Union Pacific Railroad Company v. Ann Brown D/B/A Jay Construction ( 2018 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-17-00788-CV
UNION PACIFIC RAILROAD COMPANY,
Appellant
v.
Ann BROWN d/b/a Jay Construction,
Appellee
From the 49th Judicial District Court, Webb County, Texas
Trial Court No. 2013CVT001716D1
Honorable Jose A. Lopez, Judge Presiding
Opinion by: Irene Rios, Justice
Sitting: Karen Angelini, Justice
Luz Elena D. Chapa, Justice
Irene Rios, Justice
Delivered and Filed: December 19, 2018
AFFIRMED
Union Pacific Railroad Company (“Union Pacific”) appeals from an order granting
summary judgment in favor of Ann Brown d/b/a Jay Construction (“Jay Construction”) on all of
Union Pacific’s claims. The issues raised concern application of the Texas Anti-Indemnity Act
(“TAIA”), timing of an indemnity claim, evidence of breach of contract, and granting of excess
relief. We affirm.
04-17-00788-CV
Facts
On July 1, 2011, Union Pacific entered a contract (“Contract”) with Jay Construction that
describes the work to be performed by Jay Construction as “providing fully operated, fueled, and
maintained equipment to assist [Union Pacific] forces in performing work on an as-needed basis
. . . .” The Contract contains a general indemnity provision stating that Jay Construction will
indemnify Union Pacific
from any and all fines, judgments, awards, claims, decrees, demands, liability,
losses, damages, injury, costs and expenses (including attorney fees and costs) of
any and every kind whatsoever, including, without limitation, for injury or death to
all persons . . . arising in any manner from or in the performance of this Agreement
or the breach by [Jay Construction] of any provision of this Agreement.
The provision includes indemnification for claims “caused or alleged to be caused by the partial
or sole negligence of [Union Pacific] and/or its employees . . . .” In addition, the Contract requires
Jay Construction to “adjust, settle or appear and defend . . . all Claims made against any Railroad
Indemnified Party.”
In early 2013, Jay Construction was called upon to provide equipment and operators for a
Union Pacific bridge repair project in Mathis, Texas. Jay Construction subcontracted that work to
a company known as Rail 1. In March 2013, Union Pacific asked Rail 1 to provide three manlifts
to be used on the project. Rail 1 complied by renting manlifts from a third company, NES.
A serious accident involving one of the manlifts occurred at the project site in September
2013. One Union Pacific employee (Ernie Barrera) was killed and another (Pedro Ramon) was
badly injured. This accident precipitated numerous claims by Barrera’s family (“Barrera”) and
Ramon against various defendants, as well as claims by and between Union Pacific, Jay
Construction, Rail 1, and NES. This appeal involves only Union Pacific’s contract claims against
Jay Construction.
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Union Pacific alleged that Jay Construction breached its contractual obligations to
indemnify Union Pacific and to defend it against the claims asserted by Ramon and Barrera. It
further alleged that Jay Construction breached the Contract by failing to provide safety training on
how to operate the manlift and by hiring a subcontractor without Union Pacific’s prior written
permission. The latter two claims are not pursued on appeal.
Jay Construction filed an amended motion for traditional and no-evidence summary
judgment 1 on claims asserted against it by Ramon and by Union Pacific. As to Union Pacific, Jay
Construction alleged in its traditional motion (as pertinent to this appeal) that the contractual
indemnity provision was void under the TAIA and that Union Pacific’s claim for breach of the
indemnity provision was premature. It also alleged that it conclusively negated Union Pacific’s
negligence claim because Jay Construction was “not in the chain of entities” that provided the
manlift. Rather, Jay Construction argued, Rail 1 provided the manlift in its capacity as a vendor to
Union Pacific, separate and apart from its capacity as Jay Construction’s subcontractor on the
project.
In its no-evidence motion, Jay Construction asserted that there was no evidence that (1) it
“entered into any agreement or contract for the lease of the man lift involved in the accident,” (2)
it “breached any valid provision of the contract,” or (3) Union Pacific “suffered any damages as a
result of any alleged contractual breach by Jay Construction or that any liability has been
established against Jay Construction.”
After receiving Jay Construction’s motion, Union Pacific amended its third-party petition
to add a claim for declaratory judgment. Specifically, Union Pacific requested a declaration that
1
Jay Construction’s original summary judgment motion referenced a May 1, 2012 contract with Union Pacific. It
amended its motion to reference the July 1, 2011 Contract after Union Pacific asserted that that was the contract on
which its claims were based.
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“Jay Construction has a contractual obligation to indemnify Union Pacific pursuant to the
Contract’s indemnity provision.” Union Pacific then filed a response to Jay Construction’s
summary judgment motion, the contents of which are discussed below.
The trial court granted Jay Construction’s motion on all of Union Pacific’s claims against
it without stating the grounds on which it was granted. All remaining claims between the various
parties were subsequently settled or dismissed.
Standard of Review
We review an order granting summary judgment de novo. Merriman v. XTO Energy, Inc.,
407 S.W.3d 244, 248 (Tex. 2013); Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012). “[W]e take
as true all evidence favorable to the nonmovant and we indulge every reasonable inference and
resolve any doubts in the nonmovant’s favor.” Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572,
579 (Tex. 2017).
A traditional summary judgment is proper when there are no disputed issues of material
fact and the movant establishes that it is entitled to judgment as a matter of law. Shah v. Moss, 67
S.W.3d 836, 842 (Tex. 2001); TEX. R. CIV. P. 166a. A defendant may establish such entitlement
by conclusively negating at least one of the essential elements of a cause of action alleged against
it. See Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010).
A no-evidence summary judgment is proper only when the nonmovant fails to produce
“more than a scintilla of probative evidence to raise a genuine issue of material fact.” Smith v.
O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009); see TEX. R. CIV. P. 166a(i). “[M]ore than a scintilla
of evidence exists if the evidence rises to a level that would enable reasonable and fair-minded
people to differ in their conclusions.” Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex.
2004) (internal quotation marks omitted).
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“When a trial court’s order granting summary judgment does not specify the grounds relied
upon, the reviewing court must affirm summary judgment if any of the summary judgment grounds
are meritorious.” FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
“[I]f a no-evidence motion for summary judgment and a traditional motion for summary
judgment are filed which respectively asserts the plaintiff has no evidence of an element of its
claim and alternatively asserts that the movant has conclusively negated that same element of the
claim, we address the no-evidence motion for summary judgment first.” Cooper v. M.N. Gumbert
Corp., No. 04-17-00833-CV, 2018 WL 4470748, at *2 (Tex. App.—San Antonio Sept. 19, 2018,
no pet. h.) (mem. op.) (quoting Williams v. Parker, 472 S.W.3d 467, 469–70 (Tex. App.—Waco
2015, no pet.)). But if the traditional motion challenges a cause of action on an independent ground,
we consider that ground first “because it would be unnecessary to address whether a plaintiff met
his burden as to the no-evidence challenge if the cause of action is barred as a matter of law.” Id.
(citing Lotito v. Knife River Corp.-S., 391 S.W.3d 226, 227 n.2 (Tex. App.—Waco 2012, no pet.)).
In its no-evidence motion, Jay Construction challenged Union Pacific’s evidentiary support
for the essential elements of (1) the existence of a valid contract, (2) breach of that contract, and
(3) damages resulting from the breach. It also moved for traditional summary judgment on the
independent ground (among others) that Union Pacific’s indemnity claim is barred by the TAIA.
The applicability of the TAIA is a threshold issue, resolution of which may obviate the need to
consider the merits of the no-evidence summary judgment. We therefore consider that issue first.
Discussion
Applicability of the Texas Anti-Indemnity Act
The Contract required Jay Construction to indemnify Union Pacific for claims “including
those caused or alleged to be caused by the partial or sole negligence” of Union Pacific. It also
required Jay Construction to provide Union Pacific a defense against such claims. In its first issue
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on appeal, Union Pacific challenges the trial court’s implied ruling that the Contract is subject to
the TAIA. That statute provides, in pertinent part:
[A] provision in a construction contract, or in an agreement collateral to or affecting
a construction contract, is void and unenforceable as against public policy to the
extent that it requires an indemnitor to indemnify, hold harmless, or defend a party
. . . against a claim caused by the negligence or fault . . . of the indemnitee, its agent
or employee, or any third party under the control or supervision of the indemnitee
....
TEX. INS. CODE ANN. § 151.102. The statute expressly applies to both an obligation to indemnify
and an obligation to defend.
Union Pacific responded that the TAIA does not apply to the Contract because the Contract
was executed on July 1, 2011, six months before the January 1, 2012 effective date of the statute.
H.B. 2093, which enacted the TAIA, explains the application of the statute’s effective date:
The changes in law made by this Act apply only to an original construction contract
. . . that is entered into on or after the [January 1, 2012] effective date of this Act.
If an original construction contract . . . is entered into on or after the effective date
of this Act, the changes in law made by this Act apply . . . . If an original
construction contract . . . is entered into before the effective date of this Act, that
original construction contract . . . [is] governed by the law in effect immediately
before the effective date of this Act, and that law is continued in effect for that
purpose.
Act of May 29, 2011, 82d Leg., R.S., ch. 1292, § 3(b), 2011 Tex. Gen. Laws 3612, 3614 (H.B.
2093). 2
It is undisputed that the Contract was entered into before the effective date of the TAIA.
But the Contract states that it “shall continue for a period of 2 YEAR(S) from the Effective Date
2
This section of H.B. 2093, “while uncodified, is still binding law. The language of Section 3(b) does not come from
a draft version of the bill, but rather is found in the final, enrolled version, as signed by the governor. Uncodified
session law is law nonetheless.” United States of Am. for the Use & Benefit of E J Smith Constr., Co., LLC v. Travelers
Cas. & Sur. Co., No. 5:15-CV-971 RP, 2016 WL 1030154, at *5 (W.D. Tex. Mar. 10, 2016) (citing AlYahnai Fountain
Hawkins v. State, No. 11-04-00278-CR, 2005 WL 2156981, at *2 (Tex. App.—Eastland Sept. 8, 2005, no pet.); Ward
Cty. Irrigation Dist. No. 1 v. Red Bluff Water Power Control Dist., 170 S.W.3d 696, 697-98 (Tex. App.—El Paso
2005, no pet.); Tijerina v. Tijerina, No. 01-96-01046-CV, 1997 WL 760535, at *1 (Tex. App.—Houston [1st Dist.]
Dec. 11, 1997, no pet.)).
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unless sooner terminated as provided herein.” The two-year termination date was June 30, 2013.
Effective June 11, 2013, however, the parties entered into Change Order No. 3, which revised
certain work and compensation provisions and extended the term of the Contract to August 15,
2013.
In December 2013, the parties entered Change Order No. 4, with an effective date of
November 4, 2013. That Change Order also revised certain work and compensation provisions and
extended the term of the Contract to December 15, 2013. Both Change Orders state that they are
not to be “construed as amending or modifying the Basic Agreement except as herein specifically
provided.” (Emphasis added.)
The accident underlying this lawsuit occurred on September 4, 2013, during an apparent
gap between the August 15, 2013 extension date provided in Change Order No. 3 and the
November 4, 2013 effective date of Change Order No. 4.
Jay Construction argues that the Change Orders fall within the TAIA because they
constitute new contracts that were executed after the effective date of the statute. Union Pacific
counters that only the July 1, 2011 Contract is relevant because Jay Construction’s duty to
indemnify arose before the original June 30, 2013 termination date. Specifically, Union Pacific
argues that Jay Construction’s duty to indemnify arose on March 27, 2013, the date the manlift
was delivered to the job site, because Ramon’s and Barrera’s negligence claims were based on a
failure to provide training, which should have been provided at the time of delivery. We disagree.
Ramon and Barrera alleged that Union Pacific was negligent in failing to properly train
them and other employees on the use of the manlift. This failure to train was not alleged to have
occurred on any particular date. In any event, the failure to train did not give rise to a negligence
claim until it proximately caused injury, which is alleged to have occurred on September 4, 2013.
See Childs v. Haussecker, 974 S.W.2d 31, 36 (Tex. 1998) (absent application of the discovery rule,
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“a cause of action accrues when a wrongful act causes an injury”). Union Pacific essentially
contends that Jay Construction’s duty to indemnify it predated the accrual of the claims for which
it seeks indemnity. This contention is not only not supported by any legal authority, it is contrary
to the plain language of the indemnity clause of the Contract, which provides for indemnification
for “claims” of negligence by Union Pacific. Similarly, Jay Construction’s duty to defend could
not possibly have arisen before there was any claim to defend against.
Union Pacific next argues that the two Change Orders operated to extend the Contract to
December 15, 2013 without creating a new contract. It urges that Change Order No. 3 extended
the Contract term from June 30, 2013 to August 15, 2013. Then Change Order No. 4 (despite its
express effective date of November 4, 2013) extended the Contract term from August 15, 2013 to
December 15, 2013. This argument does not accurately reflect the content or effect of the Change
Orders.
Both Change Orders include additional work to be performed and revisions to the
compensation provided under the Contract. Rather than simply extending the term of the Contract,
they substantively modified it. “A modification to a contract creates a new contract that includes
the new modified provisions and the unchanged old provisions.” Blackstone Med., Inc. v. Phoenix
Surgicals, L.L.C., 470 S.W.3d 636, 647 (Tex. App.—Dallas 2015, no pet.); see Hobby Lobby
Stores, Inc. v. Standard Renewable Energy, LP, No. 02-15-00124-CV, 2016 WL 4247969, at *8
(Tex. App.—Fort Worth Aug. 11, 2016, pet. denied) (mem. op.).
Change Order No. 3 modified the terms of the Contract and therefore created a new contract
in June 2013. Similarly, Change Order No. 4 contained further modifications and therefore created
a new contract in December 2013, effective November 4, 2013.
The only document that even arguably creates contractual indemnity and defense
obligations covering the September 4, 2013 accident is Change Order No. 4. Without that
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document, the terms of the July 1, 2011 Contract, even as extended by Change Order No. 3,
terminated and were of no force or effect as of August 15, 2013. Change Order No. 4 created a
new contract which was executed after the January 1, 2012 effective date of the TAIA and is
subject to that Act. To the extent that the indemnity and defense provisions contained in that new
contract 3 required Jay Construction to indemnify and defend against claims of Union Pacific’s
own negligence, those provisions are void. See TEX. INS. CODE ANN. § 151.102 (voiding provisions
in construction contract to indemnify or defend party for own negligence).
Union Pacific argues in the alternative that, between the expiration of Change Order No. 3
and the effective date of Change Order No. 4, “the contract was impliedly extended by the parties’
conduct.” It is true that continued performance after the expiration of an express contract may give
rise to a new implied contract or the implied extension of the expired contract. See Double
Diamond, Inc. v. Hilco Elec. Co-op., Inc., 127 S.W.3d 260, 266 (Tex. App.—Waco 2003, no pet.)
(continued performance may create implied extension of expired contract); Emmer v. Phillips
Petro. Co., 668 S.W.2d 487, 490 (Tex. App.—Amarillo 1984, no writ) (continued performance
may create new implied contract). But even if the parties’ conduct in this case operated as an
implied extension, it extended the contract created by Change Order No. 3, not the July 1, 2011
Contract. Because the contract created by Change Order No. 3 was executed after the effective
date of the TAIA, that statute still operates to void the indemnity and defense provisions.
Union Pacific next asserts that, because the TAIA voids the indemnity provision only to
the extent it requires indemnification for Union Pacific’s own negligence, we should remand for a
determination of “the extent of Jay Construction’s indemnity obligations to Union Pacific, if any,
3
The indemnity and defense provisions of the Contract, being unmodified by the Change Orders, carried forward to
the new contracts. See Blackstone Med., 470 S.W.3d at 647 (new contract includes new modified terms and old
unchanged terms).
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for the negligence or fault of Jay Construction, Rail 1, or NES.” But Union Pacific does not identify
any pleading in which any party has asserted that Union Pacific is liable for the negligence or fault
of any other party. Ramon and Barrera each sued Union Pacific for its own negligence. The TAIA
voids Jay Construction’s obligation to indemnify Union Pacific for that negligence. No other
indemnity issue remains for remand.
We note that Jay Construction did not expressly argue in its traditional summary judgment
motion that the TAIA voids the Contract provision requiring it to defend Union Pacific against
claims arising from its own negligence. But even if the trial court erred in granting summary
judgment on the duty to defend claim, that error does not require reversal.
“Although a trial court errs in granting a summary judgment on a cause of action not
expressly presented by written motion, . . . the error is harmless when the omitted cause of action
is precluded as a matter of law by other grounds raised in the case.” G & H Towing Co. v. Magee,
347 S.W.3d 293, 297-98 (Tex. 2011). Union Pacific’s failure to defend claim was precluded as a
matter of law by other grounds properly raised in Jay Construction’s motion. Specifically, Jay
Construction alleged and established that the contractual indemnity provision is void under the
TAIA as a matter of law. The TAIA, by its express terms, applies to both indemnity and defense
provisions. The contractual defense provision is therefore also void under the TAIA as a matter of
law.
Jay Construction negated the duty element of Union Pacific’s defense and indemnity
claims as a matter of law and established its entitlement to summary judgment on those claims.
Premature indemnity claim
In its second issue on appeal, Union Pacific challenges the implied ruling that its claim for
indemnity was premature. Because we have held above that the contractual provision on which
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Union Pacific’s indemnity claim is based is void, we need not address whether that claim was
premature.
Breach of contract
In its third issue on appeal, Union Pacific contends that there are genuine issues of material
fact that preclude a no-evidence summary judgment on its claims for breach of contract. It
specifically argues that it produced evidence that Jay Construction breached its contractual
obligations to defend and indemnify Union Pacific. We have held above that the portions of the
Contract creating the duties to defend and indemnify Union Pacific for its own negligence are void.
We have also recognized that all of the claims against Union Pacific arise from allegations of
Union Pacific’s own negligence. Because Jay Construction had no duty to defend or indemnify
those claims, its refusal to defend or indemnify does not constitute a breach of contract as a matter
of law.
The trial court did not err by granting summary judgment in Jay Construction’s favor on
Union Pacific’s breach of contract claims.
Excess summary judgment relief
Union Pacific’s final complaint is that the trial court granted summary judgment on its
declaratory judgment claim even though that claim was not addressed in Jay Construction’s
summary judgment motion.
A motion for summary judgment must expressly present grounds on which judgment is
sought. TEX. R. CIV. P. 166a. Because of this requirement, it is generally reversible error to grant
a summary judgment on a claim not addressed in the summary judgment motion. G & H Towing,
347 S.W.3d at 297. But, as noted above, “the error is harmless when the omitted cause of action is
precluded as a matter of law by other grounds raised in the case.” Id. at 297-98. This court has
similarly held,
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when a summary judgment movant fails to amend its motion after an amended or
supplemental petition, we may affirm the summary judgment if (1) the amended or
supplemental petition essentially reiterates previously pleaded causes of action, (2)
a ground asserted in the motion for summary judgment conclusively negates a
common element of the newly and previously pleaded claims, or (3) the original
motion is broad enough to encompass the newly asserted claims.
Garcia v. Lloyds, 514 S.W.3d 257, 263 (Tex. App.—San Antonio 2016, pet. denied).
The declaration Union Pacific sought was that “Jay Construction has a contractual
obligation to indemnify Union Pacific pursuant to the Contract’s indemnity provision.” But
whether Jay Construction had a duty to indemnify is necessarily encompassed within, and
determined by, Jay Construction’s summary judgment grounds asserting application of the TAIA.
Any error in granting summary judgment on the declaratory judgment claim is harmless because
that claim is precluded as a matter of law by the court’s ruling on Jay Construction’s TAIA
grounds. See Magee, 347 S.W.3d at 297-98.
In addition, Union Pacific tacitly concedes that its declaratory judgment claim essentially
reiterates previously pleaded claims. Rather than attempting to distinguish the declaratory
judgment claim, it argues only that Jay Construction was not entitled to summary judgment on that
claim for the same reasons it was not entitled to summary judgment on Union Pacific’s other
claims. We may therefore affirm the summary judgment on the declaratory judgment claim despite
Jay Construction’s failure to amend its motion to expressly include that claim. See Garcia, 514
S.W.3d at 263.
Conclusion
Union Pacific’s claims against Jay Construction are founded on contractual provisions
requiring Jay Construction to defend and indemnify Union Pacific against claims arising from
Union Pacific’s own negligence. Those provisions are void under the TAIA. Union Pacific’s
claims therefore fail as a matter of law.
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The trial court’s summary judgment order is affirmed.
Irene Rios, Justice
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