## Facts

- A hotel owner hired Price Woods, Inc. as general contractor to renovate a meeting room at the Renaissance Hotel in Dallas.
- Price Woods subcontracted HVAC and sheet metal work to Frymire Engineering Company, Inc.
- Frymire’s subcontract required it to pay damages to Price Woods or the owner caused “by reason of” Frymire’s work and to obtain liability insurance covering that obligation.
- Frymire obtained a commercial general liability policy from Liberty Mutual Insurance Company.
- During the project, Frymire installed an “Add‑A‑Valve” on a chilled-water line in the air-conditioning system.
- The water line later ruptured at the valve location, causing extensive water damage.
- The owner sought contractual indemnification from Frymire rather than pursuing the valve manufacturer, Jomar International, Ltd. and Mixer S.R.L.
- Liberty Mutual paid approximately $458,496 on Frymire’s behalf (and Frymire paid its deductible); the owner executed a release of Frymire and Liberty Mutual for all claims arising from the incident.
- Nearly two years later, Frymire (through Liberty Mutual) sued Jomar for negligence, products liability, and breach of warranty, alleging a design defect in the valve caused the rupture.

## Issues

1. Whether equitable subrogation gives a subcontractor (and its insurer) standing to sue an alleged third-party tortfeasor after paying a contractual indemnity obligation to the property owner.
2. Whether the payment can satisfy the “debt primarily owed by another” element when the payor was contractually obligated to pay the owner.
3. Whether payment made to comply with a contractual indemnity obligation is “voluntary” so as to defeat equitable subrogation.
4. Whether subrogation is warranted to prevent unjust enrichment of an alleged tortfeasor when the owner has been made whole and has released the indemnitor and insurer.

## Decision

- The trial court granted Jomar’s traditional and no-evidence motions for summary judgment without stating grounds.
- The court of appeals affirmed on the basis that Frymire lacked standing to sue Jomar via equitable subrogation.
- The Supreme Court of Texas reversed, holding equitable subrogation can apply to a subcontractor seeking to recoup contractual payments from alleged third-party tortfeasors if traditional subrogation requirements are met.
- The Court held the evidence supported Frymire’s standing because it alleged it paid a debt primarily owed by Jomar, paid to protect its own interests (not as a volunteer), and Jomar would be unjustly enriched if suit were barred.
- The case was remanded to the court of appeals for further proceedings.

## Legal Principles

- Equitable subrogation may confer standing by allowing a party who paid a loss to pursue the rights of the party whose claim was discharged, to the extent of the payment.
- Traditional requirements for equitable subrogation include:
  - the subrogee paid a debt primarily owed by another;
  - the payment was made to protect the subrogee’s own interests, not as a mere volunteer; and
  - subrogation is needed to prevent unjust enrichment of the primarily liable party.
- Payment pursuant to a binding contractual obligation, made in good faith to protect a substantial interest, is not treated as “voluntary” for purposes of barring equitable subrogation.
- A release given to the paying party does not, by itself, defeat equitable subrogation when the subrogee seeks to assert the payee’s underlying claims against an alleged wrongdoer to the extent of the payment.

## Conclusion

The Texas Supreme Court held that a subcontractor and its insurer who paid a contractual indemnity claim for property damage may, through equitable subrogation, pursue the property owner’s claims against an alleged third-party tortfeasor when the payment is alleged to have discharged the tortfeasor’s primary liability, was made to protect the payor’s interests, and denial of subrogation would unjustly enrich the alleged wrongdoer.


Frymire Eng’g Co. v. Jomar Int’l, Ltd., 259 S.W.3d 140 (Tex. 2008)