American Coatings Association


Texas Supreme Court Rules Favorably in Case in which ACA Filed Amicus Brief


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On Jan. 8, the Texas Supreme Court issued a unanimous opinion in Occidental Chemical Corporation v. Jason Jenkins, reversing the judgment of the Houston Court Of Appeals. In its 9-0 opinion, the Texas Supreme Court concluded that Occidental breached no duty of care to Jenkins, and as a result, the court never reached the statute of repose issues in the case. ACA and the National Association of Manufacturers, American Petroleum Institute, National Shooting Sports Foundation, Inc., Precision Machined Products Association, Texas Association of Manufacturers, and the Vinyl Institute had submitted an amicus brief in the case, encouraging the Texas Supreme Court to review the appellate court decision because it breaks from clearly established Texas law and sets a dangerous precedent that weakens Texas’ robust manufacturing economy. ACA and its fellow amici maintained that manufacturers across Texas were facing unforeseeable and expensive liability created by this decision.

As way of background, a Texas court imposed forever liability on a previous owner of real property for improvements designed by licensed engineers and constructed by the plant owner, notwithstanding two statutes of repose that require that any claims be brought within 10 years following design or construction. This case presents the concern that prior owners of realty who make permanent improvements are retroactively held liable, but are powerless to maintain, update or remove the improvements or to train third parties on how to properly use them. In this case, Occidental Chemical Corporation constructed a new mechanical system for its chemical manufacturing plant to replace a manual process. The system was used safely for 14 years. Meanwhile, the plant was sold to a new owner. An employee of the new plant owner was injured while operating the machinery and won a jury verdict against the prior owner. However, the trial court applied the statutes of repose and ordered that the plaintiff “take nothing,” and awarded zero damages. The Texas Court of Appeals overturned the take-nothing verdict, imposed liability on the prior owner, and reinstated nearly $10 million in damages.

The Texas Supreme Court heeded ACA and fellow amici’s petition to grant review of this case in late June, and amici submitted a brief in July. Specifically, amici argued that the Court of Appeals decision upends settled premises liability law in Texas and causes Texas to be out of step with the national mainstream of tort law in this area. This decision imposes liability on former owners for disclosed conditions and carves out unintended exceptions to Texas’ statutes of repose. Because of the dramatic extension of liability, manufacturers faced with these unpredictable conditions will be incentivized to leave Texas for more predictable regimes in other states.

Moreover, ACA and its fellow amici contended that the Court of Appeals’ imposition of liability for an innovative improvement with a perfect 14-year safety record will have negative consequences for companies conducting business in Texas. Manufacturers in Texas may determine that the potential liability associated with allocating capital for improvements to Texas-based facilities is too great.

Finally, the amicus stated that the Court of Appeals interpretation of TEX. CIV. PRAC. & REM. CODE § 16.009, a statute of repose for construction, is also incorrect. Texas jurisprudence has uniformly held that a company that hires a third party contractor to construct an improvement on its real property is protected by section 16.009.2

Through its Amicus and Legal Tracking System program, each year ACA chooses select prominent cases in which it files an amicus, or “friend of the court,” brief as a show of support for issues that can adversely impact the industry. Specifically, the Amicus Program seeks to prevent court decisions that establish bad precedent, or to overturn such precedent where it currently exists, and to advance the legal protection of property due process and liberties that rightfully belong to good faith corporate interests and behavior. Since the program’s 2007 inception, ACA has filed some 50 amicus briefs.

ACA believes that the Texas’ highest court’s decision clarifies that perpetual liability for property owners cannot stand as a rule.

Contact ACA’s Tom Graves for more information.

 


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