Flint_571_37277184_2118794428_9 252 1340 Supreme Court Of Texas Opinion

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203
Tex.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. Black-
mon, J., granted defendants motions’ for
summary judgment asserting that indem-
nity provision barred owner’s claim. Owner
appealed. The Corpus Christi Court of Ap-
peals, 866 S.W.2d 252, affirmed. Defen-
dants sought attorney fees and costs in-
curred in defending against owner’s
claims. The District Court granted sum-
mary 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) sub-
contractor’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 anti-
cipatory breach, when contractor made de-
mand 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.
Judgment of the Court of Appeal re-
versed 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 pro-
moting 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 counter-
claim 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 defen-
dant at the time of filing the answer; (4) it
arose out of the same transaction or occur-
rence 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 de-
termining whether it is compulsory coun-
terclaim, when it has accrued.
6. Indemnity O11
Broad language that holds an indem-
nitee ‘‘harmless’’ against ‘‘all claims’’ and
204 Tex. 997 SOUTH WESTERN REPORTER, 2d SERIES
‘‘liabilities’’ evidences an agreement to in-
demnify against liability and thus entitles
the indemnitee to recover when the liabili-
ty becomes fixed and certain, as by rendi-
tion of a judgment, whether or not the
indemnitee has yet suffered actual dam-
ages, as by payment of a judgment.
7. Set-Off and Counterclaim O60
Subcontractor’s liabilities from refin-
ery 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. Ver-
non’s Ann.Texas Rules Civ.Proc., Rule
97(a, d).
8. Judgment O585(4)
Doctrine of res judicata did not pre-
clude subcontractor from pursuing indem-
nity claim for attorney fees against refin-
ery owner after entry of judgment in
owner’s initial action against subcontrac-
tor, 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 in-
demnity clause was thus permissive rath-
er 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 indem-
nitee become fixed and certain by judg-
ment, and recovery for attorney fees com-
ponent of potential liabilities need not be
pursued before and separate from remain-
ing components.
10. Limitation of Actions O56(2)
Subcontractor’s claim for attorney
fees against refinery owner under indem-
nity 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
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 perfor-
mance.
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 indem-
nity and owner refused to perform, even
assuming owner’s initial petition against
contractor acted as unequivocal anticipato-
ry repudiation, given that contractor was
entitled to ignore any anticipatory repudia-
tion, 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 as-
serting 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).
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.
205
Tex.INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
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 malfunction-
ing equipment. Kellogg and Ingersoll–
Rand installed the equipment during an
expansion of Valero’s oil refinery. Kellogg
was the general contractor on the expan-
sion, and Ingersoll–Rand was one of Kel-
logg’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 interlocu-
tory 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 abat-
ed the remaining claims. After the abate-
ment was lifted, Kellogg and Ingersoll–
Rand moved for summary judgment, seek-
ing 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.
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 in-
demnity claims did not accrue until the
trial court’s rendition of summary judg-
ment 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 me-
chanical malfunctions allegedly resulting
from Kellogg’s flawed installation of refin-
ery equipment. Valero pleaded fraudulent
misrepresentation, breach of contract, vio-
lations of the Texas Deceptive Trade Prac-
tices Act,6 breach of implied and express
warranties, products liability, negligence,
gross negligence, and intentional miscon-
duct. Valero added Ingersoll–Rand as a
defendant in 1989, after a piece of equip-
ment supplied by Ingersoll–Rand explod-
ed. 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 con-
tract’s indemnity provision barred Valero’s
1. Valero Energy Corp. appears individually
and as parent corporation of Valero Refining
& Marketing Co. Valero Refining & Market-
ing Co. (formerly known as Saber Energy,
Inc.) appears individually and as parent cor-
poration of Valero Refining Co. Valero Refin-
ing Co. (formerly known as Saber Refining
Co.) appears individually. We refer to these
respondents as ‘‘Valero.’’
2. We refer to petitioners, M.W. Kellogg Co.,
M.W. Constructors, Inc., M.W. Kellogg Con-
structors, Inc., Kellogg Rust Synfuels, Inc.,
and Henley/MWK Holdings, Inc., as ‘‘Kel-
logg.’’
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 con-
tract provision:
6.8 OWNER [Valero] shall release, de-
fend, indemnify and hold harmless
CONTRACTOR [Kellogg], its subcon-
tractors [Ingersoll–Rand] and affiliates
and their employees performing services
under this Agreement against all claims,
liabilities, loss or expense, including le-
gal 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 negli-
gence, to the extent CONTRACTOR is
not compensated by insurance carried
under this ARTICLETTTT
Valero replied that the contract’s indemni-
ty 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 ren-
dered judgment that Valero take nothing
on its claims against Kellogg and Inger-
soll–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 Va-
lero’s application for writ of error on April
20, 1994, and overruled its motion for re-
hearing of the application on June 2, 1994.
That judgment is final.
Valero II
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 be-
tween 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, Inger-
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.
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 litiga-
tion expenses incurred in Valero I. Valero
responded with a motion for summary
judgment, asserting two affirmative de-
fenses: (1) Kellogg and Ingersoll–Rand’s
counterclaims were compulsory, had not
been asserted in Valero I, and were there-
fore 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 sum-
mary judgment, and denied Kellogg and
Ingersoll–Rand’s motion. The court of ap-
peals 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 re-
view.
Because resolution of the issues we con-
sider in Ingersoll–Rand’s appeal disposes
of issues presented by Kellogg’s appeal, we
consider Ingersoll–Rand’s appeal first.
Ingersoll–Rand’s Appeal
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.
[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
7. See Valero I, 866 S.W.2d 252.
8. See TEX. CIV. PRAC. & REM.CODE § 16.004(a)(3).
9. 953 S.W.2d at 866, 868.
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.
207
Tex.INGERSOLL–RAND CO. v. VALERO ENERGY CORP.
Cite as 997 S.W.2d 203 (Tex. 1999)
are claims or defenses that, through dili-
gence, 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 litiga-
tion and promoting judicial economy.12
Res judicata, however, does not bar a
former defendant who asserted no affirma-
tive 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 con-
cluded 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
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 as-
serts that its indemnity claim for attor-
ney’s fees was not compulsory because the
claim could not have become mature be-
fore 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 ac-
crual 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’’ evi-
dences an agreement to indemnify against
liability.18 Such provisions entitle the in-
demnitee to recover when the liability be-
comes 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
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); Lesbrook-
ton, 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
counterclaim unless the claim is mature at
the time the answer is due.’’) (citing Mc-
Donald, 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); Rus-
sell 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 Tex. 997 SOUTH WESTERN REPORTER, 2d SERIES
Valero’s suit presented the rather ano-
malous 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 sep-
arate and distinct parties: plaintiff (party
one), indemnitee (party two), and indemni-
tor (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 indemnifica-
tion 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 Va-
lero’s claims for damages. And Ingersoll–
Rand, presumably, would have sought in-
demnification 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 Va-
lero 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 liabili-
ties became fixed and certain at zero for
Valero’s tort, DTPA, and contract dam-
ages plus the total amount of attorney’s
fees and costs incurred in defending
against Valero when summary judgment
was rendered in Valero I.21 Because Valero
demonstrated no time earlier than the date
of judgment in Valero I by which Inger-
soll–Rand’s liabilities became fixed and
certain, the third element of the compulso-
ry counterclaim rule—maturity of the
claim—was not satisfied.
Our reasoning is bolstered by commen-
tary 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 Fed-
eral 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 coun-
terclaim requirement necessarily encom-
passes 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 termi-
nated. 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 estab-
lished. In this case, as in a contribution
claim against a joint tortfeasor, liability
could not have been established until judg-
ment was rendered.
The court of appeals relied heavily on
Getty Oil v. Insurance Company of North
America 24 in reaching a different conclu-
sion. In Getty we stated:
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.
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. Mil-
ler, FEDERAL PRACTICE AND PROCEDURE § 1411, at
82–84 (2d ed.1990) (footnotes omitted) (em-
phasis added).
24. 845 S.W.2d 794 (Tex.1992).
209
Tex.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 opera-
tion of res judicata. We held in Barr [v.
Resolution Trust Corp.] that ‘‘[a] subse-
quent 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-defen-
dants, and Getty chose to file a permissive
cross-claim against NL based on indemni-
fication 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 judi-
cata purposes, Getty was subject to the
general rule of res judicata that any cause
of action that arises out of the same sub-
ject matter should, if practicable, be liti-
gated 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. Be-
cause Getty could have asserted those
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 per-
missive 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 defen-
dant 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 compulso-
ry 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 as-
signed 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 pre-
serve them. As we specifically noted in
Getty, such claims are permissive.30 None
of the cases we cited in Getty, for the
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 mat-
ter 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
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 encour-
age settlements and to minimize litigation.’ ’’)
(citation omitted).
30. See id.
210 Tex. 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 Inger-
soll–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. How-
ever, 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 depend-
ing on the outcome of the case. This
difference is significant.
Consider Fidelity Mutual Life Insur-
ance Company v. Kaminsky,33 another
case upon which the court of appeals re-
lied. 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 contractu-
al right to attorney’s fees contingent on
the result of the suit, but it did not indem-
nify him against other liabilities generally.
It was not an indemnification agreement.
Thus, the general rule that a cause of
action accrues when facts come into exis-
tence 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 indemni-
fication: an indemnity claim does not ac-
crue 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 enti-
tle 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 re-
maining components. An indemnification
claim does not accrue until all of the in-
demnitee’s liabilities become fixed and cer-
tain.
Because we resolve Valero’s res judicata
claim by applying the compulsory counter-
claim 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 attor-
ney’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
31. See id.
32. See, e.g., Fidelity Mut. Life Ins. Co. v. Ka-
minsky, 820 S.W.2d 878, 882 (Tex.App.—Tex-
arkana 1991, writ denied).
33. Id.
34. Id.
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. PRAC. & REM.CODE
§ 16.004(a)(3).
38. See KPMG Peat Marwick v. Harrison Coun-
ty Hous. Fin. Corp., 988 S.W.2d 746, 748
211
Tex.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 four-
year 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 In-
gersoll–Rand, Kellogg’s claim for attor-
ney’s fees did not accrue until summary
judgment was rendered in Valero I. Con-
sequently, Kellogg’s claim was not compul-
sory. 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 judi-
cata does not bar it.
As to Valero’s statute of limitations de-
fense, limitations could not have began to
run before Kellogg’s indemnity claim be-
came 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 Novem-
ber 20, 1991, less than a month after sum-
mary judgment was signed in Valero I,
and well within the four-year limitations
period.
[11–13] The court of appeals, however,
held that limitations began to run on Kel-
logg’s indemnification claim when Valero
filed suit on July 11, 1986, because Valero’s
suit acted as a repudiation of the contract’s
indemnity provision. It is true that limita-
tions may begin to run upon a promisor’s
anticipatory repudiation, but only if the
repudiation is adopted by the nonrepudiat-
ing party.40 Valero contends that its peti-
tion in Valero I was an unequivocal repudi-
ation of its duty to indemnify. However,
the effect of such an anticipatory repudia-
tion 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 perfor-
mance.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 Novem-
ber 20, 1991, and filed its claims for attor-
ney’s fees on the same day. Thus, even if
Valero repudiated the contract, Kellogg
still satisfied the statute of limitations.
Conclusion
Kellogg and Ingersoll–Rand’s claims for
attorney’s fees were not compulsory coun-
terclaims and are not barred by res judi-
cata. Further, the claims were filed
within the applicable limitations period.
Accordingly, we reverse the court of ap-
peals’ 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).
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 Com-
mences to Run Against Claim for Contribution
or Indemnity Based on Tort, 57 A.L.R.3d 867,
875–76 (1974).
40. See Hubble v. Lone Star Contracting Corp.,
883 S.W.2d 379, 382 (Tex.App.—Fort Worth
1994, writ denied).
41. See Murray v. Crest Constr., Inc., 900
S.W.2d 342, 344 (Tex.1995); Greenwall Theat-
rical 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.
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 judg-
ment was rendered but before severance
was granted, Valero filed an amended peti-
tion. 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 condition-
al cross-point that if res judicata did not
bar Kellogg’s claim, then likewise, res ju-
dicata 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 rehear-
ing, reminds us of its cross-point and we
consider it now.2
Valero’s cross-point has no merit. Vale-
ro’s late-filed amended petition circum-
vents 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 re-
cast 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 Vale-
ro I was Valero’s liability under the indem-
nity 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.
Our opinion and judgment of June 24,
1999 remain unchanged.
,
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 nega-
tive 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 ap-
pealed 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 equi-
table relief precluded remand of claim.
Court of Appeals reversed in part;
take nothing judgment rendered.
1. See 953 S.W.2d at 869.
2. See TEX.R.APP. P. 53.4.
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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