The Texas Supreme Court ruled that a contractor and its insurer can pursue recovery from a subcontractor following a multimillion-dollar workplace injury settlement.
In a 5-4 decision in S&B Engineers & Constructors Ltd. and Zurich American Insurance Co. v. Scallon Controls, the court determined that S&B Engineers & Constructors and Zurich American Insurance Co. may attempt to recover a portion of a $6.75mn settlement linked to a refinery accident.
The case originates from a 2015 incident at a Sunoco refinery in South Texas. A short power outage triggered a fire-suppression system installed by Scallon Controls, which released chemical suppressant across the work area.
Seven workers standing on scaffolding fled the unexpected discharge and suffered injuries after falling during the evacuation.
The injured workers filed lawsuits against S&B and Sunoco. Both companies later settled the claims for $6.75 mn. S&B contributed $2.35 mn to the settlement, while insurers for S&B and Sunoco covered the remaining portion.
After the settlement, S&B and Zurich sought reimbursement from Scallon Controls, arguing that the subcontractor’s programming of the suppression system contributed to the accident.
A Texas appeals court previously ruled the contractor could not pursue the subcontractor because the settlement occurred without Scallon’s participation.
The state’s highest court reversed that ruling. Justices concluded that contractual agreements between the parties allow liability to be divided according to each party’s share of responsibility.
The majority opinion emphasized that contractual freedom allows businesses to allocate risk through agreements governing construction projects and subcontractor relationships.
The court returned the case to a trial court, which will determine whether any portion of the settlement should be assigned to Scallon Controls based on fault.
Jane Bland issued a dissent joined by three other justices. She argued the settlement resolved claims only against S&B and Sunoco and should not allow the contractor to transfer responsibility afterward.
Bland wrote that the settlement payments addressed negligence attributed to S&B rather than the subcontractor.
