USA – TEXAS Trends and Developments Contributed by: Rodrigo (Diego) Garcia Jr. and Kolby J. Keller, Thompson, Coe, Cousins & Irons, LLP
Thompson, Coe, Cousins & Irons, LLP 4400 Post Oak Parkway Suite 1000 Houston, TX 77027 Texas USA
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In S&B Engineers & Constructors, Ltd. v Scallon Controls, Inc. On 13 March 2026, the Supreme Court of Texas issued its opinion in S & B Engineers & Constructors , Ltd . v Scallon Controls , Inc ., 734 S.W.3d 869 (Texas 2026) (“S&B Engineers”). The primary issue in S&B Engineers was whether a party may settle one lawsuit, sue a different party based on contractual indemnity, and then recover damages based upon the settlement in the primary lawsuit. The court split 5–4 in favour of permitting recovery under those circumstances, with each side issuing an opinion. Background facts The primary parties were: • Sunoco – the employer of the plaintiffs and owner of the premises; • S&B Engineers (“S&B”) – the entity that Sunoco hired to install a safety system in its refinery; • Scallon Controls, Inc. (“Scallon”) – the entity that S&B subcontracted with to install the system; • the plaintiffs in the first suit (the “Plaintiffs”) – the employees of Sunoco who alleged injuries based on an event when the safety system failed; and • Zurich American Insurance Company (“Zurich”) – Sunoco’s insurer which covered Sunoco’s settle- ment of the suit against the Plaintiffs. S&B Engi- neers, 734 S.W.3d at 873. In S&B Engineers, 734 S.W.3d at 873, the Plaintiffs sued Sunoco and S&B, but did not sue Scallon. How- ever, Sunoco and S&B maintained that Scallon bore the responsibility for the incident and denied any
responsibility on their part. Sunoco and S&B then filed a third-party petition against Scallon for breach of con- tract. After four years of litigation, Sunoco and S&B settled with the Plaintiffs, with S&B paying USD2.35 million, and Zurich paying USD400,000 on Sunoco’s behalf. Scallon did not participate in the settlement. After that settlement, Sunoco non-suited its claims against Scallon, and Zurich intervened to assert claims for subrogation. Zurich and S&B then contin- ued to pursue their claims against Scallon based on contractual indemnity. In the post-settlement litiga- tion, S&B and Zurich claimed that Scallon owed them its proportional share of the settlement amount, equal to its share of liability for the accident. The indemnity agreement in question provided, as fol- lows: “To the maximum extent permitted by applicable law, [Scallon] shall defend, indemnify and hold harmless S&B, and its... clients from and against any and all loss, damage, claim, suit, liability, strict liability, prod- uct liability, judgment and expense (including attor- ney’s fees and other costs of litigation) and any fines, penalties and assessments, arising out of... bodily injury, disease or death to persons other than employ- ees of [Scallon], its agents or subcontractors resulting from or in connection with the execution of this pur- chase order to the extent of [Scallon]’s negligence or willful misconduct. In case of comparative, concurrent and/or contributing negligence, fault or strict liability of [Scallon] or [S&B], whether through its employees and/or representatives, [Scallon]’s duty to indemnify
355 I NSURANCE L I T IGATI O N 2026
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