Petrobras America, Inc. v. Samsung Heavy Industries Co., Ltd.

Filing 131

MEMORANDUM AND OPINION denying 91 SEALED MOTION -Plaintiff Petrobras America Inc.'s Motion To Dismiss Defendant Samsung Heavy Industries Co., Ltd.'s Counterclaim. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(gclair, 4)

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United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PETROBRAS AMERICA, INC.,
Plaintiff,
VS.
SAMSUNG HEAVY INDUSTRIES
CO., LTD.,
Defendant.

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August 09, 2022
Nathan Ochsner, Clerk

CIVIL ACTION NO. H-19-1410

MEMORANDUM AND OPINION
This case goes back in time; how much time is the issue the pending motion presents. In
2007, Samsung Heavy Industries Co., Ltd., entered into a construction contract with Pride Global
Limited. Under the construction contract, Samsung had the option to build a drillship for Pride if
Pride secured a drilling-services contract to operate the ship. (Docket Entry No. 51 at ¶ 2).
Samsung bribed two officials with Petrobras America, Inc., a subsidiary of Petroleo Brasileiro
S.A., to award Pride a drilling-services contract. (Id.). Pride received a drilling-services contract
from Petrobras, and Samsung exercised its option with Pride to build a drillship, known as the DS5, for $640 million. (Id. at ¶ 3). In this lawsuit, and in arbitration proceedings, Petrobras alleged
that but for the bribes paid to its corrupt officials, payments that Petrobras discovered in 2015, it
would not have entered into the drilling-services contract with Pride. (Id. at ¶ 5). In January 2016,
Petrobras cancelled its drilling-services contract with Pride, which by then had been acquired by
Ensco Deepwater USA, Inc. (Id. at ¶¶ 98–99).
Samsung answered this lawsuit and counterclaimed for contribution from Petrobras,
alleging that Petrobras was aware of and had engaged in the bribery scheme. Samsung sought the

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money awarded to Ensco (formerly, Pride) in a related but separate arbitration that Ensco had
initiated against Samsung for losses arising from the cancellation of the contracts. (Docket Entry
No. 85).
Petrobras moved to dismiss Samsung’s contribution counterclaim on two grounds: the
counterclaim is untimely, and the counterclaim fails to state a basis for relief. (Docket Entry No.
91). Samsung has responded, and Petrobras has replied. (Docket Entry Nos. 100, 105). In the
briefs and at oral argument, the parties agreed that Texas, not English law, governs limitations. 1
At oral argument, the parties confirmed their agreement that English law governs the substantive
elements of the counterclaim, and that if the court finds that the counterclaim is not time barred,
Samsung has stated a claim for relief under English law. (Docket Entry No. 119). After oral
argument, the parties submitted supplemental briefs and replies on the only remaining issue—
whether Samsung’s counterclaim for contribution is time-barred. (Docket Entry Nos. 120, 121,
128, 130).
After careful consideration of the pleadings, the parties’ arguments, the record, and the
applicable law, the court denies Petrobras’s motion to dismiss because Samsung’s counterclaim is
not time-barred under Texas law. The reasons are explained below.
I.

Background

1

In Samsung’s response and Petrobras’s reply, the parties agreed that English law would govern the
substantive claim and that Texas law, which treats statutes of limitations as procedural, would govern
limitations. (See Docket Entry No. 100 at 12; Docket Entry No. 105 at 6); see In re Air Disaster at Ramstein
Air Base, Germany, on 8/29/90, 81 F.3d 570, 577 (5th Cir. 1996) (“Because both parties agree that either
Texas or Georgia law applies, this Court’s inquiry is limited to the substantive law of those two states.”
(citing Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 249 (5th Cir.1990); Crisman v. Cooper
Industries, 748 S.W.2d 273, 276 (Tex. App.–Dallas 1988))); see also O’Shaughnessy v. Young Living
Essential Oils, L.C., 810 Fed. Appx. 308, 311 (5th Cir. Apr. 28, 2020) (per curiam) (applying Utah law
because the parties agreed that it applied); Ingalls Shipbuilding v. Fed. Ins. Co., 410 F.3d 214, 224–26 (5th
Cir. 2005) (similar).

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Petrobras America and Petrobras International Braspetro B.V., together referred to as
Petrobras, are subsidiaries of Petróleo Brasileiro S.A. (Docket Entry No. 85 at 23). In 2007,
Samsung entered into a construction contract with Pride Global Limited. Under the construction
contract, Samsung had the option to build a drillship if Pride secured a drilling-services contract
to operate the ship. (Id. at 49). Hamylton Padilha acted as an agent of Pride in the negotiations to
secure the drilling-services contract. (Id.) To help Pride receive a drilling-services contract,
Samsung bribed two Petrobras officials, Nestor Cuñat Cerveró and Renato de Souza Duque. (Id.
at 4). Pride received a drilling-services contract from Petrobras America, and Samsung exercised
its option with Pride to build a drillship, called the DS-5, for $640 million. (Id.).
Samsung alleges that the payments it made to Petrobras to facilitate the drilling-services
contract between Pride and Petrobras were only a small part of a “massive” bribery scheme
facilitated by Petrobras, in which Petrobras generated over $2 billion in corrupt payments to pay
Brazilian politicians and political parties. (Id. at 24). Samsung alleges that this decade-long
bribery scheme was planned, directed, and carried out by high-level officials at Petrobras, not
limited to Cerveró and Duque. (Id.).
In a nonprosecution agreement with the United States Department of Justice, Petrobras
admitted that from at least 2004 to 2012, its executives and managers “participated in the
facilitation and direction of portions of the corrupt payments to Brazilian politicians and Brazilian
political parties, some of which could affect [Petrobras], including because they had oversight over
the location in which a [Petrobras] project was being completed.” (Id. at 30–31). Petrobras
admitted to two transactions that violated the Foreign Corrupt Practices Act. (Id. at 39–40). One
“transaction related to the purchase of a Texas oil refinery in 2006, and another related to a drillship
charter brokered by Padilha in 2009.” (Id. at 39). Samsung alleges that members of Petrobras’s

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Board of Directors and Executive Board knew of the DS-5 bribery scheme, and that Petrobras
admitted that it “falsified books and records and failed to implement internal controls in
furtherance of the bribery scheme at issue in this counterclaim.” (Id. at 30, 53).
Samsung alleges that in addition to Petrobras’s admissions, its agent, Cerveró, told
Brazilian investigators that “that ‘all Petrobras businesses were a source of bribes,’ that Petrobras’s
CEO and the rest of the Executive Board were aware that Cerveró was receiving payments from
transactions, including transactions involving [Samsung], and that Petrobras’s CEO knew that this
was how business was conducted at Petrobras.” (Id. at 33). Samsung alleges that an executive
who worked as a manager in Petrobras’s engineering department from 2003 to 2011 told Brazilian
investigators that “bribery and kickbacks were ‘built in’ to many Petrobras contracts with
suppliers,” and that requiring some form of bribe or kickback in its business dealings was
Petrobras’s “modus operandi.” (Id.). Samsung also alleges that another member of Petrobras’s
executive board, Paulo Roberto Costa, stated that Petrobras’s directors and executives all knew
that to maintain their jobs, they had to permit the company to make payments to Brazilian
politicians. (Id. at 34–35).
In January 2016, Petrobras terminated the drilling-services contract with Pride, asserting
that the contract was void because it had been procured through corruption. Petrobras refused to
pay the $152 million it still owed Pride under the contract. (Id. at 57–58). After Petrobras ended
the drilling-services contract, Ensco—Pride’s successor—initiated two London-based arbitrations.
The first was against Petrobras, asserting wrongful termination of the drilling-services contract.
(Id. at 58). Petrobras faced more than $150 million in liability for cancelling the contract.
Samsung alleges in this case that Ensco and Petrobras decided to team up against Samsung in the
arbitration. One Ensco Senior Vice President wrote in an internal email that the company should

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promote a “story whereby [Samsung] are the only bad guys and Ensco and Petrobras settle their
claims clearing the way for Ensco to do business with Petrobras and shift their focus towards
[Samsung] (independently or jointly . . .).” (Id. at 59). The Ensco-Petrobras arbitration settled in
August 2018; neither party paid anything. (Id.).
Ensco then filed a second arbitration, this time against Samsung, for making the bribery
payments. (Id. at 60). In January 2018, the arbitration tribunal found that Samsung had paid the
bribes, that Ensco was unaware of the payments, that Samsung had paid those bribes for the benefit
of Padilha, Cerveró and Duque, and that Samsung misrepresented $20 million dollars worth of
costs in building the drillships to cover the costs of the bribes. (Docket Entry No. 92-11 at ¶¶ 367,
370–71, 513). In August 2018, the tribunal issued a second award ordering Samsung to pay costs
incurred up to the First Award. (Docket Entry No. 92-12 at ¶ 25). In May 2019, the tribunal issued
its third and final award, determining that Samsung owed Ensco a total of $200 million in damages.
The award included over $152 million in losses for “the value of the claim given up in the Petrobras
settlement [with Ensco],” that is, the amount due to Ensco from Petrobras under the drillingservices contract. (Docket Entry No. 85 at 60). In December 2019, Samsung settled with Ensco,
paying $200 million in damages. (Id.).
In March 2019, while the second arbitration was pending, Petrobras filed this suit against
Samsung. Petrobras sought to recover the amounts it had paid to acquire the drillship from Pride.
(Docket Entry No. 1). Petrobras acknowledged that two of its employees had demanded and
received personal payments from Samsung through Pride’s agent, Hamylton Padilha. (Docket
Entry No. 51 at ¶¶ 42–43, 134). In November 2021, Samsung filed its original answer and
counterclaim. (Docket Entry No. 85). The counterclaim seeks contribution from Petrobras for

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some or all of the $200 million that Samsung paid Ensco as a result of the DS-5 transaction with
Petrobras.
The pending motion seeks to dismiss the counterclaim as barred by limitations.
II.

The Legal Standard for Dismissal
Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be

granted.” FED. R. CIV. P. 12(b)(6). Rule 12(b)(6) must be read in conjunction with Rule 8(a),
which requires “a short and plain statement of the claim showing that the pleader is entitled to
relief.” FED. R. CIV. P. 8(a)(2). “[A] complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Rule 8 “does not require
‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Id. at 678 (quoting Twombly, 550 U.S. at 555). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S.
at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more
than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S.
at 556).
“A complaint ‘does not need detailed factual allegations,’ but the facts alleged ‘must be
enough to raise a right to relief above the speculative level.’” Cicalese v. Univ. Tex. Med. Branch,
924 F.3d 762, 765 (5th Cir. 2019) (quoting Twombly, 550 U.S. at 555). “Conversely, when the
allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic
deficiency should be exposed at the point of minimum expenditure of time and money by the

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parties and the court.” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (alterations omitted)
(quoting Twombly, 550 U.S. at 558).
A court reviewing a motion to dismiss under Rule 12(b)(6) may consider “(1) the facts set
forth in the complaint, (2) documents attached to the complaint, and (3) matters of which judicial
notice may be taken under Federal Rule of Evidence 201.” Inclusive Cmtys. Project, Inc. v.
Lincoln Prop. Co., 920 F.3d 890, 900 (5th Cir. 2019).
“A motion to dismiss may be granted on a statute of limitations defense where it is evident
from the pleadings that the action is time-barred, and the pleadings fail to raise some basis for
tolling.” Taylor v. Bailey Tool Mfg. Co., 744 F.3d 944, 946 (5th Cir. 2014).
III.

The Statute of Limitations
Petrobras argues that under Texas law, the statute of limitations for Samsung’s

counterclaim is two years, that the claim accrued when the tribunal issued the damages award
against Samsung in May 2019 in the Ensco-Samsung arbitration, and that the limitations period
ended before Samsung filed this counterclaim in November 2021. Samsung argues that under
Texas law, the applicable limitations period is four years, making its counterclaim clearly timely.
Samsung also argues that even if a two-year period applies, Samsung’s counterclaim did not accrue
until December 2019, when Ensco and Samsung settled their arbitration, or, at the earliest, March
2019, relating back to the date Petrobras filed this lawsuit. (Docket Entry No. 1-3).
A.

Counterclaim Limitations v. Underlying Action Limitations

The first question under Texas law is whether the limitations period governing contribution
actions should be the same as the limitations period that applies to the underlying claim. Samsung
argues that under Texas law, this court must determine the limitations period for the underlying
substantive claim and apply that period to the contribution counterclaim. Ensco’s substantive

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claims against Samsung in the arbitration were for bribery, dishonest assistance in the breach of
fiduciary duty, deceit and fraudulent misrepresentation, and conspiracy to injure by unlawful
means. Analogous claims have four-year limitations periods under Texas law. E.g., TEX. CIV.
PRAC. & REM. CODE § 16.004(a)(4), (5); Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580
S.W.3d 136, 138 (Tex. 2019). Samsung argues that the same four-year limitations period that
applies to the substantive claims here should also apply to the contribution counterclaim. Petrobras
argues that Texas courts have routinely applied a two-year limitations period to contribution
claims, regardless of the limitations period for the underlying substantive claim.
Under Texas law, [a] “defendant’s claim of contribution is derivative of the plaintiff’s right
to recover from the joint defendant against whom contribution is sought.” Varela v. Am. Petrofina
Co. of Tex., Inc., 658 S.W.2d 561, 562 (Tex. 1983). The issue is whether the derivative nature of
a contribution claim means that it is governed by the same limitations period that applies to the
underlying substantive claim.
The parties do not cite a case making clear whether the contribution counterclaim in this
case is governed by the same limitations period that applies to the underlying claims. Samsung
cites two Texas Supreme Court cases that apply the limitations period of an underlying cause of
action to a derivative cause of action, but these cases are distinguishable from the contribution
context present in this case.
Samsung first relies on Guillot v. Hix, 838 S.W.2d 230 (Tex. 1992). Guillot concerned a
provision of the Texas Workers’ Compensation Act that subrogated the insurance carrier “to the
rights of the injured employee” and permitted the carrier to “enforce the liability of the person who
caused the injury.” Id. at 231. The carrier paid the injured employee and then filed a subrogation
action against the employer. The Texas Supreme Court held that because the carrier “merely

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succeed[ed]” to the interests of the injured employee, the limitations period for the insurance
carrier’s derivative action was the same period that would apply had the injured employee brought
the action. Id. at 232–33.
Subrogation claims are analytically different from contribution claims.

Bringing a

subrogation claim entails standing in the shoes and asserting the rights of the injured party. See
Bay Rock Op. Co. v. St. Pail Surplus Lines Ins. Co., 298 S.W.3d 216, 223 (Tex. App.—San
Antonio 2009, pet. denied) (“Under both [equitable and contractual] subrogation, the insurer stands
in the shoes of the insured, and may assert only those rights held by the insured against the third
party, subject to any defenses of the third party against the insured.”). Because the same rights are
asserted, the applied limitations period should be the same, as the Texas Supreme Court recognized
in Guillot. But contribution claims do not involve the same right asserted in the underlying action.
The underlying action could be for a personal injury, fraud, or a breach of contract, but the right
asserted in the contribution action is for payment from another liable party. See ROBERT N. KELLY,
Insurer v. Insurer: Subrogation and Contribution Claims Against Other Insurers, 15 TORTSOURCE
1, 6 (2013) (“[E]quitable contribution allows a recovery, not from the party primarily responsible
for a loss, but from a co-obligor who shares such liability with the party seeking contribution.”);
18 AM. JUR. 2D CONTRIBUTION § 1 (a claim for contribution allows a defendant to “distribute[] a
loss caused by more than one person by requiring each person to pay a proportionate share of the
damages on a comparative fault basis”). Guillot does not support Samsung’s position.
Samsung also relies on Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580 S.W.3d 136
(Tex. 2019). In Agar, the Texas Supreme Court concluded that because civil conspiracy is a
derivative tort, in which “the plaintiff seeks to hold the defendant liable for an injury caused by a
third party who has acted in combination with the defendant for a common purpose,” the

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limitations period for conspiracy is the same as for the underlying tort. Id. at 139–40. The Court
explained that making the limitations periods different could lead to a bizarre result:
[W]hy should co-conspirators who participate in a scheme to
defame a person but who do not commit any defamatory acts
themselves be subject to suit for a longer period than the primary
tortfeasor upon whom their liability is premised? See TEX. CIV.
PRAC. & REM. CODE § 16.002(a) (applying a one-year limitations
period for libel and slander).
Equating the limitations period for civil conspiracy with that of the
underlying tort also accords with the Legislature’s statute-oflimitations scheme. The Legislature has defined different statutes
of limitations for various claims, such as “suit[s] for trespass or
injury,” “suit[s] on ... fraud,” “suit[s] for ... libel” or “suit[s] for
misappropriation of trade secrets.” TEX. CIV. PRAC. & REM. CODE
§§ 16.002–.004, .010. The scheme thus assigns statutes of
limitations based on the type of wrong, but it does not assign
different limitations for parties who may be liable through different
theories for the same wrong. Because civil conspiracy is a theory of
vicarious liability, a lawsuit alleging a civil conspiracy that
committed some intentional tort is still a “suit for” that tort.
Id. at 142. Agar does not help Samsung here. As the Texas Supreme Court explained, there is no
reason to give a defendant who is vicariously liable for conspiring to commit a tort a different
limitations period than the defendant who directly commits the tort. The plaintiff asserts the same
right against both defendants, under different theories of liability. In the case of contribution, the
plaintiff asserts the underlying right, but it is the defendant that asserts the right of contribution.
Although the Texas Supreme Court has held that subrogation and civil conspiracy claims
should have the same limitations period as the underlying claims, the Texas Supreme Court has
not decided this issue as to contribution. “In the absence of a controlling decision” by the state’s
highest court, the court must “make an ‘Erie [R.R. Co. v. Tompkins, 304 U.S. 64 (1938)] guess’ as
to how the state’s highest court would resolve the issue.” In re Franchise Servs. of N. Am., Inc.,
891 F.3d 198, 209–10 (5th Cir. 2018), as revised, (June 14, 2018) (quoting Temple v. McCall, 720

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F.3d 301, 307 (5th Cir. 2013)). “Unless persuaded that the state’s highest court would decide the
issue differently, [the court] also defer[s] to the decisions of the state’s intermediate appellate
courts.” Id.
The Texas Supreme Court in Agar and Guillot asked whether there was any reason for
subrogation claims and civil conspiracy claims to have different limitations periods than the
underlying claims from which they arise. It answered that question by comparing the rights
asserted in the subrogation or conspiracy claims and the underlying claims. Applying the same
reasoning, the Texas Supreme Court would likely recognize that the rights asserted in a
contribution claim are distinct from those in an underlying claim, warranting a different limitations
period for contribution claims that does not vary with the underlying claim. This is consistent with
Texas intermediate appellate court case law that has applied one limitations period to contribution
claims without considering the limitations period that applies to the underlying claims. See, e.g.,
Potter v. Kaufman & Broad Home Sys. of Tex., Inc., 137 S.W.3d 701, 705 (Tex. App.—San
Antonio 2004, no pet.); Atchison, Topeka & Santa Fe Ry. Co. v. Payne, No. 14-94-00628-CV,
1996 WL 283067, at *1 (Tex. Civ. App.—Houston [14th Dist.] 1996, writ. denied); Caldwell v.
Stevenson, 567 S.W.2d 278, 280 (Tex. Civ. App.—Austin 1978, no pet.). See also Robbins v. Port
of $ale, Inc., 62 V.I. 151, 158–59 (Super. Ct. 2015, March 6, 2015) (“[T]he practice in the Virgin
Islands and elsewhere favors treating limitations of actions for indemnity and contribution
differently than limitations on their predicate torts.”); RESTATEMENT (THIRD)

OF

TORTS:

APPORTIONMENT OF LIABILITY § 23 cmt. k (“[A] person is not protected from contribution by the
fact that the plaintiff would be precluded from recovery because of a statute of limitation.”). The
underlying claim is a right asserted by plaintiff, and the derivative, or contribution action, is a right
asserted by the defendant against a separate potential obligor.

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Because the limitations period for the underlying substantive claims does not determine
the period for the contribution claim, the next issue is whether a two or four year limitations period
applies to that claim.
B.

Two v. Four Years

Petrobras argues for a two-year period, citing TEX. CIV. PRAC. & REM. CODE § 16.003(a),
which provides:
(a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a
person must bring suit for trespass for injury to the estate or to the
property of another, conversion of personal property, taking or
detaining the personal property of another, personal injury, forcible
entry and detainer, and forcible detainer not later than two years
after the day the cause of action accrues.
This provision does not refer to claims for contribution.
Texas has a four-year statute of limitation for lawsuits involving contractual obligations.
Breach of contract, certain debt collection suits, and breach of fiduciary duty claims are all subject
to the four-year limitation. The four-year limitation also applies to certain transfers of real
property. A short list of claims subject to this rule are:
•

breach of fiduciary duty, TEX. CIV. PRAC. & REM. CODE § 16.004(a)(5);

•

claims in which no other statute of limitation is expressly applicable, TEX. CIV. PRAC. &
REM. CODE § 16.051;

•

claims for debt, TEX. CIV. PRAC. & REM. CODE § 16.004(a)(3);

•

fraud, TEX. CIV. PRAC. & REM. CODE § 16.004(a)(4);

•

specific performance of contract for conveyance of real property, TEX. CIV. PRAC. & REM.
CODE § 16.004(a)(1); and

•

breach of contract, TEX. CIV. PRAC. & REM. CODE § 16.004(3), § 16.051, or TEX. BUS. &
COM. CODE § 2.725.

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Texas state court cases have consistently treated claims for contribution as claims based on
an implied contract—an unwritten agreement for the payment of a debt. See Barton v. Farmers’
State Bank of Bertram, 263 S.W. 1093, 1095, 1097 (Tex. Civ. App.—Austin, 1924), overruled on
other grounds, 276 S.W. 177 (Commission of Appeals of Texas, Section A, 1925) (“It is well
settled in this state that payment by one co-obligor of more than his proportionate part of a common
debt must be made before a cause of action exists in favor of him against another co-obligor for
contribution. . . . The limitation applicable to an action for contribution is that fixed for an implied
contract.”); Nelms v. Chazanow, 404 S.W.2d 359, 362 (Tex. Civ. App.—Houston, 1966, no pet.)
(“The law is well settled in this State that each joint obligor in a contract is liable to the other for
contribution to indemnify him for any payments made in excess of his prorata share. The joint
obligor making such payment in excess of his share has a right of action upon the implied promise
of the other joint obligor for reimbursement. . . . In the instant case appellant’s cause of action
upon the implied promise arising out of the relationship of the parties and not upon a written
contract was barred in two years from the date when the right of action upon each payment
accrued.” (citing Article 5526)); Victor Refining Co v. City Nat’l Bank of Commerce, 263 S.W.
622, 624 (Tex. Civ. App.—Amarillo 1924), aff’d, 274 S.W. 561 (Tex. 1925) (“The right of
contribution exists only on compulsory payment of the debt by the one claiming the right.
Glasscock v. Hamilton, 62 Tex. 143, 151; 13 C.J. p. 823, § 6. It follows that when one is sued for
contribution, he may show that the other party was not legally bound to pay the debt, and
consequently is without right of contribution.”). Applying this approach to the Texas statutory
provisions setting four-year statutes of limitation supports a four-year limitations period.
This is consistent with other jurisdictions, in which courts have described contribution as
a way to apportion costs after liability has been established, a remedy given to the party who pays

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a debt that is concurrently owed by another party, and a doctrine that requires persons under a
common burden to share that burden equitably. Liability for contribution is coextensive with
liability for a debt, and a contribution action is an action to collect that unwritten debt. See 18 AM.
JUR. 2D CONTRIBUTION § 1 (citations omitted); see also Jones v. Meat Packers Equip. Co., Civ. A.
No. 81–871–N, 1984 WL 2877, at *3 (E.D. Va. July 5, 1984) (“While derived from the plaintiff’s
original action, in this instance a tort claim of negligence, a contribution action sounds in contract,
specifically as an implied promise to pay.” (citing cases)); Reddy v. PMA Ins. Co., 20 A.3d 1281,
1284 (Del. 2011) (“Contribution is the right of one who has discharged a common liability to
recover from another who is also liable.”); In re Individual 35W Bridge Litig., 806 N.W.2d 811,
815 (Minn. 2011) (“Contribution is an equitable remedy that then allows ‘one who has discharged
more his fair share of a common liability or burden to recover from another who is also liable the
proportionate share which the other should pay or bear.’” (citation omitted)); Sayles v. Bates, 5 A.
497, 498 (1886) (“[T]he liability to contribution is co–extensive with the liability for the debt.”).
Petrobras cites several older Texas state cases that cited and relied on the now-repealed
section of the Texas Civil Practice and Remedies Code, Article 5526, as support for the argument
that

a

two-year

limitations

period

applies

to

contribution

claims.

Article 5526, the predecessor of §16.003, set a two-year limitations period for personal injury
actions. (Docket Entry No. 105 at 13 n.8). But Article 5526, unlike its successor, also provided a
limitations period for actions to recover debts not evidenced in writing. Article 5526 stated in full:
Actions to be commenced in two years.–There shall be commenced
and prosecuted within two years after the cause of action shall have
accrued, and not afterward, all actions or suits in court of the
following description:
1. Actions of trespass for injury done to the estate or the
property of another.

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2. Actions for detaining the personal property of another, and
for converting such property to one’s own use.
3. Actions for taking or carrying away the goods and chattels
of another.
4. Actions for debt where the indebtedness is not evidenced
by a contract in writing.
5. Actions upon stated or open accounts, other than such
mutual and current accounts as concern the trade of merchandise
between merchant and merchant, their factors or agents. In all
accounts, except those between merchant and merchant, as
aforesaid, their factors and agents the respective times or dates of
the delivery of the several articles charged shall be particularly
specified, and limitation shall run against each item from the date of
such delivery, unless otherwise specially contracted.
6. Action for injury done to the person of another.
7. Action for injury done to the person of another where
death ensued from such injury and the cause of action shall be
considered as having accrued at the death of the party injured.
8. Actions of forcible entry and forcible detainer.
VERNON’S TEXAS STAT. 1948, Art. 5526, available at https://www.sll.texas.gov/libraryresources/collections/historical-texas-statutes/bookreader/1948-1/#page/1646/mode/2upp.

The

current version of this statute, TEX. CIV. PRAC. & REM. CODE § 16.003(a), does not include “actions
for debt where the indebtedness is not evidenced by a contract in writing.”
Turning to the cases that rely on now-repealed Article 5526, in Caldwell v. Stevenson, 567
S.W.2d 278 (Tex. Civ. App.—Austin 1978, no pet.), a bank sued four co-signers to recover the
balance on a promissory note. Id. at 279. A judgment was issued, and one of the co-signers,
Caldwell, paid the judgment. Caldwell then sued another co-signor for contribution. Id. at 279–
80. The Texas Civil Appeals Court cited Article 5526 as providing the limitations period for the
contribution action because it was an action for “assumpsit” or “implied promise to pay,”

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describing the action as one for a “debt.” Id. at 280. It appears that the Texas Court of Civil
Appeals cited Article 5526 as providing the two-year limitations period because the court
considered contribution to be an “[a]ction[] for debt where the indebtedness is not evidenced by a
contract in writing,” not because it considered contribution to be a claim for “injury” or “trespass.”
See also Miller v. Miles, 400 S.W.2d 4, 9 (Tex. Civ. App.—Tyler 1966, writ ref’d n.r.e.) (applying
the two-year statute of limitations under Article 5526 of the Texas Civil Practice and Remedies
Code because “a cause of action for contribution [is] brought on the theory of implied contract”);
Littlefield v. Scott, 244 S.W. 824, 826 (Tex. Civ. App. 1922, writ ref’d) (recognizing that the twoyear limitations period for a debt action was based on “implied contract”).
Although these older Texas state cases did not address limitations periods for contribution
actions in the context of tort claims, the cases provide additional support that contribution claims
in Texas have been understood as actions based on an implied, unwritten promise for a debt. Until
1979, these actions were subject to the two-year limitations period set out in Article 5526. Article
5526 was repealed in 1979, when the legislature placed actions for debt under a four-year
limitations statutory provision. See TEX. CIV. PRAC. & REM. CODE § 16.004; Amoco Prod. Co. v.
Smith, 946 S.W.2d 162, 164–65 (Tex. App.—El Paso 1997, no writ.) (recognizing that the
recodification of Texas statutes replaced the two-year limitations period for debt actions with a
four-year limitations period).
The parties’ supplemental briefs appear to agree that Texas state courts have consistently
recognized that a claim for contribution is a claim for breach of an implied contract, at times
described as an action for a debt or breach of an implied promise to pay, known as an action in
assumpsit. See Caldwell, 576 S.W.2d at 280 (“The cause of action for contribution is in assumpsit,
or implied promise to pay. . . .”); Nelms, 404 S.W.2d at 362 (contribution is a “right of action upon

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the implied promise of the other joint obligor for reimbursement”). The parties also agree that
under Texas law, debt and implied contract actions were governed by a two-year limitations period
until 1979, when the Texas legislature amended Article 5526 and made the four-year limitations
period applicable to debt actions. TEX. CIV. PRAC. & REM. CODE § 16.004; Crego v. Lash, No.
13–12–00100–CV, 2014 WL 1272220, at *5 (Tex. App.—Corpus Christi, Mar. 27, 2014)
(applying a four-year limitations period to a claim to recover the unpaid balance of an unwritten
note).
Petrobras nonetheless argues that the Texas Supreme Court’s holding in Elledge v. FribergCooper Water Supply Corp., 240 S.W.3d 869 (Tex. 2007) (per curiam), which applied a two-year
limitations period to unjust enrichment claims, extends to contribution claims. In Elledge, a county
contracted with the defendant to improve waterline service to rural residents. Id. at 869. The
defendant was required to provide his own insurance and equipment, but instead he charged one
of the residents for these costs. Id. The resident brought an action seeking restitution under an
unjust enrichment theory. Id. The Texas Court of Appeals had reasoned that unjust enrichment
claims were like claims for a “debt,” and that considering the 1979 amendments, the applicable
statute of limitations was four years. Id. at 870; see also Amoco, 946 S.W.2d 162 (reasoning that
unjust enrichment actions developed from assumpsit actions, which were actions for promise or
contract implied by law, and should be considered a “cause of action for debt not evidenced in
writing”).
In a short per curiam opinion, the Texas Supreme Court reversed the intermediate appellate
court because the Supreme Court had stated in a 1998 and a 2001 case, although without
explanation, that a two-year limitations period applied to claims for unjust enrichment. The

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Elledge Court did offer an an additional explanation, which, contrary to Petrobras’s argument,
supports applying a four-year limitations period to the contribution claim at issue here:
Even without the benefit of our prior decisions, we would conclude
that unjust enrichment claims should fall under the two-year statute.
The most logical reading of sections 16.003 and 16.004 is to treat
“debt” actions under section 16.004 as breach-of-contract actions
that fall under the four-year statute of limitations for such claims,
see also TEX. CIV. PRAC. & REM. CODE § 16.004(a)(1) (four-year
statute for claims seeking specific performance of contract to
convey real estate); TEX. BUS. & COM. CODE § 2.725 (four-year
statute for breach-of-contract claims under Texas Uniform
Commercial Code), while construing the two-year statute’s
reference to actions for “taking or detaining the personal property of
another” as applicable to extra-contractual actions for unjust
enrichment. This construction harmonizes the two statutes and
gives meaning to each.
Id. at 870–71.
Petrobras interprets this part of the opinion as evidencing the Texas Supreme Court’s intent
to treat every type of extracontractual claim, not only an extracontractual claim for unjust
enrichment, as subject to the two-year limitations period under §16.003. This appears overbroad.
The Texas Supreme Court read the §16.003 reference to actions for “taking or detaining the
personal property of another” to include extracontractual actions for unjust enrichment. The Court
distinguished extracontractual claims for unjust enrichment from debt actions, which are actions
for breach of contract and subject to a four-year limitations period. An action for unjust enrichment
is an action to recover a benefit that another has improperly obtained. See Heldenfels Bros., Inc.
v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (“A party may recover under the unjust
enrichment theory when one person has obtained a benefit from another by fraud, duress, or the
taking of an undue advantage.”); see also RESTATEMENT (THIRD)

OF

RESTITUTION & UNJUST

ENRICHMENT § 1 cmt. a (“Liability in restitution derives from the receipt of a benefit whose
retention without payment would result in the unjust enrichment of the defendant at the expense
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of the claimant.”). That is separate and different from an action for breach of an express or implied
contract, such as breach of an implied contract to pay a debt—including a debt sought by way of
contribution.
Elledge does not hold that contribution claims, which Texas and other courts treat as claims
for breach of an implied contract to pay a debt, which would be subject to a four-year limitations
period under §16.004, should also be treated as claims for unjust enrichment, which Elledge
characterized as claims for taking or detaining the property of another and subject to a two-year
limitations period under §16.003. See Nghiem v. Sajib, 567 S.W.3d 718, 722 n.20 (Tex. 2019)
(recognizing that while the Texas Supreme Court had indicated in Elledge that breach of contract
actions are subject to a four-year limitation period under § 16.004, the Court had also indicated,
without analysis, in other cases, that breach of contract actions fell under the residual four-year
limitations statute).
The historical analysis is consistent with treating contribution claims as claims for breach
of an implied contract to pay a debt, not claims for taking or holding another’s property. Article
5526 also had a provision for “taking or detaining the personal property of another,” but despite
the availability of that provision, lower intermediate courts considered contribution actions to be
actions for debts not evidenced by a contract in writing. Treating a claim for unjust enrichment as
a claim for a taking by another, while treating contribution as a claim for a debt owed by a party
liable to another party who has overpaid its share of a judgment, is consistent with Texas law. See,
e.g., TEX. CIV. PRAC. & REM. CODE § 33.015 (describing a defendant’s right of contribution for
“overpayment”); Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 21 (Tex. 1987) (describing as a
prerequisite for contribution the payment of “a disproportionate share of the common liability”).

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The Elledge Court cited another Texas Supreme Court decision, Williams v. Khalaf, 802
S.W.2d 651 (Tex. 1990). The issue in Khalaf was what limitations period should apply to actions
for fraud, which was not then set by statute. Id. at 654. The Khalaf Court noted a 1909 case that
had stated in “unequivocal terms” that an action for fraud was an action for a “debt.” Id. (citing
Gordon v. Rhodes & Daniel, 116 S.W. 40, 41–42 (1909)). The Khalaf Court was asked to treat
fraud like a tort or a trespass, with a two-year limitations period, rather than like a debt, with a
four-year limitations period. The Court refused, reasoning that fraud claims had evolved out of
contractual or quasi-contractual actions. Id. at 655–56. Because the Texas legislature had
amended Article 5526 to apply four-year limitations period to actions for debt—a contract or
quasi-contract claim—the Texas Supreme Court reasoned that the four-year period should apply
to actions for fraud. Id. at 657.
The Elledge Court noted that the interpretation in Khalaf was no longer “warranted”
because the Texas legislature had later amended the limitations statute to expressly state that fraud
actions were subject to a four-year limitations period. But the Elledge Court did not otherwise
find fault with the reasoning in Khalaf.

See Elledge, 240 S.W.3d at 870 n.1. And Texas

intermediate appellate courts have characterized contribution claims as implied contracts for debt
actions. See, e.g., Victor Refining, 263 S.W. at 624 (relying on Glasscock v. Hamilton, 62 Tex.
143, 151 (Tex. 1884), and referring to a contribution claim as seeking a “debt”); Caldwell, 567
S.W.2d at 280. Treating a contribution claim as a debt action or as a claim for breach of an implied
contract to pay a debt make the four-year limitations period apply, a conclusion that is consistent
with the Elledge Court’s treatment of a claim for unjust enrichment as a claim for the “taking or
detaining” of the property of another and subject to a two-year limitations period.

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Petrobras cites several Texas and federal cases that have applied a two-year limitations
period to contribution claims, but these decisions did not explain the reason for doing so. In Fed.
Ins. Co. v. Northfield Ins. Co., No. 4:14-0262, 2019 WL 13039283 (S.D. Tex. Aug. 29, 2019), the
“parties d[id] not contest that contribution claims are subject to a two-year statute of limitations.”
Id. at *4. That court cited Evanston Ins. Co. v. Nat'l Union Fire Ins. Co., No. 1:09-CV-909, 2012
WL 12977322, (E.D. Tex., Mar. 19, 2012), in which it was similarly “undisputed that Texas law
establishes a two-year statute of limitations for contribution claims such as this one.” Id. at *6.
The Evanston court cited Kelley v. Wal–Mart Stores, Inc., 224 F. Supp. 2d 1082 (E.D. Tex. 2002),
and Potter v. Kaufman & Broad Home Sys. of Tex., Inc., 137 S.W.3d 701 (Tex. App.—San Antonio
2004, no pet.), but neither is helpful here. Kelley discussed the separate issue of when the cause
of action for contribution accrued, not what the limitations period would be. 224 F. Supp. 2d at
1083. Potter stated that “common law contribution claims” must be brought “two years from the
date the cause of action accrues,” but cited only § 16.003(a) without explaining how that section
applied to “common law contribution.” Id. at 705; see also Atchison, Topeka & Santa Fe Ry. Co.
v. Payne, No. 14-94-00628-CV, 1996 WL 283067, at *1 (Tex. Civ. App.—Houston [14th Dist.]
1996, writ. denied) (applying the two-year limitations period to a contribution action, without
explanation).
One other ground supports applying a four-year limitations period. There is no express
limitations period for a contribution claim. Under TEX. CIV. PRAC. & REM. CODE ANN. § 16.051,
“[e]very action for which there is no express limitations period . . . must be brought not later than
four years after the day the cause of action accrues.” See Nationstar Mortgage LLC v. Barefoot,
NO. 14-19-00750-CV, 2021 WL 5001660, at *2–4 (Tex. App.—Houston [14th Dist.] Oct. 28,
2021) (applying a residual limitations period to claims under the Texas Debt Collection Act

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because it was not clear what limitations period applied, despite the fact that several other courts
had applied the two-year personal-injury limitations period, without explanation).
A four-year limitations period applies to Samsung’s counterclaim.

Samsung seeks

contribution for the damages it paid to Ensco under a settlement agreement that resolved arbitration
awards and appeals for which Petrobras had responsibility. (Docket Entry No. 85, Counterclaim,
at ¶¶ 10, 211–14, 221, 224). The counterclaim asserts a breach of an implied obligation to pay
Samsung for some or all of the amount Samsung paid Ensco because of Petrobras’s acts. This
obligation is a breach of an implied promise to pay, or a claim on a debt, not a claim from a tortious
detention of Samsung’s property. The four-year limitations period is appropriate. Because
Samsung brought its counterclaim in November 2021, less than four years after the third arbitral
award, the court need not decide when Samsung’s counterclaim accrued or whether it relates back
to the date of Petrobras’s original complaint.
IV.

Conclusion
Petrobras’s motion to dismiss Samsung’s contribution counterclaim, (Docket Entry No.

91), is denied.
SIGNED on August 8, 2022, at Houston, Texas.
_______________________________
Lee H. Rosenthal
Chief United States District Judge

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