Astra Oil Co., Inc. v. Diamond Shamrock Refining Co., L.P – Case Brief Summary (Texas)

In Astra Oil Co., Inc. v. Diamond Shamrock Refining Co., L.P. (Tex.Ct.App. 2002) 89 S.W.3d 702, the court held that a contractual relationship is insufficient to support a claim for common law indemnity under Texas law.

The plaintiff in Astra Oil leased a cargo vessel from a third party to transport the plaintiff's oil. Plaintiff then entered into a separate contract for the sale of its oil with defendant.

Under this sales contract, the defendant ensured the safety of the marine terminal where the oil was to be delivered. While the oil was being off loaded, the hull of the leased cargo vessel sustained damage. The third-party vessel owner sued plaintiff, who then filed "a claim for the vicarious liability incurred as a result of the defendant's breach of its contract with plaintiff." (Id. at p. 706.)

In support, plaintiff relied on prior Texas decisions holding that "common law indemnity is recoverable by a defendant who, through no act of his own, has been made to pay for the negligence of another defendant based solely on the relationship between the two defendants." (Ibid.)

The court rejected the indemnity claim, stating:

"Plaintiff fails to show that the relationship between defendant and itself is the type of relationship that imposes vicarious liability. In the cases plaintiff cites, the relationship between the two defendants was an employer and employee relationship. In the case before us, plaintiff and defendant had a contractual relationship. Plaintiff cites no authority to support a finding of vicarious liability based solely on a contractual relationship. Under the facts of this case, plaintiff has not established a relationship to support its vicarious liability theory or to show it is entitled to common-law indemnity." (Astra Oil, supra, 89 S.W.3d at p. 706.)

The court also noted that plaintiff appeared to have "confused its causes of action," explaining that if defendant had "breached its contract" by failing to "'to provide safe berth for the third-party cargo vessel,'" plaintiff "must pursue a breach of contract . . . cause of action." (Id. at p. 706, fn. 2.)