A general contractor is not a “seller” with statutory indemnity rights against a manufacturer of component parts, where the sale of the component is “incidental” to the contractor’s services, says the Texas Supreme Court.
Centerpoint Builders GP, LLC v. Trussway, Ltd.
Supreme Court of Texas (June 17, 2016)
Centerpoint Builders was the general contractor for an apartment construction project. One component of the construction was roofing trusses, which Centerpoint purchased from Trussway, the manufacturer, for installation by a subcontractor. A worker was severely injured while walking on trusses that had not yet been installed, and sued the owner, Centerpoint, Trussway, and the subcontractor. Centerpoint cross-claimed against Trussway, asserting that as an innocent seller it was entitled to indemnification from the manufacturer under the Products Liability Act, chapter 82 of the Civil Practice and Remedies Code. The trial court granted partial summary judgment for Centerpoint on that issue, and certified its order for an agreed interlocutory appeal under CPRC § 51.014(d). The court of appeals reversed, and Centerpoint sought review by the Texas Supreme Court.
The sole issue on appeal was whether Centerpoint was a seller, defined in chapter 82 as “a person who 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.” Under Government Code § 22.225, the Supreme Court’s jurisdiction to hear the case was predicated on Centerpoint’s argument that the challenged decision “holds differently from a prior decision of” the Supreme Court, specifically, Fresh Coat, Inc. v. K-2, Inc., 318 S.W.2d 893 (Tex. 2010). Although the Court found the two decisions were not in conflict, it held jurisdiction was established by “a genuine dispute about whether the court of appeals correctly applied Fresh Coat, revealing uncertainty to be clarified.”
On the merits, the Court focused on the phrase “engaged in the business of” distributing a product, and held it does not encompass providing a product that “is incidental to selling services.” The Court distinguished Fresh Coat, in which it had held that a subcontractor installing synthetic stucco on exterior walls was a “seller” of the product and thus entitled to indemnity from the manufacturer, by noting several factual differences. Relying instead on “more factually similar” cases addressing strict-liability claims, the Court affirmed the court of appeals.
Justice Boyd, joined by Justice Johnson, filed a lengthy dissent, saying the Court’s statutory analysis “strays from the statute’s plain language.” The dissent found “the Court’s attempt to distinguish Fresh Coat to be both incomplete and unconvincing,” and criticized the Court’s reliance on common-law principles concerning “seller” status for strict-liability purposes as “unnecessary and imprudent.”