Opinion ID: 895253
Heading Depth: 2
Heading Rank: 3

Heading: Effect of Fresh Coat's Contract with Life Forms

Text: Section 82.002(a) imposes a duty on manufacturers to indemnify sellers for a loss arising out of a products liability action. It provides an exception for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable. K-2 does not argue that the statutory exception should apply because Fresh Coat improperly installed the EIFS, an argument that would apply equally to Fresh Coat's settlements with Life Forms and the homeowners. [13] Instead, K-2 argues it should not have to indemnify Fresh Coat for the settlement payment Fresh Coat made to Life Forms because Fresh Coat's contract with Life Forms contained an indemnity provision. The court of appeals agreed with K-2, concluding Fresh Coat's settlement payment to Life Forms was not subject to indemnity under Chapter 82 because it was based solely on Fresh Coat's independent liability under the contract between Fresh Coat and Life Forms. [14] A Fresh Coat attorney testified that Fresh Coat indemnified Life Forms because its contract with Life Forms required indemnification regardless of any fault on the part of Life Forms. The contract indeed states in a Contractor's Indemnity provision that Fresh Coat agrees to indemnify and hold Life Forms harmless for any claims in favor of homeowners and others on account of property and other losses in any way occurring, incident to, arising out of or on [sic] connection with ... the work performed by the contractor. ... Under Section 82.002(a), Fresh Coat's settlement with Life Forms ar[ose] out of a products liability action. Fresh Coat's settlement indisputably arose out of homeowner claims against Life Forms that were settled. Those underlying homeowner claims, as well as Life Forms' indemnity cross-claim against Fresh Coat, were brought in a products liability action, which, under Section 82.001(2), is broadly defined to include actions for damage allegedly caused by a defective product whether the action is based in strict tort liability ... negligence ... or any other theory or combination of theories. As explained above, the claims in this case involved a product. Further, since Fresh Coat was a seller under Section 82.002(a), that provision requires indemnity from K-2 for Fresh Coat's settlement with Life Forms unless the exception found in Section 82.002(a) applies. The court of appeals reasoned that Fresh Coat could not recover its settlement payment to Life Forms from K-2 since Fresh Coat was independently liable for the loss in the contract. However, the statute does not except the manufacturer from its indemnity obligation whenever the seller is contractually liable to another. The exception applies only for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable. [15] The court of appeals excluded from its analysis all the language of the exception preceding for which the seller is independently liable. The jury, however, was correctly instructed to exclude from its calculation of Fresh Coat's loss any amount that constitutes loss caused by Fresh Coat's own negligence, intentional misconduct, or other act or omission, if any (such as negligently modifying or altering the product), for which Fresh Coat is independently liable. The jury did not find the exception applicable. The court of appeals focused solely on Fresh Coat's independent liability, and did not find the reason for that liability relevant. Fresh Coat argues that Section 82.002(a) creates an exception for the manufacturer's duty to indemnify that only applies when the seller tortiously causes a loss. We agree with Fresh Coat that K-2 has not proven that Fresh Coat caused the loss via the type of act or omission contemplated in the statute. Section 82.002(a) excepts the manufacturer from indemnity only when it proves that a loss was caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable. [16] K-2 argues it should not be liable for contractual obligations that it was not a party to, namely, any losses Fresh Coat suffered solely as a result of its contract with Life Forms rather than as a result of Fresh Coat's products-liability obligations. But Section 82.002(a) does not exempt manufacturers from their indemnity obligations for any loss ... for which the seller is independently liable. Such a reading disregards the 20 words between any loss and for which. ... Moreover, Section 82.002(e) expressly provides that the manufacturer's duty to indemnify under this section ... is in addition to any duty to indemnify established by law, contract, or otherwise. Thus, Section 82.002(e) suggests that the indemnification duty under Chapter 82 is not affected by the mere creation of other contracts or obligations to indemnify. Our ultimate purpose when construing statutes is to discover the Legislature's intent. [17] Presuming that lawmakers intended what they enacted, [18] we begin with the statute's text, [19] relying whenever possible on the plain meaning of the words chosen. [20] In addition, we examine the entire act to glean its meaning, [21] try to give meaning to each word, [22] and avoid treating statutory language as surplusage where possible. [23] Finally  and essential here  we presume that `the entire statute is intended to be effective.' [24] The 20 words in Section 82.002(a) that K-2 ignores make clear that what is important is not merely whether a seller is independently liable, but why. Otherwise, all of those intervening words in Section 82.002(a) would be needless. Although we have not previously held that what matters is not merely whether but why a seller is independently liable, this Court has suggested as much: To escape this duty to indemnify, the indemnitor must prove the indemnitee's independent culpability.  [25] Section 82.002(a) exempts from indemnity a seller's own negligence, intentional misconduct, or act such as negligently modifying or altering the product for which the seller would be independently liable. Section 82.002(a) does not always exempt losses arising from a contractual indemnity obligation. We express no opinion as to whether a loss need always be tortious to fit within the ambit of Section 82.002(a)  the statute includes other act[s] or omission[s] that may not necessarily be tortious. On today's facts, though, K-2 has not conclusively established a loss for which it is exempt from indemnity. Both the text of Section 82.002(a) and the other provisions of Chapter 82, such as 82.002(e), lead us to conclude that K-2 failed to prove that Fresh Coat's settlement payment to Life Forms was caused by the type of act or omission for which K-2 owes no indemnity under the statutory exception.