Judge Stacy Sharp
The Business Court had granted a defense motion for summary judgment in a dispute between a general contractor and the owner’s subcontractor based on the economic-loss rule.
ESI Incorporated of Tennessee v. Orion Engineered Carbons, LLC, and Redecam USA, LLC (2026 Tex. Bus. 74; October 20, 2026) arose from a contract dispute between a general contractor and the owner and owner’s subcontractor. Orion contracted with ESI to design and install emissions reduction systems for its carbon-black plants. It then contracted with Redecam to supply owner-provided equipment. ESI alleged that Orion’s late delivery of the equipment and Redecam’s “disorganized and untimely shipments of unmarked components and incorrect design details disrupted” its work. This disruption resulted in a compressed work schedule, reduced productivity, and more than $10 million in increased costs. ESI further alleged that it relief on representations by Orion and Redecam when bidding, pricing, and executing the contract, representations that turned out to be false. Orion countered that it met its obligations under the contract, but that ESI missed project milestones and failed to pay subcontractors.
The parties jointly removed the litigation from Harris County District Court to the Business Court. Redecam moved for summary judgment. Orion moved for leave to to designate a RTP. The court conducted a hearing on September 23.
In an opinion by Judge Sharp, the court granted Redecam’s MSJ and denied Orion’s motion for leave to designate an RTP. First, Redecam argued that ESI’s negligent misrepresenation claim was barred by the economic-loss rule, which “‘restrict[s] recovery of purely economic damages unaccompanied by injury to plaintiff or his property’ in actions for unintentional torts.” Observing that SCOTX has held that the economic-loss rule bars a contractor’s subcontractor’s from recovering delay damages against an architect,” the court saw no distinction here. Even if ESI had relied on Redecam’s statements, the economic-loss rule would still apply to bar its claim to a “contractual stranger.”
The court further dismissed ESI’s constructive-fraud claim for lack of evidence of a special or fiduciary relationship with Redecam. ESI asserted that it had an “informal fiduciary relationship” based on its “personal relationships of special trust and confidence.” Here the evidence showed that ESI and Redecam had a nine-month business relationship prior to the ESI-Orion agreement, but that collaboration didn’t, without more, establish “special trust and confidence” sufficient to imply a fiduciary duty. The court granted Redecam’s motion for summary judgment.
Orion wanted to designate Brown and Root as an RTP “based on alleged staffing and equipment deficiencies that resulted in project delays.” The court determined that Orion’s pleadings “adequately allege[d] that Brown and Root contributed to the same harm at issue in ESI’s claims against Orion” (i.e., inventory and equipment problems, inadequate staffing). But it failed to adequately plead facts showing that Brown and Root violated a legal duty. Instead, it made only a “passing mention of a contract breach rather than satisfying the fair-notice requirement of Rule 47(a).” The court, consequently granted Orion leave to replead to provide fair notice of the applicable legal standard and its violation by Brown and Root.
Orion likewise failed to name Brown and Root as an RTP in its initial disclosures to the Harris County district court under TRCP 194.2(b)(12), due in early 2024. Not until January 2026 did Orion name Brown and Root in an amended disclosure. Based on the record, the court couldn’t determine “whether Orion satisfied its obligation to timely disclose Brown and Root under Rules 193 and 194, nor whether it moved for the designation before the four-year limitations period ran on that claim.” Once again the court granted Orion leave to replead.
