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Important Decision Looms for Construction Contractors in Texas

In the construction industry, it is a common occurrence for a subcontractor to sustain an injury on the job site in connection with building materials. That situation often gives rise to a product liability claim against the general contractor as a “seller” of the offending material under Chapter 82 of the Texas Civil Remedies and Practice Code. Texas courts have long grappled with how to define a “seller” for purposes of applying Chapter 82 to cases in the construction industry.

In Fresh Coat, Inc. v. K-2, Inc., the court directly confronted that definitional question. In that case, the court held that a contractor hired to apply synthetic stucco components to homes, following the training and instructions provided by the product manufacturer, was a “seller” of the stucco components. The court further held that the Chapter 82 definition of “seller” does not exclude a service provider who also sells products, and that such a determination does not depend on whether the seller is exclusively selling the product in question or sells other products as well.

Now, the Supreme Court of Texas has taken on a new case that all but promises to either severely expand or limit the holding in Fresh Coat. In Centerpoint Builders GP v. Trussway, Ltd., the Texas Supreme Court heard oral arguments about whether a general contractor could be considered a “seller” entitled to indemnification from the manufacturer of an allegedly defective roof truss. An affirmative decision by the court would probably create an increased liability risk for general contractors, as well as manufacturers of products installed by general contractors.

The case began as a personal injury lawsuit brought by the injured worker against the general contractor and the manufacturer of the truss. When the accident occurred, the worker was standing on a truss that had not yet been installed. The truss broke, and the worker fell, sustaining severe injuries. The worker filed a suit alleging that the truss was defective and unreasonably dangerous. The general contractor filed a claim against the manufacturer, seeking indemnification under Chapter 82. The statute requires a manufacturer to indemnify and hold harmless a seller for losses arising out of a product liability action, unless the loss was caused by the seller’s negligence, intentional misconduct, or some other basis of independent liability. Chapter 82 defines “seller” broadly, to encompass “a person who is engaged in the business of distributing or otherwise placing, for any commercial purpose, in the the stream of commerce for use or consumption a product or any component part thereof.”

However the Supreme Court ultimately decides, there will be implications for general contractors in Texas. If the court rules that the general contract is a “seller” for purposes of Chapter 82, such actions may be brought with far greater frequency. General contractors could expect to see an increase in the number of product liability suits as a result of their more certain status as “sellers” under the statute.

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