Arnold Oil Properties LLC v. Schlumberger Technology Corp.
672 F.3d 1202
10th Cir.2012Background
- Arnold hired Schlumberger to perform a cementing job at a deep-zone gas well in Oklahoma.
- Schlumberger prepared proposals using different hole volume calculations, leading to more cement being used than needed.
- Arnold signed Schlumberger's contract after the work was completed; the contract contained indemnity and a liability-limiting clause.
- The contract included broad indemnities and a separate Limitation of Liability (LOL) provision capping liability to the contract price, with exceptions.
- The district court treated the indemnity provision as not exculpatory and denied summary judgment on the LOL; a jury later found unequal bargaining power and Schlumberger breached the contract.
- The appeal centers on whether the indemnity clause is exculpatory and whether the LOL is enforceable given unequal bargaining power.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the indemnity clause is exculpatory and unenforceable | Arnold argues the indemnity provision exculpates Schlumberger from liability. | Schlumberger argues indemnities cover only third-party claims, not exculpation of itself. | Exculpation not established; under Oklahoma law the clause cannot exculpate due to unequal bargaining power. |
| Whether the limitation-of-liability provision should be enforced given bargaining power | Arnold contends unequal bargaining power voids the LOL. | Schlumberger contends equal power or non-negotiable terms allow enforcement. | LOL unenforceable due to proven unequal bargaining power. |
| What standard governs whether to enforce or deny summary judgment/jury verdict | N/A (precision focus) | N/A | De novo review of summary-judgment and judgment-as-a-matter-of-law standards; affirm denial where justified. |
Key Cases Cited
- Schmidt v. United States, 912 P.2d 871 (Okla.1996) (three-factor test for exculpatory clauses under Oklahoma law)
- Elsken v. Network Multi-Family Sec. Corp., 49 F.3d 1470 (10th Cir.1995) (take-it-or-leave-it evidence insufficient to prove unequal bargaining power (context))
- Webco Indus., Inc. v. Thermatool Corp., 278 F.3d 1120 (10th Cir.2002) (standard for reviewing Rule 50/judgment as a matter of law; substantial-evidence def.)