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At a Glance:
Title:
Banta Oilfield Services, Inc. v. Mewbourne Oil Company
Date:
December 4, 2018
Citation:
568 S.W.3d 692
Status:
Published Opinion

Banta Oilfield Services, Inc. v. Mewbourne Oil Company

Court of Appeals of Texas, Texarkana.

BANTA OILFIELD SERVICES, INC., Appellant

v.

MEWBOURNE OIL COMPANY, Appellee

No. 06-17-00107-CV

|

Date Submitted: August 1, 2018

|

Date Decided: December 4, 2018

|

Rehearing Denied December 28, 2018

*697 On Appeal from the 114th District Court, Smith County, Texas, Trial Court No. 16-0719-C/B. Christi J. Kennedy, Judge

Attorneys & Firms

Joseph E. Byrne, Byrne, Cardenas & Aris LLP, Dallas, TX, for appellant.

Gregory D. Smith, Smith Legal PLLC, Tyler, TX, for Appellee.

Before Burgess, JJ.

OPINION

Opinion by Justice Moseley

In 2014, Mewbourne Oil Company (Mewbourne), a Tyler, Texas, based entity,1 was operating in the State of New Mexico, drilling for and producing oil and/or natural gas. Mewbourne decided to install a 300-gallon battery tank at a well site there and retained Banta Oilfield Services, Inc. (Banta) to assist in its installation. Mewbourne and Banta entered into a Master Services Agreement (MSA) drafted by Mewbourne, which they both concur governed their relationship.

Mewbourne also contracted with Steve Kent Trucking NM, LLC (Kent Trucking) to be a contractor at the well site in New Mexico. It also entered into an agreement with C&M Services, LLC (C&M) wherein C&M would provide services at the site. An individual named Daniel Vargas worked for Kent Trucking and/or C&M Services as either a direct employee, an agent, or a contractor. Vargas was injured at the New Mexico site when a chain slipped off a tank that was being moved by a Banta-owned-and-operated pole truck. Vargas’ wife brought suit against Banta in New Mexico for Vargas’ personal injuries.2 *698 Banta sent a demand letter to Mewbourne seeking defense and indemnity from Mewbourne.3 Mewbourne refused Banta’s demand, informing Banta that Mewbourne was only a pass-through for defense and indemnification and that Banta should demand a defense and indemnity from Kent Trucking.4

Banta brought suit against Mewbourne seeking a judicial declaration that: (1) Texas substantive law applied to the interpretation of the MSA; (2) Mewbourne breached the agreement; (3) Mewbourne was obligated to defend and indemnify Banta in regard to Vargas’ personal injury lawsuit; and (4) Mewbourne was responsible to Banta for court costs and attorney fees. In response, Mewbourne argued that New Mexico law applied and that (under it and the MSA) Banta would be responsible for its own actions. Although the parties agreed that their respective liability would be governed by the terms of the MSA, they disagreed as to the interpretation of the contract. In doing so, they disagreed as to whether Texas law applied to the controversy or whether it would be governed by New Mexico law. After the parties filed cross-motions for summary judgment, the trial court denied Banta’s motion and entered judgment in favor of Mewbourne, finding that New Mexico law applied to the parties’ MSA and that Banta was estopped from arguing otherwise.

On appeal, Banta maintains (1) that Mewbourne’s grounds for summary judgment were its affirmative defenses of judicial estoppel and quasi-estoppel, neither of which apply to the facts of this case, and (2) that Banta proved as a matter of law its own entitlement to summary judgment. For the reasons below, we reverse the trial court’s order granting summary judgment in favor of Mewbourne, render judgment for Banta on its motion for summary judgment, and remand this case to the trial court for further determination.

*699 I. Pleadings at Trial Court

As previously stated, Banta sued Mewbourne in the 114th Judicial District Court of Smith County for breach of contract. It also sought a declaratory judgment regarding the enforceability of the asserted defense and indemnity obligations.5 In addition, Banta requested an award of attorney fees. Banta’s position rested in large part on a provision in the MSA that stated (1) that any suit shall be brought exclusively in the state or federal courts located in Tyler, Smith County, Texas, and (2) that “[a]ll disputes, controversies, or claims arising out of or relating to this Agreement ... shall be governed and controlled by the substantive laws of the State of Texas, excluding any conflict of law or choice of law principles.”

Shortly after filing suit, Banta moved for summary judgment on the enforceability of the indemnity provision under Texas law.6 Mewbourne also moved for summary judgment, arguing that New Mexico law applied and that the principles of judicial estoppel and quasi-estoppel were applicable based on Banta’s indemnity agreement in a case that involved a different contract, work site, and parties.7 See Pina v. Gruy Petroleum Mgmt. Co., 139 N.M. 619, 136 P.3d 1029 (N.M. Ct. App. 2016).

Banta subsequently filed an amended motion for summary judgment wherein it asserted the same arguments contained in its original motion, but also offered additional proof to demonstrate the application of the indemnity agreement as it applied to Vargas’ claim. Mewbourne filed an amended response to Banta’s amended motion for summary judgment. In its amended response, Mewbourne continued to argue the applicability of the principles of judicial *700 estoppel and quasi-estoppel, but also added a choice-of-law analysis under the Restatement (Second) of Conflict of Laws and argued that the indemnity agreement was invalid under Texas law as applied to gross negligence and willful misconduct.

After the trial court held two hearings on the parties’ cross-motions for summary judgment, it entered judgment in favor of Mewbourne and denied Banta’s motions for summary judgment. Banta appealed, maintaining that the trial court erred in granting Mewbourne’s motion for summary judgment and in failing to grant its motion for summary judgment. Banta also contends that it affirmatively demonstrated entitlement to summary judgment on Mewbourne’s indemnity obligation. Banta asks this Court to reverse the trial court’s judgment in favor of Mewbourne, reverse the trial court’s denial of Banta’s summary judgment motion, render judgment in favor of Banta on the enforceability of the indemnity provision against Mewbourne and Mewbourne’s breach thereof, and remand for a determination on the issues of damages and attorney fees.8

II. Standard of Review

Appellate courts review de novo the grant or denial of a motion for summary judgment. Nash v. Beckett, 365 S.W.3d 131, 136 (Tex. App.—Texarkana 2012, pet. denied).

III. Discussion

A. Mewbourne’s Motion for Summary Judgment

In Mewbourne’s motion for summary judgment and its supplement to its motion for summary judgment, Mewbourne argued that the application of judicial estoppel and quasi-estoppel prevented Banta from using “a Texas choice-of-law provision in the Banta/[Mewbourne] MSA to obtain indemnity when, in the past, Banta has used the [NMOAIS] to void indemnity obligations and to thwart a similar choice-of-law provision.”9 The trial *701 court found merit in Mewbourne’s argument and granted judgment in its favor. Therefore, in order for this Court to affirm the trial court’s judgment in favor of Mewbourne, we must initially address Mewbourne’s contention that the principles of judicial estoppel and quasi-estoppel are applicable to this case. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 339 (Tex. 1993) (finding an appellate court cannot affirm summary judgment on a basis not stated in a party’s motion for summary judgment).

1. Judicial Estoppel

“Judicial estoppel precludes a party who successfully maintains a position in one proceeding from afterwards adopting a clearly inconsistent position in another proceeding to obtain an unfair advantage.” Pleasant Glade Assembly of God, 264 S.W.3d at 7).

In order for the doctrine of judicial estoppel to apply, a party must show the following: “(1) the opposing party made a sworn, inconsistent statement[10] in a prior judicial proceeding; (2) the opposing party making the statement gained some advantage by it; (3) the statement was not made inadvertently or because of mistake, fraud, or duress; and (4) the statement was deliberate, clear, and unequivocal.” In re Estate of Huff, 15 S.W.3d 301, 309 (Tex. App.—Texarkana 2000, no pet.) ). Thus, in order for the trial court to grant summary judgment in favor of Mewbourne based on its judicial estoppel theory, Mewbourne must have presented sufficient summary judgment evidence in support of these four factors.

Maintaining that Banta is estopped from arguing that Texas law applies to the indemnity issues in this case, Mewbourne relies on Id.

In addition, Article 10 of the MSC provided that

[t]o the fullest extent permitted by law, [Banta] shall indemnify, defend and hold harmless GRUY ... from and against all claims, damages, losses, liens, causes of action, suits, judgments, fines and expenses, including, but not limited to reasonable attorneys’ fees (collectively referred to and defined as “Liabilities”), of any person or entity arising out of, caused by or resulting directly or indirectly from the performance of the work under this Contract, ... regardless of whether the Liabilities are caused in part by the negligence of any Indemnitee.

Id.

Banta intervened in the wrongful death action, seeking a declaratory judgment invalidating the indemnity provision in Article 10 as violative of Section 56-7-2 of the NMOAIS (which was enacted in 1971), and it also filed a motion for summary judgment11 based on that section.12 Id. at 1033. The amended version stated,

A. An agreement, covenant or promise, foreign or domestic, contained in ... an agreement pertaining to a well for oil ... within New Mexico, that purports to indemnify the indemnitee against loss or liability for damages arising from the circumstances specified in Paragraph (1) ... of this subsection is against public policy and is void:

(1) the sole or concurrent negligence of the indemnitee....

Pina, 136 P.3d at 1031. Gruy appealed.

The New Mexico Court of Appeals affirmed the district court’s summary judgment in favor of Banta. Is doing so, it examined conflict-of-laws principles, “observ[ing] that New Mexico courts may decline to enforce a choice-of-law provision in a contract incorporating foreign law if application of foreign law would offend New Mexico public policy.” Section 56-7-2, the appellate court stated,

The Legislature’s decision to expressly subordinate freedom of contract to well site safety is a persuasive indicator that the Legislature believed promoting safety at well sites to be an especially important public policy. The Legislature, which we presume was familiar with the strong public policy favoring freedom of contract, nevertheless, chose to elevate the public policy favoring safety at well sites over the public policies underlying freedom of contract.

Id. at 1033.

Relying on Banta’s position in Pina, Banta argued that the choice-of-law provision was void and unenforceable since the accident and lawsuit were in New Mexico and (2) that it received affirmative relief based on its argument. Mewbourne contends that the only time Banta makes any distinction in the two cases is when Banta sues in Texas to obtain a defense and indemnity, as opposed to Banta owing a defense and indemnity under similar contract terms and similar facts.

Notably, Mewbourne contends that it was not required to show that Banta made a prior sworn inconsistent statement. In support of its position, Mewbourne relies on the Fifth Court of Appeals’ opinion in Id. at 820.

The Dallas Court of Appeals’ reasoning has little, if any, application to this case. Judicial estoppel seeks to prevent a party from “abus[ing] the judicial process by obtaining one recovery based first on affirming a certain state of facts, and then another recovery based on denying the same state of facts.Webb, the appellate court made clear that an exception to the general rules of judicial estoppel would apply under a very particular set of circumstances, that is, where contrary statements have been made by a party’s attorney relating to distinctly different factual assertions made in two separate proceedings in the same case and involving the same parties. That is simply not the case here.15

Mewbourne also relies on Id.

After the September Will was admitted to probate in Louisiana, certified copies of the will and the order admitting it to probate were filed of record in the office of the County Clerk of Gregg County, Texas. Id. at 314. After a jury trial, the trial court entered judgment in favor of Wife. Linam appealed.

In the Id. at 316. In finding that Wife was “very definitely estopped to contest the will under Texas law,” we stated,

Any person who secures the entry of a judgment fully cognizant of all antecedent facts, is estopped to assert any right contrary to such judgment even though the determination made by the prior judgment may not be right. A person is estopped from taking an adverse position in a subsequent suit involving the same matters to a position previously taken in the same matters by pleadings or otherwise. [Wife] having successfully maintained [her] first position in the State of Louisiana, with full cognizance of the contention made in this case, [she] cannot now be permitted to take a position inconsistent therewith.

Id. (citations omitted).

Despite Mewbourne’s contention, Pina may be similar to the facts of this case, the two cases clearly do not involve the same “matters.” Among other things, Mewbourne was not a party to the contract between Banta and Gruy, it had no rights or obligations under the Pina-Gruy contract, and it was not involved in the litigation between the parties who did have rights and obligations under the contract, i.e., Pina and Gruy.

Regardless, this Court has previously made clear that a prior, sworn, inconsistent statement is required in order to establish judicial estoppel. Pina litigation, which litigation did not involve Mewbourne in any way.

In sum, the evidence does not show that Banta made a prior, sworn, inconsistent statement in the Pina litigation, and in fact, Mewbourne concedes this point by arguing that proof of a sworn statement is not necessary to support a finding of judicial estoppel. We recognize that there are very narrow exceptions to this rule; however, the facts of this case do not support such an exception.18 For these reasons, we find that judicial estoppel does not apply in this case.

2. Quasi-Estoppel

The affirmative defense of quasi-estoppel precludes another party from asserting, to another’s disadvantage, a right inconsistent with a position he or she has previously taken. Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 494 (Tex. 1991) ).

Banta maintains that quasi-estoppel requires mutuality of parties and unconscionability, neither of which Mewbourne could show. Quasi-estoppel “may not be asserted by or against a ‘stranger’ to the transaction that gave rise to the estoppel.” Pina litigation and a stranger to the transaction that was made the basis of that lawsuit. For that reason alone, Mewbourne’s quasi-estoppel argument is without merit.

In our review, we may address only those grounds expressly presented in Mewbourne’s motion for summary judgment and its supplement to that motion. See McConnell, 858 S.W.2d at 341. Because we find that neither judicial estoppel nor quasi-estoppel are applicable under the *707 facts of this case, we reverse the trial court’s order granting summary judgment in favor of Mewbourne.

B. Banta’s Motion for Summary Judgment

Banta contends that the trial court wrongly denied its motion for summary judgment, which sought enforcement and determination of Mewbourne’s liability for breach of its defense and indemnity obligations. Banta asks this Court to reverse and render judgment in its favor, declaring the defense and indemnity obligations enforceable and finding Mewbourne liable for its breach of contractual obligation.

1. The MSA’s Choice-of-Law Provision

Paragraph 11 of the MSA states:

All disputes, controversies, or claims arising out of or relating to this Agreement, including the validity, construction, enforcement, or interpretation of this Agreement, shall be governed and controlled by the substantive laws of the State of Texas, excluding any conflict of law or choice-of-law principles. In the absence of a mandatory venue prescribed by state or federal law, any suit or proceeding hereunder shall be exclusively in the state or federal courts located in Tyler, Smith County, Texas. Each Party hereby consents to the personal jurisdiction of said state and federal courts and waives any objection that such courts are an inconvenient forum.

(Emphasis added). Banta contends that according to this paragraph, the parties clearly intended Texas substantive law to apply to the interpretation of the MSA. While this issue appears to be one of first impression in Texas, Banta maintains that Texas’ contract-construction principles require the same result.

In support of its position, Banta contends that the exclusion is phrased broadly in terms precluding the application of “any conflict of law or choice of law principles.”19 Further, Banta states that under relevant contract-construction principles, this exclusion must have some meaning and that the only meaning that makes sense of the entire agreement is one that precludes the choice-of-law analysis that Mewbourne contends is necessary. According to Banta, “Because Texas is—and always will be—the forum and because the forum’s conflicts laws apply by default, the parties necessarily intended to preclude any choice-of-law analysis that would point away from applying Texas substantive law to their contractual disputes—even if the exclusion of choice-of-law principles were limited to those of Texas.”

Maintaining that the parties did not intend for Texas law to apply in relation to any potential indemnification issues, Mewbourne contends that when a declarative contract provision is followed by “excluding,” the general rule is that the *708 parties intended to narrow the primary provision by carving out an exception. Thus, according to Mewbourne, the exclusionary language in the MSA means that conflict of law and choice-of-law principles are omitted from and not subject to the parties’ attempt to fix the applicable law.20 Mewbourne also contends that Banta ignores the phrase “substantive laws.” Thus, before the comma, the choice-of-law proviso addresses the substantive laws, while after the comma, the exclusion addresses the procedural choice-of-law principles.

Taken together, the intention is that the parties intend to be governed by Texas substantive laws insofar as they are permitted to make this selection. And in those instances when choice-of-law principles are available to override the parties’ choice of substantive law, the parties have chosen to allow for application of the forum state’s choice-of-law principles.

This Court disagrees.

When interpretation of a contract is in issue, a court must first determine whether the provisions in question are ambiguous. State Farm Fire & Cas. Co. v. Reed, 873 S.W.2d 698, 699 (Tex. 1993).

In maintaining that New Mexico law applies to any indemnity issues, Mewbourne points to the language contained in paragraph 5F of the MSA, which states,

The indemnities provided in this Article shall be limited to the extent necessary for compliance with laws or regulations applicable to the performance of Work hereunder, and to the extent any such laws or regulations are in variance with the indemnities provided in this Agreement, such indemnity shall be deemed to be amended so as to comply with such laws or regulations.

Mewbourne contends that the exclusionary language contained in paragraph 11, along with language contained in paragraph 5F, clearly shows that the parties intended for New Mexico law to apply to indemnity issues since the work performed took place in New Mexico.21

*709 If we were to adopt Mewbourne’s position, we would be compelled to consider paragraph 5E alone, while at the same time ignore the remaining provisions of the parties’ MSA. It is well settled that no single provision taken alone is given controlling effect; rather, each provision must be considered in the context of the instrument as a whole. Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 2014). Here, Mewbourne discounts the language contained in paragraph 5E, which states:

In the event this Agreement is subject to the indemnity limitations in Chapter 127 of the Texas Civil Practice and Remedies Code (or any successor statute), and so long as such limitations are in force, each Party covenants and agrees to support the mutual indemnity obligations contained in Sections 5.B and 5.C, by carrying insurance of the types and in the amounts not less than those specified in Article 4 and Exhibit A of this Agreement, for the benefit of the other Party.

(Emphasis added). The language of paragraph 5E clearly demonstrates that the parties intended Texas law to apply, even in regard to indemnity issues. Had the parties intended for New Mexico law to apply, they could have easily included that language in the MSA. Had the parties intended to apply New Mexico law to indemnity issues, the MSA could have stated that the agreement shall be governed and controlled by the substantive laws of the State of Texas, excluding any conflict of law or choice-of-law principles, which principles shall be controlled by New Mexico law.22 In addition, the forum selection clause in the MSA contained a venue provision that clearly stated any potential litigation would take place in Texas; more specifically, Tyler, located in Smith County, Texas.

The Texas Supreme Court has held that courts are required to consider the entire writing, harmonizing and giving effect to all contract provisions so that none will be rendered meaningless. See id. at 4. Stated differently, even if the language of the parties’ MSA was in conflict, this Court is required to choose an interpretation that harmonizes all of the provisions contained in the agreement. When we review the parties’ MSA in its totality, we find that the language contained in their agreement showed the parties’ intent that there be no choice-of-law analysis and that Texas law apply regarding any issue arising out of the parties’ agreement, including indemnity issues.

2. Enforceability of the Choice-of-Law Provision

However, while courts generally honor contracting parties’ bargained-for and expressed choice of which state’s laws governs the performance of a contract, the contracting parties’ freedom to choose what state’s law applies is not unlimited. *710 Id. at 680.

In order to determine the enforceability of a choice-of-law provision, we apply principles from the Restatement (Second) of Conflict of Laws. Id. at 677–81. Section 187(2) of the Restatement reads as follows:

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

In re J.D. Edwards World Sols. Co., 87 S.W.3d 546, 549 (Tex. 2002) (per curiam) (orig. proceeding) (finding Colorado had a substantial relationship to parties and their transaction because one party’s office was located in Colorado). We, therefore, conclude that under these circumstances, Texas has a substantial relationship to the parties and the transaction, and Section 187(2)(a) of the Restatement does not preclude the application of Texas law in this case.

Next, we determine, pursuant to TEX. R. APP. P. 47.1.25

Whether there is a state with a more significant relationship to the parties and the transaction at issue than the one contractually specified by the parties is determined pursuant to five factors that are set out in Section 188(2) of the Restatement. DeSantis, 793 S.W.2d at 678.

We find that Texas has the most significant relationship to the parties and the transaction in regard to the first, second, and fifth factors. Mewbourne, the drafter of the agreement, is domiciled in Texas and conducts business in Texas. Its business office is located in Texas. Further, Banta maintains, and Mewbourne does not dispute, that Mewbourne drafted the MSA in Texas and signed the agreement in Texas. We recognize that Banta is a New Mexico company and that it signed the agreement in New Mexico. Despite those facts, we find, among other reasons, that because Mewbourne drafted the agreement in Texas, Texas, and not New Mexico, has a more significant relationship to the substantive issue before us.

In regard to the third and fourth factors, we find that Texas has a more significant relationship to the parties and the transaction than does New Mexico. Notably, Vargas’ accident occurred while he was performing work in New Mexico; however, the parties’ agreement is silent as to where any of the work was to be performed. The MSA did not state that New Mexico would be the place of performance. In fact, there is no mention of New Mexico in the entire agreement. More importantly, however, the issue in this case involves the enforceability of the indemnity provision in the MSA, and not the work that had been performed in New Mexico pursuant to that agreement. “What is determinative is which state has the most significant relationship with respect to the indemnity issue,” and not the location of the work.26 Chesapeake Operating, *712 Inc. v. Nabors Drilling USA, Inc., 94 S.W.3d 163, 173 (Tex. App.—Houston [14th Dist.] 2002, no pet.). The past performance of the work is not at issue here. The only dispute remaining is wholly related to the performance of the MSA’s indemnity provision, a dispute that has been litigated entirely in Texas.

Further, the MSA was written in a manner showing the parties anticipated and intended that the provisions of the agreement would control regardless of the location of the work being performed. In fact, the parties agreed in paragraph 5E that the provisions of Chapter 127 of the Texas Civil Practice and Remedies Code, entitled “Indemnity Provisions in Certain Mineral Agreements,” would apply. See Chesapeake, 94 S.W.3d at 177.

In addition, Section 6 of the Restatement sets out several non-exclusive factors that may be considered in determining the applicable law. Section 6 factors are:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum.

(c) the relevant policies of other interested states and the relative interests of those states in determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law applied.

Id.

Here, the enforcement of the MSA in accord with its terms satisfies the relevant policies of the chosen forum (that is Texas). See Chesapeake, 94 S.W.3d at 177. Here, if New Mexico law were applied to the indemnity issue, as Mewbourne maintains, it would have relieved Mewbourne of the defense and indemnity it agreed to provide Banta. Certainly, Banta had a justified expectation that Mewbourne would comply with the terms of an agreement that Mewbourne negotiated, drafted, and signed (all in Texas). *713 Moreover, Mewbourne and Banta purchased insurance in order to comply with Texas law. Had the parties expected New Mexico law to apply, there would have been no reason to include such a requirement in their agreement.28

When we consider the Restatement’s factors, along with the quality and quantity of each of the parties’ contacts to Texas and New Mexico, we find that Texas has the “most significant relationship to the transaction and the parties.” See 188(1). As such, we must enforce the parties’ choice of Texas law. For these reasons, we hold that Texas law governs the enforceability of the MSA’s indemnity provision.

3. Enforceability of MSA under Texas Law

In order for this Court to grant its requested relief, Banta was required, pursuant to the laws of Texas, to present sufficient competent summary judgment evidence to show that Mewbourne’s defense and indemnity obligations were enforceable pursuant to the terms of the MSA.

a. Coverage of Vargas’ Claim

Mewbourne maintains that the provisions of the MSA did not cover Vargas’ personal injury claim because Vargas was not Mewbourne’s employee. Paragraph 5C of the MSA states that Mewbourne, as “Company Group,” would release, indemnify, defend, and hold Banta, as “Contractor Group,” harmless against any and all claims resulting from, among other things, personal injury.29 In paragraph 5.A.3, Company Group is defined as:

(i) Company, its parent, subsidiary and affiliated or related companies, (ii) its and their working interest owners, co-lessees, co-owners, partners, joint operators, and joint venturers, if any, and their respective parent, subsidiary and affiliated or related companies, (iii) Company’s other contractors of any tier, and (iv) the officers, directors, employees, agents, consultants, and invitees of any and all of the foregoing.

The summary judgment evidence shows that on February 17, 2015, Mewbourne contracted with Kent Trucking to be a contractor at the New Mexico site. Further, in the plethora of summary judgment evidence provided to the Court, we find a letter written and sent by Mewbourne’s counsel to Kent Trucking, which letter had been written following Vargas’ accident. In it, Mewbourne’s counsel explained, “At the time of the incident Daniel Vargas was employed by C&M Services LLC who either shares the same ownership as [Steve Kent Trucking] or was a subcontractor of [Steve Kent Trucking].” There is even stronger evidence of this relationship in *714 Mewbourne’s responses to Vargas’ interrogatories, where Mewbourne ratified that Vargas was either employed by or was a contractor for Kent Trucking when the injury occurred.

Based on the summary judgment evidence, we find that Banta demonstrated that Vargas was at the very least a “contractor[ ] of any tier,” or Mewbourne’s invitee, and that Vargas had asserted a claim against Mewbourne for the injury he incurred while working at the New Mexico site. As such, the MSA covers Mewbourne’s indemnity and defense obligations to Banta as it relates to the Vargas lawsuit.

b. Fair Notice Requirements

Banta seeks indemnity from Mewbourne for the consequences of its own negligence. Indemnity agreements used to exculpate a party from the consequences of its own negligence involve an extraordinary shifting of risk. See Fisk Elec. Co. v. Constructors & Assoc., Inc., 888 S.W.2d 813, 815 (Tex. 1994) ).

Banta points out that the Texas Supreme Court (along with several appellate courts) has held that the express-negligence doctrine is satisfied when “regardless” language is included as part of the parties’ indemnity provision. Id. at 8.

Here, paragraph 5D of the parties’ MSA states,

OR THE NEGLIGENCE OF ANY PERSON OR PARTY, INCLUDING THE INDEMNIFIED PARTY OR PARTIES, WHETHER SUCH FORM OF NEGLIGENCE BE SOLE, JOINT AND/OR CONCURRENT, ACTIVE OR PASSIVE, OR ANY OTHER THEORY OF LEGAL LIABILITY.[31]

The plain language of the MSA shows that the parties intended for Mewbourne to indemnify Banta, “without regard to the causes thereof,” and that it contracted to do so even in the event the claim was a result of Banta’s own negligence. Further, the MSA consisted of seven pages of single-spaced language, with the majority of its contents written in lower-case letters. The language contained in paragraphs 5C and 5D, however, consist entirely of capital letters, along with bold type-face. In general, “[l]anguage that appears in contrasting type or in capitals satisfies the conspicuousness requirement.” Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494 (Tex. 2015). We, therefore, find that the indemnity provision of the MSA satisfies the express negligence doctrine and the conspicuousness requirement; thus, Mewbourne had fair notice that it agreed to indemnify Banta, even for Banta’s own negligence.32

Despite this language, Mewbourne maintains that the MSA included no requirement that it indemnify Banta on *716 claims relating to punitive damages or gross negligence. We disagree. The MSA contains a list of claims that would be covered by the indemnity provision: latent or patent conditions, ultrahazardous activity, strict liability, tort, breach of contract, breach of duty, or breach of safety requirements or regulations. Moreover, the provision clearly includes language extending its duties to Mewbourne, that is, “including without limitations” and “without regard to the causes of action thereof.” It is plain that Mewbourne drafted this agreement. As the drafter of the agreement, Mewbourne cannot now maintain that it intended anything other than to indemnify Banta in relation to any cause of action, including gross negligence claims and punitive damages claims.

IV. Conclusion

Based on the foregoing, we find that Texas law applies to the terms of the parties’ MSA; that under Texas law, Mewbourne had the obligation to defend and indemnify Banta against Vargas’ claims; that it breached its contractual obligation to Banta by refusing to do so; and that Banta is entitled to recover damages and its attorney fees.

We, therefore, reverse the trial court’s summary judgment in favor of Mewbourne, reverse the trial court’s denial of Banta’s motion for summary judgment and render judgment in favor of Banta on the enforceability of the indemnity provision against Mewbourne and Mewbourne’s breach thereof; and remand to the trial court for a determination of damages and attorney fees.

Footnotes

1

Originally appealed to the Twelfth Court of Appeals in Tyler, this case was transferred to the Sixth Court of Appeals by the Texas Supreme Court pursuant to its docket equalization efforts. See TEX. R. APP. P. 41.3.

2

Vargas’ pleadings alleged that while lifting a 500-gallon tank “[d]uring [an] improvised procedure,” the tank shifted and fell, causing a nearby riser to break loose and fall towards both the Banta and C&M crews. Vargas pushed a Banta crew member out of the way of a falling riser, and in the process, he “suffered serious, debilitating and life-threatening personal injuries.” Vargas alleged negligence and sought compensatory and punitive damages, as well as damages for loss of consortium and loss of services. Vargas claimed Banta was vicariously liable for his damages by virtue of the negligent conduct of its employees.

3

In its letter, Banta referenced paragraph 5C of the MSA, which stated,

[MEWBOURNE OIL COMPANY] SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD CONTRACTOR GROUP [BANTA OILFIELD SERVICES, INC.] HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO (I) PERSONAL OR BODILY INJURY, ILLNESS, SICKNESS, DISEASE, OR DEATH OF ANY MEMBER OF THE COMPANY GROUP [VARGAS], AND (II) LOSS, DAMAGE OR DESTRUCTION OF REAL OR PERSONAL PROPERTY (WHETHER OWNED OR LEASED) OR ANY MEMBER OF COMPANY GROUP.

4

Banta points out that the MSA contained no pass-through language and, in fact, contained language to the contrary in section 5D:

THE ASSUMPTIONS OF LIABILITY, RELEASES, AND INDEMNITIES SET FORTH IN THIS ARTICLE 5 SHALL APPLY TO ANY CLAIMS WITHOUT REGARD TO THE CAUSES THEREOF, INCLUDING, WITHOUT LIMITATION, PRE-EXISTING CONDITIONS, WHETHER SUCH CONDITIONS BE PATENT OR LATENT, ULTRAHAZARDOUS ACTIVITY, STRICT LIABILITY, TORT, BREACH OF CONTRACT, BREACH OF DUTY (STATUTORY OR OTHERWISE), BREACH OF ANY SAFETY REQUIREMENT OR REGULATION, OR THE NEGLIGENCE OF ANY PERSON OR PARTY, INCLUDING THE INDEMNIFIED PARTY OR PARTIES, WHETHER SUCH FORM OF NEGLIGENCE BE SOLE, JOINT AND/OR CONCURRENT, ACTIVE OR PASSIVE, OR ANY OTHER THEORY OF LEGAL LIABILITY.

5

Banta sought a judicial declaration regarding the interpretation of the MSA pursuant to Section 37.001 of the Texas Civil Practice and Remedies Code. Specifically, Banta sought an order declaring that

A. Texas substantive law applied to the interpretation of the MSA;

B. Mewbourne was in breach of the MSA;

C. Mewbourne had an obligation to defend and to indemnify Banta in the Vargas lawsuit; and

D. Mewbourne owed Banta the costs of court and attorney fees.

6

Specifically, Banta argued that summary judgment should be granted in its favor and against Mewbourne on the following issues:

(1) Mewbourne had an obligation under the Master Service Agreement to defend and to indemnify Banta in the pending Vargas lawsuit;

(2) Mewbourne was in breach of the MSA;

(3) Texas substantive law applied to the interpretation of the MSA; and

(4) Banta was entitled to recover its attorney fees as a result of Mewbourne’s breach of the MSA.

Mewbourne responded to Banta’s summary judgment motion, arguing that Banta was attempting to use a Texas choice-of-law provision to obtain indemnity when, in the past, it had used the New Mexico Oilfield Anti-Indemnity Statute (NMOAIS) to void indemnity obligations and to “thwart” a similar choice-of-law provision. According to Mewbourne, Banta is estopped from taking a contrary position in this case.

7

Mewbourne filed a supplement to its motion for summary judgment, continuing to argue that Banta was attempting to use a Texas choice-of-law provision in the underlying litigation in order to obtain indemnity when, in the past, it had used the NMOAIS to void indemnity obligations.

In addition, Mewbourne filed a third-party petition against Kent Trucking. Banta contends that Mewbourne’s claim against Kent Trucking rested on identical indemnity language contained in a MSA between Mewbourne and Kent Trucking. In Mewbourne’s petition, it claimed that Kent Trucking was obligated to (1) indemnify Banta as a result of Vargas’ claim, or (2) was obligated to indemnify Mewbourne as a result of Banta’s claim. The trial court denied Mewbourne’s motion for summary judgment against Kent Trucking. It also dismissed Mewbourne’s claims against Kent Trucking on September 25, 2017.

8

In the alternative, Banta asks this Court to remand its claims in whole or in part for further trial court proceedings, along with an award of appellate court costs.

9

In its supplement to its original motion for summary judgment, Mewbourne presented analogous estoppel arguments. Moreover, Mewbourne asserted a very similar position in its response to Banta’s motion for summary judgment. In addition, Mewbourne filed an amended response to Banta’s motion, continuing to assert its estoppel arguments, but also adding a choice-of-law analysis under the Restatement (Second) Conflict of Laws and an argument that the indemnity agreement was invalid under Texas law to indemnify for gross negligence or willful misconduct.

In its appellate brief, Mewbourne presents arguments beyond the estoppel arguments contained in its motion for summary judgment. “[T]he Texas Supreme Court has held that summary judgment cannot be granted except on the grounds expressly presented in [a party’s] motion.” Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 204 (Tex. 2002).

10

In order to qualify as a sworn statement under Texas law, the statement must have been made in verified pleadings, an affidavit, or a deposition during the course of sworn testimony. 566 S.W.2d 900 (Tex. 1978) (per curiam).

11

Gruy also filed a motion for summary judgment.

12

Originally, Section 56-7-2 stated as follows:

A. Any agreement, covenant or promise contained in, collateral to or affecting any agreement pertaining to any well for oil, gas or water ... which purports to indemnify the indemnitee against loss or liability for damages, for:

(1) death or bodily injury to persons; or

(2) injury to property; or

(3) any other loss, damage or expense arising under either Paragraph (1) or (2) or both; or

(4) any combination of these, arising from the sole or concurrent negligence of the indemnitee or the agents or employees of the indemnitee ... is against public policy and is void and unenforceable. This provision shall not affect the validity of any insurance contract or any benefit conferred by the Workmen’s Compensation Act....

Pina, 136 P.3d at 1031.

13

Webb’s employment with the police department was terminated due to an arrest and charge of assault on a family member. After entering a plea of nolo contendere, Webb was subsequently sentenced to deferred adjudication community supervision, which he successfully completed. Webb, 211 S.W.3d at 811. Because Webb completed community supervision, he was not convicted of the charged offense.

14

The city first stated that Webb’s employment with the police department was based on his conviction for family violence assault. The statement was obviously not sworn. Later in the proceedings, the city changed its position regarding the basis for Webb’s termination. Id. at 820.

15

Our sister court explained,

Stated differently, if a party prevails in one action after asserting the truth of one version of the facts, he cannot attempt to prevail in a later proceeding by asserting those same facts are not true. Indeed, pursuant to this doctrine, a fact admitted by a prevailing party in a judicial proceeding is established as a matter of law; the admitting party may not in a second proceeding dispute the admission or introduce evidence contrary to it.

Bailey-Mason v. Mason, 334 S.W.3d 39, 43 (Tex. App.—Dallas 2008, pet. denied) (emphasis added).

16

Louisiana was Jones’ place of domicile at the time of his death. Jones, 301 S.W.3d at 311.

17

As we stated previously in In re Estate of Loveless:

There is a line of Texas cases holding that, if a party takes an affirmative position in a proceeding and is successful in having the court adopt its position, that party may be judicially estopped from later taking an inconsistent position in that or in any other proceeding, even though the previous position does not consist of a sworn declaration. Andrews v. Diamond, Rash, Leslie & Smith, 959 S.W.2d 646, 649–50 (Tex. App.—El Paso 1997, writ denied).

These cases all involve judicial estoppel invoked by defendants against plaintiffs who failed to list causes of action as potential assets in previous bankruptcy actions. The courts in those cases applied Fifth Circuit precedent rather than Texas law in order to “promote the goal of uniformity and predictability in bankruptcy proceedings.” Andrews, 959 S.W.2d at 649 n.1.

Id.

18

There is no evidence in the record to indicate that Mewbourne was involved in the Pina litigation.

19

Banta cites to several non-Texas courts that have limited language to narrow the scope of this exclusion to, for example, the conflicts of law of one particular state. See 874 F.3d 1136 (10th Cir. 2017).

20

Mewbourne states that its position is consistent with the last antecedent doctrine concerning the use of commas. In support of its contention, Mewbourne cites 82 C.J.S. Statutes § 333 (1999) ).

Here, when reading the MSA in its totality, we are of the opinion that the parties’ MSA contained a “contrary intention.”

21

Contrary to Mewbourne’s contention, paragraph 5F can have no effect until after the “applicable” state laws and regulations have been determined. In other words, paragraph 5F does not dictate what state’s law applies; instead, only after that determination has been made, does paragraph 5F have any meaning or relevance.

22

Mewbourne states that paragraph 5E added a “flexibility” to the contract, harmonizing its expressed general desire for the application of Texas law with the specific requirements of local law, but without the necessity of redrafting the entire MSA anytime work is to be done in a state that prohibits indemnification for well-site negligence. Mewbourne’s contention is not based on a reading of all of the provisions contained in the MSA; rather, Mewbourne speculates, in its favor, as to what the agreement meant based on a single provision in the MSA.

23

In Id.

24

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188(1) (AM. LAW INST. 1971).

25

TEX. R. APP. P. 47.1.

26

Banta sought defense and indemnity from Mewbourne with respect to the Vargas lawsuit by sending a letter to Mewbourne’s office in Tyler, Texas. The insurance company that drafted and sent the demand letter on Banta’s behalf was located in Houston, Texas.

27

Exhibit A is attached to the parties’ MSA and states, in part, “During the term of this Agreement, unless otherwise prohibited by law, each Party shall, at each Party’s sole expense, carry with solvent and reputable insurance carriers, insurance of the types and in the minimum amounts....” The document set out the minimum dollar amount of insurance the parties were required to carry for commercial (or comprehensive) general liability insurance, workers’ compensation insurance, employer’s liability insurance, automobile liability insurance, pollution insurance, and excess (or umbrella) liability insurance.

28

Mewbourne maintains that if Texas law were applied to the facts of this case, such application would be in violation of New Mexico’s public policy against the use of indemnity provisions imposing indemnity obligations for an indemnitee’s own negligence. Unlike New Mexico, Texas does not prohibit such an indemnity agreement if “the parties agree in writing that the indemnity obligation will be supported by liability insurance coverage to be furnished by the indemnitor....” TEX. CIV. PRAC. & REM. CODE ANN. § 127.005(a) (West 2011). We are unwilling to find, nor is it necessary to do so, that the enforcement of an indemnity agreement indemnifying the indemnitee against its own negligence supported by insurance directly contravenes New Mexico’s public policy of assuring the safety of its oilfield workers. Even assuming it does, when we rely on Texas’ public policy favoring freedom of contract, along with the numerous other factors favoring the use of Texas law, this factor, alone, is not determinative.

29

See infra note 3 (referring to paragraph 5C).

30

See infra note 3 (referring to paragraph 5C).

31

In Texas, oilfield indemnity clauses are generally void. Ken Petroleum Corp. v. Questor Drilling Corp., 24 S.W.3d 344, 346 (Tex. 2000). In this case, paragraph 5E states,

In the event this Agreement is subject to the indemnity limitations in Chapter 127 of the Texas Civil Practice and Remedies Code (or any successor statute), and so long as such limitations are in force, each Party covenants and agrees to support the mutual indemnity obligations in Section 5.B and 5.C, by carrying insurance of the types and in the amounts not less than those specified in Article 4 and Exhibit A of this Agreement, for the benefit of the other Party.

Attached to the parties’ agreement is Exhibit A, which sets out in detail the parties’ obligations regarding the types and minimum amounts of insurance the parties were required to procure. Thus, by the terms of the contract, both companies were required to maintain a sufficient amount of liability insurance.

32

In Cate v. Dover Corp., 790 S.W.2d 559, 561).

The summary judgment evidence in this case shows that Mewbourne had actual knowledge of the indemnity provision.

End of Document
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