Gregory M. Cokinos and Anthony T. Golz 2016-12-20 18:07:45
The Texas Supreme Court issued numerous opinions this year that impacted construction law, addressing subjects such as indemnity under Civil Practice and Remedies Code Chapter 82 to whether the grounds for vacatur enumerated in the Texas General Arbitration Act, or TAA, are exclusive. Three are noted in the following. In Centerpoint Builders, GP, LLC v. Trussway, Ltd.,1 the Texas Supreme Court held 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. In the case, a roof truss collapsed and injured a worker. In the ensuing products-liability action, the general contractor argued that it was entitled to statutory indemnity from the manufacturer of the truss, but the court disagreed. Civil Practice and Remedies Code Chapter 82 defines “seller” not simply as “a person who sells” or “a person who places a product in the stream of commerce,” but as a person “engaged in the business of” commercially distributing products. The court reasoned that the general contractor, like most builders, is “engaged in the business of” selling construction services, not building materials, and held that “one is not ‘engaged in the business of’ selling a product if providing that product is incidental to selling services.”2 Although the quantity of materials used is not dispositive, the fact that the general contractor used innumerable building materials supported the conclusion that any single material was incidental to its provision of construction services.3 In TIC Energy & Chemical, Inc. v. Martin,4 the Supreme Court held that a subcontractor may be entitled to the exclusive-remedy defense as a fellow employee of the general contractor’s employees by virtue of the general contractor’s written agreement to provide workers’ compensation insurance to the subcontractor. The sole issue in dispute was the legal effect of Texas Labor Code §§406.122(b) and 406.123 when agreements meeting the terms of both govern the general contractor and subcontractor relationship. Section 406.122(b) excludes subcontractors as the general contractor’s employees if they are operating as an independent contractor and have a written agreement evidencing the relationship. Section 406.123, in turn, provides for an election by which a general contractor may become a statutory employer by agreeing, in writing, to provide workers’ compensation insurance to the subcontractor. “Taken together, the only plausible reading of the statute is that Section 406.122 states a general rule of employment status for workers’ compensation purposes and Section 406.123 deviates from that rule by creating the fiction of another.”5 In Hoskins v. Hoskins,6 the court held that the TAA does not permit an arbitration award to be vacated on common-law grounds not enumerated in the statute. The losing party in arbitration sought to vacate the award because the arbitrator manifestly disregarded the law. The court rejected the challenge, reasoning that the statutory text “could not be plainer”: under CPRC §171.087, the trial court “shall confirm” an award unless vacatur is required under one of the enumerated grounds in section 171.088.7 Therefore, “the TAA leaves no room for courts to expand on those grounds, which do not include an arbitrator’s manifest disregard of the law.”8 It’s important to note, however, that the court acknowledged that parties may contractually limit the arbitrator’s authority so as to authorize vacatur on the basis of a common-law ground not enumerated in the TAA (e.g., agreeing that the arbitrator “does not have authority to render a decision which contains a gross mistake”).9 Notes 1) No. 14-0650, 2016 WL 3413329 (Tex. June 17, 2016). 2) Id. at *6. 3) Id. at *7. 4) No. 15-0143, 2016 WL 3136877 (Tex. June 3, 2016). 5) Id. at *6. 6) No. 15-0046, 2016 WL 2993929 (Tex. May 20, 2016). 7) Id. at *4. 8) Id. 9) Id. at *5, 7. GREGORY M. COKINOS is the founder and managing principal of Cokinos, Bosien & Young and co-editor of the Construction Law Journal, which is published by the Construction Law Section of the State Bar of Texas. ANTHONY T. GOLZ is a principal of Cokinos, Bosien & Young and co-author of the Construction Case Law Update, presented at the Construction Law Conference each spring, which is sponsored by the Construction Law Section of the State Bar of Texas.
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