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Eslon Thermoplastics v. Dynamic Systems, Inc.

A Mark 8, used in the production of semiconductor wafers, became equipment incorporated into the construction when it was installed and connected to the chilled lines in the walls of the new facility.

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After a water line broke causing $800,000 in damages to a semiconductor wafer processor and the new building in which it was installed, owner Tokyo Electron America, Inc. (Tokyo Electron) and its property insurer Tokio Marine & Fire Insurance Company (Tokio Marine) *fn1 sued Dynamic Systems, Inc., which installed the water line, and Eslon Thermoplastics (Eslon), which manufactured the pipe fitting that broke. Eslon, in turn, sued Dynamic Systems for indemnity and contribution. Dynamic Systems was granted summary judgment against Tokyo Electron and Eslon based on a waiver of subrogation clause in the contract between Tokyo Electron and the general contractor, which was incorporated into its contracts with subcontractors. Tokyo Electron and Tokio Marine appeal that judgment, arguing that the water line was installed pursuant to a separate contract between Tokyo Electron and Dynamic Systems, which had no waiver of subrogation clause. In the event this Court reverses the summary judgment against Tokio, Eslon urges that we reverse the summary judgment on its contribution claim. Because we hold that there is a genuine issue of material fact whether the work occurred under a separate contract, we reverse both summary judgments and remand to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Tokyo Electron manufactures, sells, and services semiconductor equipment. In April 1995, Taisei Construction Corporation agreed to be the design/builder of Tokyo Electron’s new corporate facility in Austin. *fn2 This facility included an on-site training lab to familiarize customers with the operation of Tokyo Electron’s Clean Track photoresist processing systems. Taisei hired subcontractors to provide labor and materials on various parts of the project. Dynamic Systems contracted to install the building’s plumbing infrastructure. Taisei later asked Dynamic Systems to submit a bid on bringing chilled water lines from the ceiling of the training facility down the wall to a piece of machinery called the Clean Track Mark 8 wafer processor (Mark 8), which is used in the production of semiconductor wafers. Dynamic Systems submitted a bid to Taisei in April 1996, and performed the Mark 8 hookup in July 1996.

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