JUSTICE LEHRMANN delivered the opinion of the Court, in which CHIEF JUSTICE HECHT, JUSTICE GREEN, JUSTICE WILLETT, JUSTICE GUZMAN, JUSTICE DEVINE, and JUSTICE BROWN joined.
Texas Civil Practice and Remedies Code chapter 82 entitles the "seller" of a defective product to indemnity from the product manufacturer for certain losses. In this case, the general contractor hired to construct an apartment complex seeks indemnity under chapter 82 from the manufacturer of wooden trusses used in roofing and drywall projects on the site. The sole issue is whether the general contractor qualifies as a truss seller under chapter 82. The trial court held that it does, but the court of appeals disagreed and rendered judgment for the manufacturer on the indemnity claim. Applying chapter 82's definition of "seller," we agree with the court of appeals that the general contractor is not a seller and affirm the court's judgment.
Glenmont Madison Beaumont LLC hired Centerpoint Builders, Ltd. (now
The underlying lawsuit arose when Merced Fernandez, an independent contractor hired by Sandidge, stepped onto a truss that had been laid in position but not yet installed. Fernandez was carrying sheetrock while walking across the trusses above the second story. A truss broke and Fernandez fell eight to ten feet, rendering him paraplegic. Fernandez sued Glenmont, Centerpoint, Maverick, Sandidge, and Trussway for, among other related claims, failing to use reasonable and appropriate care to correct, remedy, or warn of an unreasonably unsafe condition on the property, failing to adequately supervise, failing to use good quality building materials, and negligently designing, manufacturing, and testing the truss. Fernandez ultimately settled with all defendants.
Centerpoint filed a cross-action against Trussway for statutory indemnity, alleging that Trussway, the truss manufacturer, was legally required to indemnify Centerpoint, the truss seller, for any loss arising from Fernandez's suit. Trussway responded with its own indemnity crossclaim against Centerpoint.
Centerpoint and Trussway filed cross-motions for summary judgment. Centerpoint also sought partial summary judgment on its own claim, arguing that it was a seller under chapter 82 and was entitled to indemnity as a matter of law. The trial court granted Centerpoint's motion as to Trussway's claim. With respect to the motions on Centerpoint's claim, the court held as a matter of law that Centerpoint was a seller under chapter 82, but otherwise denied both parties' requests for summary judgment. The trial court certified its order for interlocutory appeal. TEX. CIV. PRAC. & REM. CODE § 51.014(d) (allowing a trial court to permit an interlocutory appeal of an otherwise unappealable order if certain conditions are met).
The court of appeals reversed in part, holding that Centerpoint did not fit the statutory definition of a seller and was not eligible to seek indemnity. 436 S.W.3d 882, 888 (Tex.App.-Beaumont 2014). The court of appeals also affirmed the trial court's summary judgment in Centerpoint's favor on Trussway's cross-claim because Centerpoint did not manufacture the truss and therefore was not obligated to indemnify Trussway. Id. at 889. Only Centerpoint filed a petition for review, presenting as its sole issue whether the court of appeals erred in holding Centerpoint was not a seller. Centerpoint contends that the court of appeals' analysis conflicts with our opinion in Fresh Coat, Inc. v. K-2, Inc., 318 S.W.3d 893 (Tex.2010),
The Texas Products Liability Act gives the innocent seller of an allegedly
The Act's indemnity provision states:
TEX. CIV. PRAC. & REM. CODE § 82.002(a). "Products liability action" is broadly defined as "any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product." Id. § 82.001(2). The term includes "all direct allegations against the seller that relate to plaintiff's injury." Meritor Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 90 (Tex.2001).
We have explained that the "purpose of section 82.002 is to protect innocent sellers by assigning responsibility for the burden of products-liability litigation to product manufacturers." Petroleum Sols., 454 S.W.3d at 494. To that end, the duty to indemnify is triggered by allegations in the injured claimant's pleadings of a defect in the manufacturer's product, regardless of any adjudication of the manufacturer's liability to the claimant. Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 255 (Tex.2006); see Owens & Minor, Inc. v. Ansell Healthcare Prods., Inc., 251 S.W.3d 481, 484 (Tex.2008) ("The manufacturer's duty begins when it is given notice that a seller has been sued."). The manufacturer may "escape this duty to indemnify" by proving that the seller's "acts or omissions independent of any defect in the manufactured product cause[d] injury." Hudiburg, 199 S.W.3d at 252, 255.
While the scope of a manufacturer's duty to indemnify is often described as broad, it is owed only to sellers, and an indemnity claimant's seller status is a necessary prerequisite to maintaining a claim. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 867 (Tex.1999) ("Anyone who qualifies as a `seller' may seek indemnification, subject to the limitations of section 82.002(a)."). The Act defines "seller" as "a person who is engaged in the business of distributing or otherwise placing, for any commercial purpose, in the stream of commerce for use or consumption a product or any component part thereof." TEX. CIV. PRAC. & REM. CODE
The statute does not define the phrase "engaged in the business of." Black's Law Dictionary defines "engaged" as "to employ or involve oneself; to take part in; to embark on." BLACK'S LAW DICTIONARY 646 (10th ed.2014); State Office of Risk Mgmt. v. Carty, 436 S.W.3d 298, 302 (Tex.2014) (noting that "[u]ndefined terms in a statute are typically given their ordinary meaning [unless] a different or more precise definition is apparent from the term's use in the context of the statute" (citation and internal quotation marks omitted)). "Business" is defined as a "commercial enterprise carried on for profit; a particular occupation or employment habitually engaged in for livelihood or gain." BLACK'S LAW DICTIONARY at 239. And the similar phrase "doing business" is defined as "the carrying out of a series of similar acts for the purpose of realizing a pecuniary benefit." Id. at 590. Our analysis cannot begin and end with the definitions of individual words, however, because the Legislature used an entire phrase: "engaged in the business of." See In re Office of Atty. Gen., 422 S.W.3d 623, 629 (Tex.2013) ("We must endeavor to read the statute contextually, giving effect to every word, clause, and sentence.").
Centerpoint argues that it is a truss seller entitled to indemnity from the truss manufacturer for Centerpoint's losses arising out of this lawsuit, in which Fernandez alleged in part that a defective truss caused his injuries. Like the court of appeals, our inquiry is limited to Centerpoint's seller status.
Whether a general contractor may seek statutory indemnity as a seller of materials used in a building's construction is an issue of first impression in this Court. We addressed the seller status of a subcontractor in Fresh Coat and begin with that case, cited extensively by both the parties and the court of appeals.
Fresh Coat contracted with a homebuilder to install synthetic stucco components (collectively referred to as EIFS, or exterior insulation and finishing system) on the exterior walls of several homes. Fresh Coat, 318 S.W.3d at 895. The contract required Fresh Coat to provide "labor, services and/or materials, equipment, transportation, or facilities" necessary to apply and finish the synthetic stucco. Id. at 899 (internal quotation marks omitted). Fresh Coat purchased EIFS components from their manufacturer and installed them pursuant to Fresh Coat's contract with the builder. Id. at 895. After moving in, more than 90 homeowners sued Fresh Coat, the EIFS manufacturer, and the builder, alleging the EIFS allowed water penetration that damaged their homes. Id. The builder sought indemnity from Fresh Coat and the manufacturer, and
The issue pertinent to this case was whether Fresh Coat qualified as a seller. Rejecting the manufacturer's characterization of Fresh Coat as a service provider and not a product seller, we held that chapter 82 "anticipates that a product seller may also provide services" and that a company's "installation services do not preclude it from also being a seller." Id. at 899. We agreed with the court of appeals that Fresh Coat presented legally sufficient evidence it was a seller entitled to seek indemnity under chapter 82 even though the stucco was a component part of improved real property, which is not considered a product. Id. at 898-99; see also RESTATEMENT (THIRD) OF TORTS: PROD. LIAB. § 19 cmt. e (1998) ("Traditionally, courts have been reluctant to impose products liability on sellers of improved real property in that such property does not constitute goods.").
Centerpoint contends that, like Fresh Coat, it is both a product seller and a service provider. It argues that the contract and truss purchase order show that Centerpoint was "in the business of placing the trusses, for a commercial purpose (fulfilling its contract to build the apartment building), into the stream of commerce for use or consumption." Trussway responds that Centerpoint, like most builders, "is `engaged in the business' of selling construction services," not building materials. For the reasons discussed below, we agree with Trussway.
In holding that Fresh Coat was a seller, we relied in part on witness testimony that the company was "in the business of providing EIFS products combined with the service of EIFS installation."
In evaluating Centerpoint's seller status, we do not examine whether Centerpoint has ever sold trusses, but whether Centerpoint is "engaged in the business of" selling trusses. Aside from the court of appeals' opinion in this case, we have found few Texas cases addressing whether a general contractor is a seller of the materials it incorporates into construction projects. But the cases we have found, which typically involve whether a general contractor is a seller for strict-liability purposes, are consistent with the court of appeals' conclusion that Centerpoint is not a seller. In
Id. at 738; cf. Peterson Homebuilders, Inc. v. Timmons, No. 14-03-00400-CV, 2004 WL 1660936, at *5 (Tex.App.-Houston [14th Dist.] July 27, 2004, no pet.) (mem. op.) (holding that a subcontractor that built a foundation pad for a house did not owe the general contractor a duty to indemnify because the subcontractor "did not place this structural pad in the stream of commerce").
Case law from other jurisdictions, while sparse, also supports a determination that general contractors typically are not "engaged in the business of" selling or distributing the materials used in constructing a particular improvement. In Maack v. Resource Design & Construction, Inc., homeowners sued the builder for strict liability, alleging that defects in the home's exterior components led to water leaks. 875 P.2d 570, 573 (Utah Ct.App.1994), abrogated in part on other grounds by Davencourt at Pilgrims Landing Homeowners Ass'n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009). The Utah Court of Appeals held that the builder was not a "seller" of the house's exterior component parts, explaining: "The evidence is undisputed that [the contractor and its owner] were construction contractors who simply utilized these component parts when constructing the residence — they were not in the business of selling stucco, adhesives, or membranes on a wholesale or retail basis."
Other cases take a similar approach in denying seller status to contractors whose business is providing construction services, not any particular building material that may be utilized in that process. See, e.g., Calloway v. City of Reno, 116 Nev. 250, 993 P.2d 1259, 1272 (2000) ("Although a contractor may, as part of a construction or remodeling project, install certain products, a contractor, without doing more, is not engaged in the business of `manufacturing' or selling such products and therefore does not come within the ambit of [strict products liability]."), superseded by statute on other grounds, NEV. REV. STAT. § 40.635, as recognized in Olson v. Richard, 120 Nev. 240, 89 P.3d 31 (2009); Scordino v. Hopeman Bros., 662 So.2d 640, 645 (Miss.1995) (holding that a subcontractor hired to build the interior outfitting of a ship, which included providing the necessary services and materials, was not a "seller" of the wall paneling it provided and installed under the contract); compare State Stove Mfg. Co. v. Hodges, 189 So.2d 113, 115, 123-24 (Miss.1966) (holding that contractors that installed a water heater as part of their construction of a residence were subject to strict liability because they also operated the hardware store that sold the water heater to the homeowners), superseded by statute on other grounds, MISS.CODE ANN. § 11-1-63, as recognized in Huff v. Shopsmith, Inc., 786 So.2d 383 (Miss.2001).
We agree with the reasoning of these cases and hold that one is not "engaged in the business of" selling a product if providing that product is incidental to selling services. Applying that standard here requires the conclusion that Centerpoint is not a truss "seller" entitled to seek indemnity from the manufacturer. To that end, whether Centerpoint technically sold trusses to Glenmont does not make it "engaged in the business of" commercially distributing that product.
In turn, as the court of appeals noted, "Centerpoint's contract with the property owner covered innumerable construction products and materials that would be involved in the construction of the apartment complex." 436 S.W.3d at 888. And that is the nature of a general contractor's business when it builds based on custom designs and specifications, as the materials required for a particular project will vary. See RESTATEMENT (THIRD) OF TORTS: PROD. LIABILITY § 19 cmt. e (1998) ("A housing contractor, building and selling one house at a time, does not fit the pattern of a mass producer of manufactured products...."). Although the quantity of materials used is not dispositive, we agree with Trussway's contention that "the fact that Centerpoint used innumerable building materials supports the conclusion that any single material was incidental to its provision of construction services."
In sum, we hold that a general contractor who is neither a retailer nor a wholesale distributor of any particular product is not necessarily a "seller" of every material incorporated into its construction projects for statutory-indemnity purposes. Whether a person or entity is "engaged in the business of" selling a service, selling a product, or doing both (as in Fresh Coat) — regardless of the person's classification as a general contractor or subcontractor — depends upon the specific facts at issue. In this case, evidence that the general contractor agreed to undertake construction of the entire building and to be reimbursed for the cost of the materials (including the trusses) indicates that Centerpoint was selling construction services rather than trusses or other building materials. While some contractors may engage in the business of selling both products and services, the record is devoid of evidence that Centerpoint was doing so here.
Finally, we address the dissent's reliance on two cases from this Court that purportedly support the dissent's conclusion that Centerpoint is a seller. Neither of those cases involves contractors, and neither supports the dissent's position.
In Barbee v. Rogers, we held that the plaintiff could not pursue a strict-liability claim against licensed optometrists for failing to properly fit prescribed contact lenses to the plaintiff's eyes. 425 S.W.2d 342, 346 (Tex.1968). We explained that the optometrists' activities "fall between those ordinarily associated with the practice of a profession and those characteristic of a merchandising concern." Id. at 345. In rejecting the strict-liability claim, we noted that in addition to "the disqualifying factor of the professional relationship," the claim was "not premised on any defect in the lenses as such." Id. at 346.
The dissent extrapolates from this statement that, had such a defect been alleged, "the optometrist would have been a `seller' subject to strict liability even though the sales were incidental to the defendant's optometric services." Post at 54. But Barbee simply does not support this assertion. First, what we would have held in the event the plaintiff asserted a hypothetical defective-lens claim is not at all obvious, particularly in light of the professional relationship between the parties. See Barbee, 425 S.W.2d at 346. Further, the dissent assumes that product sales in Barbee were incidental to services, but we described evidence indicating the opposite, noting the defendants' "advertising and sales techniques designed to promote the sale of contact lenses at a predetermined and advertised price" and "their standardization of procedures and methods."
The dissent also cites New Texas Auto Auction Services, L.P. v. Gomez de Hernandez, in which we held that an auctioneer who conducted sales of automobiles was not a seller subject to strict liability. 249 S.W.3d 400, 405-06 (Tex.2008). The parties in that case agreed that auctioneers are generally not considered sellers, and disputed only the significance of the fact that the defendant atypically held title to the allegedly defective vehicle when it was sold. Id. at 405. We found that fact immaterial, noting that strict liability "applies to those whose business is selling, not everyone who makes an occasional sale." Id. We agree with this broad proposition; however, our analysis in New Texas Auto of whether an auctioneer was a seller is of little help in this factually dissimilar case.
The Products Liability Act defines "seller" not simply as "a person who sells" or
JUSTICE BOYD filed a dissenting opinion, in which JUSTICE JOHNSON joined.
JUSTICE BOYD, joined by JUSTICE JOHNSON, dissenting.
Centerpoint Builders seeks indemnity from Trussway, Ltd., under the Texas Products Liability Act. The sole issue in this interlocutory appeal is whether Centerpoint qualifies under the Act as a "seller" of Trussway's allegedly defective roof truss. The first time this Court addressed the Act's indemnity provisions it warned that, "when we stray from the plain language of a statute, we risk encroaching on the Legislature's function to decide what the law should be." Fitzgerald v. Advanced Spine Fixation Systems, Inc., 996 S.W.2d 864, 866 (Tex.1999). I conclude that the Court strays from the statute's plain language in this case by excluding from the definition of "seller" those persons whose sales of a product are "incidental" to its sales of services. Ante at 43. The statute's definition of "seller" says nothing about sales that are "incidental" to sales of services. Instead, it includes all those who are "engaged in the business of" selling the product, and nothing in the ordinary, common meaning of the phrase "engaged in the business" excludes business activities that are "incidental" to other business activities in which the person is also engaged. Because the evidence here establishes that Centerpoint was "engaged in the business of" selling trusses, the Act's plain language makes it a "seller" entitled to indemnity regardless of whether those sales were "incidental" to its other business activities. Because the Court holds otherwise, I respectfully dissent.
Centerpoint was the general contractor for the construction of an apartment complex on property owned by Glenmont Madison Beaumont, LLC. Pursuant to the contract, Centerpoint purchased preassembled roof trusses
Fernandez sued Glenmont, Centerpoint, Sandidge, and Trussway, alleging that the truss that broke beneath him was unreasonably dangerous and that "the Defendants" (including Centerpoint) "designed, manufactured, marketed, distributed[,] and utilized" the product and "placed [it] into the stream of commerce." Centerpoint and Trussway filed cross-claims against each other seeking indemnity from the other under the Texas Products Liability Act. TEX. CIV. PRAC. & REM. CODE §§ 82.001.008. Both Centerpoint and Trussway then filed cross-motions for summary judgment on their indemnity claims.
The trial court denied Trussway's summary-judgment motion and granted partial summary judgment for Centerpoint, holding that, for purposes of indemnity under the Act, Centerpoint was a "seller" of the allegedly defective truss. On Trussway's agreed interlocutory appeal, the court of appeals reversed, and this Court now affirms that court's judgment. In support of its conclusion that Centerpoint was not a seller of the allegedly defective truss, the Court cites to the text of the Products Liability Act, our precedents construing that text, and other precedents that address whether a party is a "seller" under common-law strict-liability principles. In my view, none of these authorities support the Court's conclusion.
The Texas Products Liability Act requires a "manufacturer" to "indemnify and hold harmless a seller against loss arising out of a products liability action, except for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable." TEX. CIV. PRAC. & REM. CODE § 82.002(a). The parties agree that Trussway was the "manufacturer" of the allegedly defective truss, that this is a "products-liability action," and that Centerpoint seeks indemnification for a "loss" arising out of this action. The only issue is whether Centerpoint was a "seller" of the allegedly defective truss.
Because the Products Liability Act expressly defines the term "seller," we need not decide in this case whether Centerpoint was a seller of trusses under the term's common, ordinary meaning.
It is undisputed that Centerpoint "distributed"
Relying on these dictionary definitions to inform the meaning of the "entire phrase ... `engaged in the business of,'" the Court holds that "one is not `engaged in the business of' selling a product if providing that product is incidental to selling services." Ante at 40 (emphasis added). Applying that holding, the Court concludes that Centerpoint's sales of trusses were "incidental to its contract to provide the services necessary to construct a building," ante at 42 (quoting Barham v. Turner Constr. Co. of Tex., 803 S.W.2d 731, 738 (Tex.App.-Dallas 1990, writ denied)), because "Centerpoint did not set prices on the materials to achieve a gain or profit," ante at 41, and "Centerpoint used innumerable building materials" in addition to the trusses, ante at 41. The Court then goes on to hold that "a general contractor who is neither a retailer nor a wholesale distributor of any particular product is not necessarily a `seller' of every material incorporated into its construction projects...." Ante at 41. I disagree, because nothing in the statute's definition of "seller"
The Court's first holding is that "one is not `engaged in the business of' selling a product if providing that product is incidental to selling services." Ante at 45 (emphasis added). Although the Court does not explain what it means by "incidental," that term commonly refers to something "[s]ubordinate to something of greater importance" or having "a minor role" within a greater enterprise. Incidental, BLACK'S 10th ed. Presumably, under the Court's incidental-sales test, an entity is not "engaged in the business of" selling a product if that business activity is "subordinate" in importance to, or plays only a "minor role" compared with, other business activities in which the entity is also engaged. Nothing in the common meaning of "engaged in the business" or in the statutory definition of "seller" supports this test.
An entity can of course be simultaneously engaged in more than one business activity,
Numerous Texas statutes confirm that the common meaning of "engaged in the business of" does not exclude activities that are "incidental" to a business's other activities.
As the Court itself explains, we must presume that "the Legislature deliberately and purposefully selects words and phrases it enacts, as well as deliberately and purposefully omits words and phrases it does not enact." Ante at 36 (quoting Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 452 (Tex.2012)). The fact that many statutes include words that limit the scope of the phrase "engaged in the business of" indicates that statutes that omit those words are not so limited. If, as the Court asserts, the common meaning of "engaged in the business of" does not include business activities that are only "incidental" to the business or transaction, there would be no need to limit statutes to those who are "primarily" or "principally" engaged in a particular business, or who engage in the business "regularly" or "continuously." Under the Court's construction, a statute that applies to entities that are "engaged in the business of" a particular activity already excludes those that only "incidentally" engage in that activity. If that were true, there would be no need for statutes to modify the phrase "engaged in the business" with terms like "primarily," "principally," or "regularly," and those terms would be meaningless and superfluous in all the statutes that use them. Of course, we must not construe statutes in ways that render statutory terms "meaningless or superfluous." Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271 S.W.3d 238, 256 (Tex.2008).
I believe we must acknowledge and respect the fact that the Products Liability Act's definition of "seller" includes all those "engaged in the business" of selling a product, and does not employ limiting words like "primarily" or "regularly" or, as the Court holds today, "non-incidentally." The Products Liability Act thus applies to all persons "engaged in the business" of selling a product regardless of whether their engagement in that business is a primary, regular, or merely incidental activity. By construing "engaged in the business" to exclude those whose relevant activities are incidental to other business activities, the Court construes the Act's definition of "seller" as if it included terms like "primary," "principally," and "regularly" when it does not. Of course, we must not do this when construing a statute either. City of Rockwall v. Hughes, 246 S.W.3d 621, 631 (Tex.2008) ("[C]hanging
Under the ordinary, common meaning of "engaged in the business" and the Act's language, a person is a "seller" under the Products Liability Act if the person is employed or involved (that is, "engaged") in a commercial enterprise for profit or gain (that is, a "business") in which the person distributes or places for use or consumption a product or component part into the stream of commerce for any commercial purpose. See TEX. CIV. PRAC. & REM. CODE § 82.001(3); Engage, Business, Doing Business, BLACK'S 10th ed. Because the Act's definition of "seller" does not include additional language like "primarily," "principally," "regularly," or "non-incidentally," the question of whether the entity's distribution or placement of the product is "incidental" in comparison to its other business activities is irrelevant to determining whether it is "engaged in the business" at issue.
The Court's second, more specific holding is that "a general contractor who is neither a retailer nor a wholesale distributor of any particular product is not necessarily a `seller' of every material incorporated into its construction projects...." Ante at 45. While I agree with this holding as worded, it merely begs the question of when a general contractor is or is not a "seller" of a product it incorporates into a construction project. Under the Products Liability Act's plain language, the answer is that a general contractor is a "seller" of a product if it is "engaged in the business of distributing or otherwise placing" the product "in the stream of commerce for use or consumption," and does so "for any commercial purpose." TEX. CIV. PRAC. & REM. CODE § 82.001(3) (emphasis added).
To the extent the Court suggests by this holding that the Act's definition of "seller" applies differently to a "general contractor" than to others who sell products, I disagree. The statutory definition includes every "person" who is "engaged in the business," TEX. CIV. PRAC. & REM. CODE § 82.001(3), and the Court makes no effort to explain how the Act distinguishes general contractors from any other "person." Nothing in the Act or in the common meaning of "engaged in the business of" imposes different criteria on "general contractors" than on builders, subcontractors, retailers, or wholesalers, and nothing in the common meaning or the Act conditions "seller" status on how the product is ultimately used.
To the contrary, as discussed further below, this Court has held that the fact that the entity is a contractor that provides services through which it incorporates the product into a construction project does not preclude it from being a "seller" of that product. Fresh Coat, 318 S.W.3d at 899. Under the Act's language, any "person" (thus, any general contractor, subcontractor, retailer, wholesaler, etc.) "who is engaged in the business of distributing or otherwise placing, for any commercial purpose, in the stream of commerce for use or consumption a product or any component part thereof" is a seller, regardless of how the product is used. TEX. CIV. PRAC. & REM. CODE § 82.001(3) (emphasis added).
The Court identifies two facts that it believes demonstrate that Centerpoint's placement of trusses into the stream of commerce for commercial purposes was merely "incidental" to its primary business obligations: (1) Centerpoint did not price
Regarding the Court's first factor, nothing in the Act or the ordinary meaning of "engaged in the business of" requires that the sale of the specific product at issue must be designed to achieve a financial "gain" or "profit." Under the common, ordinary meaning of the phrase, even a non-profit corporation like the Salvation Army may be "engaged in the business" of selling products, even though it is not seeking to "achieve a profit" from those sales. See, e.g., City of San Antonio v. Salvation Army, 127 S.W. 860, 862 (Tex. Civ.App.-San Antonio 1910, writ ref'd) (noting the Salvation Army's legislative charter provides that the "proceeds of said business shall be devoted to the religious, charitable, educational or missionary purposes of the Salvation Army" (emphasis added)). The statutory definition provides no basis for excluding a non-profit or not-for-profit organization from the Act's indemnity provisions.
More specifically, neither the Act nor the common meaning support the Court's suggestion that a party is "engaged in the business of" selling a particular product only if it seeks a "gain or profit" from the sales of that specific product. If a hardware store, for example, decides to sell all hammers for a price below the company's costs, it is still "engaged in the business of" selling those hammers. When cell-phone carriers sold iPhones below cost to attract customers into service contracts, they were still "engaged in the business of" selling iPhones, even if their primary business was providing cellular services and they realized no financial gain from the sales of the phones. See Matt Scully & Scott Moritz, iPhones go from T-Mobile Loss Leader to New Source of Cash, BLOOMBERG (Apr. 30, 2015, 6:07 PM), http://www.bloomberg.com/news/articles/2015-04-30/t-mobile-changes-iphones-from-loss-leaders-to-source-of-finance. And when Wal-Mart sold gasoline as a loss-leader in an effort to attract shoppers into their stores, it was still "engaged in the business of" selling gasoline, even if it did not seek a profit or realize a gain from those sales. See Brad Tuttle, Walmart's New Loss Leader: Cheap Gas, TIME, (June 29, 2011), http://business.time.com/2011/06/29/walmarts-new-loss-leader-cheap-gas. In the same way, when Centerpoint sells trusses or other building materials at cost in connection with a contract to build an apartment complex, it is still "engaged in the business of" selling those building materials. Even under the dictionary definitions on which the Court relies, the seller need only be seeking some "gain" or "pecuniary benefit" from the transaction as a whole to be "engaged in the business," even if it may not seek or "achieve a gain or profit" from the specific sale at issue.
Regarding the Court's second factor — that trusses were only one of "innumerable" products that Centerpoint sold — nothing in the Act supports the Court's reliance on this factor either. The Act's definition of "seller" expressly includes a person who distributes a product "for any commercial purpose." TEX. CIV. PRAC. & REM. CODE § 82.001(3) (emphasis added). If a quick-lube shop whose primary business is to offer oil-change services sells oil, oil additives, oil filters, fuel filters, air
The apartment project Centerpoint was constructing when Fernandez was injured was one of "four or five" similar construction projects that Centerpoint had going at the time. And as the Court itself acknowledges, it "is the nature of a general contractor's business when it builds based on custom designs and specifications" to provide "innumerable construction products and materials." Ante at 41. Under the ordinary meaning of "engaged in the business," selling trusses and other building materials is part of the business in which Centerpoint engaged, even if it is an "incidental," and not the "primary," part. Although Centerpoint may be only "incidentally" — and not "primarily" or "regularly" — engaged in the business of selling trusses, it is nevertheless "engaged in the business" of selling trusses. I would apply the unambiguous statutory language and conclude that Centerpoint is a "seller" of trusses under the Products Liability Act. TEX. CIV. PRAC. & REM. CODE § 82.001(3).
In addition to its purported reliance on the statutory text, the Court relies on our precedent addressing the Products Liability Act to support its conclusion that Centerpoint does not qualify as a "seller." Although we have addressed the Act's definition of "seller" on a number of occasions,
The Court claims that Fresh Coat is unhelpful here because the "contractor at issue in Fresh Coat sold and installed a particular product" while Centerpoint was "a general contractor constructing an improvement to real property." Ante at 38. I find the Court's attempt to distinguish Fresh Coat to be both incomplete and unconvincing. The Court begins by noting that the contract in Fresh Coat "required Fresh Coat to provide `labor, services and/or materials, equipment, transportation, or facilities' necessary to apply and finish the synthetic stucco." Ante at 37 (citing Fresh Coat, 318 S.W.3d at 899). Under the Court's analysis in Fresh Coat, however, there are no relevant differences between Fresh Coat's contractual obligations and Centerpoint's (to provide "the construction and services required by the Contract Documents," including "all other labor, materials, equipment and services" necessary "to fulfill its obligations").
Although the Court suggests today that the Fresh Coat contract placed those products on "equal footing" with the services while Centerpoint's contract did not, ante at n. 8, the Court placed no value on that point in Fresh Coat. In both cases, the contract required the party to provide both the allegedly defective "materials" and the services to properly install them in the construction project. Nothing in Fresh Coat suggests that the fact that Centerpoint contractually agreed to provide other materials and services requires a conclusion that it was not "engaged in the business" of providing the materials that were later alleged to be defective. Nor does anything in the Act support that proposition.
Next, the Court notes that "Fresh Coat purchased [the synthetic stucco products] from their manufacturer and installed them pursuant to its contract with the builder." Ante at 37 (citing Fresh Coat, 318 S.W.3d at 895). But the Court makes no effort to explain how Fresh Coat's installation of the stucco products pursuant to its contract with the builder is different from Centerpoint's installation of the trusses pursuant to its contract with Glenmont. See ante at 51. The product at issue in Fresh Coat was a combination of component products that the installer had to properly combine, apply, and finish in a particular way at the time of installation. See Fresh Coat, 318 S.W.3d at 899 (explaining that the synthetic stucco system included a "base coat, mesh, and finish coat"). Here, by contrast, Centerpoint did not rely on Trussway's instructions to "completely or partially assemble" the trusses because Trussway provided the trusses fully assembled. All Centerpoint had to do was install the trusses, and as even Trussway admits, "no builder needs instructions on putting up a truss any more than it needs to be told how to drive a nail." In short, Fresh Coat's sale of the stucco products was far more "incidental" to the services Fresh Coat provided to install the stucco products than Centerpoint's
Next, the Court states, "In holding that Fresh Coat was a seller, we relied in part on witness testimony that the company was `in the business of providing [the] products combined with the service of [the] installation.'" Ante at 38 (quoting Fresh Coat, 318 S.W.3d at 899). While the Court correctly quotes from the Fresh Coat opinion, the Court did not find such conclusory testimony determinative in Fresh Coat, nor could it have. See, e.g., Elizondo v. Krist, 415 S.W.3d 259, 264 (Tex.2013) (rejecting testimony that legal malpractice resulted in reduced settlement as conclusory and mere ipse dixit); Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 161 (Tex.2012) (rejecting property owner's valuation testimony as conclusory and speculative). While the testimony may have been worth noting, it was meaningless in the absence of evidence supporting that conclusory assertion. Here, the evidence established that Centerpoint was engaged in the business of selling trusses even if no witness expressly stated that it was.
Finally, the Court simply concludes that, in Fresh Coat, "we were not required to consider how and if the analysis would be affected when the person seeking seller status were a general contractor constructing an improvement to real property." Ante at 38. But Fresh Coat was also a contractor constructing an improvement to real property, and nothing in the Act's definition of "seller" or in our opinion in Fresh Coat supports the Court's conclusion that general contractors should be treated differently from any other contractor, person, or entity.
The Court's discussion of Fresh Coat is unconvincing, but what the Court does not say about Fresh Coat is even more illuminating. The Court makes no effort to distinguish or analogize Fresh Coat in light of the incidental-sales test it adopts and applies today. That is because the Court did not apply any incidental-sales test when it applied the Act's plain language in Fresh Coat. The Fresh Coat Court never considered whether the contractor's obligation to provide the product was "primary" or "incidental," never discussed whether the contractor derived its "profits" or "gains" from its products sales or its installation services or both, and never mentioned whether the contractor sold products other than those alleged to be defective. See Fresh Coat, 318 S.W.3d at 899. Those questions, which the Court finds determinative in today's case, do not appear in the Act and thus were simply not relevant to the Court's conclusion that Fresh Coat qualified as a "seller."
Instead, when the Fresh Coat Court addressed the specific question of whether the contractor could be a "seller," it expressly agreed with the court of appeals' holding in that case that the Act's "definition of `seller' does not exclude a seller who is also a service provider, nor does it require the seller to only sell the product." Id. at 899 (quoting K-2, Inc. v. Fresh Coat, Inc., 253 S.W.3d 386, 393 (Tex.App.-Beaumont 2008)). And it specifically recognized that "homebuilders and their contractors" could seek indemnity as sellers under the Act. Id. at 898-99.
Ultimately, the Court agrees with Trussway's argument that, under Fresh Coat, Centerpoint could not be a truss seller because it sold "`construction services,' not building materials." Ante at 40. But it does not explain why it believes that is an either/or proposition, as if Centerpoint's status as a construction-services seller precludes it from also being a truss seller. The Court expressly rejected this very approach in Fresh Coat, holding that "the company's installation services do not preclude
Ultimately, the Court relies not on our own applicable decision in Fresh Coat but on other courts' decisions addressing the issue of whether a service provider is a "seller" of products under common-law strict-liability principles. This case, however, presents the issue of who is a seller under the Products Liability Act, not who is a seller under common-law strict-liability principles. I believe it is unnecessary and imprudent to address the difficult and complicated common-law issue that this case does not raise.
The common-law principle and the Act's indemnity provisions address two separate but related issues. Under the common law, "the seller of a defective product is subject to strict liability for damages the product causes even though the defect was not his fault, but he is generally entitled to indemnity from the manufacturer by statute and by common law." SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 446-47 (Tex.2009) (footnote omitted). The cases on which the Court relies address whether and when a party that provides or distributes a product in connection with its service is considered to be a "seller" that is strictly liable for any defect in the product under the common law. This is an issue that has been the subject of extensive discussion and debate throughout the country for many years. See, e.g., William C. Powers, Jr., Distinguishing Between Products and Services in Strict Liability, 62 N.C. L. REV. 415 (1984).
As the Court notes, other courts have held, at least generally, that a service provider that also distributes products is not a "seller" subject to strict liability under the common law if:
We rejected some of these very reasons in Fresh Coat when we specifically held that the Act does not exclude those that provide construction services from being a "seller," even when the product is used in and incorporated into a building project. Fresh Coat, 318 S.W.3d at 899. Instead of relying on those extra-jurisdictional cases, I find better guidance in this Court's own decisions.
First, in Barbee v. Rogers, 425 S.W.2d 342, 346 & n. 3 (Tex.1968), the Court addressed whether an optometrist was a "seller" of contact lenses subject to strict liability under the common law. In answering that question, the Court focused on the plaintiff's allegations to determine whether he alleged that his injuries resulted from defective optometry services or a defective product. Id. at 346. The Court concluded that the optometrist could not be strictly liable as a seller because the plaintiff in that case attributed the injury not "to the product itself, i.e., the contact lenses, but to the professional and statutorily authorized act of `measuring the powers of vision' of [the plaintiff's] eyes and `fitting lenses ... to correct or remedy ... (his) defect or abnormal condition of vision.'" Id. (alterations in original). In short, the alleged "miscarriage, if such there was, rests in the professional acts of Respondents and not in the commodity they prescribed, fitted[,] and sold." Id. Because the plaintiff complained not of "the act of one selling a `product in a defective condition unreasonably dangerous to the user,'" but instead complained of "the act of one deemed in law to have the competence to remedy a visual defect by furnishing particularly prescribed contact lenses," the Court concluded that the optometrist was not a seller subject to strict liability in that case. Id. Under the Court's reasoning in Barbee, if the plaintiff had alleged that the contact lenses were defective, rather than the optometrist's services, the optometrist would have been a "seller" subject to strict liability even though the sales were incidental to the defendant's optometric services.
Once the Court identified that distinction in New Texas Auto, it then noted that the auctioneer in that case had in fact "actually held title to the [allegedly defective automobile] when it was finally sold at auction." Id. at 405. Thus, that auctioneer was in fact the "seller" in that particular transaction. See id. But "it was undisputed that [the auctioneer] normally never took title to the cars it auctioned, and did so here only because an arbitrator ordered it to do so." Id. Because sellers subject to strict liability are "those whose business is selling, not everyone who makes an occasional sale," the Court concluded that the auctioneer in that case was not subject to strict liability even though it actually sold the vehicle in that case. Id. at 405-06. The Court reached that conclusion not because the sale in that case was only "incidental" to the auctioneer's services, but because the auctioneer "normally never" engaged in such sales at all. Id. at 404-05.
In discussing these principles in New Texas Auto, the Court relied heavily on the Restatement (Third) of Torts. The Restatement supports the proposition that a service provider that also distributes products can be a "seller" subject to strict liability under the common law. It begins with the unremarkable principle: "Services, even when provided commercially, are not products." RESTATEMENT (THIRD) OF TORTS: PRODS. LIAB. § 19 (1998). But it rejects the notion that one who provides a service is not a seller of products used in the provision of the service. To the contrary, the Restatement explains, "When a building contractor sells a building that contains a variety of appliances or other manufactured equipment, the builder, together with the equipment manufacturer and other distributors, are held as product sellers with respect to such equipment notwithstanding the fact that the built-in equipment may have become, for other legal purposes, attachments to and thus part of the underlying real property." Id. § 19 cmt. e.
Thus, for example, "one who contracts to inspect, repair, and maintain machinery owned and operated by another is the provider of a product-related service rather than the provider of a product." Id. § 19 cmt. f. However, if "a product repairer replaces a worn-out component part with a new part, the replacement constitutes a sale of the part...." Id. And one "sells or otherwise distributes a product when, in a commercial transaction, one provides a combination of products and services and either the transaction taken as a whole, or the product component thereof," constitutes a commercial sale or distribution of the product. Id. § 20(c). When a service-provider sells or provides a product that is "consumed or permanently transferred to the customer" in connection with the service, "the transaction ordinarily is treated as a sale of the material that is consumed in providing the service," and this is true "[e]ven when the service provider does not charge the customer separately" for the product. Id. § 20 cmt. d. In short, as we noted in Fresh Coat, the Restatement "recognizes that a product seller may also provide services." 318 S.W.3d at 899.
Ultimately, however, the Court need not and should not decide in this case whether Centerpoint was a "seller" subject to strict liability under the common law. The issue before us is whether Centerpoint is a "seller" who is entitled to indemnity under the Products Liability Act. The Court appears to equate the two today. See ante at n. 5 (suggesting that "by arguing that it is a seller for statutory-indemnity purposes, Centerpoint is essentially conceding that it
For these reasons, the Court's reliance on other courts' decisions addressing the common-law strict-liability question is unconvincing, not only because they address the common-law question, but also because they are inconsistent with this Court's own prior decision in Barbee and the Restatement's guidance. Ultimately, however unclear and unsettled the common-law question may be in Texas or throughout the country, the question before us is not what the common law should be, but what Texas statutory law is. Even if the Court desires to limit the scope of the Product Liability Act's definition of "seller," we must apply the Act as written in this case, not announce common-law principles. "[A]s with any statute, we begin with the text," City of DeSoto v. White, 288 S.W.3d 389, 395 (Tex.2009), and when "the statute's language is unambiguous and does not lead to absurd results, our search also ends there: `Where text is clear, text is determinative.'" Tex. Adjutant Gen.'s Office v. Ngakoue, 408 S.W.3d 350, 362 (Tex. 2013) (quoting Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009)). In short, the statutory definition — and "only" that definition — should control our decision in this case. Needham, 82 S.W.3d at 318.
As part of its regular business for financial gain, Centerpoint contracted to transfer title of an allegedly defective truss from itself to Glenmont. It was thus a seller of the truss and not merely a facilitator of the sale. And making such sales was a regular part of the business in which Centerpoint was engaged. The summary judgment evidence in this case conclusively established that Centerpoint was "engaged in the business of distributing or otherwise placing" trusses "in the stream of commerce for use or consumption" and for a "commercial purpose." TEX. CIV. PRAC. & REM. CODE § 82.001(3). It was thus a "seller" under the Product Liability Act's plain language.
Of course, the Legislature could have defined the term "seller" to include only those who are "primarily" engaged in the business of distributing an allegedly defective product, who do not make such sales only "incidentally" as part of other business activities, who price the product to "achieve a profit" or "gain," or who do not sell "innumerable" other products in conjunction with the provision of a service. But it did not. Because the Court concludes that Centerpoint was not a seller when the Products Liability Act plainly says that it was, I respectfully dissent.
More recently, we acknowledged that the Act imposes "`a new, distinct statutory duty' of indemnification because it is, by its terms, `in addition to any duty to indemnify established by law, contract, or otherwise.'" Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 255 (Tex.2006) (footnote omitted) (first quoting Fitzgerald, 996 S.W.2d at 866; then quoting TEX. CIV. PRAC. & REM. CODE § 82.002(e)(2)). We thus acknowledged that our preconceptions based on common law liabilities and indemnity' cannot control our construction of the Act's provisions. See id. at 255-57. And most recently, we recognized that the Act "broadly defines [the term] `seller.'" Petroleum Sols., Inc. v. Head, 454 S.W.3d 482, 491 (Tex.2014) (emphasis added).
As the following discussion of the Restatement's principles explains, this "proof rationale," based on the nature of the plaintiff's allegations against the party seeking indemnity, may answer the Court's illustration regarding hair salons and products. See ante at n. 7. While the Court apparently doubts that we would hold that a hair stylist can be strictly liability as a seller of the products used when providing hair-styling services, our decision in Barbee, President Powers' proof rationale, and the Restatement all suggest that the law should hold the stylist liable if, for example, the customer alleges that the product was defectively designed or manufactured and damaged her hair or scalp. On the other hand, if the customer alleges that the product was defective because the stylist improperly used or applied it, these authorities suggest that we should not subject the stylist to strict liability as the product's seller. However we might decide that issue, the Court's illustration demonstrates why the Court should not rely on common-law strict-liability cases from other courts and jurisdictions to decide whether Centerpoint is a seller under the Products Liability Act, because for these purposes the Legislature has already decided that issue. The day may come when we must reconsider Barbee's approach to deciding whether a service provider is subject to common-law strict liability as a seller of products provided in connection with its services. This, however, is not that day. As for whether the hair stylist would be a seller entitled to statutory indemnity under the Products Liability Act, we must at least agree that only the Act itself must provide the answer.
