Texas Construction Law Blog

The Texas Supreme Court recently issued an important decision for contractors, subcontractors, and infrastructure companies working on public roadway projects. In Third Coast Services, LLC v. Castaneda, the Court confirmed that statutory liability protection under the Texas Civil Practice & Remedies Code Section 97.002 can apply even when a contractor does not have a direct contract with the Texas Department of Transportation (“TxDOT”). No. 23-0848, 2025 WL 3558839 (Tex. Dec. 12, 2025).

The opinion provides meaningful guidance on three recurring issues in construction-defect and roadway-accident litigation:

1. Whether Section 97.002 requires a direct contract with TxDOT;
2. What it means to perform work “for” TxDOT; and
3. Whether work involving traffic signals and related infrastructure constitutes construction or repair of a “highway, road, or street.”

The Dispute

Third Coast Services arose from a fatal crash at an intersection under construction along Highway 249. Traffic signals had been installed but were not yet operational at the time of the accident. The deceased driver’s family sued the general contractor (SpawGlass) and an electrical subcontractor (Third Coast Services), alleging negligence in traffic control and signal-related work.

Importantly, neither contractor had contracted directly with TxDOT. TxDOT entered into a master agreement with Montgomery County for a tollway; Montgomery County hired SpawGlass as general contractor; and SpawGlass hired Third Coast Services as a subcontractor to perform electrical and signal work.

The contractors argued they were protected by Texas Civil Practice and Remedies Code Section 97.002, which provides that:

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 injury or death, the contractor is in compliance with contract documents material to the condition or defect that was the proximate cause.

The court of appeals had held that Section 97.002’s protections did not apply to SpawGlass and Third Coast Services because they were not “hired by TxDOT” and lacked contractual privity. The Supreme Court disagreed.

No Privity Requirement

The Texas Supreme Court’s first and most important holding was straightforward: Section 97.002 does not require direct contractual privity with TxDOT. The Court noted that the statute does not limit its application to a contractor “who contracts with TxDOT” or “who is hired by TxDOT,” emphasizing that when the Legislature intends to impose a privity requirement, it does so expressly—and it did not do so here. Therefore, the statute’s scope extends to a contractor that performs qualifying work “for” TxDOT.

What It Means to Work “For” TxDOT

The Court’s second holding clarified what it means to perform work “for” TxDOT. First, as a general rule, a contractor who contracts directly with TxDOT or a subcontractor hired to perform part of that work, perform work “for” TxDOT. However, the Court declined to adopt the SpawGlass and Third Coast Services’ proposed rule that any work subject to TxDOT standards or approval is necessarily performed “for” TxDot. While the Court did not define for all cases the precise line at which work on a project is work “for” TxDOT,” it focused its reasoning on whether TxDOT would ultimately own, operate or be responsible for the infrastructure at issue. Here, the evidence showed that: (1) the contractors worked on roadway components that would become frontage roads; (2) TxDOT would ultimately operate and maintain those roads; and (3) TxDOT would exercise responsibility and control over the traffic signals after completion.

As such, that was enough for the Court to conclude the work was performed “for” TxDOT and “for” the County. The fact that the contractors were performing work for the County did not preclude the work also being “for” TxDOT.

Traffic Signals Are Part of the “Highway”

The Court’s third holding is a meaningful indication of that work on “highway, road, or street” under Section 97.002 is not limited to the paving and concrete. The Court rejected Plaintiffs’ argument that installing traffic signals falls outside of the construction or repair of a “highway, road, or street” under Section 97.002. Instead, the Court concluded that the contractors’ work on traffic signals for what would become the frontage roads on the tollway project constituted “construction or repair” of a “highway” for TxDOT. In coming to this conclusion, the Court relied on the Transportation Code’s definition of “highway,” which includes “other necessary structure related to a public road.” The Court found that traffic signals directly relate to the physical function and safety of the roadway, much like guard rails.

This holding is significant because this opens the door to Section 97.002’s scope also extending to traffic control devices, lighting, and other safety-related infrastructure that is integral to roadway function.

The Remaining Risk: Contract Compliance Still Matters

Although the Court ruled in favor of the contractors on statutory interpretation, it did not render judgment in their favor. Instead, it remanded the case to the court of appeals to address whether the contractors complied with the project requirements material to the condition or defect that was the proximate cause of the accident.

The plaintiffs had alleged, among other things, that: signal heads were not properly covered before activation; temporary traffic controls were not modified despite known hazards; and work sequencing did not follow contractual requirements.

While the Court did not resolve this issue, it is important to understand that, even though the statute can provide powerful protection from liability, it can only do so if contractors can prove compliance with contractual requirements tied to the alleged defect.

Key Takeaways from Third Coast Services

For Texas construction practitioners, Third Coast Services is a meaningful victory with several implications:

• It strengthens the availability of Section 97.002 protection for subcontractors who have not directly contracted with TxDOT.
• Roadway-related infrastructure (signals, lighting, safety devices) may fall within the statute.
• It discourages plaintiffs from avoiding the statute simply by pleading around privity.
• It highlights the importance of documentation, QA/QC procedures, and contract compliance.

At the same time, the decision signals that Section 97.002 is not a blanket liability shield. Courts will scrutinize whether the work at issue truly benefits TxDOT in a meaningful way and whether the contractor can prove compliance with contractual documents. As such, strong, consistent project documentation and disciplined compliance practices remain critical and can make the difference.