Texas High Court Allows Equitable Subrogation in Indemnity Case

AUSTIN, Texas - The Texas Supreme Court has held that a building subcontractor who indemnifies the building's owner for damage allegedly caused by faulty materials is entitled to seek recovery from a third-party under the doctrine of equitable subrogation. Frymire Engineering Co. v. Jomar International Ltd., et al., No. 06-0755 (Texas Sup. Ct.).

The high court held June 13 that the subcontractor has standing to sue because its payments were "involuntary," even though they were made pursuant to an indemnification clause in a building contract.

Frymire Engineering Co. and its insurer, Liberty Mutual Insurance Co., want to recover $458,496 …