USA – TEXAS Trends and Developments Contributed by: Rodrigo (Diego) Garcia Jr. and Kolby J. Keller, Thompson, Coe, Cousins & Irons, LLP
and hold harmless referred to in the previous sen- tence shall be [Scallon]’s allocable share of compara- tive, concurrent and/or contributing negligence, fault or strict liability.” In the litigation over the indemnity agreement, the par- ties filed competing motions for summary judgment. The trial court ruled in favour of Scallon, and the court The majority identified the key issue in the appeal as “whether S&B and Zurich may ask a factfinder to allo- cate any portion of the settlement amount to Scallon’s negligence, or whether, as the court of appeals and Scallon contend, it covered only their own as a mat- ter of law.” This question required the majority to review its prec- edent in a case known as “Jinkins” ( Beech Aircraft Corp . v Jinkins , 739 S.W.2d 19, 19–22 (Texas 1987)). Since we have relied on Jinkins heavily in our motions and responses in the Webber matter, a brief review of Jinkins – as the majority summarised it – is warranted. The latter view relies on our decision in Jinkins, which examined “the contribution rights of a settling party under both statutory and common law contribution schemes” when an alleged joint tortfeasor does not participate in the settlement. We acknowledged, “the general rule that a cause of action for damages for personal injuries may be sold or assigned” but held that, “a defendant can settle only his proportionate share of a common liability and cannot preserve con- tribution rights under either the common law or the comparative negligence statute by attempting to set- tle the plaintiff’s entire claim.” of appeals affirmed. The majority opinion Jinkins was open about its limited scope: common- law and statutory avenues for a settling party to impose contribution obligations on a non-settling par- ty. We did not address or even mention a very different source of legal authority: voluntarily formed contracts providing for indemnification. In other words, public policy led the court to refuse to find or create rights of contribution in certain situations, but we said noth- ing to suggest that parties could not create rights to
indemnification if they deemed it in their interest to do so. With the limitation on a party only being able to settle its portion of liability no longer applying, the majority next addressed what requirements applied for recov- ering against a third party for some or all of the amount that a party paid in settlement. The majority reaffirmed the “express negligence doc- trine” from Ethyl Corp . v Daniel Const . Co ., 725 S.W.2d 705, 708 (Texas 1987). Under the express negligence doctrine, quoting Ethyl, “a party [can] be indemnified for its own negligence, as long as such an agreement ‘express[es] that intent in specific terms.’” One way to avoid violating the express negligence doctrine is “by affirmatively disclaiming any entitlement to indemnifi- cation for one’s own negligence.” Id. at 876. The majority held that the indemnity agreement did not violate the express negligence doctrine. Id. “The contract here avoids any express-negligence problem both with its unambiguous disclaimer and by textually limiting Scallon’s indemnification to only its own ‘allo- cable share’ rather than seeking some way to force it to bear the burden of S&B’s or Sunoco’s negligence.” The majority recognised other burdens on the party seeking indemnification from a settlement. The party seeking indemnity must prove (i) the settlement was made in good faith and for a reasonable amount to discharge liability; and (ii) the allocable share attribut- able to the indemnitor. But even when there is no doubt that a contract applies and provides for proportional indemnification, settlement generates a series of burdens for the set- tling party. First, we have always upheld the right to settle and then sue, but to succeed, the settling party must establish that the settlement was made in good faith and for a reasonable amount to discharge the potential liability. See, for example, Fireman’s Fund, 490 S.W.2d at 823. Second, even if the settlement was wholly proper and for a reasonable amount, the set- tling party bears the burden to show (using this con- tract’s phrasing) the “allocable share” of the indemni- tor’s negligence. So if the settlement is deemed to have been unreasonably high, for example, then the
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