Ingersoll-Rand Co. v. Valero Energy Corp.

997 S.W.2d 203, 1999 WL 417279
CourtTexas Supreme Court
DecidedSeptember 23, 1999
Docket97-1168
StatusPublished
Cited by199 cases

This text of 997 S.W.2d 203 (Ingersoll-Rand Co. v. Valero Energy Corp.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 1999 WL 417279 (Tex. 1999).

Opinions

Justice ENOCH

delivered the opinion for a unanimous Court.

Valero1 sued Kellogg2 and Ingersoll-Rand 3 for damages caused by malfunctioning equipment. Kellogg and Ingersoll-Rand installed the equipment during an expansion of Valero’s oil refinery. Kellogg was the general contractor on the expansion, and Ingersoll-Rand was one of Kellogg’s subcontractors. Both Kellogg and Ingersoll-Rand defended by asserting that certain indemnification and hold-harmless provisions in the Valero-Kellogg contract applied. The trial court concluded that the contract’s indemnification provisions were enforceable and granted interlocutory summary judgment for Kellogg and Ingersoll-Rand. The court then severed that part of the case, so that Valero could appeal the summary judgment. The court of appéals affirmed, and that judgment is now final.4

During that appeal, the trial court abated the remaining claims. After the abatement was lifted, Kellogg and Ingersoll-Rand moved for summary judgment, seeking attorney’s fees under the indemnity provisions upheld in Valero I. Valero filed its own motion for summary judgment, asserting that Kellogg’s and Ingersoll-Rand’s claims for attorney’s fees were compulsory counterclaims barred by res judicata and by the statute of limitations. The trial court granted Valero summary judgment. The court of appeals affirmed.5

The pivotal question in this case is when does an indemnitee’s contractual claim for indemnification mature for purposes of the compulsory counterclaim rule. We adhere to the longstanding rule that a claim based on a contract that provides indemnification from liability does not accrue until the indemnitee’s liability becomes fixed and certain. Applying this rule, we conclude that Kellogg’s and Ingersoll-Rand’s indemnity claims did not accrue until the trial court’s rendition of summary judgment in Valero I. Accordingly, neither res judicata nor limitations bar Kellogg’s and Ingersoll-Rand’s claims. We reverse the court of appeals’ judgment and remand to the trial court for further proceedings.

Valero I

Valero sued Kellogg in 1986 over mechanical malfunctions allegedly resulting from Kellogg’s flawed installation of refinery equipment. Valero pleaded fraudulent misrepresentation, breach of contract, violations of the Texas Deceptive Trade Practices Act,6 breach of implied and express warranties, products liability, negligence, gross negligence, and intentional misconduct. Valero added Ingersoll-Rand as a defendant in 1989, after a piece of equipment supplied by Ingersoll-Rand exploded. The suit eventually came to include a host of cross-claims, counterclaims, and third-party claims not at issue here.

Kellogg and Ingersoll-Rand answered Valero’s petition, asserting that the contract’s indemnity provision barred Valero’s [206]*206claims. Both relied on the following contract provision;

6.8 OWNER [Valero] shall release, defend, indemnify and hold harmless CONTRACTOR [Kellogg], its subcontractors [Ingersoll-Rand] and affiliates and their employees performing services under this Agreement against all claims, liabilities, loss or expense, including legal fees and court costs in connection therewith, arising out of or in connection with this Agreement or the Work to be performed hereunder, including losses attributable to CONTRACTOR’S negligence, to the extent CONTRACTOR is not compensated by insurance carried under this ARTICLE....

Valero replied that the contract’s indemnity provision was unenforceable as against public policy. On this issue, each side filed competing motions for summary judgment.

The trial court granted Kellogg’s and Ingersoll-Rand’s motions for summary judgment, denied Valero’s motion, and rendered judgment that Valero take nothing on its claims against Kellogg and Inger-soll-Rand. That matter was severed, and the remaining issues were abated pending appeal. Valero appealed, and the court of appeals affirmed the trial court’s judgment on June 30, 1993.7 This Court denied Va-lero’s application for writ of error on April 20, 1994, and overruled its motion for rehearing of the application on June 2, 1994. That judgment is final.

Valero II

One of the remaining abated claims was Kellogg’s counterclaim for attorney’s fees and costs incurred in defending against Valero. Kellogg filed the counterclaim between the time summary judgment was entered and the time the severance order was entered, but more than five years after Valero first sued Kellogg. After the trial court dissolved the abatement, Inger-soll-Rand initiated its own counterclaim against Valero for attorney’s fees and costs. This claim was raised more than five years after Valero added Ingersoll-Rand as a defendant.

Kellogg and Ingersoll-Rand filed a joint motion for summary judgment asserting that the contract’s indemnity provision, held enforceable in Valero I, entitled each to attorney’s fees, court costs, and litigation expenses incurred in Valero I. Valero responded with a motion for summary judgment, asserting two affirmative defenses: (1) Kellogg and Ingersoll-Rand’s counterclaims were compulsory, had not been asserted in Valero /, and were therefore precluded by res judicata; and (2) the four-year statute of limitations for breach of contract barred the claims.8

Without specifying grounds, the trial court granted Valero’s motion for summary judgment, and denied Kellogg and Ingersoll-Rand’s motion. The court of appeals affirmed, holding that Ingersoll-Rand’s counterclaim was compulsory and barred by res judicata, and Kellogg’s claim was barred by limitations.9 Kellogg and Ingersoll-Rand each petitioned for review.

Because resolution of the issues we consider in Ingersoll-Rand’s appeal disposes of issues presented by Kellogg’s appeal, we consider Ingersoll-Rand’s appeal first.

Ingersoll-Rand’s Appeal

The court of appeals held that Ingersoll-Rand’s claim for attorney’s fees was a compulsory counterclaim that Ingersoll-Rand should have brought in Valero I; and, therefore, res judicata barred the claim in Valero II. We disagree.

Res judicata prevents parties and their privies from relitigating a cause of action that has been finally adjudicated by a competent tribunal.10 Also precluded [207]*207are claims or defenses that, through diligence, should have been litigated in the prior suit but were not.11 The doctrine is intended to prevent causes of action from being split, thus curbing vexatious litigation and promoting judicial economy.12 Res judicata, however, does not bar a former defendant who asserted no affirmative claim for relief in an earlier action from stating a claim in a later action that could have been filed as a cross-claim or counterclaim in the earlier action, unless the claim was compulsory in the earlier action.13 Here, the court of appeals concluded that Ingersoll-Rand’s claim was compulsory.

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Cite This Page — Counsel Stack

Bluebook (online)
997 S.W.2d 203, 1999 WL 417279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ingersoll-rand-co-v-valero-energy-corp-tex-1999.