On Aug. 20, the Texas Supreme Court effectively issued free liability insurance to contractors sued in products liability cases when it decided Fresh Coat v. K-2. Its characterization of contractors as “sellers” for purposes of indemnity will make indemnity suits commonplace in cases where plaintiffs sue both manufacturers and contractors alleging construction defects.
Fresh Coat is a products liability suit about an allegedly defective synthetic stucco-cladding system manufactured by K-2. The opinion sets out the following: Fresh Coat installed stucco-cladding systems on numerous homes. But purported design flaws in the stucco-cladding system allowed moisture to penetrate the exterior walls of the homes, leading to structural damage, termite problems and mold. More than 90 homeowners sued K-2, Fresh Coat and Life Forms, the homebuilder, claiming that the stucco-cladding system caused property damage and personal injuries.
