Court Opinion

ID: 4388657
Source: CourtListenerOpinion
Date Created: 2019-04-18 15:52:16.845573+00
Date Added: 2024-06-11T14:50:46.300074
License: Public Domain

NUMBER 13-17-00547-CV

                                   COURT OF APPEALS

                       THIRTEENTH DISTRICT OF TEXAS

                          CORPUS CHRISTI - EDINBURG

AAON,                                                                                     Appellant,

                                                        v.

CJO ENTERPRISES, INC.,                                                                       Appellee.

                       On appeal from the 117th District Court
                             of Nueces County, Texas.

                            MEMORANDUM OPINION
 Before Chief Justice Contreras and Justices Rodriguez and Benavides1
             Memorandum Opinion by Justice Benavides

        By one issue, appellant AAON challenges the trial court’s granting of appellee CJO

Enterprises, Inc.’s (CJO) motion for summary judgment. We affirm.

       1 The Honorable Nelda V. Rodriguez, former Justice of this Court, was a member of the panel

when this case was orally argued but did not participate in this decision because her term of office expired
on December 31, 2018.
                                  I.     BACKGROUND

      A.     Prior Litigation

      The background of this case involves litigation relating to heating, ventilation, and

air conditioner (HVAC) systems installed at Calallen Independent School District (CISD).

CISD contracted with AAON to purchase and install HVAC units at five of its schools. As

part of the contract, CISD requested that Adsil protective coating be applied to the HVAC

units’ coils to prevent corrosion. AAON contracted with CJO to apply the Adsil coating

to the HVAC units’ coils. CISD alleged that the Adsil coating failed to protect the HVAC

units and led to “premature degradation and corrosion” and sued AAON, Adsil, and CJO.

Eventually, CISD non-suited AAON and Adsil in its case against them and entered into a

mediated settlement agreement with CJO.

      B.     Current Litigation

      Subsequent to CISD’s lawsuit, AAON filed this petition claiming indemnity from

CJO and Adsil under chapter 82 of the civil practice and remedies code. See TEX. CIV.

PRAC. & REM. CODE ANN. § 82 (West, Westlaw through 2017 1st C.S.). AAON sought

“reasonable attorney’s fees, expert witness costs, and other reasonable expenses in

defending the CISD litigation and in enforcing its right to indemnification in this suit.”

      AAON settled its indemnity claim with Adsil.       CJO filed a hybrid motion for

traditional and no-evidence summary judgment regarding AAON’s indemnity claim

against it. In the motion, CJO alleged that AAON did not qualify for indemnity because

CJO was not a “manufacturer” of Adsil and AAON was not a “seller” of Adsil and there

was no evidence that entitled AAON to statutory indemnity from CJO. The trial court,

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considering the evidence before it, granted CJO’s hybrid motion for summary judgment.

This appeal followed.

                               II.   SUMMARY JUDGMENT

      By its sole issue, AAON argues the trial court committed error by granting CJO’s

motion for summary judgment.

      A.     Standard of Review

      A motion for summary judgment may be brought on no-evidence or traditional

grounds. See TEX. R. CIV. P. 166a(c), (i). We review a trial court’s grant of summary

judgment de novo.       Neely v Wilson, 418 S.W.3d 52, 59–60 (Tex. 2013); Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).        The party moving for

summary judgment bears the burden of proof. Roskey v. Tex. Health Facilities Comm'n,

639 S.W.2d 302, 303 (Tex. 1982). Though these burdens vary for traditional and no-

evidence motions, the summary judgment motion here was a hybrid motion and both

parties brought forth summary judgment evidence; therefore, the differing burdens are

immaterial and the ultimate issue is whether a fact issue exists. Buck v. Palmer, 381
S.W.3d 525, 527 & n. 2 (Tex. 2012). A fact issue exists if there is more than a scintilla

of probative evidence. See id. at 527; TEX. R. CIV. P. 166a(c),(i). We must review the

summary judgment record “in the light most favorable to the nonmovant, indulging every

reasonable inference and resolving any doubts against the motion.” City of Keller v.

Wilson, 168 S.W.3d 802, 824 (Tex. 2005).       “In reviewing a summary judgment, we

consider all grounds presented to the trial court and preserved on appeal in the interest

of judicial economy.” Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex.

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2005).

         B.    Applicable Law and Discussion

         The Texas Products Liability Act (the Act) gives the innocent seller of an allegedly

defective product a statutory right to indemnity from the product’s manufacturer for losses

arising out of a products-liability action. TEX. CIV. PRAC. & REM. CODE ANN. § 82.002(a);

Centerpoint Builders GP, LLC v. Trussway, Ltd., 496 S.W.3d 33, 35–36 (Tex. 2016);

Petroleum Sols., Inc. v Head, 454 S.W.3d 482, 491 (Tex. 2014). This statutory right is

“in addition to any duty to indemnify established by law, contract, or otherwise.” TEX.

CIV. PRAC. & REM. CODE ANN. § 82.002(e)(2). The Act’s indemnity provision states:

         A manufacturer shall indemnify and hold harmless a seller against loss
         arising out of a products liability action, except 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.

Id. § 82.002(a). “Products liability action” is broadly defined as “any action against a

manufacturer or seller for recovery of damages arising out of personal injury, death, or

property damage allegedly caused by a defective product.” Id. § 82.001(2). The duty

to indemnify is triggered by allegations in the injured claimant’s pleadings of a defect in

the manufacturer’s product, regardless of any adjudication of the manufacturer’s liability

to the claimant. Centerpoint, 496 S.W.3d at 36; see Gen. Motors Corp. v. Hudiburg

Chevrolet, Inc., 199 S.W.3d 249, 255 (Tex. 2006).

         While the scope of a manufacturer’s duty to indemnify is often described as broad,

it is owed only to sellers, and an indemnity claimant’s seller status is a necessary

prerequisite to maintaining a claim. Centerpoint, 496 S.W.3d at 36. The Act defines

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“seller” as a “person who is engaged in the business of distributing or otherwise placing,

for any commercial purpose, in the stream of commerce for use or consumption a product

or any component part thereof.”      TEX. CIV. PRAC. & REM. CODE ANN. § 82.001(3).

        AAON argues that it should be designated as an “innocent seller” because it is a

“seller of HVAC units and coil coatings.” In the pleadings and briefs submitted to the trial

court, AAON stated that the Adsil condenser coating was included on quotations and

purchase orders of its products to CISD. However, in its first amended petition, the live

petition, AAON stated it “was not in the business of selling, marketing, or distributing Adsil”

and claimed Adsil was included as a “pass-through” transaction on its sales documents.

        Although AAON did include the Adsil coating as part of the quotes and purchase

orders it submitted, the Adsil product was “incidental” to the selling and installation of the

HVAC units. See Centerpoint, 496 S.W.3d at 40 (holding that one is “not engaged in the

business of” selling a product if providing that product is incidental to selling services).

AAON also argues that it made a profit from the inclusion of Adsil in the purchase order,

unlike Centerpoint. See id. at 41.

        Centerpoint was a general contractor who purchased trusses directly from the

manufacturer, Trussway, Ltd. Id. at 35. Sandidge & Associates were contracted to

install the trusses in an apartment complex for Centerpoint, but during the job, one of

Sandidge’s workers was injured on a truss that broke.            See id.   Centerpoint sued

Trussway for statutory indemnity, but the Beaumont Court of Appeals found Centerpoint

was not a seller and not entitled to indemnity. See id. The Texas Supreme Court held

that:

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       a general contractor who is neither a retailer nor a wholesale distributer of
       any particular product is not necessarily a ‘seller’ of every material
       incorporated into its construction projects for statutory-indemnity purposes.
       Whether a person or entity is ‘engaged in the business’ of selling a service,
       selling a product, or doing both—regardless of the person’s classification as
       a general contractor or subcontractor—depends on the specific facts at
       issue.

Id. at 41. The Centerpoint Court found that the sale of trusses by Centerpoint was

“incidental to its contract to provide the services necessary to construct a building” and

because they were engaged in the “business” of providing a service, Centerpoint was not

a “seller” under the Act. Id. at 42.

       We find Centerpoint analogous to this case. AAON stated it included Adsil in its

quotes and purchase orders, but the inclusion of Adsil was “incidental to its contract,”

since CISD required the application of Adsil. Therefore, we hold that AAON was not

“engage in the business of” selling Adsil because providing Adsil was incidental to its

contract with CISD. Id. at 40. AAON was not a seller in this transaction and does not

meet the definition of an “innocent seller” necessary to enact the right to indemnification.

See TEX. CIV. PRAC. & REM. CODE ANN. § 82.001(3).

       Because we held that AAON does not meet the “seller” requirement under the

Texas Civil Practices and Remedies Code section 82.001(3), the trial court properly

granted summary judgment, and we do not need to determine if CJO met the definition

of a manufacturer. See Centerpoint, 496 S.W.3d at 36.

       We overrule AAON’s sole issue.

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                                    III.   CONCLUSION

      We affirm the ruling of the trial court.

                                                        GINA M. BENAVIDES,
                                                        Justice

Delivered and filed the
18th day of April, 2019.

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