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Manchester Tank & Equipment Co. v. Engineered Controls International, Inc.

The only exception to the duty to indemnify is found in Texas Civil Practices & Remedies Code �82.002(a), which states that a manufacturer must indemnify a seller "except for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable." In this case, both parties were entitled to indemnification. Waco Court of Appeals, No. 10-08-00207-CV, 12-30-2009

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OPINION

Manchester Tank & Equipment Company appeals the denial of its claim for indemnification pursuant to Texas Civil Practice and Remedies Code Chapter 82. TEX. CIV. PRAC. & REM. CODE ANN. Ch. 82 (Vernon 2005). Manchester also complains that the trial court erred in its determination that both Manchester and ECI owed each other the duty of indemnification, therefore offsetting their obligations to each other. After a bench trial, the trial court found that each party took nothing regarding their indemnity claims. Because we find that both parties were entitled to indemnification from the other and therefore offsetting these duties was correct, we affirm the judgment of the trial court.

This indemnity action resulted from a products liability suit filed after an explosion of an LP-gas cylinder that killed two people and severely burned four others. The suit was brought against the manufacturer of both the cylinder, Manchester, and the valve assembly, ECI. Manchester settled its claims with the plaintiffs prior to trial, and after a mistrial was declared due to a hung jury between the claimants and ECI, ECI settled its claims with the plaintiffs for an additional amount. Manchester filed this separate litigation against ECI seeking indemnification for the settlement proceeds and other costs, including the costs of pursuing its indemnity claim. ECI subsequently filed a counterclaim against Manchester seeking indemnification which it contended should be offset against any potential indemnification they might owe to Manchester.

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