Audubon Indemnity Co. v. Custom Site-Prep, Inc.
358 S.W.3d 309
| Tex. App. | 2011

Background

  • Audubon Indemnity, acting as subrogee of Comanche, sues CSP Site-Prep on a written subcontract indemnity clause signed after CSP completed earthwork.
  • Arbitrator awarded Child Advocates damages against Comanche, via CSP’s negligent performance, prompting Audubon to seek indemnity from CSP for the arbitrator’s award under the subcontract.
  • The subcontract included an indemnity provision and a merger clause stating prior negotiations were voided.
  • Oral agreement between Comanche and CSP predated the written subcontract; the oral arrangement involved CSP performing sitework with reimbursement by Child Advocates, without a written indemnity understood by the parties at that time.
  • The parties routinely executed post-performance written subcontracts containing indemnity provisions, implying a long-course of dealing; CSP argued lack of consideration because performance was completed before signing.
  • The trial court granted CSP’s traditional summary judgment; Audubon appealed, arguing (a) valid indemnity supported by consideration, (b) breach of contract claim for failure to obtain insurance, and (c) objections to summary judgment evidence.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Indemnity enforceability despite lack of consideration Audubon contends indemnity is valid, supported by consideration due to course of dealing. CSP argues the written subcontract lacks independent consideration as performance was completed prior to signing. Issue unresolved; trial court reversal; fact issue on consideration remains.
Fair notice requirement's applicability to indemnity Audubon asserts fair notice does not apply to reciprocal indemnity claims arising from CSP’s negligence. CSP argues fair notice applies and bars indemnity for claims by Child Advocates. Fair notice does not bar enforceability of indemnity; held applicable only to self-negligence shifts.
Breach of contract for failure to obtain insurance Audubon maintains CSP breached the subcontract by failing to obtain required insurance. CSP contends the contract is unenforceable for lack of consideration, or the clause does not obligate CSP to insure Comanche. Summary judgment improper; genuine issue on contract enforceability and insurance obligation.
Audubon’s entitlement to indemnity as a matter of law Audubon asserts it is entitled to indemnity under the written subcontract. CSP contends lack of clear, enforceable indemnity due to unresolved modification/memorandum issues. Summary judgment improper; fact issues on modification vs memorialization preclude recovery as a matter of law.

Key Cases Cited

  • Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993) (express negligence and fair notice framework for indemnity)
  • Green Int'l, Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) (express negligence doctrine and notice standards for indemnity)
  • Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744 (Tex.1988) (intent to be bound without final writing; preliminary terms)
  • Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227 (Tex.1986) (modification requires independent consideration)
  • Walden v. Affiliated Computer Servs., 97 S.W.3d 303, 97 S.W.3d 303 (Tex.App.-Houston [14th Dist.] 2003) (parol evidence and integration in summary judgment context)
  • Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1 (Tex.App.-Houston [1st Dist.] 2005) (parol evidence rule and merger doctrine application)
  • DeLuca v. Munzel, 673 S.W.2d 373 (Tex.App.-Houston [1st Dist.] 1984) (parol evidence to show consideration)
  • Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744 (Tex.1988) (see above)
  • Amtech Elevator Serv. Co. v. CSFB 1998-P1 Buffalo Speedway Office Ltd., 248 S.W.3d 373 (Tex.App.-Houston [1st Dist.] 2007) (fair notice requirements for indemnity)
  • English v. BGP Int'l, Inc., 174 S.W.3d 366 (Tex.App.-Houston [14th Dist.] 2005) (indemnity limitations and scope)
  • DDD Energy, Inc. v. Veritas DGC Land, Inc., 60 S.W.3d 880 (Tex.App.-Houston [14th Dist.] 2001) (fair notice limited to indemnitee's own negligence)
  • Murphy v. Seabarge, Ltd., 868 S.W.2d 929 (Tex.App.-Houston [14th Dist.] 1994) (intent to be bound in absence of final writing)
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