The Tenth Court of Appeals (Waco), in Capstone Building Corp. v. IES Commercial, Inc., reversed the trial court’s summary judgment in favor of IES.

This case is a severed part of a broader dispute relating to a housing complex at Sam Houston State University.* Capstone was the general contractor, and IES was the mechanical/HVAC/electrical subcontractor. Capstone and IES entered into a settlement agreement after IES filed a petition for arbitration alleging a payment dispute. The settlement agreement included a payment amount, a warranty that the sub’s subs had been paid, and that IES would indemnify Capstone from claims brought by subs or suppliers. Capstone released claims relating to HVAC warranty claims.

Several years later, SHSU sued ACC alleging construction defects, including alleged HVAC defects, according to the opinion. IES filed for summary judgment on Capstone’s claims against it, and the trial court granted the motion for summary judgment.

The Court of Appeals rejected IES’ argument that the settlement agreement’s merger clause did not provide for indemnity of Capstone for the university’s claims. The Court of Appeals held that the summary judgment evidence did not hold, as a matter of law, that the subject matter of the writings (the settlement agreement and the subcontracts) was the same.

The opinion also examines the effect of recitals in a settlement agreement as background information or statements as to the subject matter of the settlement agreement.

*Note: The author of this blog is employed by SHSU, but is not counsel for the university nor did he participate in any part of the underlying litigation.

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