Opinion ID: 895010
Heading Depth: 2
Heading Rank: 2

Heading: Involuntary Payment

Text: Having determined that Frymire showed some evidence that it paid a debt primarily owed by Jomar, we turn to the next, and most frequently disputed, element of equitable subrogationan involuntary payment. [19] A payment is voluntary when the payor acts without any assignment or agreement for subrogation, without being under any legal obligation to make payment, and without being compelled to do so for the preservation of any rights or property. [20] Texas courts are liberal in their determinations that payments were made involuntarily. [21] Frymire claims that it was legally obligated by its contract with Price Woods to pay the hotel for the water damage; therefore, the indemnity payment made to the hotel owner was involuntary. Jomar responds that equitable subrogation is only available when one person confers upon another a benefit that is not required by legal duty or contract. [22] According to Jomar, Frymire voluntarily entered the contract and voluntarily satisfied the hotel owner's demands for payment, so it is not entitled to equitable subrogation. We do not read Smart as foreclosing equitable subrogation to any party who pays a debt pursuant to the requirements of a contract. Our equitable subrogation holdings as far back as Oury describe involuntary payments as legal obligation[s] [23] and payments that are made for the protection of some interest of the party making the payment [24] ; these descriptions easily encompass a contractual obligation. Instead, we read Smart as preventing a person who confers a benefit on a party as required by legal duty or contract from leveraging equitable subrogation to assert claims against that same party. [25] That is, Frymire would lack standing to seek equitable subrogation if Frymire had contracted with Jomar, rather than with Price Woods, to pay the hotel's damages caused by Jomar. This common-sense reading reflects the equitable nature of equitable subrogation and harmonizes Smart with our other equitable subrogation holdings. [26] Jomar's argument that Frymire cannot assert equitable subrogation because its indemnity payment was under a voluntary contract would, if accepted and applied to other contracts, be a radical departure from long-settled Texas subrogation law. For instance, insurance policies are contracts, too, and if the hotel's property insurer had paid the hotel for the cost of repairs pursuant to a policy agreement, it would certainly be able to assert an equitable subrogation claim against Jomar. [27] The situation here is not much different. Frymire agreed to indemnify and hold Price Woods, Inc. and Owner harmless from any and all liability ... which may be incurred ... by reason of [Frymire's] performance of the work. When the water line ruptured, the hotel owner made a claim on Frymire for indemnification under the contract. In this case, no legal duty obligated Frymire to confer a benefit on JomarFrymire paid the hotel owner to satisfy contractual indemnity obligations owed to Price Woods. Frymire's decision to contract with Price Woods was voluntary; its duty to honor that contract was not. Having acted to satisfy a legal obligation and to protect its interests under the contract (and its reputation in the marketplace), Frymire involuntarily extinguished a debt primarily owed by Jomar to the hotel owner.