Fresh Coat, Inc. v. Parexlahabra, Inc.

In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-13-00067-CV
____________________
FRESH COAT, INC., Appellant
V.
PAREXLAHABRA, INC., Appellee
_______________________________________________________ ______________
On Appeal from the 284th District Court
Montgomery County, Texas
Trial Cause No. 07-09-09911 CV
________________________________________________________ _____________
OPINION
In this appeal, we consider whether the trial court properly granted a
summary judgment in favor of a manufacturer on a statutory indemnity claim
brought against it by a company that installed an allegedly defective product, an
exterior insulation and finishing system (EIFS), on the exterior walls of various
homes in Montgomery County, Texas. See Tex. Civ. Prac. & Rem. Code Ann. §
82.002 (West 2011) (providing that a manufacturer has a duty to indemnify sellers
against losses arising out of “a products liability action”). Because there was no
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evidence before the trial court to support at least one essential element of the
installer’s claim for statutory indemnity, we hold the trial court properly granted
the manufacturer’s motion for summary judgment.
Background
Parexlahabra, Inc. (Parex) is one of several manufacturers of EIFS against
whom Fresh Coat, Inc. filed suit seeking indemnity under Chapter 82 of the Texas
Civil Practice and Remedies Code. For the purposes of Chapter 82, the Texas
Supreme Court has held that EIFS is a product that may be made the basis of a
claim for statutory indemnity, that the contractor who installed EIFS is considered
a seller, and the manufacturer’s indemnity obligation extends to settlements that a
contractor paid to settle lawsuits which resulted following the installer’s
application of EIFS to a home. Fresh Coat, Inc. v. K-2, Inc., 318 S.W.3d 893, 895,
897-900 (Tex. 2010). The question before us concerns whether an EIFS
manufacturer has a statutory duty of indemnity to the seller if the seller fails to
show that its damages were related to lawsuits that alleged EIFS is defective and
that it caused either property damages or personal injuries.
Between 1995 and 2001, Life Forms, Inc., a production home builder,
employed Fresh Coat to install EIFS on the exterior walls of homes that were
subsequently sold in Montgomery County, Texas. In 2009, Fresh Coat added Parex
to a suit that it had previously filed against other manufacturers of EIFS.
2
According to Fresh Coat’s First Amended Petition, its live pleading for the purpose
of the summary judgment hearing, it sought indemnity against the defendants who
manufactured EIFS relating to forty-nine Montgomery County homeowners who
had “brought claims or filed suit” against Fresh Coat “for damages caused to their
homes resulting from defective EIFS cladding.”
In 2012, challenging Fresh Coat to present evidence to support its claim that
Fresh Coat had settled a “products liability action” within the meaning of Chapter
82 of the Civil Practice and Remedies Code, and asserting that Fresh Coat had no
evidence that Parex sold the EIFS on the homes at issue, Parex filed a combined
no-evidence and traditional motion for summary judgment. See Tex. Civ. Prac. &
Rem. Code Ann. § 82.002; Tex. R. Civ. P. 166a(b) (traditional summary judgment
rule), 166a(i) (no-evidence rule). In its no-evidence motion, Parex sought summary
judgment on all of Fresh Coat’s claims. Parex’s no-evidence motion concludes that
without evidence to show that it had settled a “products liability action” or to show
that Parex’s products were installed on the homes at issue, Fresh Coat could not
prevail on its claim for statutory indemnity.
In its traditional motion, Parex sought summary judgment on Fresh Coat’s
indemnity claims that related to the settlements Fresh Coat made with two of the
homeowners identified in Fresh Coat’s First Amended Petition. In this appeal,
Fresh Coat does not challenge the trial court’s decision to grant Parex’s traditional
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motion for summary judgment to the extent its indemnity claim is related to the
claims of those two homeowners.
In opposing Parex’s no-evidence motion, Fresh Coat filed a response that
contained (1) letters containing general complaints about the presence or
performance of EIFS on their homes from seven of the homeowners identified in
Fresh Coat’s First Amended Petition; (2) release agreements 1 between Life Forms
and five of the homeowners to show that Life Forms had settled with several
homeowners regarding its installation of EIFS; (3) inventory material sheets for
various Fresh Coat installation sites, identifying Parex as a supplier of EIFS at
those sites; and (4) an affidavit signed by Gerald Banks, Fresh Coat’s former
president, who stated that Parex-supplied EIFS was used on several of the homes
made the basis of Fresh Coat’s indemnity claim. Banks’s affidavit mentions that
Fresh Coat settled claims from homeowners regarding complaints about EIFS on
their homes, and his affidavit states that “[i]n many cases, the homeowners’ claims
1
The releases attached to Fresh Coat’s response reflect that these same
homeowners agreed to release all of their claims against Life Forms and Fresh
Coat arising from the use of EIFS on their homes. The releases recite that the
homeowners were releasing all of their claims, including claims that sound in
“contract, tort, negligence, gross negligence, product liability, breach of express or
implied warranty, breach of fiduciary duty, fraud, misrepresentation, claims under
any federal or state statute, equity, the common law, or any other theory of law or
equity[.]” However, the releases do not reflect that Life Forms was sued before the
claims were settled; instead, the releases state that “such actions have been taken to
avoid the expense and inconvenience of litigation.”
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were resolved without the need for suit to be filed.” Banks’s affidavit also states
that “[i]n other cases, suit was filed and the claims eventually resolved through
various release agreements.”2
After conducting a hearing, the trial court granted Parex’s no-evidence and
traditional motions for summary judgment. Subsequently, to make the summary
judgment final, the trial court severed the summary judgment order from Fresh
Coat’s remaining claims against the other defendants. See Tex. R. Civ. P. 41
(allowing a trial court to sever claims); F.F.P. Operating Partners, L.P. v. Duenez,
237 S.W.3d 680, 693-94 (Tex. 2007) (explaining when a claim may properly be
severed).
Standard of Review
Only the trial court’s decision to grant Parex’s no-evidence motion is at
issue in this appeal. The standards that apply when a trial court decides a no-
evidence motion are settled. The trial court should grant a no-evidence motion if:
(1) the moving party asserts that there is no evidence of one or more
specified elements of a claim or defense on which the adverse party
would have the burden of proof at trial; and (2) the respondent
produces no summary judgment evidence raising a genuine issue of
material fact on those elements.
2
In a footnote in its brief, Fresh Coat alleges that “four of the homes at issue
were the subject of litigation prior to settlement[,]” and it identifies the owners of
those homes; however, Fresh Coat has not pointed to the evidence that it provided
to the trial court showing that it settled with these homeowners after it was sued.
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Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); see also Tex. R. Civ. P.
166a(i).
The standards used to review a trial court’s decision granting a no-evidence
motion are also clear. To defeat a no-evidence motion, the non-movant must
produce enough summary judgment evidence to raise a genuine issue of material
fact on each of the elements of recovery that the movant’s no-evidence motion has
challenged. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). The
non-movant can raise a genuine issue of material fact by producing “more than a
scintilla of evidence” to establish that a fact issue exists on each of the elements the
no-evidence motion places at issue. Id. More than a scintilla of evidence exists
when the evidence is such that reasonable and fair-minded people can differ in
their conclusions. Id. at 601. If “‘the evidence offered to prove a vital fact is so
weak as to do no more than create a mere surmise or suspicion of its existence, the
evidence is no more than a scintilla and, in legal effect, is no evidence.’” Id.
(quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).
Analysis
To resolve whether the trial court properly granted Parex’s no-evidence
motion, we first consider Fresh Coat’s argument that it produced more than a
scintilla of evidence to show that it was seeking to be indemnified for a “products
liability action.” See Tex. Civ. Prac. & Rem. Code Ann. § 82.002. In its appeal,
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Parex argues that an “action” is a lawsuit, and that Fresh Coat produced no
evidence that it was sued by homeowners who had EIFS applied to their homes. In
response, Fresh Coat contends that a seller does not have to show that it was sued
to invoke the manufacturer’s statutory duty of indemnity under Chapter 82.
Resolving Fresh Coat’s issue requires that we determine whether or not the
Legislature used the term “action” as the equivalent of the term “suit.” Under the
Products Liability Act of 1993, a manufacturer is required to indemnify a seller for
losses “arising out of a products liability action.” See id. § 82.002(a). Section
82.001 of the Products Liability Act of 1993 defines “products liability action” as
follows:
“Products liability action” means any action against a
manufacturer or seller for recovery of damages arising out of personal
injury, death, or property damage allegedly caused by a defective
product whether the action is based in strict tort liability, strict
products liability, negligence, misrepresentation, breach of express or
implied warranty, or any other theory or combination of theories.
Id. § 82.001(2) (West 2011). Parex’s no-evidence motion challenged Fresh Coat to
demonstrate the damages for which it was seeking indemnity resulted from
lawsuits filed against it by homeowners that asserted they had been damaged
because a defective product supplied by Parex had been applied to their homes.
The trial court appears to have agreed with Parex’s no-evidence motion that Fresh
Coat’s evidence failed to show that its damages related to settlements or expenses
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incurred because homeowners sued it alleging that Parex supplied a defective
product to Fresh Coat that it installed, which then caused damages to the homes at
issue.
First, we address whether Fresh Coat provided the trial court with any
evidence that its damages arose from a product liability action. Questions that arise
from a trial court’s interpretation of a statute are reviewed as questions of law,
using a de novo standard of review. State v. Shumake, 199 S.W.3d 279, 284 (Tex.
2006). When the meaning of a word in a statute is unambiguous, courts ordinarily
give the word its common meaning. See Nat’l Liab. & Fire Ins. Co. v. Allen, 15
S.W.3d 525, 527 (Tex. 2000); Fitzgerald v. Advanced Spine Fixation Sys., Inc.,
996 S.W.2d 864, 865 (Tex. 1999).
Also, in construing Chapter 82, the Products Liability Act, the Legislature
instructed the courts to generally follow the rules of construction found in the Code
Construction Act, Chapter 311 of the Government Code. See Tex. Civ. Prac. &
Rem. Code Ann. § 1.002 (West 2002); Tex. Gov’t Code Ann. §§ 311.001-.034
(West 2013). Under the Code Construction Act, the words of a statute that are not
expressly defined are to be examined in context and in accord with “the rules of
grammar and common usage.” Tex. Gov’t Code Ann. § 311.011(a). “We look first
to the statute’s language to determine that intent, as we consider it ‘a fair
assumption that the Legislature tries to say what it means, and therefore the words
8
it chooses should be the surest guide to legislative intent.’” Leland v. Brandal, 257
S.W.3d 204, 206 (Tex. 2008) (quoting Fitzgerald, 996 S.W.2d at 866). “If the
statute’s language is unambiguous, its plain meaning will prevail.” Id. Further, we
are not to enlarge the plain meaning of a statute by enlarging on a word’s common
meaning. See Nat’l Plan Adm’rs, Inc. v. Nat’l Health Ins. Co., 235 S.W.3d 695,
701 (Tex. 2007) (“[W]e do not expand the meaning of statutes by implication[.]”);
see also Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex. 2002) (“When construing a statute,
we ascertain the Legislature’s intent from the plain meaning of the actual language
used.”); Sorokolit v. Rhodes, 889 S.W.2d 239, 241 (Tex. 1994) (“In applying the
plain and common meaning of the language in a statute, courts may not by
implication enlarge the meaning of any word in the statute beyond its ordinary
meaning; such implication is inappropriate when legislative intent may be gathered
from a reasonable interpretation of the statute as it is written.”).
While the term “products liability action” is expressly defined in the
Products Liability Act of 1993, the phrase “any action” and the term “action” are
not. See Tex. Civ. Prac. & Rem. Code Ann. §§ 82.001-.008 (West 2011).
According to Fresh Coat, the letters attached to its no-evidence response are some
evidence showing that its claim for indemnity relates to a “products liability
action.” Parex disagrees; it claims that the letters from the homeowners, which
contain general complaints about EIFS, cannot be used to define what actions the
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homeowners might have chosen to pursue had they filed suit. Parex reasons that by
confining the manufacturer’s statutory indemnity obligation to a “products liability
action,” the Legislature intended to limit claims for statutory indemnification under
the Products Liability Act to causes of action that were defined by pleadings.
In light of the absence of an express definition for the term “action” in the
Products Liability Act, we use its common meaning to construe it. See Tex. Gov’t
Code Ann. § 311.011(a). Dictionaries inform us of a term’s common use and
meaning. See generally Powell v. Stover, 165 S.W.3d 322, 326 (Tex. 2005); Tex.
Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d
170, 196 (Tex. 2004). According to the version of Black’s Law Dictionary
available when the Legislature used the term “action” in the statute at issue, the
term “action” “means a lawsuit brought in a court; a formal complaint within the
jurisdiction of a court of law.” BLACK’S LAW DICTIONARY 28 (6th ed. 1990). Bryan
Garner provides a similar definition in A Dictionary of Modern Legal Usage,
defining “action” as “a mode of proceeding in court to enforce a private right, to
redress or prevent a private wrong, or to punish a public offense. . . . The terms
action and suit are interchangeable.” Bryan A. Garner, A DICTIONARY OF MODERN
LEGAL USAGE 20 (2d Ed. 1995). “Action,” as defined in Webster’s Dictionary,
means:
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1: a deliberative or authorized proceeding: a (1) : a legal
proceeding by which one demands or enforces one’s right in a court of
justice (2) : a judicial proceeding for the enforcement or protection of
a right, the redress or prevention of a wrong, or the punishment of a
public offense — usu. distinguished from special proceeding (3) : the
right to bring or maintain such a legal or judicial proceeding — see
[suit.]
WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 21 (2002).
Based on these references, we conclude that as commonly used, “action” is
generally used to refer to a legal proceeding. Courts, considering the meaning of
the term “action” in other statutes, have construed “action” to mean a “suit.”
Thomas v. Oldham, 895 S.W.2d 352, 356 (Tex. 1995) (stating that the word
“action” under section 101.106 of the Texas Civil Practice and Remedies Code “is
generally synonymous with ‘suit,’ which is a demand of one’s rights in court”);
Villasan v. O’Rourke, 166 S.W.3d 752, 763-64 (Tex. App.—Beaumont 2005, pet.
denied) (concluding that the term “action,” as used in the context of the savings
provision enabling section 101.106 of the Civil Practice and Remedies Code,
meant suit); Bradley v. Etessam, 703 S.W.2d 237, 241 (Tex. App.—Dallas 1985,
writ ref’d n.r.e.) (stating that “action” in section 10.01 [of article 4590i] means
“suit”).
In construing what the Legislature intended by a term in a statute, we may
also consider laws on the same or similar subjects. See Tex. Gov’t Code Ann. §
311.023(4). We note that in the same legislative session that the Legislature
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created the statutory duty of manufacturers to indemnify sellers for damages
related to “products liability actions,” the Legislature also created a products
liability statute of repose, and that it shared section 82.001’s definition of
“products liability action.” Compare Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, §
1, sec. 82.001-.002, 1993 Tex. Gen. Laws 13, 13 (current version at Tex. Civ. Prac.
& Rem. Code Ann. §§ 82.001-.002 (West 2011)) (manufacturer’s duty to
indemnify sellers), with Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, § 2, sec.
16.012, 1993 Tex. Gen. Laws 13, 14 (former version at Tex. Civ. Prac. & Rem.
Code Ann. § 16.012 (West 2002)), (current version at Tex. Civ. Prac. & Rem.
Code Ann. § 16.012(2) (West Supp. 2013)) (revising definition of “products
liability action” with respect to the statute of repose). The products liability statute
of repose provides a manufacturer a defense against suits that are filed more than
fifteen years after the date the manufacturing equipment is sold. To avoid the
statute’s operation, the “claimant must commence a products liability action
against a manufacturer or seller of manufacturing equipment” within fifteen years
of the equipment’s sale. Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, § 2, sec.
16.012(b), 1993 Tex. Gen. Laws 13, 15.
Thus, for purposes of repose, the Legislature clearly considered the filing of
suit as the “action” that was required to avoid a potential defense of repose. The
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filing of a lawsuit, and not a letter from a user complaining of a manufacturer’s
product, is the action required to prevent the operation of the statute of repose.
Additionally, courts can decide what claims were made underlying an
indemnity claim when the claims are stated in pleadings; it is more difficult to do
so when the claims consist merely of complaints in letters that may or may not
have been pursued in a lawsuit. Evaluating whether the seller’s damages arose
from a “product liability action” with respect to a settlement is further complicated
by the fact that under Chapter 82, a manufacturer does not have a statutory
indemnity obligation to indemnify a seller from damages resulting from the seller’s
negligence, intentional misconduct, or its alterations of the product. See Tex. Civ.
Prac. & Rem. Code Ann. § 82.002. Consequently, the nature of the claims the
homeowners might have made against Fresh Coat is a critical beginning point for a
court to determine whether a seller has a claim for statutory indemnity. To allow
letters from homeowners to define actions would require courts to engage in
speculation about whether any individual homeowner with complaints over Fresh
Coat’s installation of EIFS would have asserted actions seeking a products liability
recovery or whether those homeowners might have claimed that their damages
were solely Fresh Coat’s fault. In this case, of the letters in Fresh Coat’s summary
judgment proof, only two of the letters express complaints that relate to a claimed
product defect; the remaining letters attribute the problems with EIFS to Life
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Forms, the homebuilder, or to Fresh Coat, the EIFS installer, without stating
whether the problems being alleged are based on an alleged product defect or some
other claim. We will not speculate on what these homeowners might have claimed
in pleadings to define their causes of action.
We also conclude that the releases attached to Fresh Coat’s response are also
no evidence proving that Fresh Coat settled a “products liability action.” Although
the releases include a release of claims that each homeowner might have asserted
based on a products or a strict liability theory, the releases include a laundry list of
other claims that fall outside the manufacturer’s statutory indemnity obligation.
Moreover, Fresh Coat’s releases do not state that the claims being released resulted
from products liability claims that were filed against Fresh Coat in lawsuits, as
they state the parties entered into the settlements to avoid litigating the claims. The
releases also do not mention the existence of any lawsuits. Consequently, they
provide no evidence that Fresh Coat’s indemnity claim arose from the settlement
of a product liability action.
Fresh Coat’s remaining summary judgment proof, the product inventory
sheets and Banks’s affidavit, also constitute no evidence that Fresh Coat’s
indemnity claim arose from a “products liability action.” The product inventory
sheets, while providing some evidence that Parex supplied EIFS on some of the
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homes at issue, do not define the legal theories for any causes of action, nor do
they indicate that any of the homeowners filed suit.
Banks’s affidavit is also not competent summary judgment proof to prove
that Fresh Coat incurred any damages arising from a “product liability action.” The
affidavit does not show that Banks had personal knowledge regarding what types
of claims were contained in the lawsuits generally referenced in his affidavit.
Affidavits must be based on personal knowledge and are conclusory if the affiant
fails to provide underlying facts that support the affiant’s conclusions. See Tex. R.
Civ. P. 166a(f) (requiring affidavits that oppose summary judgment motions to
“show affirmatively that the affiant is competent to testify to the matters stated
therein”); LeBlanc v. Lamar State College, 232 S.W.3d 294, 301 (Tex. App.—
Beaumont 2007, no pet.) (citing 1001 McKinney Ltd. v. Credit Suisse First Boston
Mortg. Capital, 192 S.W.3d 20, 27 (Tex. App.—Houston [14th Dist.] 2005, pet.
denied)). Banks’s affidavit reflects that Fresh Coat began receiving complaints
about EIFS from homeowners in April 2001, but his affidavit fails to state when
the lawsuits referenced by his affidavit were filed, whether he was employed by
Fresh Coat when the suits were filed, or that he was familiar with the allegations in
the lawsuits that his affidavit generally references. We conclude that Banks’s
affidavit fails to raise a fact issue showing that Fresh Coat’s damages arose from a
products liability action filed by homeowners. See Ryland Group, Inc. v. Hood,
15
924 S.W.2d 120, 122 (Tex. 1996) (“Conclusory affidavits are not enough to raise
fact issues.”).
To avoid summary judgment, Fresh Coat was required to produce some
evidence showing that it suffered a loss by virtue of a “products liability action.”
Fresh Coat presented the trial court with no evidence to show that its losses arose
“out of a products liability action,” an element of its statutory indemnity cause of
action under section 82.002 of the Civil Practice and Remedies Code. See id. §
82.002(a).
We hold the trial court properly granted Parex’s no-evidence motion for
summary judgment.
Conclusion
Because Fresh Coat presented no evidence to show that it settled “products
liability actions” under Chapter 82 of the Civil Practice and Remedies Code, we
hold the trial court properly granted Parex’s no-evidence motion. As this
conclusion serves as a sufficient basis to support the trial court’s judgment, we
need not reach Fresh Coat’s additional arguments to resolve its appeal. See Tex. R.
App. P. 47.1. The trial court’s judgment is affirmed.
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AFFIRMED.
________________________________
HOLLIS HORTON
Justice
Submitted on November 7, 2013
Opinion Delivered February 20, 2014
Before McKeithen, C.J., Kreger and Horton, JJ.
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