Reversed and Rendered and Memorandum Opinion filed August 28, 2014.

In The

Fourteenth Court of Appeals

NO. 14-13-00282-CV

JUDY RYLIE, Appellant

V.

RYLIE TRANSPORTS, INC., Appellee

On Appeal from the 13th District Court

Navarro County, Texas1

Trial Court Cause No. 09-18048-CV

MEMORANDUM OPINION

The Texas Workforce Commission (TWC) awarded appellant Judy Rylie 

unemployment benefits and authorized charging back those benefits to Rylie’s 

former employer, appellee Rylie Transports, Inc. Rylie Transports then sued 

Rylie, alleging she was required to reimburse it for the charges under an indemnity 

agreement contained in the final divorce decree ending her marriage to the 

1 This case was transferred to this Court from the Tenth Court of Appeals. 

 
president of Rylie Transports. Both parties filed cross-motions for summary 

judgment, and the trial court granted Rylie Transports’ motion and denied Rylie’s. 

In this appeal, Rylie contends the trial court erred when it granted Rylie 

Transports’ motion and denied her own because she established as a matter of law 

that the indemnity agreement did not cover Rylie Transports’ claim for 

reimbursement. Because the undisputed facts establish that Rylie’s claim for 

unemployment benefits is not covered by the plain language of the indemnity 

agreement, we reverse and render judgment that Rylie Transports take nothing.

BACKGROUND

Rylie was married to Ernest Rylie, the president of Rylie Transports. Ernest 

filed for a divorce from Rylie, and a Final Decree of Divorce ending their marriage 

was signed on December 5, 2008. In addition to a negotiated property settlement, 

the Divorce Decree contained an indemnification agreement.

During her marriage to Ernest, Rylie worked for Rylie Transports. After 

Ernest had filed for divorce, a restraining order was signed barring Rylie from 

entering the premises of Rylie Transports and preventing her from performing her 

work duties. Despite barring her from entering the premises, Rylie Transports

continued to pay Rylie her regular salary. Rylie Transports paid Rylie until 

September 26, 2008, when the wages were stopped in anticipation of a settlement 

in the divorce action. Ultimately, the Divorce Decree ordered Rylie to resign from 

her positions with Rylie Transports.

After Rylie Transports stopped paying her salary, Rylie filed a claim for 

unemployment benefits with the TWC on October 19, 2008. The TWC approved 

Rylie’s claim and authorized charging back Rylie’s unemployment benefits to 

Rylie Transports’ account on November 17, 2008. One result of the TWC’s 

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decision was an increase in Rylie Transports’ unemployment insurance tax rate. 

The TWC Appeal Tribunal confirmed the decision awarding Rylie unemployment 

benefits as well as the charge to Rylie Transports’ account on March 9, 2009. 

Rylie Transports sought judicial review of the TWC’s decision in district 

court. In the same suit, Rylie Transports sued Rylie to recover the damages it 

claimed it had incurred as a result of charging back Rylie’s unemployment benefits 

to Rylie Transports’ account. Rylie Transports based its claim against Rylie on an 

indemnity agreement in the Divorce Decree and also alleged fraud.

Rylie Transports filed a motion for partial summary judgment, arguing it had 

established as a matter of law that Rylie was liable to it under the indemnity 

agreement. Riley filed a combined response and cross-motion for summary 

judgment asserting, among other arguments, that her claim for unemployment 

benefits was not covered by the plain language of the indemnity agreement. 

Before the court ruled on these motions, Rylie Transports non-suited its cause of 

action seeking review of the TWC’s decision.

The trial court granted Rylie Transports’ motion and denied Rylie’s. It then 

conducted a bench trial on the damages Rylie Transports alleged it had incurred as 

a result of Rylie filing for unemployment benefits.2

 At the conclusion of the 

evidence, the trial court signed a final judgment awarding Rylie Transports 

$13,089.33 in damages and $9,220 in attorneys’ fees. This appeal followed.

2 At the beginning of the bench trial, the trial court agreed to reconsider its summary 

judgment in response to a legal argument re-urged by Rylie. The court also proceeded to hear 

evidence regarding damages and attorneys’ fees. In its final judgment, the court again granted 

Rylie Transports’ summary judgment motion. Nothing in the bench trial record affects our 

interpretation of the indemnity agreement, which presents a legal issue.

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ANALYSIS

Rylie brings four issues on appeal challenging the trial court’s final 

judgment. Because it is dispositive, we need only address her second issue. In that 

issue, Rylie contends the trial court erred when it granted Rylie Transports’ motion 

for partial summary judgment and denied her own because Rylie Transports’ claim 

for indemnification is not covered by the Divorce Decree’s indemnity agreement. 

We agree with Rylie.

I. Standard of review and applicable law

We review a trial court’s order granting a traditional summary judgment de 

novo. Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007). When a 

plaintiff moves for summary judgment on its cause of action, it must conclusively 

prove all essential elements of its claim as a matter of law. Cullins v. Foster, 171 

S.W.3d 521, 530 (Tex. App.—Houston [14th Dist.] 2005, pet. denied). When a 

defendant moves for summary judgment, it must disprove at least one essential 

element of the plaintiff’s cause of action in order to prevail. Doggett v. Robinson, 

345 S.W.3d 94, 98 (Tex. App.—Houston [14th Dist.] 2011, no pet.). When both 

parties move for summary judgment, each party bears the burden of establishing 

that it is entitled to judgment as a matter of law. City of Garland v. Dallas 

Morning News, 22 S.W.3d 351, 356 (Tex. 2000). When the trial court grants one 

motion and denies the other, the appellate court reviews both motions and 

determines all questions presented. Id. The reviewing court should then render the 

judgment that the trial court should have rendered, or reverse and remand if neither 

party has met its summary judgment burden. Id.

“An indemnity agreement is a promise to safeguard or hold the indemnitee 

harmless against either existing [or] future loss liability.” Dresser Indus., Inc. v. 

Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993). Indemnity agreements 

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are construed under the normal rules of contract construction. Ayres Welding Co.

v. Conoco, Inc., 243 S.W.3d 177, 180 (Tex. App.—Houston [14th Dist.] 2007, pet. 

denied). Indemnity agreements must be strictly construed to give effect to the 

parties’ intent as expressed in the agreement. Crowder v. Scheirman, 186 S.W.3d 

116, 119 (Tex. App.—Houston [1st Dist.] 2005, no pet.). To determine that intent, 

we must examine the entire agreement in an effort to harmonize and give effect to 

all provisions so that none will be rendered meaningless. Ayres Welding Co., 243 

S.W.3d at 181. In an effort to discern that intent, we may not expand the parties’ 

rights or responsibilities beyond the limits agreed upon by the parties in the 

indemnity agreement. See Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 

951, 953 (Tex. 1983); Lehmann v. Har-Con Corp., 76 S.W.3d 555, 561 (Tex. 

App.—Houston [14th Dist.] 2002, no pet.). In addition, we must read the 

indemnity provision in light of common sense and give its terms their plain, 

ordinary, and generally accepted meanings unless the agreement provides 

otherwise. Lehmann, 76 S.W.3d at 561. The interpretation of an unambiguous 

indemnity agreement, like any unambiguous contract, is a question of law which is 

reviewed de novo. Crowder, 186 S.W.3d at 119.

II. Rylie established as a matter of law that the plain language of the 

indemnity agreement does not cover her claim for unemployment 

benefits. 

Rylie Transports moved for partial summary judgment on its indemnity 

cause of action, asserting that: (1) it was a party covered by the Divorce Decree’s 

indemnity agreement; and (2) Rylie breached the indemnity agreement when she 

received unemployment benefits after the Divorce Decree was signed and then 

failed to reimburse Rylie Transports for the amount charged back to Rylie 

Transports’ unemployment insurance account. 

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The indemnity agreement executed on December 5, 2008 provides in 

pertinent part:

[1] Each party represents and warrants that he or she has not incurred 

any outstanding debt, obligation, or other liability on which the other 

party is or may be liable, other than those described in this decree. 

[2] Each party agrees and IT IS ORDERED that if any claim, action, 

or proceeding is hereafter initiated seeking to hold the party not 

assuming a debt, an obligation, a liability, an act, or an omission of 

the other party liable for such debt, obligation, liability, act or 

omission . . . , that other party will . . . defend the party not assuming 

the debt, obligation, liability, act or omission of the other party against 

any such claim or demand . . . and will indemnify the party not 

assuming the debt, obligation, liability, act or omission . . . and hold 

him or her harmless from all damages resulting from the claim or the 

demand.

(Emphasis added). In Rylie Transports’ view, Rylie’s claim for unemployment 

benefits invoked the duty to indemnify Rylie Transports because the charge led to

an increase in its unemployment insurance tax rate. In her combined summary 

judgment response and cross-motion for final summary judgment, Rylie argued her 

filing for unemployment benefits and any impact that may have had on Rylie 

Transports’ unemployment insurance tax rate was not covered by the plain 

language of the indemnity agreement.

For purposes of our analysis, we assume without deciding that Rylie 

Transports was a party to the indemnity agreement.3

 Nevertheless, we conclude 

that the unambiguous language of the indemnity agreement quoted above does not 

cover Rylie’s claim of unemployment benefits or the TWC proceeding seeking to 

3 In her motion for summary judgment and in her first issue on appeal, Rylie also argues

that section 207.071 of the Texas Labor Code declares invalid any agreement requiring a former 

employee to reimburse his or her former employer for any amounts the former employer is 

required to pay the TWC because the former employee received unemployment benefits. 

Because of our disposition, we need not reach this issue. 

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charge Rylie Transports’ account for those benefits.

Rylie Transports alleged in the trial court that Rylie breached the first 

sentence of the agreement quoted above and committed fraud by failing to disclose 

her unemployment claim. But the first sentence only required Rylie to disclose 

whether “she ha[d] . . . incurred an[] outstanding debt, obligation, or other 

liability.” The parties have not cited, and we have not discovered, any basis for 

concluding that Rylie incurred a liability when she filed a claim for unemployment 

benefits. Accordingly, we hold that her claim is not covered by the first sentence 

of the indemnity agreement.

Nor does the second sentence of the agreement apply here. Even if a claim 

for unemployment benefits could qualify as an “act” of Rylie, the TWC proceeding 

seeking to hold Rylie Transports liable for that act was initiated before the 

indemnity agreement took effect. It is undisputed that (1) Rylie Transports ceased 

paying Rylie on September 26, 2008; (2) Rylie filed for unemployment benefits on 

October 19; (3) the TWC approved her claim for benefits and ordered the benefits 

charged back to Rylie Transport’s account on November 17; and (4) the Divorce 

Decree containing the indemnity was not signed until December 5. These dates 

demonstrate that the TWC had approved Rylie’s application for unemployment 

benefits and charged back those benefits to Rylie Transports’ account well before 

the Divorce Decree was signed. 

Under the plain language of the second sentence of the indemnity 

agreement, Rylie’s duty to indemnify only arose for claims, actions, or proceedings

initiated after the Divorce Decree was signed and seeking to hold Rylie Transports 

liable for a debt, obligation, liability, act, or omission of Rylie. Because Rylie’s 

unemployment claim was initiated before the Divorce Decree was signed, we hold 

Rylie did not have a duty to indemnify Rylie Transports for the cost of the charge 

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and did not breach the Divorce Decree’s indemnity agreement by failing to do so. 

See Ideal Lease Serv., Inc., 662 S.W.2d at 953 (holding, based on evidence in trial 

record and language of the indemnity agreement, that injury underlying indemnity 

lawsuit was not covered by indemnity agreement). 

Given that the plain language of the indemnity agreement does not require 

Rylie to pay Rylie Transports for any damages it allegedly incurred as a result of 

her unemployment claim, we sustain her second issue on appeal and hold that the 

trial court erred in denying her motion for summary judgment and granting Rylie 

Transports’ motion.

CONCLUSION

Having sustained Rylie’s second issue on appeal, we reverse the trial court’s 

judgment and render judgment that Rylie Transports take nothing.

/s/ J. Brett Busby

Justice

Panel consists of Justices McCally, Busby, and Donovan.

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