Accrual of Indemnity Claim

WHEN DOES CLAIM FOR INDEMNIFICATION ACCRUE? 

Whether the cause of action accrues at the time a judgment is rendered or at the time the judgment is paid depends on the language of the indemnity clause. See Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 207 (Tex. 1999) ("To determine the correct accrual date of an indemnity claim we look to the contract's indemnity provision."). "There are two types of indemnity agreements, those that indemnify against liabilities and those that indemnify against damages." Id. (citations omitted). Broad language that "holds the indemnitee `harmless' against `all claims' and `liabilities' evidences an agreement to indemnify against liability." Id. "Damages indemnity agreements, on the other hand, are not as broad, and the indemnitee's right to sue does not accrue `until the indemnitee has suffered damage or injury by being compelled to pay the judgment or debt.'" Smith Int'l, Inc. v. Egle Grp., LLC, 490 F.3d 380, 389 (5th Cir. 2007) (quoting Tubb v. Bartlett, 862 S.W.2d 740, 750 (Tex. App. 1993, writ denied) (emphasis omitted)).

SOURCE: TIB v. CANYON COMMUNITY BANK, U.S. Dist. Court, ND Texas 2014