Houston Partners Obtain Take-Nothing Judgment for Subcontractor Regarding Indemnity Agreement

Construction Accident Leads to Lawsuit Regarding Indemnity Agreement

The case began when, prior to Mr. Guerra and his family driving through a highway construction site on Interstate 35, another car struck an improperly placed traffic sign causing a series of events that led to a segment of the pole being launched into the air and into the windshield of the car in Mr. Guerra was riding, killing him instantly. The general contractor for the highway construction project and our subcontractor client, who was in charge of adding and removing striping, were both defendants in that first lawsuit, which was ultimately settled.

While that first lawsuit was pending, the general contractor demanded the subcontractor indemnify it under a provision in the subcontract. Both the subcontractor and its insurance company refused. The general contractor filed suit against the subcontractor on the indemnity issue in a separate court. After the original lawsuit settled, the general contractor and subcontractor filed competing motions regarding the enforceability of the indemnity agreement, and the trial court granted the general contractor’s summary judgment and denied the subcontractors.

The general contractor then filed and prevailed on another summary judgment arguing that it was not liable to the plaintiffs in the original suit. Finally, the general contractor filed a third motion for summary judgment arguing that the amount it settled for was reasonable because it faced a risk of liability to the plaintiffs in the original lawsuit.

In response, the subcontractor filed a motion for reconsideration arguing that the relief the general contractor was seeking in its latest motion was (1) inconsistent with the relief it had obtained in the first two summary judgments and (2) supported our argument in our original motion that the indemnity agreement was unenforceable under Texas law. After the third hearing, the court denied the general contractor’s third summary judgment and granted the subcontractor’s motion for reconsideration, rescinding the previous relief it had provided and rendering a take-nothing judgment in favor of the subcontractor.

Texas Anti-Indemnity Act and Fault

The Texas Anti-Indemnity Act makes void as a matter of public policy any indemnity agreement in a construction contract where the indemnitor is required to indemnify the indemnitee for the indemnitee’s own negligence or fault.

The plain language of the indemnity agreement in the subcontract required the subcontractor to indemnify the general contractor for its own negligence. After originally arguing that the indemnity agreement did not require our client to indemnify it for its own negligence, the general contractor then argued in a third motion that the amount it settled for in the original lawsuit was reasonable because it faced real liability in that suit. In our motion for reconsideration, the Thompson Coe team pointed out that the general contractor admitted it risked liability in the original lawsuit. Therefore, what it settled was its portion of liability, not our subcontractor client’s. Because the general contractor was seeking indemnity for some or all of the amount it settled, then, this meant that it was seeking indemnification for its own liability, not our client’s.

Ultimately, the trial court found that the indemnity agreement was unenforceable and granted the original summary judgment for a take-nothing judgment against the general contractor.