American Alloy Steel, Inc. v. Armco, Inc – Case Brief Summary (Texas)

In American Alloy Steel, Inc. v. Armco, Inc. (Tex.Ct.App. 1989) 777 S.W.2d 173, the plaintiff brought a similar indemnity claim against a steel plate supplier.

Plaintiff entered into a purchase agreement with defendant for a steel plate, which plaintiff then sold to a third party. The third-party buyer subsequently alleged that the plate was defective. Plaintiff agreed to replace the plate and then sued defendant for common law indemnity and various related claims. The issue presented on appeal was "whether . . . an implied obligation of indemnity arose out of the contractual relationship between the two companies." (Id. at p. 175.)

The court concluded that plaintiff could not pursue such a claim, explaining that Texas law only recognized implied or common law indemnity in cases "arising out of a tort" or involving "agency or surety principles." (Ibid.)

In contrast, the plaintiff and the defendant were merely "parties to a contract with the freedom to negotiate its terms, keeping in mind their individual needs and circumstances." (Id. at pp. 175-176.)