary judgment as to Trussway’s cross-action against Centerpoint. In its
motion for partial summary judgment as to its cross-claim against Trussway,
Centerpoint argued that (1) the case is clearly a “product liability action” as that
term is defined in Chapter 82, and (2) the case is governed by the Supreme Court’s
holding in Fresh Coat that a contractor who installs a product that is a component
part of a building is a “seller” as defined in Chapter 82. In Centerpoint’s motion for
summary judgment as to Trussway’s cross-claim against Centerpoint, Centerpoint
argued that because it did not assemble the truss in question but the truss instead
“was a finished product when delivered” to Centerpoint, Centerpoint does not fit
Chapter 82’s definition of “manufacturer” and therefore owes no duty of indemnity
to Trussway as a matter of law. As explained above, the trial judge signed an order
granting Centerpoint’s motion for partial summary judgment with respect to
whether Centerpoint is a “seller” and entitled to seek indemnity from Trussway
under Chapter 82, denying Centerpoint’s motion for partial summary judgment
with respect to Centerpoint’s entitlement to indemnity, and denying Trussway’s
motion for summary judgment.
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This appeal turns on the issue of whether Centerpoint qualifies as a seller
under Chapter 82 of the Civil Practice and Remedies Code. Under the common
law, a manufacturer was not required to indemnify a seller of its products unless
the manufacturer had been judicially determined to have been negligent. Owens &
Minor, Inc. v. Ansell Healthcare Prods., Inc., 251 S.W.3d 481, 483 (Tex. 2008).
By enacting Chapter 82, the Legislature supplemented the common law and
provided a means for an innocent seller to seek indemnification from the
manufacturer of an allegedly defective product. Id. at 483-84. Accordingly, we turn
to Chapter 82 and the case law construing that statute in analyzing the propriety of
the trial court’s order on the parties’ respective motions for summary judgment.
“Chapter 82 governs a manufacturer’s indemnity obligations arising from a
‘products liability action.’” Fresh Coat, 318 S.W.3d at 896. Section 82.002(a) of
the Civil Practice and Remedies Code provides, “A manufacturer shall indemnify
and hold harmless a seller against loss arising out of a products liability action,
except 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.” Tex. Civ. Prac. & Rem. Code Ann. §
82.002(a) (West 2011). Section 82.001(3) of the Civil Practice and Remedies Code
provides that, for purposes of products liability actions, a “seller” is “a person who
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is engaged in the business of distributing or otherwise placing, for any commercial
purpose, in the stream of commerce for use or consumption a product or any
component part thereof.” Id. § 82.001(3).
In Fresh Coat, the Texas Supreme Court examined “a synthetic stucco
manufacturer’s duty to indemnify a contractor under Chapter 82 of the Texas Civil
Practice and Remedies Code.” Fresh Coat, 318 S.W.3d at 895. K-2, Inc.
manufactured synthetic stucco components (“EIFS”). Id. A homebuilder, Life
Forms, Inc., entered into a contract with Fresh Coat, Inc. “to install EIFS on the
exterior walls of several homes that Life Forms was building.” Id. Fresh Coat
purchased the EIFS and installed it, aided by K-2’s instructions and training. Id.
Approximately ninety homeowners later sued K-2, Life Forms, and Fresh Coat for
alleged structural damage, termite problems, and mold caused by water
penetration. Id. Life Forms sought indemnity from Fresh Coat and K-2, and Fresh
Coat sought indemnity from K-2. Id. at 896. K-2, Life Forms, and Fresh Coat all
settled with the homeowners, the case proceeded to trial on the defendants’ cross-
claims against each other, and the jury found in favor of Fresh Coat as to all
damages Fresh Coat requested. Id. On appeal, the issue was Fresh Coat’s claims
against K-2. Id. This Court affirmed the trial court’s judgment except with regard
to the settlement payment Fresh Coat made to the homebuilder, Life Forms. Id.
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Both K-2 and Fresh Coat filed petitions for review with the Texas Supreme
Court. Id. In addressing the issue of whether Fresh Coat, the EIFS installer, was a
“seller” under Chapter 82, the Supreme Court agreed with this Court’s
determination that Chapter 82’s definition of “seller” does not exclude a seller who
is also a service provider, and Chapter 82 does not require the seller to sell only the
product. Id. at 899. The Supreme Court noted that said approach “is consistent with
the Third Restatement of Torts, which recognizes that a product seller may also
provide services.” Id. (citing RESTATEMENT (THIRD) OF TORTS:
PRODUCTS LIABILITY §§ 19, 20 (1998)). In determining that Fresh Coat was a
seller pursuant to Chapter 82, the Supreme Court pointed out that “Fresh Coat
installed the EIFS according to K-2’s instructions[,]” “K-2 trained and certified
Fresh Coat personnel in the installation of its EIFS system[,]” and Fresh Coat’s
contract with Life Forms was to provide “‘labor, services and/or materials,
equipment, transportation, or facilities necessary’” to provide “‘synthetic stucco
application and finish.’” Id. The Supreme Court also noted that “Fresh Coat was in
the business of providing EIFS products combined with the service of EIFS
installation.” Id. In affirming this Court’s judgment as to indemnity for Fresh
Coat’s settlement with the homeowners, the Supreme Court held as follows:
Chapter 82, like the Restatement, anticipates that a product seller may
also provide services. Thus, we conclude that when a company
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contracts to provide a product that is alleged to be defective – like the
EIFS system in this case – the company’s installation services do not
preclude it from also being a seller.
Id. (emphasis added).
In the instant case, Centerpoint, as general contractor, entered into a contract
with the owner of the apartment complex. The contract defined the term “work” as
“the construction and services required by the Contract Documents, whether
completed or partially completed, and includes all other labor, materials,
equipment[,] and services provided or to be provided by the Contractor to fulfill
the Contractor’s obligations. The [w]ork may constitute the whole or a part of the
[p]roject.” Centerpoint hired various subcontractors, one of which was Sandidge &
Associates, LLC (“Sandidge”). Centerpoint hired Sandidge to erect wooden
trusses, and at the time of the accident, Fernandez was working as an independent
contractor of both Sandidge and Maverick Builders, a contractor Centerpoint hired
to install sheetrock, drywall, and related materials.
We determine that the case at bar is distinguishable from Fresh Coat for
several reasons. First, it is undisputed that Fernandez’s accident occurred before
the trusses were installed at the apartment complex. Unlike Fresh Coat, there is no
indication that Centerpoint (or its subcontractors) installed the truss pursuant to
training or instructions from Trussway. Second, Centerpoint’s contract with the
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property owner covered innumerable construction products and materials that
would be involved in the construction of the apartment complex, as opposed to the
contract involved in Fresh Coat, in which Fresh Coat merely contracted to install a
specific product, the EIFS, from component parts, instructions, and training
provided by K-2. Id. at 899. Third, although the trusses were made a permanent
part of the apartment complex upon completion of construction, we conclude that
Centerpoint was not engaged in placing the trusses into the stream of commerce
when Fernandez’s accident occurred. Fourth, in Fresh Coat, the Texas Supreme
Court held that Fresh Coat was a seller under Chapter 82 and noted that the
company’s installation services did not “preclude” it from being a seller; however,
the Court did not broadly hold that a contractor who installs a product is always a
“seller” for purposes of Chapter 82. Id. The Supreme Court discussed the common
law and upheld our interpretation of the term “seller” as consistent with the
common law. Therefore, we conclude that the Supreme Court did not hold that
Chapter 82 expanded the common-law definition of “seller.”
We also find instructive the opinion of the Fourteenth Court of Appeals in
F & F Ranch v. Occidental Chem. Corp., No. 14-09-00901-CV, 2011 WL
1123402 (Tex. App.—Houston [14th Dist.] Mar. 29, 2011, no pet.) (mem. op.), in
which the Court pointed out that in Fresh Coat, the indemnitee “actually sold
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services in which it installed the defective product in accordance with the
manufacturer’s instructions, and the manufacturer trained and certified the
indemnitee’s personnel in the installation of the defective product.” Id. at *4. The
Fourteenth Court of Appeals also noted that Fresh Coat “clearly holds that the
party seeking indemnity must provide the defective product as part of its sales and
services[.]” Id. at *4 n.8.
For all of the reasons discussed above, we hold that Centerpoint does not fit
the statutory definition of a seller; therefore, Centerpoint is not entitled to
indemnity from Trussway. 1 See Tex. Civ. Prac. & Rem. Code Ann. § 82.001(3);
Fresh Coat, 318 S.W.3d at 895-99. We therefore overrule Centerpoint’s sole
appellate issue, and we sustain Trussway’s first cross-issue, in which Trussway
argues that Centerpoint is not a “seller” under Chapter 82. Accordingly, we reverse
the trial court’s order granting partial summary judgment in favor of Centerpoint as
to Centerpoint’s alleged status as a seller and Centerpoint’s entitlement to seek
indemnity from Trussway.
We turn now to Trussway’s third cross-issue, in which Trussway contends
the trial court erred by granting summary judgment in favor of Centerpoint as to
1
We do not hold that the indemnity provisions of Chapter 82 can never apply
to a general contractor at a construction site. Rather, we conclude only that, under
the circumstances presented in this record, Centerpoint was not a seller of the truss,
and Centerpoint is therefore not entitled to indemnity from Trussway.
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Trussway’s conditional cross-claim. As previously explained, in its cross-action,
Trussway denied that Centerpoint was a seller under Chapter 82 of the Texas Civil
Practice and Remedies Code, and Trussway contended that as an innocent seller of
a component part, it is entitled to indemnity from Centerpoint under Chapter 82.
In a products liability action, the court must look to the allegations in the
plaintiff’s petition to determine whether the manufacturer’s duty to indemnify a
seller for costs incurred in products liability litigation under Chapter 82 has been
triggered. Toyota Indus. Equip. Mfg., Inc. v. Carruth-Doggett, Inc., 325 S.W.3d
683, 690 (Tex. App.—Houston [1st Dist.] 2010, pet. denied). The manufacturer’s
duty to indemnify is triggered by the pleadings, not by proof of a product defect.
Id.; see also Meritor Automotive, Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 91 (Tex.
2001). Fernandez’s petition did not allege that a product manufactured or
assembled by Centerpoint was defective; rather, Fernandez’s petition alleged only
that the uninstalled truss manufactured by Trussway was defective, and the parties
stipulated that Trussway manufactured and supplied the truss.
We conclude that Centerpoint was not a manufacturer of the truss and,
accordingly, is not obligated to indemnify Trussway. See Tex. Civ. Prac. & Rem.
Code Ann. § 82.001(4); see also generally Hudiburg Chevrolet, 199 S.W.3d at
252, 257. Accordingly, the trial court did not err by granting summary judgment in
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favor of Centerpoint as to Trussway’s cross-claim. We overrule Trussway’s third
cross-issue. Because Trussway’s second cross-issue2 would not result in greater
relief, we need not address it. See Tex. R. App. P. 47.1. We affirm the trial court’s
granting of summary judgment in favor of Centerpoint as to Trussway’s cross-
claim against Centerpoint for indemnity. We remand the cause to the trial court for
further proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
______________________________
STEVE McKEITHEN
Chief Justice
Submitted on April 24, 2014
Opinion Delivered July 10, 2014
Before McKeithen, C.J., Kreger and Johnson, JJ.
2
In cross-issue two, Trussway argues that a custom-built apartment complex
is not a “product” under Chapter 82.
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