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Meritor Automotive3/29/2001
On Petitions for Review from the Court of Appeals for the Third District of Texas
Argued on October 3, 2000
Justice Hankinson did not participate.
The Texas Products Liability Act provides, among other things, that the manufacturer of an allegedly defective product must indemnify the seller for any loss arising out of a products liability action except when the seller independently causes the loss. Tex. Civ. Prac. & Rem. Code § 82.002(a). The Act defines "loss" broadly to include not only damages, but also the innocent seller's reasonable attorney's fees and other defense costs. Id. § 82.002(b). Here, we must decide whether the seller's reasonable cost to defend an unsuccessful negligence claim, asserted independently of the products liability claim, is properly included as part of the "loss arising out of a products liability action," so that it is within the manufacturer's indemnity duty. Id. § 82.002(a). Because we hold that it is, we affirm the judgment of the court of appeals. 6 S.W.3d 726.
I.
Truck driver Paul Hampton was injured while attempting to open the hood of his leased Freightliner. As the truck was designed, Hampton had to stand on the front bumper and pull a handle to open the hood. As he pulled the handle, it broke free, and Hampton fell. Hampton filed a products liability claim against Freightliner Corp., the truck manufacturer, and Meritor Automotive, Inc., the hood manufacturer [the "Manufacturers"]. He also joined the truck's owner, Ruan Leasing Company, which had leased the truck to Hampton's employer. The Manufacturers agreed to defend their product, and Ruan tendered its defense to them. Months later, Hampton amended his petition to add an allegation that Ruan was independently negligent in failing to maintain the hood. This allegation created a conflict of interest between Ruan and the Manufacturers, causing Ruan to hire its own attorney to defend against the negligence claim. Ruan then filed a cross-claim against the Manufacturers, seeking indemnification for all damages and expenses.
On the eve of trial, Hampton settled with both manufacturers, and the trial court signed an agreed judgment dismissing Hampton's claims against Freightliner and Meritor. The trial court severed that judgment from this cause. After Hampton nonsuited his claims against Ruan, only Ruan's indemnity claim against the Manufacturers remained in controversy. Both sides moved for summary judgment on this claim. The Manufacturers urged that the Act did not obligate them to pay for Ruan's negligence defense because the negligence claim was not a part of the products liability action. Ruan responded that the negligence claim against it was and remained a part of the products liability action because the negligence claim was never established to be a cause of the plaintiff's injury. Ruan further asserted that it was entitled to summary judgment because the evidence conclusively established that it was not negligent and that its defense costs were reasonable. While the Manufacturers did not contend otherwise, they argued that the Act was not intended to indemnify the seller for its costs in defeating a claim that it was independently negligent. The trial court denied the Manufacturers' motion and granted Ruan's. The summary judgment reimbursed Ruan for attorney's fees and expenses in defending itself against Hampton and in enforcing its indemnity rights against the Manufacturers. The court of appeals affirmed. We granted the Manufacturers' petitions for review to consider the scope of the Manufacturers' statutory indemnity obligation.
II.
The Texas Products Liability Act describes the manufacturer's indemnity dut
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