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INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
Cite as 997 S.W.2d 203 (Tex. 1999)

INGERSOLL–RAND COMPANY,
et al., Petitioners,
v.
VALERO ENERGY CORPORATION,
et al., Respondents.
No. 97–1168.
Supreme Court of Texas.
Argued Oct. 21, 1998.
Decided June 24, 1999.
Opinion On Rehearing Aug. 26, 1999.
Rehearing Overruled Sept. 23, 1999.
Refinery owner sued contractor and
subcontractor for damages arising out of
construction project. The 117th District
Court, Nueces County, Robert M. Blackmon, J., granted defendants motions’ for
summary judgment asserting that indemnity provision barred owner’s claim. Owner
appealed. The Corpus Christi Court of Appeals, 866 S.W.2d 252, affirmed. Defendants sought attorney fees and costs incurred in defending against owner’s
claims. The District Court granted summary judgment for owner, and defendants
appealed. The Court of Appeals, affirmed.
Petition for review was filed. The Supreme
Court, Enoch, J., held that: (1) indemnity
claims for attorney fees against owner
were not compulsory counterclaims at time
of initial action; (2) res judicata doctrine
did not bar indemnity claims for attorney
fees against owner after entry of take
nothing judgment against owner; (3) subcontractor’s claim for attorney fees under
indemnity clause did not accrue until date
on which trial court signed take nothing
judgment; (4) contractor’s indemnity claim
for attorney fees accrued, despite any anticipatory breach, when contractor made demand for indemnity and owner refused to
perform; and, on rehearing, (5) refinery
owner’s amended petition asserting breach
of contract claim in order to attack validity
of indemnity agreement was barred by
doctrine of res judicata.

Tex.

203

Judgment of the Court of Appeal reversed and case remanded.
1. Judgment O540, 713(2)
Res judicata prevents parties and
their privies from relitigating a cause of
action that has been finally adjudicated by
a competent tribunal, as well as claims or
defenses that, through diligence, should
have been litigated in the prior suit but
were not.
2. Judgment O591.1
Res judicata doctrine is intended to
prevent causes of action from being split,
thus curbing vexatious litigation and promoting judicial economy.
3. Judgment O585(4)
Res judicata does not bar a former
defendant who asserted no affirmative
claim for relief in an earlier action from
stating a claim in a later action that could
have been filed as a cross-claim or counterclaim in the earlier action, unless the claim
was compulsory in the earlier action.
4. Set-Off and Counterclaim O60
Counterclaim is compulsory only if:
(1) it is within the jurisdiction of the court;
(2) it is not at the time of filing the answer
the subject of a pending action; (3) the
claim is mature and owned by the defendant at the time of filing the answer; (4) it
arose out of the same transaction or occurrence that is the subject matter of the
opposing party’s claim; (5) it is against an
opposing party in the same capacity; and
(6) it does not require the presence of
third parties over whom the court cannot
acquire jurisdiction. Vernon’s Ann.Texas
Rules Civ.Proc., Rule 97(a, d).
5. Set-Off and Counterclaim O60
Claim is mature, for purposes of determining whether it is compulsory counterclaim, when it has accrued.
6. Indemnity O11
Broad language that holds an indemnitee ‘‘harmless’’ against ‘‘all claims’’ and

204

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997 SOUTH WESTERN REPORTER, 2d SERIES

‘‘liabilities’’ evidences an agreement to indemnify against liability and thus entitles
the indemnitee to recover when the liability becomes fixed and certain, as by rendition of a judgment, whether or not the
indemnitee has yet suffered actual damages, as by payment of a judgment.
7. Set-Off and Counterclaim O60
Subcontractor’s liabilities from refinery owner’s suit against subcontractor did
not become fixed and certain until date of
judgment that owner take nothing, and
thus, subcontractor’s claim against owner
for attorney fees under indemnification
clause was not mature until that date and
did not have to be asserted as compulsory
counterclaim at time of initial suit. Vernon’s Ann.Texas Rules Civ.Proc., Rule
97(a, d).
8. Judgment O585(4)
Doctrine of res judicata did not preclude subcontractor from pursuing indemnity claim for attorney fees against refinery owner after entry of judgment in
owner’s initial action against subcontractor, in light of fact that subcontractor was
only a defendant in initial action and
made no affirmative claims, and its claim
against owner for attorney fees under indemnity clause was thus permissive rather than compulsory in relation to owner’s
initial action.
9. Limitation of Actions O56(2)
Indemnity claim does not accrue until
all of the potential liabilities of the indemnitee become fixed and certain by judgment, and recovery for attorney fees component of potential liabilities need not be
pursued before and separate from remaining components.

against subcontractor. V.T.C.A., Civil
Practice & Remedies Code § 16.004(a)(3).
11. Limitation of Actions O46(6)
Limitations may begin to run upon a
promisor’s anticipatory repudiation, but
only if the repudiation is adopted by the
nonrepudiating party.
12. Contracts O313(1)
Effect of an anticipatory repudiation
is to give the nonrepudiating party the
option of treating the repudiation as a
breach or ignoring the repudiation and
awaiting the agreed upon time of performance.
13. Limitation of Actions O66(6)
Contractor’s indemnity claim against
refinery owner for attorney fees accrued
and statute of limitations began to run
when contractor made demand for indemnity and owner refused to perform, even
assuming owner’s initial petition against
contractor acted as unequivocal anticipatory repudiation, given that contractor was
entitled to ignore any anticipatory repudiation, await time of performance, and sue
after actual breach of indemnity clause
when owner refused to pay.
On Rehearing.
14. Judgment O593
Refinery owner’s amended petition asserting breach of contract claim to attack
validity of indemnity agreement was
barred by doctrine of res judicata, where
amended petition was attempt to recast
owner’s prior tort challenge to indemnity
agreement, upon which adverse judgment
already had been rendered, as contract
claim. Restatement (Second) of Judgments
§§ 24, 25(1).

10. Limitation of Actions O56(2)
Subcontractor’s claim for attorney
fees against refinery owner under indemnity clause did not accrue for purposes of
statute of limitations until date on which
trial court signed summary judgment that
refinery owner take nothing in its action

John B. Shely, Houston, Audrey Mullert
Vicknair, Roberta Shellum Dohse, Corpus
Christi, Dimitri Zgourides, Kendall M.
Gray, Joseph A. Katarincic, Houston, Paul
W. Nye, Harvey Ferguson, Jr., Corpus
Christi, for Petitioners.

INGERSOLL–RAND CO. v. VALERO ENERGY CORP.

Tex.

Cite as 997 S.W.2d 203 (Tex. 1999)

Thomas H. Watkins, C.A. Davis, Austin,
Gilberto Hinojosa, Brownsville, James K.
McClendon, Elizabeth G. Bloch, Austin, for
Respondents.
Justice ENOCH delivered the opinion
for a unanimous Court.
Valero 1 sued Kellogg 2 and Ingersoll–
Rand 3 for damages caused by malfunctioning equipment. Kellogg and Ingersoll–
Rand installed the equipment during an
expansion of Valero’s oil refinery. Kellogg
was the general contractor on the expansion, and Ingersoll–Rand was one of Kellogg’s subcontractors. Both Kellogg and
Ingersoll–Rand defended by asserting that
certain indemnification and hold-harmless
provisions in the Valero–Kellogg contract
applied. The trial court concluded that
the contract’s indemnification provisions
were enforceable and granted interlocutory summary judgment for Kellogg and
Ingersoll–Rand. The court then severed
that part of the case, so that Valero could
appeal the summary judgment. The court
of appeals affirmed, and that judgment is
now final.4
During that appeal, the trial court abated the remaining claims. After the abatement was lifted, Kellogg and Ingersoll–
Rand moved for summary judgment, seeking attorney’s fees under the indemnity
provisions upheld in Valero I. Valero filed
its own motion for summary judgment,
asserting that Kellogg’s and Ingersoll–
Rand’s claims for attorney’s fees were
compulsory counterclaims barred by res
judicata and by the statute of limitations.
1.

2.

Valero Energy Corp. appears individually
and as parent corporation of Valero Refining
& Marketing Co. Valero Refining & Marketing Co. (formerly known as Saber Energy,
Inc.) appears individually and as parent corporation of Valero Refining Co. Valero Refining Co. (formerly known as Saber Refining
Co.) appears individually. We refer to these
respondents as ‘‘Valero.’’
We refer to petitioners, M.W. Kellogg Co.,
M.W. Constructors, Inc., M.W. Kellogg Constructors, Inc., Kellogg Rust Synfuels, Inc.,

205

The trial court granted Valero summary
judgment. The court of appeals affirmed.5
The pivotal question in this case is when
does an indemnitee’s contractual claim for
indemnification mature for purposes of the
compulsory counterclaim rule. We adhere
to the longstanding rule that a claim based
on a contract that provides indemnification
from liability does not accrue until the
indemnitee’s liability becomes fixed and
certain. Applying this rule, we conclude
that Kellogg’s and Ingersoll–Rand’s indemnity claims did not accrue until the
trial court’s rendition of summary judgment in Valero I. Accordingly, neither res
judicata nor limitations bar Kellogg’s and
Ingersoll–Rand’s claims. We reverse the
court of appeals’ judgment and remand to
the trial court for further proceedings.
Valero I
Valero sued Kellogg in 1986 over mechanical malfunctions allegedly resulting
from Kellogg’s flawed installation of refinery equipment. Valero pleaded fraudulent
misrepresentation, breach of contract, violations of the Texas Deceptive Trade Practices Act,6 breach of implied and express
warranties, products liability, negligence,
gross negligence, and intentional misconduct. Valero added Ingersoll–Rand as a
defendant in 1989, after a piece of equipment supplied by Ingersoll–Rand exploded. The suit eventually came to include a
host of cross-claims, counterclaims, and
third-party claims not at issue here.
Kellogg and Ingersoll–Rand answered
Valero’s petition, asserting that the contract’s indemnity provision barred Valero’s
and Henley/MWK Holdings, Inc., as ‘‘Kellogg.’’
3.

We refer to petitioners, Ingersoll–Rand Co.,
and Dresser–Rand Co., as ‘‘Ingersoll–Rand.’’

4.

See Valero Energy Corp. v. Kellogg Constr.
Co., 866 S.W.2d 252 (Tex.App.—Corpus
Christi 1993, writ denied) (‘‘Valero I ’’).

5.

See 953 S.W.2d 861 (‘‘Valero II ’’).

6.

See TEX. BUS.

&

COM.CODE § 17.46.

206

Tex.

997 SOUTH WESTERN REPORTER, 2d SERIES

claims. Both relied on the following contract provision:
6.8 OWNER [Valero] shall release, defend, indemnify and hold harmless
CONTRACTOR [Kellogg], its subcontractors [Ingersoll–Rand] and affiliates
and their employees performing services
under this Agreement against all claims,
liabilities, loss or expense, including legal fees and court costs in connection
therewith, arising out of or in connection
with this Agreement or the Work to be
performed hereunder, including losses
attributable to CONTRACTOR’S negligence, to the extent CONTRACTOR is
not compensated by insurance carried
under this ARTICLETTTT
Valero replied that the contract’s indemnity provision was unenforceable as against
public policy. On this issue, each side filed
competing motions for summary judgment.
The trial court granted Kellogg’s and
Ingersoll–Rand’s motions for summary
judgment, denied Valero’s motion, and rendered judgment that Valero take nothing
on its claims against Kellogg and Ingersoll–Rand. That matter was severed, and
the remaining issues were abated pending
appeal. Valero appealed, and the court of
appeals affirmed the trial court’s judgment
on June 30, 1993.7 This Court denied Valero’s application for writ of error on April
20, 1994, and overruled its motion for rehearing of the application on June 2, 1994.
That judgment is final.

soll–Rand initiated its own counterclaim
against Valero for attorney’s fees and
costs. This claim was raised more than
five years after Valero added Ingersoll–
Rand as a defendant.

Valero II

The court of appeals held that Ingersoll–
Rand’s claim for attorney’s fees was a
compulsory counterclaim that Ingersoll–
Rand should have brought in Valero I;
and, therefore, res judicata barred the
claim in Valero II. We disagree.

One of the remaining abated claims was
Kellogg’s counterclaim for attorney’s fees
and costs incurred in defending against
Valero. Kellogg filed the counterclaim between the time summary judgment was
entered and the time the severance order
was entered, but more than five years
after Valero first sued Kellogg. After the
trial court dissolved the abatement, Inger7.

See Valero I, 866 S.W.2d 252.

8.

See TEX. CIV. PRAC.

9.

953 S.W.2d at 866, 868.

&

REM.CODE

§

16.004(a)(3).

Kellogg and Ingersoll–Rand filed a joint
motion for summary judgment asserting
that the contract’s indemnity provision,
held enforceable in Valero I, entitled each
to attorney’s fees, court costs, and litigation expenses incurred in Valero I. Valero
responded with a motion for summary
judgment, asserting two affirmative defenses: (1) Kellogg and Ingersoll–Rand’s
counterclaims were compulsory, had not
been asserted in Valero I, and were therefore precluded by res judicata; and (2) the
four-year statute of limitations for breach
of contract barred the claims.8
Without specifying grounds, the trial
court granted Valero’s motion for summary judgment, and denied Kellogg and
Ingersoll–Rand’s motion. The court of appeals affirmed, holding that Ingersoll–
Rand’s counterclaim was compulsory and
barred by res judicata, and Kellogg’s
claim was barred by limitations.9 Kellogg
and Ingersoll–Rand each petitioned for review.
Because resolution of the issues we consider in Ingersoll–Rand’s appeal disposes
of issues presented by Kellogg’s appeal, we
consider Ingersoll–Rand’s appeal first.
Ingersoll–Rand’s Appeal

[1–3] Res judicata prevents parties
and their privies from relitigating a cause
of action that has been finally adjudicated
by a competent tribunal.10 Also precluded
10. See Getty Oil Co. v. Insurance Co. of N.
Am., 845 S.W.2d 794, 798 (Tex.1992) (citing
Barr v. Resolution Trust Corp., 837 S.W.2d
627, 630 (Tex.1992)), cert denied, 510 U.S.

INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
Cite as 997 S.W.2d 203 (Tex. 1999)

are claims or defenses that, through diligence, should have been litigated in the
prior suit but were not.11 The doctrine is
intended to prevent causes of action from
being split, thus curbing vexatious litigation and promoting judicial economy.12
Res judicata, however, does not bar a
former defendant who asserted no affirmative claim for relief in an earlier action
from stating a claim in a later action that
could have been filed as a cross-claim or
counterclaim in the earlier action, unless
the claim was compulsory in the earlier
action.13 Here, the court of appeals concluded that Ingersoll–Rand’s claim was
compulsory.
[4] But a counterclaim is compulsory
only if: (1) it is within the jurisdiction of
the court; (2) it is not at the time of filing
the answer the subject of a pending action;
(3) the claim is mature and owned by the
defendant at the time of filing the answer;
(4) it arose out of the same transaction or
occurrence that is the subject matter of
the opposing party’s claim; (5) it is against
an opposing party in the same capacity;
and (6) it does not require the presence of
third parties over whom the court cannot
acquire jurisdiction.14 A claim having all
of these elements must be asserted in the
820, 114 S.Ct. 76, 126 L.Ed.2d 45 (1993);
Gracia v. RC Cola–7–Up Bottling Co., 667
S.W.2d 517, 519 (Tex.1984); Texas Water
Rights Comm’n v. Crow Iron Works, 582
S.W.2d 768, 771–72 (Tex.1979).
11.

See Barr, 837 S.W.2d at 629.

12. See id.; Jeanes v. Henderson, 688 S.W.2d
100, 103 (Tex.1985).
13. See TEX.R. CIV. P. 97(a); Valley Forge Ins.
Co. v. Ryan, 824 S.W.2d 236, 238–39 (Tex.
App.—Fort Worth 1992, no writ); Lesbrookton, Inc. v. Jackson, 796 S.W.2d 276, 281
(Tex.App.—Amarillo 1990, writ denied);
Swiss Ave. Bank v. Slivka, 724 S.W.2d 394,
396 (Tex.App.—Dallas 1986, no writ).
14. See TEX.R. CIV. P. 97(a) & (d); Wyatt v.
Shaw Plumbing Co., 760 S.W.2d 245, 247
(Tex.1988); see also Denbina v. City of Hurst,
516 S.W.2d 460, 463 (Tex.Civ.App.—Tyler
1974, no writ) (‘‘Under Sections (a) and (d) of
[Rule 97] a party is not required to file a

Tex.

207

initial action and cannot be asserted in
later actions.15
To meet its summary judgment burden
on the affirmative defense that Ingersoll–
Rand’s claim was compulsory and barred
by res judicata, Valero had to prove that
Ingersoll–Rand’s counterclaim satisfied
each element above. Ingersoll–Rand asserts that its indemnity claim for attorney’s fees was not compulsory because the
claim could not have become mature before the trial court’s rendition of summary
judgment in Valero I.
[5, 6] A claim is mature when it has
accrued.16 To determine the correct accrual date of an indemnity claim we look to
the contract’s indemnity provision. There
are two types of indemnity agreements,
those that indemnify against liabilities and
those that indemnify against damages.17
Broad language, like that in this contract,
that holds the indemnitee ‘‘harmless’’
against ‘‘all claims’’ and ‘‘liabilities’’ evidences an agreement to indemnify against
liability.18 Such provisions entitle the indemnitee to recover when the liability becomes fixed and certain, as by rendition of
a judgment, whether or not the indemnitee
has yet suffered actual damages, as by
payment of a judgment.19
counterclaim unless the claim is mature at
the time the answer is due.’’) (citing McDonald, Texas Civil Practice, § 7.49, p. 285
(1970)).
15.

See Wyatt, 760 S.W.2d at 247.

16. See, e.g., Ryan, 824 S.W.2d at 239; Stille v.
Colborn, 740 S.W.2d 42, 44 (Tex.App.—San
Antonio 1987, writ denied); Gray v. Kirkland,
550 S.W.2d 410, 411 (Tex.Civ.App.—Corpus
Christi 1977, writ ref’d n.r.e.).
17. See Tubb v. Bartlett, 862 S.W.2d 740, 750
(Tex.App.—El Paso 1993, writ denied); Russell v. Lemons, 205 S.W.2d 629, 631 (Tex.Civ.
App.—Amarillo 1947, writ ref’d n.r.e.).
18. See, e.g., Tubb, 862 S.W.2d at 750; Bernard
v. L.S.S. Corp., 532 S.W.2d 409, 410 (Tex.Civ.
App.—Austin 1976, writ ref’d n.r.e.).
19. See Tubb, 862 S.W.2d at 750; Russell, 205
S.W.2d at 631.

208

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997 SOUTH WESTERN REPORTER, 2d SERIES

Valero’s suit presented the rather anomalous situation of an indemnitor (Valero)
acting concurrently as the plaintiff seeking
damages from the indemnitee (Ingersoll–
Rand). The more common scenario for an
indemnification dispute involves three separate and distinct parties: plaintiff (party
one), indemnitee (party two), and indemnitor (party three). Despite the unusual
factual setting here, we find no persuasive
reason not to apply the longstanding rule
that a claim under a liability indemnification clause does not accrue, and thus is not
mature, until the indemnitee’s liability to
the party seeking damages becomes fixed
and certain.20
[7] When Ingersoll–Rand was added
as a defendant in Valero I, it was entirely
conceivable that Ingersoll–Rand might
sustain extensive liabilities because of Valero’s claims for damages. And Ingersoll–
Rand, presumably, would have sought indemnification for all such liabilities under
the contract’s indemnity provision. Any
claim Ingersoll–Rand could have asserted,
however, could not have accrued until all of
Ingersoll–Rand’s potential liabilities to Valero became fixed and certain by rendition
of a judgment.
In Valero I, the trial court rendered
summary judgment for Ingersoll–Rand
that Valero take nothing on its claims for
damages. That judgment was signed on
October 25, 1991. Ingersoll–Rand’s liabilities became fixed and certain at zero for
Valero’s tort, DTPA, and contract damages plus the total amount of attorney’s
fees and costs incurred in defending
against Valero when summary judgment
20. See Humana Hosp. Corp. v. American Med.
Sys., Inc., 785 S.W.2d 144, 145 (Tex.1990);
Pope v. Hays, 19 Tex. 375, 379–80 (1857);
Tubb, 862 S.W.2d at 750; Holland v. Fidelity
& Deposit Co., 623 S.W.2d 469, 470 (Tex.
App.—Corpus Christi 1981, no writ); Pate v.
Tellepsen Constr. Co., 596 S.W.2d 548, 552
(Tex.Civ.App.—Houston [1st Dist.] 1980, writ
ref’d n.r.e.); Bernard, 532 S.W.2d at 410;
Texas Auto Servs., Inc. v. Kemp, 478 S.W.2d
646, 648 (Tex.Civ.App.—Austin 1972, no
writ); Russell, 205 S.W.2d at 631.

was rendered in Valero I.21 Because Valero
demonstrated no time earlier than the date
of judgment in Valero I by which Ingersoll–Rand’s liabilities became fixed and
certain, the third element of the compulsory counterclaim rule—maturity of the
claim—was not satisfied.
Our reasoning is bolstered by commentary on the analogous federal rule. The
Texas compulsory counterclaim rule is
based on Rule 13 of the Federal Rules of
Civil Procedure.22 In commenting on Federal Rule 13(a)’s condition that a claim
must be mature in order to be compulsory,
Professors Wright and Miller state:
This exception to the compulsory counterclaim requirement necessarily encompasses a claim that depends upon the
outcome of some other lawsuit and thus
does not come into existence until the
action upon which it is based has terminated. For example, TTT a claim for
contribution cannot be compulsory in
the action whose judgment is the subject
of the contribution suit.23
Likewise, an indemnity claim cannot be
compulsory in the action whose judgment
is the subject of the indemnity suit. In a
suit for either contribution or indemnity
the injury upon which suit might be based
does not arise until some liability is established. In this case, as in a contribution
claim against a joint tortfeasor, liability
could not have been established until judgment was rendered.
The court of appeals relied heavily on
Getty Oil v. Insurance Company of North
America 24 in reaching a different conclusion. In Getty we stated:
21. See, e.g., Pope, 19 Tex. at 379; Tubb, 862
S.W.2d at 750; Kemp, 478 S.W.2d at 648;
Russell, 205 S.W.2d at 631.
22.

See TEX.R. CIV. P. 97, Notes and Comments.

23. 6 Charles Alan Wright and Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1411, at
82–84 (2d ed.1990) (footnotes omitted) (emphasis added).
24.

845 S.W.2d 794 (Tex.1992).

INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
Cite as 997 S.W.2d 203 (Tex. 1999)

The contingent nature of these claims,
however, does not preclude the operation of res judicata. We held in Barr [v.
Resolution Trust Corp.] that ‘‘[a] subsequent suit will be barred if it arises out
of the same subject matter of a previous
suit and which, through the exercise of
diligence, could have been litigated in a
prior suit.’’ 837 S.W.2d at 631. Getty
could have asserted its present claims in
the [previous] suit, with their resolution
being contingent on the plaintiffs’
claims.25
In all respects, we stand by Getty. But
Getty’s language cannot be applied without
considering the case’s factual context.
In Getty we held that an indemnitee
(Getty) was barred by res judicata from
maintaining a claim against an indemnitor
(NL Industries), because Getty had sought
the same relief under a different theory in
an earlier suit. In the earlier wrongful
death suit Getty and NL were co-defendants, and Getty chose to file a permissive
cross-claim against NL based on indemnification language in their contract. By
taking this action Getty put itself in the
same position, for purposes of res judicata,
as a plaintiff filing a cause of action for
damages. We specifically held this to be
so in Getty.26 As the plaintiff for res judicata purposes, Getty was subject to the
general rule of res judicata that any cause
of action that arises out of the same subject matter should, if practicable, be litigated in the same lawsuit.27 In the second
suit, Getty was the actual plaintiff. Its
claim again involved asserting indemnity
provisions as the basis for damages. Because Getty could have asserted those
25.

Id. at 799.

26. See id. at 800 (‘‘The cross-claimant [Getty]
becomes a plaintiff for res judicata purposes,
and is required to assert all claims against the
cross-defendant arising from the subject matter of the original cross-claim.’’).
27.

See Barr, 837 S.W.2d at 630.

28. See Getty, 845 S.W.2d at 799 (citing Gulf,
Colo. & Santa Fe Ry. Co. v. McBride, 159 Tex.
442, 322 S.W.2d 492, 495 (1958); Mitchell’s,
Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d

Tex.

209

claims in the earlier action but did not, res
judicata barred the claims.
[8] We face a different situation here.
In relation to Valero, Ingersoll–Rand was
a defendant only and made no affirmative
claims for relief in Valero I. Ingersoll–
Rand, like Getty, could have stated a permissive claim against Valero, but it did not.
This fact is significant because of the rule
we pointed out earlier: the doctrine of res
judicata does not bar claims against the
plaintiff from an earlier suit by a defendant from the earlier suit, unless the later
claims were compulsory in the earlier suit.
Because Ingersoll–Rand, unlike Getty,
made no affirmative claims in the first suit,
res judicata does not bar Ingersoll–Rand’s
later claims unless they were compulsory.
But, as we explained earlier, the compulsory counterclaim elements were not met by
Ingersoll–Rand’s potential claims in Valero
I. Thus, Ingersoll–Rand’s claims in Valero
II are not barred.
As the court of appeals points out, and
as we said in Getty, we have held that an
indemnitee may bring a claim against an
indemnitor before the judgment is assigned against the indemnitee.28 That is
indeed what Getty did. We allow such
claims to be brought, in the interest of
judicial economy, as an exception to the
accrual rule for indemnity claims.29 Such
claims are contingent on accrual. But we
have never held that an indemnitee must
state such claims in the initial suit to preserve them. As we specifically noted in
Getty, such claims are permissive.30 None
of the cases we cited in Getty, for the
775, 779 (1957); K & S Oil Well Serv., Inc. v.
Cabot Corp., 491 S.W.2d 733, 739 (Tex.Civ.
App.—Corpus Christi 1973, writ ref’d n.r.e.)).
29. See id. (‘‘Forcing the indemnity suit to
wait for judgment in the liability suit ‘would
contravene the policy of the courts to encourage settlements and to minimize litigation.’ ’’)
(citation omitted).
30.

See id.

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997 SOUTH WESTERN REPORTER, 2d SERIES

proposition that an indemnitee may file a
claim for indemnification before judgment
is rendered, stand for the proposition that
contingent indemnity claims must be
brought in the initial action. Rather, the
cases cited in Getty hold that it is merely
permissive for such claims to be brought
before judgment in the initial action.31
The fact that attorney’s fees and costs
were the only liabilities for which Ingersoll–Rand was eventually entitled to seek
indemnity does not change our conclusion.
It is true that a counterclaim for attorney’s
fees will in most cases be compulsory.32
We do not dispute the legal basis of such a
statement because a claim for attorney’s
fees will generally satisfy the elements of
the compulsory counterclaim rule. However, an indemnity claim based on an
agreement to indemnify against liabilities
has different characteristics than a simple
claim for attorney’s fees. The attorney’s
fees are certain to be incurred as soon as
an attorney is retained, while liabilities
covered by an indemnity agreement in any
given case may never be incurred depending on the outcome of the case. This
difference is significant.
Consider Fidelity Mutual Life Insurance Company v. Kaminsky,33 another
case upon which the court of appeals relied. In Kaminsky the court concluded
that a contractual claim for attorney’s fees,
even though contingent on the outcome of
the suit, was mature and compulsory.34
The contractual provision on which Dr.
Kaminsky relied established his contractual right to attorney’s fees contingent on
the result of the suit, but it did not indemnify him against other liabilities generally.
It was not an indemnification agreement.
31.

See id.

32. See, e.g., Fidelity Mut. Life Ins. Co. v. Kaminsky, 820 S.W.2d 878, 882 (Tex.App.—Texarkana 1991, writ denied).
33.

Id.

34.

Id.

Thus, the general rule that a cause of
action accrues when facts come into existence that authorize the claimant to seek a
judicial remedy applied in Kaminsky.35
Dr. Kaminsky’s claim for attorney’s fees
accrued when he first incurred fees.
[9] As we have explained, a specific
accrual rule applies to claims for indemnification: an indemnity claim does not accrue until all of the potential liabilities of
the indemnitee become fixed and certain.
This specific rule is consistent with the
general accrual rule. The facts that entitle an indemnitee to seek indemnification
through suit come into existence when the
indemnitee’s liabilities become fixed and
certain by judgment.
While attorney’s fees will almost always
be a component of an indemnitee’s total
liabilities, we decline to hold that recovery
for the attorney’s fees component of an
indemnitee’s potential liability must be
pursued before and separate from the remaining components. An indemnification
claim does not accrue until all of the indemnitee’s liabilities become fixed and certain.
Because we resolve Valero’s res judicata
claim by applying the compulsory counterclaim rule, we need not consider Ingersoll–
Rand’s assertion that Valero waived, by
Rule 11 agreement,36 the right to assert
res judicata.
[10] Valero also asserted in its motion
for summary judgment that the four-year
statute of limitations for contract claims
barred Ingersoll–Rand’s claims for attorney’s fees.37 To prevail on the limitations
affirmative defense, Valero had the burden
of conclusively proving when the cause of
action accrued.38 Ingersoll–Rand’s claim
35. See Murray v. San Jacinto Agency, Inc., 800
S.W.2d 826, 828 (Tex.1990).
36.

See TEX.R. CIV. P. 11.

37. See
TEX.
CIV.
§ 16.004(a)(3).

PRAC.

&

REM.CODE

38. See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748

INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
Cite as 997 S.W.2d 203 (Tex. 1999)

did not accrue until October 25, 1991, the
date that the trial court signed summary
judgment in Valero I.39 Because Ingersoll–
Rand filed its claim for attorney’s fees on
September 16, 1994, less than four years
after the trial court’s judgment, the fouryear statute of limitations does not bar
Ingersoll–Rand’s claim.
Kellogg’s Appeal
Our conclusions above largely dispose of
Valero’s claims against Kellogg. Like Ingersoll–Rand, Kellogg’s claim for attorney’s fees did not accrue until summary
judgment was rendered in Valero I. Consequently, Kellogg’s claim was not compulsory. In any event, Kellogg filed its claim
one month before severance in the original
action while summary judgment was still
interlocutory. As such, the claim was
properly preserved through the severance
order for later adjudication, and res judicata does not bar it.
As to Valero’s statute of limitations defense, limitations could not have began to
run before Kellogg’s indemnity claim became fixed and certain. Like Ingersoll–
Rand, Kellogg’s claim did not become fixed
and certain until judgment was signed in
Valero I. Kellogg filed its claim on November 20, 1991, less than a month after summary judgment was signed in Valero I,
and well within the four-year limitations
period.

Tex.

211

indemnity provision. It is true that limitations may begin to run upon a promisor’s
anticipatory repudiation, but only if the
repudiation is adopted by the nonrepudiating party.40 Valero contends that its petition in Valero I was an unequivocal repudiation of its duty to indemnify. However,
the effect of such an anticipatory repudiation is to give the nonrepudiating party the
option of treating the repudiation as a
breach or ignoring the repudiation and
awaiting the agreed upon time of performance.41 Thus, even if Valero’s petition
acted as an unequivocal repudiation, an
issue we do not decide, Kellogg was still
entitled to await the time of performance
and sue only after an actual breach of the
indemnity clause. Valero did not breach
its agreement to indemnify Kellogg until
Kellogg made a demand for indemnity, and
Valero refused to perform. It was only at
this time that the statute of limitations
began to run.
The record reveals that Kellogg made
its demand for attorney’s fees on November 20, 1991, and filed its claims for attorney’s fees on the same day. Thus, even if
Valero repudiated the contract, Kellogg
still satisfied the statute of limitations.
Conclusion

[11–13] The court of appeals, however,
held that limitations began to run on Kellogg’s indemnification claim when Valero
filed suit on July 11, 1986, because Valero’s
suit acted as a repudiation of the contract’s

Kellogg and Ingersoll–Rand’s claims for
attorney’s fees were not compulsory counterclaims and are not barred by res judicata. Further, the claims were filed
within the applicable limitations period.
Accordingly, we reverse the court of appeals’ judgment and remand to the trial

(Tex.1999); Burns v. Thomas, 786 S.W.2d
266, 267 (Tex.1990); Willis v. Maverick, 760
S.W.2d 642, 646 (Tex.1988).

40. See Hubble v. Lone Star Contracting Corp.,
883 S.W.2d 379, 382 (Tex.App.—Fort Worth
1994, writ denied).

39. See City of San Antonio v. Talerico, 98 Tex.
151, 81 S.W. 518, 520 (1904); Koonce v.
Quaker Safety Prod. & Mfg. Co., 798 F.2d 700,
706–13 (5th Cir.1986) (discussing application
of Texas law); see also Maurice T. Brunner,
Annotation, When Statute of Limitations Commences to Run Against Claim for Contribution
or Indemnity Based on Tort, 57 A.L.R.3d 867,
875–76 (1974).

41. See Murray v. Crest Constr., Inc., 900
S.W.2d 342, 344 (Tex.1995); Greenwall Theatrical Circuit Co. v. Markowitz, 97 Tex. 479, 79
S.W. 1069, 1071 (1904); America’s Favorite
Chicken Co. v. Samaras, 929 S.W.2d 617, 626
(Tex.App.—San Antonio 1996, writ denied).

212

Tex.

997 SOUTH WESTERN REPORTER, 2d SERIES

court for further proceedings consistent
with this opinion.

Our opinion and judgment of June 24,
1999 remain unchanged.

Justice OWEN did not participate in the
decision.

,

ON REHEARING
[14] Like Kellogg, which filed its claim
for attorney’s fees in Valero I after judgment was rendered but before severance
was granted, Valero filed an amended petition. Unlike Kellogg, which for the first
time asserted a claim for affirmative relief,
Valero repackaged its original tort claim
upon which the adverse judgment had
been rendered as a contract claim. Valero
urged in the court of appeals by conditional cross-point that if res judicata did not
bar Kellogg’s claim, then likewise, res judicata would not bar its breach of contract
claim. The court of appeals, because of its
disposition of the appeal, did not consider
Valero’s cross-point.1 But because we are
reversing and remanding this case to the
trial court, Valero, on motion for rehearing, reminds us of its cross-point and we
consider it now.2
Valero’s cross-point has no merit. Valero’s late-filed amended petition circumvents the trial court’s adverse ruling in
Valero I. In Valero I, Valero attacked the
validity of the indemnity agreement. By
its late-filed amended petition, Valero recast its attack on the indemnity provision
as a breach of contract claim, which is
classic claim-splitting. This, Valero cannot
do.3 The subject of the judgment in Valero I was Valero’s liability under the indemnity provision; it cannot escape the effect
of that judgment through a late-filed
amended petition, whether there was a
severance order or not. The trial court
properly concluded that Valero’s ‘‘new’’
breach of contract claim is barred by res
judicata.
1.

See 953 S.W.2d at 869.

2.

See TEX.R.APP. P. 53.4.

F.J. BREWERTON, Jerry Prock,
and Gilberto de los Santos,
Petitioners,
v.
Brent DALRYMPLE and Diane Marie
Dalrymple, Respondents.
No. 97–0944.
Supreme Court of Texas.
Argued Sept. 9, 1998.
Decided June 24, 1999.
Terminated state university professor
and his wife sued university and three
administrators who participated in negative evaluation of professor. The District
Court, Travis County, Paul R. Davis, Jr.,
J., granted summary judgment in favor of
administrators and entered judgment on
jury verdict for university. Professor appealed from grant of summary judgment.
The Austin Court of Appeals, 949 S.W.2d
395, affirmed in part, reversed in part, and
remanded. Administrators petitioned for
review. The Supreme Court, Owen, J., held
that: (1) administrators’ conduct was not
extreme and outrageous, as element of
intentional infliction of emotional distress;
(2) wife’s derivative loss of consortium
claim failed; and (3) professor’s failure to
preserve error on denial of claim for equitable relief precluded remand of claim.
Court of Appeals reversed in part;
take nothing judgment rendered.
3.

See RESTATEMENT (SECOND) OF JUDGMENTS
§§ 24, 25(1); Barr v. Resolution Trust Corp.,
837 S.W.2d 627, 629–31 (Tex.1992).



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