Powell v. Charles Offutt Co.

• Citation: 576 F. Supp. 272
• Decision Date: 23 November 1983
• Docket Number: No. TY-80-132-CA.,TY-80-132-CA.
• Parties: Kenneth POWELL, Individually and as Personal Representative of the Estate of Norma Jean Powell and as next friend for Donna Powell v. CHARLES OFFUTT COMPANY, et al. v. The BUDD COMPANY, et al.
• Court: U.S. District Court — Eastern District of Texas

576 F. Supp. 272

Kenneth POWELL, Individually and as Personal Representative of the Estate of Norma Jean Powell and as next friend for Donna Powell v. CHARLES OFFUTT COMPANY, et al. v. The BUDD COMPANY, et al.

No. TY-80-132-CA.

United States District Court, E.D. Texas, Tyler Division.

November 23, 1983.

James E. Brown, Briggs, Brown & Berkley, Dallas, Tex., for plaintiffs.

H. Kelly Ireland, Potter, Guinn, Minton, Roberts & Ireland, Tyler, Tex., for defendant.

James Edward Maloney, Baker & Botts, Houston, Tex., for Firestone Tire and Rubber Co.

Thomas G. Nash, Jr., Dallas, Tex., for Freightliner Corp.

MEMORANDUM OPINION AND ORDER

STEGER, District Judge.

This lawsuit arises out of an accident that occurred on October 23, 1978 in which Kenneth Powell, Plaintiff, was injured and his spouse, Norma Jean Powell, was killed. Plaintiff alleges that the accident occurred when the tire and wheel-rim assembly on the tractor-trailer rig in which he and his spouse were riding came apart, ultimately causing him to lose control of his vehicle and crash. The original action, filed October 30, 1980, was brought against Charles Offutt Company (Offutt) who had sold and mounted the tire and tube.

On September 16, 1982, Offutt filed its Second Third-Party Complaint seeking contribution and/or indemnity from five third-party defendants,¹ including Firestone Tire & Rubber Company (Firestone) and Freightliner Corporation (Freightliner), all of which were involved in the design, manufacture or sale of truck tires and/or wheelrim assemblies. Subsequently, on October 8, 1982, Plaintiff filed its Second Amended Original Complaint naming as additional defendants the five companies named in Offutt's third-party action.

On June 13, 1983, Firestone was granted summary judgment as to all claims by Plaintiffs. Thereafter, on June 20, 1983, summary judgment was granted in favor of Freightliner as to Plaintiff. Firestone and Freightliner have brought these motions for summary judgment contending that all claims for indemnity and/or contribution asserted by Offutt are completely derivative in nature and exist only so far as Plaintiffs' claims against them exist. Thus, it is asserted that such claims by Offutt are barred as a result of the summary judgments entered against Plaintiffs in favor of Firestone and Freightliner.

The parties appear to be in agreement that, under Texas law, the rights of indemnity and contribution are not independent causes of action, but exist only as derivatives of the primary plaintiff's cause of action. Varela v. American Petrofina Company of Texas, Inc., 658 S.W.2d 561 (Tex.1983); Grove Manufacturing Co. v. Cardinal Construction Co., 534 S.W.2d 153, 156 (Tex.Civ.App. — Houston 14th Dist. 1976, writ ref'd n.r.e.); City of Houston v. Watson, 376 S.W.2d 23, 33 (Tex.Civ. App. — Houston 1964, writ ref'd n.r.e.). See also West Texas Utilities Co. v. Renner, 53 S.W.2d 451 (Tex.Com.App.1932, holding approved). By reason of the derivative nature of such claims, the Texas courts have consistently held that neither contribution nor indemnity are recoverable from a third party against whom the injured party has no cause of action. Varela, supra at 562; Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 553 (Tex.1981); Nacogdoches County v. Fore, 655 S.W.2d 347, 350 (Tex. App. — Tyuler 1983); American Medicorp, Inc. v. Lord, 578 S.W.2d 837, 839 (Tex.Civ. App. — Beaumont 1979, no writ); Safway Scaffold Co. v. Safway Steel Products, 570 S.W.2d 225, 228-29 (Tex.Civ.App. — Houston 1st Dist. 1978, writ ref'd n.r.e.); Watson, supra at 33. Furthermore, numerous courts have recognized that this rule is especially applicable in cases where the protected co-tortfeasor's or third-party defendant's liability has already been extinguished by a judgment in his favor. Schuchart & Associates, Etc. v. Solo Serve Corp., 540 F.Supp. 928, 949-50 (W.D.Tex. 1982); Nacogdoches County, supra; American Medicorp, supra at 840.

One of the policy reasons beyond the rule prohibiting the recovery of contribution or indemnity is to prevent a party from doing indirectly what the legislature or the courts have said he cannot do directly. See Grove Manufacturing, supra at 156. Where an injured party, for some reason, would have no right of recovery from a co-tortfeasor or third-party defendant, it has been consistently held that the third-party plaintiff or other co-tortfeasor is not entitled to recover contribution or indemnity for any damages he may ultimately have to pay. See Varela, supra; Hunter, supra. This issue has arisen in cases involving an employer who is protected through the Worker's Compensation Act from liability to an injured employee, Varela, supra, at 562, or where the State or other governmental subdivision is protected by sovereign immunity, City of Houston v. Selph, 356 S.W.2d 850 (Tex.Civ.App. — Houston Dist.1961, no writ), or, as in this cause, where the running of the statute of limitations has precluded recovery by the injured party from the co-tortfeasor or third-party defendant, Hunter, supra. To allow recovery in such an instance would be to allow the injured plaintiff to circumvent the particular statutory or constitutional bar that precludes a direct right of action.

It is Offutt's contention, however, that although the general rule as set out by such cases as Varela and Hunter may be correct, the facts of the case at bar fall within an exception to the general rule. Offutt argues that when the statute of limitations on an injured party's claim expires, such does not destroy the cause of action, but merely bars the right to enforce the remedy. Thus, Offutt asserts that when the only reason an injured party cannot recover from a co-tortfeasor or third-party defendant is because the statute of limitations has expired, a co-tortfeasor or third-party plaintiff should be allowed to recover contribution or indemnity.

Therefore, it becomes apparent that the viability of the claims of Offutt for contribution or indemnity is dependent upon whether, under Texas law, there is an exception to the general rule that would allow recovery of contribution or indemnity when the co-tortfeasor or third-party defendant is protected from liability to the injured party by reason of a statute of limitations.

In support of its proposition that contribution and indemnity should still be allowed when the Plaintiffs' cause of action against the third-party defendant is barred by limitations, Offutt relies on Missouri Pacific Railroad Co. v. Southern Pacific Co., 430 S.W.2d 900 (Tex.Civ.App. — Houston 14th Dist. 1968, writ ref'd n.r.e.) and the cases cited therein. Offutt contends that the court in Missouri Pacific recognizes the limitations exception that it now requests this Court to follow.

In Missouri Pacific, the plaintiff, Southern Pacific, brought an action against Missouri Pacific to recover indemnity or contribution for amounts it had paid in settlement to an injured employee of Southern Pacific. The employee had been injured in September 1959 while switching a car owned by Missouri Pacific. On March 27, 1962, a settlement was entered into between the injured employee and Southern Pacific. Although the employee's cause of action against Southern Pacific was subject to the three-year statute of limitations under the Federal Employer's Liability Act,² the common-law negligence claims against Missouri Pacific were governed by the two-year statute of limitations³. Missouri Pacific, supra at 904. Thus, at the time of settlement, the cause of action of the injured employee against Missouri Pacific was barred by limitations.

In an action by Southern Pacific to recover the amounts it had paid in the settlement, Missouri Pacific asserted that it could not be liable indirectly, by indemnity, when the injured party, because of limitations, no longer had any right to recovery against them. The court recognized that in cases involving multiple tortfeasors, there may be situations where one of the co-tortfeasors is protected by law from liability to the injured party. Id. As mentioned above, these include the situation where one of the tortfeasors is an employer who is immune from liability because of the worker's compensation statutes and where sovereign immunity protects a city or other governmental body who is sued as a co-tortfeasor or third-party defendant. However, the court then attempted, on some questionable authority, to draw a distinction between these situations and those where the co-tortfeasor or third-party defendant is immune from liability by reason of the running of limitations.

The court sought to justify this distinction by stating that the running of the statute of limitations did not destroy the pre-existing liability, it merely deprived the injured party of the right to enforce his claim. Thus, the existence of this "cause of action," though barred, could still provide the basis for a claim of indemnity by the unprotected co-tortfeasor.

In holding that Southern Pacific was entitled to full indemnity, the court apparently based its decision on two cases, City of San Antonio v. Talerico, 98 Tex. 151, 81 S.W. 518 (1904) and Chicago, Rock Island & Pacific Ry. Co. v. United States, 220 F.2d 939 (7th Cir.1955), whose facts it felt were closely analogous. The court seemed to indicate that these two cases supported the exception that the running of limitations on the plaintiff's claims does not affect the recovery of indemnity by a co-tortfeasor or third-party defendant. Id. at 905. Upon examining those decisions, it seems to this Court that the Missouri Pacific court's reliance is misplaced.

In those cases, the courts were not dealing with the effect the running of limitations on the plaintiff's claim had on the rights to indemnity or contribution. The right to recover indemnity had already been established. Chicago, Rock Island & Pacific, supra at 941-42; Talerico, supra 81 S.W. at 519. Instead, the issue with which those...