The Texas Supreme Court Just Changed the Settlement Calculus in Multi-Defendant PI Cases

On March 13, 2026, the Texas Supreme Court handed down its opinion in S&B Engineers & Constructors, Ltd. v. Scallon Controls, Inc. The case arose from a horrific 2015 industrial accident at a Sunoco refinery in South Texas. A fire-suppression system discharged chemicals after a brief power outage. Seven workers fell from scaffolding in their rush to escape. Years of litigation followed.

The injured workers were not before the Court. They settled years ago and were made whole. What the Court decided is something else entirely: whether a general contractor who settles a tort case can still pursue a subcontractor for contractual indemnification afterward, even if the sub refused to participate in the settlement.

The Court said yes, 5-4. That answer matters for how plaintiff’s attorneys approach multi-defendant cases in Texas, particularly in construction, oilfield, and refinery litigation.

What Happened and What the Court Held

Sunoco hired S&B to design and install a safety system at its refinery. S&B hired Scallon Controls to supply and program the fire-suppression component. The contract between S&B and Scallon included a proportional indemnity clause: Scallon agreed to indemnify S&B for its own “allocable share” of negligence if something went wrong.

Something went wrong. After the accident and four years of litigation, S&B and Sunoco settled with the injured workers for $4.75 million, without Scallon at the table. Scallon refused to participate. S&B and Sunoco’s insurer, Zurich, then sued Scallon for its proportional share of the settlement under the indemnity agreement.

Scallon argued that the voluntary settlement extinguished any indemnification rights. The trial court agreed. The Ninth Court of Appeals affirmed. The Texas Supreme Court reversed.

The Court’s core holdings:

• A voluntary settlement does not automatically extinguish contractual indemnification rights. Beech Aircraft v. Jinkins bars contribution claims after settlement under statutory and common-law schemes. It has nothing to say about freely negotiated indemnity contracts.
• The express-negligence doctrine from Ethyl Corp. v. Daniel Construction Co. is satisfied by a proportional indemnity clause that disclaims coverage for the indemnitee’s own negligence. No magic words required. Limiting Scallon’s obligation to its own “allocable share” was enough.
• The limitations clock on an indemnity claim starts when liability becomes “fixed and certain” through settlement or judgment, not on the date of the underlying accident. Zurich’s claim, filed within three years of the settlement, was timely.
• The settling party still carries real burdens on remand: it must prove the settlement was made in good faith and for a reasonable amount, and that some portion of fault is actually attributable to the non-settling party. If either showing fails, recovery is reduced or eliminated.

Four Reasons Why Plaintiff’s Attorneys Need to Understand This

This case primarily resolves a dispute between defendants and their subcontractors. But the downstream effects run directly through your cases. Here’s why.

1. Defendants Now Have a Cleaner Path to Settle Without Their Subcontractors

Before Scallon, there was genuine legal uncertainty about whether settling defendants could preserve indemnification rights against non-settling parties. Courts were reading Jinkins broadly. That uncertainty made some defendants reluctant to settle your client’s case if a subcontractor wouldn’t come to the table.

That uncertainty is largely gone. A general contractor or owner with a properly drafted proportional indemnity clause can now settle your client’s case, pay a reasonable amount, and pursue the sub separately. That creates a real incentive for GCs and owners to resolve the tort case promptly, without waiting for a recalcitrant subcontractor to get on board.

In your high-stakes cases, particularly oilfield accidents, refinery incidents, and commercial construction injuries, defendants who previously stalled settlement negotiations while their subcontractors played hardball now have less reason to wait. That can accelerate resolution for your clients.

2. The Indemnity Chain Affects Your Settlement Leverage

In multi-defendant cases, particularly refinery accidents matters with plant owners and contractors, oilfield cases with operators and contractors, and construction cases with GCs and multiple subs, there is almost always an indemnity chain running beneath the surface. Most parties don’t advertise it.

After Scallon, those indemnity relationships carry more weight because they are more enforceable. That creates leverage. A defendant who knows it has a viable indemnity claim against a co-defendant has different financial incentives than one who thinks it’s stuck holding the full bag. Understanding that dynamic allows you to structure settlement negotiations strategically.

Specifically: if the party most likely to write the biggest check has a strong indemnity claim against another defendant, their net exposure is lower than their gross settlement contribution. You can use that to push the overall settlement number higher. Their willingness to contribute more to resolve the tort case goes up when they know they can recover a piece of it on the back end.

3. Don’t Let the Indemnity Chain Discount Your Client’s Recovery

Defense attorneys will sometimes use the indemnity chain as a reason to lowball your client’s settlement demand. The argument goes something like this: “Our client’s net exposure is minimal because we’ll recover most of it from the sub. We don’t need to pay full value.”

Push back hard on that. Scallon changes nothing about what your client is owed for their injuries. The indemnity dispute is between the defendants after the fact. What happens between a GC and its subcontractor is not your client’s problem, and it does not reduce the value of your client’s case. The full value of the harm is the full value of the harm.

4. Settlement Structure and Documentation Matter More Now

After Scallon, settling defendants will follow with indemnity litigation against non-settling parties. That downstream proceeding will scrutinize the settlement your client reached. The question will be whether it was made in good faith and for a reasonable amount.

That is not your fight, but it can affect your client indirectly. If a settlement gets characterized in downstream litigation as unreasonably high or collusive, that characterization can create noise. Be precise in how settlement agreements are worded. Ensure the record supports the reasonableness of the amount. Avoid any structure that could later look like it was designed to inflate the number at recalcitrant third-party’s expense.

Practice Checklist: What to Do in Your Multi-Defendant Cases

Apply these steps in any case involving a contractor/subcontractor structure, multiple commercial defendants, or an industrial  incident:

1. Pull the contracts early. In any construction, oilfield, or industrial case, get every contract between the defendants during discovery. Look for indemnity provisions. Map the chain. Know who owes whom what before settlement negotiations begin.
2. Identify who has the desire to settle and the indemnity leverage. Some defendants have public relations or business reasons to resolve catastrophic injury litigation early. The defendant with the strongest indemnity claim against a co-defendant also has a different risk profile. Use this information in your demand strategy. If the GC can recover 60% from the sub, the GC’s real cost of a $3M settlement is $1.2M. Or, if a large defendant has incentive to resolve the underlying litigation for business reasons, use that to your advantage. Let the defendants fight who pays your settlement on a different battlefield.
3. Don’t allow indemnity relationships to reduce your demand. A defendant’s internal recovery path is irrelevant to what your client is owed. If defense counsel raises their indemnity rights to justify a lower offer, reject the premise.
4. Watch the non-settling defendant. In cases where one defendant settles and another doesn’t, Scallon confirms the settling defendant can pursue the holdout under their contract. That changes the holdout’s risk calculation. A subcontractor who refuses to participate in settlement may now face a two-front exposure: your client’s remaining claims plus the settling defendant’s indemnity claim.
5. Document the reasonableness of your settlement. The post-Scallon indemnity world puts a premium on settlements that are clearly grounded in a good-faith valuation of the underlying claims. Your file should show the work: demand letters, medical records, liability analysis, comparable verdicts. That documentation protects the settlement’s integrity and encourages resolution of the whole claim by one or all.
6. Watch limitations on your client’s claims against holdouts. If one defendant settles and another doesn’t, and the settling defendant’s indemnity litigation extends for years, your client’s claims against the holdout remain governed by the standard two-year limitations period. Don’t let that clock slip.
7. Read the dissent. Justice Bland’s dissent, joined by three justices, argues that Scallon effectively allows defendants to create “satellite litigation” that monetizes a settlement your client agreed to. That argument will resurface. Know it before opposing counsel does.

The Bottom Line

Scallon is not a plaintiff’s case. But it shapes the terrain on which your cases settle. The indemnity chains that run beneath every multi-defendant construction, oilfield, and refinery case are now more enforceable. Defendants who settle with your clients have a cleaner path to pursue non-settling subcontractors. That creates settlement momentum that benefits injured workers. It also creates dynamics you need to understand and manage.

Know the contracts. Map the indemnity chain. Manage the leverage correctly. And never let a defendant’s internal risk-shifting arrangement become a reason to discount what your client is owed.

About Greenberg Streich Injury Lawyers

Greenberg Streich Injury Lawyers is a Houston-based plaintiff’s personal injury firm representing seriously injured Texans and their families against corporations, insurers, and negligent employers. Contact us today at 713-443-7000 or [email protected].