In Friday's 5-4 decision in S&B Engineers & Constructors, Ltd. v. Scallon Controls, Inc., the Supreme Court of Texas addressed an important contractual question that matters well beyond the case at issue: What happens when parties contract for comparative indemnity, one side settles, and the other side never joins that settlement? The majority opinion held that a settling party may still pursue contractual proportional indemnity after settlement if the contract clearly allows it. Meanwhile, the dissenting opinion would have held the opposite, warning that the Court’s approach untethers settlement from longstanding precedent and ordinary proportionate-responsibility principles.

 

The majority (authored by Justice Young and joined by Chief Justice Blacklock and Justices Busby, Sullivan, and Hawkins) draws a sharp distinction between contribution and contractual indemnity. In the Court’s view, Beech Aircraft v. Jinkins—which barred certain contribution claims by settling defendants—doesn't control where the parties have already agreed by contract to allocate risk. And the majority saw no express-negligence problem because the contract didn't require indemnity for the indemnitee’s own negligence. Instead, it limited recovery to the indemnitor’s “allocable share” of comparative, concurrent, or contributing negligence, fault, or strict liability. On that reading, the settling parties could succeed on remand if they could prove (1) that the settlement was made in good faith and for a reasonable amount, and (2) the proper portion of the liability attributable to the indemnitor’s conduct.

 

The dissent (authored by Justice Bland and joined by Justices Lehrmann, Devine, and Huddle) reads the contract—and Texas precedent—very differently. In its view, a party settles only its own liability, not someone else’s. So unless the contract expressly authorizes “the right to settle one's own negligence and pursue the indemnitor for that amount," the express-negligence doctrine bars recovery for proportionate indemnity. The dissent also raises a practical warning: Once the underlying plaintiff is gone, the remaining litigation can become distorted. The settling party has every incentive to maximize the perceived value of the settlement and minimize its own responsibility, all while trying to pin fault on the non-settling party—all inviting messy “case within a case” litigation.