The Texas Supreme Court’s recent holding in Third Coast Servs., LLC v. Castaneda expands potential liability coverage under § 97.002 of the Texas Civil Practice & Remedies Code by reasoning that so long as the contractor defendant can prove their work is “for” the benefit of the Texas Department of Transportation (TxDOT), they can assert the affirmative defense of immunity under this statute—despite whether they were a party to the original TxDOT contract. The Court’s plain language statutory interpretation acknowledges contractual realities for most roadway contractors who do not contract directly with TxDOT, paving the way for realistic risk management and predictability for lower-tier contractors seeking roadway construction work.
In a recent opinion, the Texas Supreme Court clarified that a contractor’s immunity from liability under § 97.002 of the Texas Civil Practice & Remedies Code extends to not just those in contractual privity with the TxDOT, but also to subcontractors and lower-tier contractors who perform work under the umbrella of a TxDOT contract. Third Coast Servs., LLC v. Castaneda, No. 23-0848, 2025 WL 3558839, at *1 (Tex. Dec. 12, 2025).
In Third Coast Servs., LLC v. Castaneda, the Texas Supreme Court considered whether a general contractor and its subcontractor, neither of whom contracted directly with TxDOT, could seek the protection of § 97.002. See generally id.; Tex. Civ. Prac. & Rem. Code § 97.002.
Section 97.002 provides, “A contractor who constructs or repairs a highway, road, or street for the Texas Department of Transportation is not liable to a claimant for personal injury, property damage, or death arising from the performance of the construction or repair if, at the time of the personal injury, property damage, or death, the contractor is in compliance with contract documents material to the condition or reflect that was the proximate cause of the personal injury, property damage, or death.” Tex. Civ. Prac. & Rem. Code § 97.002.
TxDOT and Montgomery County (the County) entered into an agreement to develop the SH 249 corridor in Montgomery County, Texas. Third Coast Servs., LLC, 2025 WL 3558839, at *1. As part of the project, the original SH 249 would become the frontage roads of the new, larger SH 249. Id. TxDOT agreed to allow use of the SH right of way for the project, and the County would finance, design, and construct the project. Id. The frontage roads—the former SH 249—would remain part of the state highway system, and TxDOT would be responsible for the operation and maintenance of the frontage roads. Id. at *1-2. In essence, the County was responsible for the project but was required to coordinate with TxDOT, comply with TxDOT standards, and allow TxDOT to review and approve the project’s plans. Id. at *2.
Under this agreement, the County contracted with SpawGlass to serve as the general contractor to construct portions of the new SH 249, including various intersections along the SH 249 corridor. Id. SpawGlass’s subcontractor, Third Coast, installed all traffic signals at the intersections. Id.
While the project was ongoing, Pedro Castaneda (Castaneda), traveling west, attempted to cross an SH 249 frontage road intersection. Id. at *1. Castaneda failed to yield at a stop sign and was struck by a truck travelling south on the SH 249 frontage road. Id. At the time of the collision, Third Coast had installed, but not electrified, the traffic signals at the intersection. Id. As such, the traffic signals were covered with black construction fabric, and in the meantime, the stop signs for east and west bound traffic (which would subsequently be replaced by the traffic signals) controlled the intersection. Id. Castaneda died as a result of the collision, and his family filed suit against the contractors (SpawGlass and Third Coast), among others. Id.
The contractors moved for summary judgment based on § 97.002, arguing that despite not contracting directly with TxDOT, as lower-tier subcontractors under a TxDOT contract umbrella, they were entitled to immunity. Id. at *2.
The trial court denied the contractors’ motions for summary judgment, and the Fourteenth Court of Appeals affirmed. Id. The court of appeals held that the contractors failed to establish that they constructed or repaired a highway, road, or street “for” TxDOT and reasoned that the legislature intended there be a contractual relationship between the contractor and TxDOT for a contractor to assert the liability protections of § 97.002. Id. The Fourteenth Court of Appeals’ holding directly contradicted a fellow court of appeal’s opinion that “privity with TxDOT is unnecessary as long as the contractor ‘perform[s] work under a contract that makes the [contractor] responsible for constructing or repairing a highway, road, or street for TxDOT.’” Id. (citing Mahoney v. Webber, LLC, 608 S.W.3d 444, 448 (Tex. App.—Houston [1st Dist.] 2020)).
Based on the conflicting intermediate court opinions, the contractors appealed to the Texas Supreme Court, which ultimately held that § 97.002 does not require contractual privity between the contractor and TxDOT. Id. at *1, *6. Although not addressing whether the contractors succeeded in obtaining the liability protections of § 97.002, the Court did reason that § 97.002’s scope extends to those who construct or repair a highway, road, or street for TxDOT—not just those hired directly by TxDOT—and to any contractor that performs part of the work under a contract with TxDOT. Id. at *4–5. The Court further held that Third Coast and SpawGlass were able to conclusively establish that they did perform their work “for” TxDOT, allowing them to assert the liability protections of § 97.002. Id. at *5. In other words, lower-tier subcontractors down the contractual chain are entitled to seek § 97.002’s protection.
The Texas Supreme Court’s opinion importantly clarifies the scope of who can take advantage of the liability protections in § 97.002 if certain elements are met. Despite the Fourteenth Court of Appeals’ holding that there was an additional contractual-privity requirement for contractors to assert the affirmative defense of immunity from liability under § 97.002, the Court’s plain language interpretation made clear that so long as the contractor is performing work “for” TxDOT, then contractors may be protected from liability, assuming they establish the other elements of the statutory scheme. Id. at *1, *5.
The Court’s holding provides contractors with greater predictability in entering contract negotiations and the ability to accurately consider risks by acknowledging contracting realities in the world of highway construction and repair.
Predictability & Risk Management
Highway construction contractors can now contract with greater predictability and understanding of risks. Because general contractors often hire subcontractors to complete various aspects of construction contracts, such as the installation of traffic lights in this case, these subcontractors can now undertake such contractual obligations with greater assurances of potential liability protection. Under the Court’s statutory interpretation, contractors who have not directly contracted with TxDOT, but whose work ultimately benefits and is for TxDOT, can have greater assurances that when their work must comply with TxDOT standards and when TxDOT has the authority to review and approve the project’s plans, the contactors may not be exposed to liability. Though, the Court did recognize that merely coordinating and submitting plans for TxDOT’s approval is insufficient to establish that a contractors’ work was “for” TxDOT. Id. at *4.
Instead, contractors should consider whether TxDOT ultimately will bear the responsibility for the operations and maintenance of the project, which in this case, it did. Id. at *5. In such circumstances, contractors should establish facts that their work is for the benefit of TxDOT to assert a defense from liability under § 97.002—again, with the caveat that contractors seeking statutory protection must also prove that they complied with the relevant contract documents.
Contracting Realities
The Court’s holding strengthens statutory protections for contractors by recognizing the realities of contracting in the world of highway construction and repair. The contractual arrangements in Third Coast Servs., LLC provide a textbook example of the highway construction processes and agreements entered to execute these types of contracts. TxDOT contracted directly with Montgomery County, which under the Fourteenth Court of Appeals’ interpretation would permit only Montgomery County to assert the immunity from liability defense under § 97.002, as the only party in horizontal privity of contract with TxDOT. However, such an interpretation disregards the vertical privity agreements that often take place in construction projects. It is these general contractors and their subcontractors who are affected by and can now take advantage of the statutory protection that § 97.002 offers.
Securing Protection & Eliminating Questions of Applicability
Contractors should assert this defense when they are constructing or repairing a highway, road, or street forTxDOT, are complying with TxDOT’s contractual specifications, and do not have liberty to make contractual modifications without TxDOT’s approval. Contractual compliance is critical for contractors performing work that ultimately benefits TxDOT. Although here the Court did not resolve the fact-intensive issue related to contractual compliance, it did emphasize the necessity of this statutory requirement by remanding the issue to the court of appeals. Id. at *5–6; Tex. Civ. Prac. & Rem. Code § 97.002 (recognizing that to achieve statutory protection there must be “compliance with the contract documents material to the condition or defect that was the proximate cause of the personal injury, property damage, or death”). Contractors should be sure not to deviate from the material contract documents, which TxDOT ultimately reviewed and approved, if they seek the protections of § 97.002.