Court Opinion

ID: 3072851
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:51:08.354487+00
Date Added: 2024-06-11T07:37:56.957940
License: Public Domain

In The

                               Court of Appeals
                   Ninth District of Texas at Beaumont
                          ____________________
                             NO. 09-13-00067-CV
                          ____________________

                        FRESH COAT, INC., Appellant

                                       V.

                      PAREXLAHABRA, INC., Appellee

_______________________________________________________          ______________

                   On Appeal from the 284th District Court
                        Montgomery County, Texas
                      Trial Cause No. 07-09-09911 CV
________________________________________________________          _____________

                                   OPINION

      In this appeal, we consider whether the trial court properly granted a

summary judgment in favor of a manufacturer on a statutory indemnity claim

brought against it by a company that installed an allegedly defective product, an

exterior insulation and finishing system (EIFS), on the exterior walls of various

homes in Montgomery County, Texas. See Tex. Civ. Prac. & Rem. Code Ann. §

82.002 (West 2011) (providing that a manufacturer has a duty to indemnify sellers

against losses arising out of “a products liability action”). Because there was no

                                            1
evidence before the trial court to support at least one essential element of the

installer’s claim for statutory indemnity, we hold the trial court properly granted

the manufacturer’s motion for summary judgment.

                                    Background

      Parexlahabra, Inc. (Parex) is one of several manufacturers of EIFS against

whom Fresh Coat, Inc. filed suit seeking indemnity under Chapter 82 of the Texas

Civil Practice and Remedies Code. For the purposes of Chapter 82, the Texas

Supreme Court has held that EIFS is a product that may be made the basis of a

claim for statutory indemnity, that the contractor who installed EIFS is considered

a seller, and the manufacturer’s indemnity obligation extends to settlements that a

contractor paid to settle lawsuits which resulted following the installer’s

application of EIFS to a home. Fresh Coat, Inc. v. K-2, Inc., 318 S.W.3d 893, 895,

897-900 (Tex. 2010). The question before us concerns whether an EIFS

manufacturer has a statutory duty of indemnity to the seller if the seller fails to

show that its damages were related to lawsuits that alleged EIFS is defective and

that it caused either property damages or personal injuries.

      Between 1995 and 2001, Life Forms, Inc., a production home builder,

employed Fresh Coat to install EIFS on the exterior walls of homes that were

subsequently sold in Montgomery County, Texas. In 2009, Fresh Coat added Parex

to a suit that it had previously filed against other manufacturers of EIFS.
                                             2
According to Fresh Coat’s First Amended Petition, its live pleading for the purpose

of the summary judgment hearing, it sought indemnity against the defendants who

manufactured EIFS relating to forty-nine Montgomery County homeowners who

had “brought claims or filed suit” against Fresh Coat “for damages caused to their

homes resulting from defective EIFS cladding.”

      In 2012, challenging Fresh Coat to present evidence to support its claim that

Fresh Coat had settled a “products liability action” within the meaning of Chapter

82 of the Civil Practice and Remedies Code, and asserting that Fresh Coat had no

evidence that Parex sold the EIFS on the homes at issue, Parex filed a combined

no-evidence and traditional motion for summary judgment. See Tex. Civ. Prac. &

Rem. Code Ann. § 82.002; Tex. R. Civ. P. 166a(b) (traditional summary judgment

rule), 166a(i) (no-evidence rule). In its no-evidence motion, Parex sought summary

judgment on all of Fresh Coat’s claims. Parex’s no-evidence motion concludes that

without evidence to show that it had settled a “products liability action” or to show

that Parex’s products were installed on the homes at issue, Fresh Coat could not

prevail on its claim for statutory indemnity.

      In its traditional motion, Parex sought summary judgment on Fresh Coat’s

indemnity claims that related to the settlements Fresh Coat made with two of the

homeowners identified in Fresh Coat’s First Amended Petition. In this appeal,

Fresh Coat does not challenge the trial court’s decision to grant Parex’s traditional
                                                3
motion for summary judgment to the extent its indemnity claim is related to the

claims of those two homeowners.

      In opposing Parex’s no-evidence motion, Fresh Coat filed a response that

contained (1) letters containing general complaints about the presence or

performance of EIFS on their homes from seven of the homeowners identified in

Fresh Coat’s First Amended Petition; (2) release agreements 1 between Life Forms

and five of the homeowners to show that Life Forms had settled with several

homeowners regarding its installation of EIFS; (3) inventory material sheets for

various Fresh Coat installation sites, identifying Parex as a supplier of EIFS at

those sites; and (4) an affidavit signed by Gerald Banks, Fresh Coat’s former

president, who stated that Parex-supplied EIFS was used on several of the homes

made the basis of Fresh Coat’s indemnity claim. Banks’s affidavit mentions that

Fresh Coat settled claims from homeowners regarding complaints about EIFS on

their homes, and his affidavit states that “[i]n many cases, the homeowners’ claims

      1
       The releases attached to Fresh Coat’s response reflect that these same
homeowners agreed to release all of their claims against Life Forms and Fresh
Coat arising from the use of EIFS on their homes. The releases recite that the
homeowners were releasing all of their claims, including claims that sound in
“contract, tort, negligence, gross negligence, product liability, breach of express or
implied warranty, breach of fiduciary duty, fraud, misrepresentation, claims under
any federal or state statute, equity, the common law, or any other theory of law or
equity[.]” However, the releases do not reflect that Life Forms was sued before the
claims were settled; instead, the releases state that “such actions have been taken to
avoid the expense and inconvenience of litigation.”
                                               4
were resolved without the need for suit to be filed.” Banks’s affidavit also states

that “[i]n other cases, suit was filed and the claims eventually resolved through

various release agreements.”2

      After conducting a hearing, the trial court granted Parex’s no-evidence and

traditional motions for summary judgment. Subsequently, to make the summary

judgment final, the trial court severed the summary judgment order from Fresh

Coat’s remaining claims against the other defendants. See Tex. R. Civ. P. 41

(allowing a trial court to sever claims); F.F.P. Operating Partners, L.P. v. Duenez,

237 S.W.3d 680, 693-94 (Tex. 2007) (explaining when a claim may properly be

severed).

                                 Standard of Review

      Only the trial court’s decision to grant Parex’s no-evidence motion is at

issue in this appeal. The standards that apply when a trial court decides a no-

evidence motion are settled. The trial court should grant a no-evidence motion if:

      (1) the moving party asserts that there is no evidence of one or more
      specified elements of a claim or defense on which the adverse party
      would have the burden of proof at trial; and (2) the respondent
      produces no summary judgment evidence raising a genuine issue of
      material fact on those elements.

      2
        In a footnote in its brief, Fresh Coat alleges that “four of the homes at issue
were the subject of litigation prior to settlement[,]” and it identifies the owners of
those homes; however, Fresh Coat has not pointed to the evidence that it provided
to the trial court showing that it settled with these homeowners after it was sued.
                                                5
Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); see also Tex. R. Civ. P.

166a(i).

      The standards used to review a trial court’s decision granting a no-evidence

motion are also clear. To defeat a no-evidence motion, the non-movant must

produce enough summary judgment evidence to raise a genuine issue of material

fact on each of the elements of recovery that the movant’s no-evidence motion has

challenged. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). The

non-movant can raise a genuine issue of material fact by producing “more than a

scintilla of evidence” to establish that a fact issue exists on each of the elements the

no-evidence motion places at issue. Id. More than a scintilla of evidence exists

when the evidence is such that reasonable and fair-minded people can differ in

their conclusions. Id. at 601. If “‘the evidence offered to prove a vital fact is so

weak as to do no more than create a mere surmise or suspicion of its existence, the

evidence is no more than a scintilla and, in legal effect, is no evidence.’” Id.

(quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).

                                       Analysis

      To resolve whether the trial court properly granted Parex’s no-evidence

motion, we first consider Fresh Coat’s argument that it produced more than a

scintilla of evidence to show that it was seeking to be indemnified for a “products

liability action.” See Tex. Civ. Prac. & Rem. Code Ann. § 82.002. In its appeal,
                                              6
Parex argues that an “action” is a lawsuit, and that Fresh Coat produced no

evidence that it was sued by homeowners who had EIFS applied to their homes. In

response, Fresh Coat contends that a seller does not have to show that it was sued

to invoke the manufacturer’s statutory duty of indemnity under Chapter 82.

      Resolving Fresh Coat’s issue requires that we determine whether or not the

Legislature used the term “action” as the equivalent of the term “suit.” Under the

Products Liability Act of 1993, a manufacturer is required to indemnify a seller for

losses “arising out of a products liability action.” See id. § 82.002(a). Section

82.001 of the Products Liability Act of 1993 defines “products liability action” as

follows:

             “Products liability action” means 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 whether the action is based in strict tort liability, strict
      products liability, negligence, misrepresentation, breach of express or
      implied warranty, or any other theory or combination of theories.

Id. § 82.001(2) (West 2011). Parex’s no-evidence motion challenged Fresh Coat to

demonstrate the damages for which it was seeking indemnity resulted from

lawsuits filed against it by homeowners that asserted they had been damaged

because a defective product supplied by Parex had been applied to their homes.

The trial court appears to have agreed with Parex’s no-evidence motion that Fresh

Coat’s evidence failed to show that its damages related to settlements or expenses

                                            7
incurred because homeowners sued it alleging that Parex supplied a defective

product to Fresh Coat that it installed, which then caused damages to the homes at

issue.

         First, we address whether Fresh Coat provided the trial court with any

evidence that its damages arose from a product liability action. Questions that arise

from a trial court’s interpretation of a statute are reviewed as questions of law,

using a de novo standard of review. State v. Shumake, 199 S.W.3d 279, 284 (Tex.

2006). When the meaning of a word in a statute is unambiguous, courts ordinarily

give the word its common meaning. See Nat’l Liab. & Fire Ins. Co. v. Allen, 15
S.W.3d 525, 527 (Tex. 2000); Fitzgerald v. Advanced Spine Fixation Sys., Inc.,

996 S.W.2d 864, 865 (Tex. 1999).

         Also, in construing Chapter 82, the Products Liability Act, the Legislature

instructed the courts to generally follow the rules of construction found in the Code

Construction Act, Chapter 311 of the Government Code. See Tex. Civ. Prac. &

Rem. Code Ann. § 1.002 (West 2002); Tex. Gov’t Code Ann. §§ 311.001-.034

(West 2013). Under the Code Construction Act, the words of a statute that are not

expressly defined are to be examined in context and in accord with “the rules of

grammar and common usage.” Tex. Gov’t Code Ann. § 311.011(a). “We look first

to the statute’s language to determine that intent, as we consider it ‘a fair

assumption that the Legislature tries to say what it means, and therefore the words
                                             8
it chooses should be the surest guide to legislative intent.’” Leland v. Brandal, 257
S.W.3d 204, 206 (Tex. 2008) (quoting Fitzgerald, 996 S.W.2d at 866). “If the

statute’s language is unambiguous, its plain meaning will prevail.” Id. Further, we

are not to enlarge the plain meaning of a statute by enlarging on a word’s common

meaning. See Nat’l Plan Adm’rs, Inc. v. Nat’l Health Ins. Co., 235 S.W.3d 695,

701 (Tex. 2007) (“[W]e do not expand the meaning of statutes by implication[.]”);

see also Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex. 2002) (“When construing a statute,

we ascertain the Legislature’s intent from the plain meaning of the actual language

used.”); Sorokolit v. Rhodes, 889 S.W.2d 239, 241 (Tex. 1994) (“In applying the

plain and common meaning of the language in a statute, courts may not by

implication enlarge the meaning of any word in the statute beyond its ordinary

meaning; such implication is inappropriate when legislative intent may be gathered

from a reasonable interpretation of the statute as it is written.”).

      While the term “products liability action” is expressly defined in the

Products Liability Act of 1993, the phrase “any action” and the term “action” are

not. See Tex. Civ. Prac. & Rem. Code Ann. §§ 82.001-.008 (West 2011).

According to Fresh Coat, the letters attached to its no-evidence response are some

evidence showing that its claim for indemnity relates to a “products liability

action.” Parex disagrees; it claims that the letters from the homeowners, which

contain general complaints about EIFS, cannot be used to define what actions the
                                               9
homeowners might have chosen to pursue had they filed suit. Parex reasons that by

confining the manufacturer’s statutory indemnity obligation to a “products liability

action,” the Legislature intended to limit claims for statutory indemnification under

the Products Liability Act to causes of action that were defined by pleadings.

      In light of the absence of an express definition for the term “action” in the

Products Liability Act, we use its common meaning to construe it. See Tex. Gov’t

Code Ann. § 311.011(a). Dictionaries inform us of a term’s common use and

meaning. See generally Powell v. Stover, 165 S.W.3d 322, 326 (Tex. 2005); Tex.

Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d
170, 196 (Tex. 2004). According to the version of Black’s Law Dictionary

available when the Legislature used the term “action” in the statute at issue, the

term “action” “means a lawsuit brought in a court; a formal complaint within the

jurisdiction of a court of law.” BLACK’S LAW DICTIONARY 28 (6th ed. 1990). Bryan

Garner provides a similar definition in A Dictionary of Modern Legal Usage,

defining “action” as “a mode of proceeding in court to enforce a private right, to

redress or prevent a private wrong, or to punish a public offense. . . . The terms

action and suit are interchangeable.” Bryan A. Garner, A DICTIONARY OF MODERN

LEGAL USAGE 20 (2d Ed. 1995). “Action,” as defined in Webster’s Dictionary,

means:

                                            10
               1: a deliberative or authorized proceeding: a (1) : a legal
       proceeding by which one demands or enforces one’s right in a court of
       justice (2) : a judicial proceeding for the enforcement or protection of
       a right, the redress or prevention of a wrong, or the punishment of a
       public offense — usu. distinguished from special proceeding (3) : the
       right to bring or maintain such a legal or judicial proceeding — see
       [suit.]

WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 21 (2002).

       Based on these references, we conclude that as commonly used, “action” is

generally used to refer to a legal proceeding. Courts, considering the meaning of

the term “action” in other statutes, have construed “action” to mean a “suit.”

Thomas v. Oldham, 895 S.W.2d 352, 356 (Tex. 1995) (stating that the word

“action” under section 101.106 of the Texas Civil Practice and Remedies Code “is

generally synonymous with ‘suit,’ which is a demand of one’s rights in court”);

Villasan v. O’Rourke, 166 S.W.3d 752, 763-64 (Tex. App.—Beaumont 2005, pet.

denied) (concluding that the term “action,” as used in the context of the savings

provision enabling section 101.106 of the Civil Practice and Remedies Code,

meant suit); Bradley v. Etessam, 703 S.W.2d 237, 241 (Tex. App.—Dallas 1985,

writ ref’d n.r.e.) (stating that “action” in section 10.01 [of article 4590i] means

“suit”).

       In construing what the Legislature intended by a term in a statute, we may

also consider laws on the same or similar subjects. See Tex. Gov’t Code Ann. §

311.023(4). We note that in the same legislative session that the Legislature
                                            11
created the statutory duty of manufacturers to indemnify sellers for damages

related to “products liability actions,” the Legislature also created a products

liability statute of repose, and that it shared section 82.001’s definition of

“products liability action.” Compare Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, §

1, sec. 82.001-.002, 1993 Tex. Gen. Laws 13, 13 (current version at Tex. Civ. Prac.

& Rem. Code Ann. §§ 82.001-.002 (West 2011)) (manufacturer’s duty to

indemnify sellers), with Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, § 2, sec.

16.012, 1993 Tex. Gen. Laws 13, 14 (former version at Tex. Civ. Prac. & Rem.

Code Ann. § 16.012 (West 2002)), (current version at Tex. Civ. Prac. & Rem.

Code Ann. § 16.012(2) (West Supp. 2013)) (revising definition of “products

liability action” with respect to the statute of repose). The products liability statute

of repose provides a manufacturer a defense against suits that are filed more than

fifteen years after the date the manufacturing equipment is sold. To avoid the

statute’s operation, the “claimant must commence a products liability action

against a manufacturer or seller of manufacturing equipment” within fifteen years

of the equipment’s sale. Act of Feb. 24, 1993, 73rd Leg., R.S., ch. 5, § 2, sec.

16.012(b), 1993 Tex. Gen. Laws 13, 15.

      Thus, for purposes of repose, the Legislature clearly considered the filing of

suit as the “action” that was required to avoid a potential defense of repose. The

                                              12
filing of a lawsuit, and not a letter from a user complaining of a manufacturer’s

product, is the action required to prevent the operation of the statute of repose.

      Additionally, courts can decide what claims were made underlying an

indemnity claim when the claims are stated in pleadings; it is more difficult to do

so when the claims consist merely of complaints in letters that may or may not

have been pursued in a lawsuit. Evaluating whether the seller’s damages arose

from a “product liability action” with respect to a settlement is further complicated

by the fact that under Chapter 82, a manufacturer does not have a statutory

indemnity obligation to indemnify a seller from damages resulting from the seller’s

negligence, intentional misconduct, or its alterations of the product. See Tex. Civ.

Prac. & Rem. Code Ann. § 82.002. Consequently, the nature of the claims the

homeowners might have made against Fresh Coat is a critical beginning point for a

court to determine whether a seller has a claim for statutory indemnity. To allow

letters from homeowners to define actions would require courts to engage in

speculation about whether any individual homeowner with complaints over Fresh

Coat’s installation of EIFS would have asserted actions seeking a products liability

recovery or whether those homeowners might have claimed that their damages

were solely Fresh Coat’s fault. In this case, of the letters in Fresh Coat’s summary

judgment proof, only two of the letters express complaints that relate to a claimed

product defect; the remaining letters attribute the problems with EIFS to Life
                                             13
Forms, the homebuilder, or to Fresh Coat, the EIFS installer, without stating

whether the problems being alleged are based on an alleged product defect or some

other claim. We will not speculate on what these homeowners might have claimed

in pleadings to define their causes of action.

      We also conclude that the releases attached to Fresh Coat’s response are also

no evidence proving that Fresh Coat settled a “products liability action.” Although

the releases include a release of claims that each homeowner might have asserted

based on a products or a strict liability theory, the releases include a laundry list of

other claims that fall outside the manufacturer’s statutory indemnity obligation.

Moreover, Fresh Coat’s releases do not state that the claims being released resulted

from products liability claims that were filed against Fresh Coat in lawsuits, as

they state the parties entered into the settlements to avoid litigating the claims. The

releases also do not mention the existence of any lawsuits. Consequently, they

provide no evidence that Fresh Coat’s indemnity claim arose from the settlement

of a product liability action.

      Fresh Coat’s remaining summary judgment proof, the product inventory

sheets and Banks’s affidavit, also constitute no evidence that Fresh Coat’s

indemnity claim arose from a “products liability action.” The product inventory

sheets, while providing some evidence that Parex supplied EIFS on some of the

                                              14
homes at issue, do not define the legal theories for any causes of action, nor do

they indicate that any of the homeowners filed suit.

      Banks’s affidavit is also not competent summary judgment proof to prove

that Fresh Coat incurred any damages arising from a “product liability action.” The

affidavit does not show that Banks had personal knowledge regarding what types

of claims were contained in the lawsuits generally referenced in his affidavit.

Affidavits must be based on personal knowledge and are conclusory if the affiant

fails to provide underlying facts that support the affiant’s conclusions. See Tex. R.

Civ. P. 166a(f) (requiring affidavits that oppose summary judgment motions to

“show affirmatively that the affiant is competent to testify to the matters stated

therein”); LeBlanc v. Lamar State College, 232 S.W.3d 294, 301 (Tex. App.—

Beaumont 2007, no pet.) (citing 1001 McKinney Ltd. v. Credit Suisse First Boston

Mortg. Capital, 192 S.W.3d 20, 27 (Tex. App.—Houston [14th Dist.] 2005, pet.

denied)). Banks’s affidavit reflects that Fresh Coat began receiving complaints

about EIFS from homeowners in April 2001, but his affidavit fails to state when

the lawsuits referenced by his affidavit were filed, whether he was employed by

Fresh Coat when the suits were filed, or that he was familiar with the allegations in

the lawsuits that his affidavit generally references. We conclude that Banks’s

affidavit fails to raise a fact issue showing that Fresh Coat’s damages arose from a

products liability action filed by homeowners. See Ryland Group, Inc. v. Hood,
                                            15
924 S.W.2d 120, 122 (Tex. 1996) (“Conclusory affidavits are not enough to raise

fact issues.”).

       To avoid summary judgment, Fresh Coat was required to produce some

evidence showing that it suffered a loss by virtue of a “products liability action.”

Fresh Coat presented the trial court with no evidence to show that its losses arose

“out of a products liability action,” an element of its statutory indemnity cause of

action under section 82.002 of the Civil Practice and Remedies Code. See id. §

82.002(a).

       We hold the trial court properly granted Parex’s no-evidence motion for

summary judgment.

                                 Conclusion

       Because Fresh Coat presented no evidence to show that it settled “products

liability actions” under Chapter 82 of the Civil Practice and Remedies Code, we

hold the trial court properly granted Parex’s no-evidence motion. As this

conclusion serves as a sufficient basis to support the trial court’s judgment, we

need not reach Fresh Coat’s additional arguments to resolve its appeal. See Tex. R.

App. P. 47.1. The trial court’s judgment is affirmed.

                                            16
      AFFIRMED.

                                        ________________________________
                                                   HOLLIS HORTON
                                                       Justice

Submitted on November 7, 2013
Opinion Delivered February 20, 2014

Before McKeithen, C.J., Kreger and Horton, JJ.

                                          17