Introduction

In a significant decision for Texas businesses that rely on layered contracting arrangements, the Texas Supreme Court has clarified that a settling defendant does not as a matter of law forfeit its contractual indemnity rights against a non-settling. In S&B Engineers & Constructors, Ltd. v. Scallon Controls, Inc., the Court reversed a court of appeals decision that had relied on decades‑old contribution cases to bar post‑settlement contractual indemnity claims. S&B Engineers & Constructors, Ltd. v. Scallon Controls, Inc., No. 24-0525, 2026 WL 705762 (Tex. Mar. 13, 2026).

The opinion provides important guidance on proportional indemnity provisions, the limits of the express‑negligence doctrine, and the risks and burdens facing parties who seek indemnification after settling underlying tort claims.

Factual Background

Sunoco hired S&B Engineers & Constructors, Ltd. (“S&B”) to design and install a safety system at a South Texas refinery. S&B subcontracted with Scallon Controls, Inc. (“Scallon”) to supply and program a fire‑suppression system. The parties’ purchase agreement contained an indemnity clause requiring Scallon to indemnify S&B and Sunoco for bodily injury claims “to the extent of [Scallon’s] negligence,” with indemnity expressly limited to Scallon’s “allocable share” in cases of comparative or concurrent negligence. S&B Engineers at *2.

In January 2015, a brief power loss triggered the system’s failsafe release of a chemical fire suppressant while workers were on scaffolding. Seven workers fell and were seriously injured. The workers sued S&B and Sunoco, who then asserted third‑party claims against Scallon, including contractual indemnity claims.

After years of litigation, S&B, Sunoco, and their insurers settled the workers’ claims in 2019 for several million dollars. The settlement agreement did not include Scallon, and there is no dispute that it fully resolved the workers’ claims. After settlement, S&B and Zurich (Sunoco’s insurer) pursued Scallon for proportional contractual indemnity based on Scallon’s alleged negligence.

The Lower Courts’ Rulings

The trial court granted summary judgment for Scallon, and the Beaumont Court of Appeals affirmed. The court of appeals reasoned that under Beech Aircraft Corp. v. Jinkins (Tex. 1987), a settling defendant cannot shift liability to a non‑settling party. It further concluded that the express‑negligence doctrine barred indemnity and that Zurich’s claims were time‑barred. 739 S.W.2d 19, 21–22 (Tex. 1987).

The Supreme Court’s Analysis

The Supreme Court rejected the premise that settlement automatically extinguishes contractual indemnity rights.

1. Jinkins Does Not Apply to Contractual Indemnity

The Court emphasized that Jinkins addressed only statutory and common‑law contribution claims—not contractual indemnity. Contribution involves imposing liability on a party with whom the settling defendant has no contractual relationship. Contractual indemnity, by contrast, reflects a voluntary and negotiated allocation of risk. The Court explained that nothing in Jinkins suggests parties are prohibited from agreeing in advance to proportional indemnification determined after a settlement. The Court also noted that Texas statutes governing comparative fault expressly preserve contractual indemnity rights and give them priority over statutory default rules.

2. Proportional Indemnity Is Permissible Under Ethyl

The court of appeals’ reliance on Ethyl Corp. v. Daniel Construction Co. was also misplaced. 725 S.W.2d 705. Ethyl does not bar proportional indemnity; it merely requires clear and express language before a party can be indemnified for its own negligence. Here, the contract did the opposite—it expressly limited indemnity to Scallon’s own negligence and disclaimed indemnity for S&B’s or Sunoco’s negligence. Under prior precedent, such a disclaimer makes the express‑negligence doctrine inapplicable.

The Court reaffirmed that parties “may contract for comparative indemnity” and that such provisions are common and enforceable in construction and industrial projects. See S&B Engineers at *4.

3. Settlement Does Not Eliminate—but Does Complicate—Indemnity Claims

While the Court allowed S&B and Zurich to pursue indemnification, it stressed that settlement carries real burdens. On remand, they must prove:

  • the settlement was reasonable and made in good faith; and
  • some portion of the liability is attributable to Scallon’s negligence.

Failure on either point will limit or defeat indemnity. The Court underscored that settling parties assume these risks and cannot rely on indemnity as a guaranteed backstop.

4. Zurich’s Claims Were Timely

Finally, the Court held that Zurich’s indemnity claims were not time‑barred. Indemnity claims accrue when liability becomes “fixed and certain,” which occurred at settlement—not at the time of the accident. Zurich intervened within four years of settlement, making its claims timely.

Key Holdings

  • Contractual proportional indemnity survives settlement unless the contract provides otherwise.
  • Jinkins does not bar contractual indemnity claims following settlement.
  • Proportional indemnity clauses that disclaim coverage for the indemnitee’s own negligence help avoid the express‑negligence doctrine.
  • Settling indemnitees bear the burden of proving settlement reasonableness and allocating fault to the indemnitor.
  • Indemnity claim limitations periods begin to run when liability becomes fixed by settlement or judgment.

Practical Implications for Texas Businesses and Practitioners

1. Contract Drafting Matters.
This case reinforces the value of carefully drafted proportional indemnity provisions that clearly allocate risk and expressly disclaim indemnity for the indemnitee’s own negligence.

2. Settlement Strategy Requires Planning.
Businesses may settle underlying claims without forfeiting indemnity rights but must be prepared to defend the reasonableness of the settlement and prove fault allocation afterward.

3. Indemnity Is Not Contribution.
Litigators should distinguish contractual indemnity claims from contribution theories early and clearly, particularly when responding to motions grounded in Jinkins.

4. Statute of Limitations Analysis Should Start at Settlement.
For indemnity claims, timing turns on when liability becomes fixed—not on when the underlying injury occurred.