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From Products Liability Law Daily,June 16, 2017

Concrete manufacturer had to indemnify construction firm for homeowners’ defective driveway

By Georgia D. Koutouzos, J.D.

A concrete manufacturer owed a duty to indemnify a construction company for damages sustained by homeowners who had sued the company after their concrete driveway cracked and discolored, a Texas appellate panel determined, affirming a state trial court’s decision. In so ruling, the panel rejected all of the manufacturer’s bases for appeal—including the contention that the construction company was not a "seller" under the terms of the Texas Products Liability Act and that the indemnification duty did not apply because the homeowners had not actually alleged a products liability claim (RDJRLW, Inc. v. Miller, June 15, 2017, Kerr, E.).

A couple sued their construction company for having used allegedly defective concrete when installing a driveway and concrete slab on their property that ultimately was discolored, failed to set properly, and cracked. In turn, the construction company filed a third-party action against the concrete manufacturer, RDJRLW, Inc., for statutory indemnity under Texas law. The jury found in the homeowners’ favor on some of their claims against the construction company and also determined that the concrete manufacturer was required to indemnify the company. The trial court entered judgment on the jury’s verdict, after which the manufacturer appealed, asserting that the evidence was legally and factually insufficient to support the jury’s finding.

The concrete manufacturer did not dispute that it was a "manufacturer" under the Texas Products Liability Act (TPLA) or that it had made the concrete at issue in the case; instead, it argued that the construction company was not a "seller" under the statute and that the aggrieved homeowners had failed to plead and prove a products liability action.

"Seller" precondition. Relevant case precedent in Texas establishes that the scope of a manufacturer’s duty to indemnify under the TPLA is broad, but is owed only to sellers. As such, the construction company’s status as a seller was a prerequisite for its indemnification under the Act, which defines a "seller" 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."

The concrete manufacturer contended on appeal that a "seller" under the statute does not include a contractor that incorporates a defective product into a construction project when the product only is incidental to the sale of construction services. Because selling concrete was incidental to the construction company’s sale of its services to the homeowners, the company was not a "seller," the manufacturer argued.

However, far from implicitly complaining that the construction company was not a statutory "seller," the concrete manufacturer’s motions at trial could be read as tacitly presupposing the company’s seller status. Therefore, because the concrete manufacturer’s contentions did not alert the trial court to any challenge to the construction company’s "seller" status, the manufacturer failed to preserve those issues for appellate review.

Nature of underlying claims. As for the concrete manufacturer’s argument that the evidence was legally and factually insufficient to support the jury’s finding that the manufacturer had to indemnify the construction company because the homeowners had not pleaded a "products liability action" (their complaint alleged breach of contract, deceptive trade practices, negligence, and negligent misrepresentation) and because they had alleged only economic damages barred by the economic-loss rule, all of the couple’s causes of action against the construction company were based on the company’s pouring of "defective concrete."

Once poured, the defective concrete became part of the homeowners’ real property. Based on that principle, the homeowners’ driveway removal and replacement costs in fact were damages arising out of property damage allegedly caused by the defective concrete. Accordingly, the homeowners pleaded a "products liability action" under the TPLA, thereby triggering the concrete manufacturer’s duty to indemnify the construction company that had poured the defective concrete.

Moreover, despite the manufacturer’s contention that the homeowners were required to obtain jury findings supporting a products liability action in order to trigger the indemnification duty, that duty was triggered simply by the allegations in an injured claimant’s petition. Ergo, the couple did not have to obtain jury findings supporting a "products liability action" in order for the indemnification duty to be triggered.

Seller’s independent liability. Finally, the concrete manufacturer asserted that the jury’s findings against the construction company for breach of contract and statutory deceptive trade practices violations conclusively established the company’s liability, thereby triggering the applicability of an exception to the indemnification mandate in circumstances where the seller is independently liable for the loss. In the instant case, however, there was no such determination. In fact, the jury impliedly found the opposite.

One of the jury instructions stated that the concrete manufacturer had to indemnify the construction company unless the jury found that the homeowners’ loss had been caused by the company’s "negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product." Thus, in concluding that the manufacturer indeed was required to indemnify the construction company, the jury implicitly found that the company did not cause the homeowners’ loss. Therefore, the manufacturer did not establish the applicability of the exception to its indemnification duty. Accordingly, the trial court’s decision was affirmed.

The case is No. 02-16-00132-CV.

Attorneys: Don Martinson (Fanning Harper Martinson Brandt & Kutchin, PC) for RDJRLW, Inc. Roger M. Yale (Yale Law Group) for Bobby Elbert Miller, Jr., d/b/a Miller Construction.

Companies: RDJRLW, Inc.; Miller Construction

MainStory: TopStory BuildingConstructionNews SCLIssuesNews DamagesNews DesignManufacturingNews TexasNews

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