Tag: Texas

1
Fifth Circuit Disallows Equitable Defenses to Limitations Under Texas Performance Bond Statute
2
Texas Supreme Court Finds Jurisdiction over Foreign Manufacturer
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Fifth Circuit Upholds Use of Contractual Interim Orders and Progress Payments to Preclude Contractors from Obtaining Further Payment for Extra Work
4
Subcontractor’s Contractual Indemnity Obligation to Contractor for EIFS Damage Not Covered by Indemnity Provisions of Texas Product Liability Act
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General Contractor Cannot Bring Direct Action Against Subcontractor’s Insurer Regardless of General Contractor’s Status as Additional Insured Under Subcontractor’s Policy
6
Texas Statute Bars Property Owner’s Liability for Injury to Independent Contractors
7
Unintended Construction Defects May Constitute an “Accident” or “Occurrence” Under Commercial General Liability Policy
8
Economic Loss Rule Remains Alive and Well in Texas

Fifth Circuit Disallows Equitable Defenses to Limitations Under Texas Performance Bond Statute

Hartford Fire Ins. Co. v. City of Mont Belvieu, Texas, No. 09-40586 (5th Cir. July 13, 2010)

By:  David Coale & Billie Ann Maxwell, K&L Gates, Dallas

This case shows why it is important for governmental entities, their contractors, and performance bond providers to be aware of statements among the parties for limitations purposes, and the application of equitable defenses, in the context of the one-year limitations period under Texas Government Code § 2253.078(a).  The lessons of this case apply fully to similar statutes in other jurisdictions.

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Texas Supreme Court Finds Jurisdiction over Foreign Manufacturer

Spir Star AG v. Kumich, No. 07-0340 (Tex. Mar. 12, 2010)

By: David Coale & Matthew Sikes, K&L Gates, Dallas

The recent Texas Supreme Court case of Spir Star AG v. Kumich affirmed jurisdiction over a foreign company that had deliberately structured its Texas business to be conducted through a separate intermediary.  No. 07-0340 (Tex. March 12, 2010).  This case illustrates an aspect of personal jurisdiction over foreign entities that can be critical to disputes about projects involving overseas consultants or specialty contractors.

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Fifth Circuit Upholds Use of Contractual Interim Orders and Progress Payments to Preclude Contractors from Obtaining Further Payment for Extra Work

Addicks Servs., Inc. v. GGP-Bridgeland, LP, 2010 WL 4250054 (5th Cir. Feb. 8, 2010)

This case shows the effectiveness that explicit waivers and progress payments can have on precluding contractors from obtaining further pay for alleged extra work.  A contractor sought damages for extra work and delay costs incurred in performing excavation and grading work for a developer.  The Fifth Circuit, applying Texas law, granted summary judgment in favor of a developer because the interim waivers and accompanying progress payments unambiguously released any outstanding claims for payment of extra work performed before the date of each interim waiver. 

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Subcontractor’s Contractual Indemnity Obligation to Contractor for EIFS Damage Not Covered by Indemnity Provisions of Texas Product Liability Act

K-2, Inc. v. Fresh Coat, Inc., 253 S.W.3d 386 (Tex. App. 2008)

In this case, the court held that the Texas Product Liability Act did not provide a product seller with the right of indemnity against a product manufacturer for that seller’s independent liability under a contract.

Several homeowners sued their builder, its subcontractor which installed synthetic stucco cladding (EIFS) on their houses and the EIFS manufacturer after experiencing water penetration leading to structural damage.  After the claims made by the homeowners and the home builder against the subcontractor were settled, the subcontractor obtained a judgment against the manufacturer for indemnification of the amounts it paid in the settlement.  The manufacturer appealed that portion of the judgment finding it liable to indemnify the subcontractor for the amount it paid to settle the home builder’s claims because it was paid under an indemnity clause in the subcontract. It did not dispute that part of the judgment obligating it to indemnify the subcontractor for settlement of the homeowners’ claims.  Read More

General Contractor Cannot Bring Direct Action Against Subcontractor’s Insurer Regardless of General Contractor’s Status as Additional Insured Under Subcontractor’s Policy

Ohio Cas. Ins. Co. v. Time Warner Entm’t Co., L.P., 244 S.W.3d 885 (Tex. App. Feb. 6, 2008)

In this case, a general contractor brought a declaratory judgment action against its subcontractor’s primary and umbrella insurers to recover the cost of removing and replacing fiber optic cable that the subcontractor installed improperly.  Although the trial court granted summary judgment in favor of the general contractor, the Dallas Court of Appeals reversed.
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Texas Statute Bars Property Owner’s Liability for Injury to Independent Contractors

Vanderbeek v. San Jacinto Methodist Hosp., 246 S.W.3d 346 (Tex. App. 2008)

A plumber working on a remodel project for San Jacinto Methodist Hospital cut and capped a drainage pipe from a sink in an adjacent room.  Although he instructed a hospital employee that the sink was out of order and should not be used, hospital employees poured a drain cleaner into the sink when it wouldn’t drain.  When the plumber returned to remove the drainage line cap, a caustic liquid came out of the pipe, causing him chemical burns.  He sued the hospital for negligence for allowing caustic drain cleaner into the sink when he had given notice it was not to be used. Read More

Unintended Construction Defects May Constitute an “Accident” or “Occurrence” Under Commercial General Liability Policy

Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007)

In this landmark decision, the Texas Supreme Court ruled that commercial general liability policies provide a duty to defend claims for property damage caused by an insured contractor’s defective construction.  Resolving a split of authority on certified questions from the Fifth Circuit, the court ruled that unintended construction defects may constitute an “accident” or “occurrence” within the meaning of a commercial general liability policy.  It also ruled that the resulting damage to or loss of use of the building may constitute “property damage” sufficient to trigger the insurer’s duty to defend.  The court also held that the CGL policy made no distinction between tort and contract damages, rejecting the insurer’s economic loss rule defense.

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Economic Loss Rule Remains Alive and Well in Texas

Pugh v. Gen. Terrazzo Supplies, Inc., 243 S.W.3d 84 (Tex. Ct. App. 2007), petition for review filed (Mar. 24, 2008)

In this case, the court affirmed a take-nothing summary judgment in favor of a materials supplier based on the economic loss rule.  Pugh arose out of a residential construction project involving an exterior insulated finishing system (“EIFS”).  After discovering alleged water damage to their home’s wood frame and interior wood flooring, the homeowners sued the masonry subcontractor and veneer supplier for negligence, “product liability (marketing defect),” and breach of the “implied warranties of good and workmanlike service and habitability.” 

In a motion for summary judgment, the material supplier argued that the economic loss rule barred the homeowners’ claims for negligence and strict liability.

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