USA – TEXAS Trends and Developments Contributed by: Rodrigo (Diego) Garcia Jr. and Kolby J. Keller, Thompson, Coe, Cousins & Irons, LLP
non-settling party will be responsible only for its pro- portional share of the amount, if any, that would have been reasonable. A settling party unable to establish that any amount of negligence is attributable to the non-settling party cannot recover at all. The majority believes there are benefits to this approach of settling and seeking indemnification for some portion of the settlement amount. “Settling before suing for indemnification may well bring cer- tain benefits – not least to the injured workers, who might still be without relief today if their presence were essential before Scallon’s ‘allocable share’ could be determined.” Likewise, the majority concluded that its holding would not spur a wave of satellite litiga- tion. “At worst, the comparatively streamlined trial to enforce the indemnity agreement would replace a far more complex trial, the focus of which would primar- ily be on the underlying facts and circumstances of the workers’ personal injuries and the extent of their damages.” The court also reversed the Court of Appeal’s holding that Zurich’s subrogation claim is untimely. The court reasoned that parties have four years to bring claims arising from written contracts and breach of warranty, and indemnity claims begin to run when “the indem- nitee’s liability becomes fixed and certain” through settlement or judgment. The court held that Zurich intervened less than three years after the settlement and Zurich’s claim was not time-barred. The dissenting opinion Justice Bland, joined by Justices Lehrmann, Devine and Huddle, dissented in an opinion arguing the major- ity misread the indemnity provision at issue and failed to follow established precedent. The dissent argued that the language of the indemnity provision did not grant S&B the right to settle claims made against Scallon on Scallon’s behalf. Notably, the injured work- ers had sued S&B for S&B’s own negligence and had made no claim against Scallon. Further, the dissent explained that the settlement was purely a payment to settle S&B’s own negligence, and that every dollar S&B paid was to settle S&B’s negligence, not Scal- lon’s. The dissent also explained the word “allocable” did not transform a payment of S&B’s own liability into a payment of Scallon’s.
Scallon filed a motion for reconsideration with the Texas Supreme Court. The court issued an order on 5 June 2026 denying Scallon’s motion for reconsid- eration. Conclusion The S&B Engineers decision clarified the law surround- ing settlements and so-called “pay-and-chase” litiga- tion. The decision will also influence how indemnity agreements are drafted going forward. While agree- ments for comparative indemnity must be drafted so as to comply with Ethyl and, under applicable circum- stances, the Texas Construction Anti-Indemnity Act and/or the Texas Oilfield Anti-Indemnity Act, if they do so, the courts will enforce them. Presumably, the deci- sion will also influence whether and to what extent the indemnitor and its insurers may be willing to partici- pate in settlement discussions with the indemnitees to avoid post-settlement satellite litigation. In Re Ace Appraisal Changes On 8 May 2026, the Texas Supreme Court led by Jus- tice Lehrmann issued an opinion In Re Ace American Insurance Company, involving an insured’s attempt to avoid an insurer’s invocation of appraisal by charac- terising the dispute as coverage dispute (734 S.W.3d 887 (2026)). In the opinion, the court determined that the trial court abused its discretion by denying the insurers’ motion to compel appraisal. The case involved a dispute over water damage to a commercial warehouse where there was a disagreement about the “amount of loss” which fell within the policy’s appraisal provision. The insured in In Re Ace, owned, leased and managed commercial properties across the county. The prop- erty at issue in this case was a commercial food-dis- tribution warehouse in Dallas, Texas. On or about 12 June 2022, a water line connected to the warehouse’s fire-suppression system broke below the property’s concrete foundation, which caused significant dam- age. The insured reported the claim, and the insurers sent an independent adjuster to investigate the claim. Throughout the adjustment of the claim, the insured claims the adjuster’s involvement was “minimal” and the adjuster “made a conscious choice to sit on the sidelines”. Moreover, the insured asserted that no
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