341 S.W.3d 432
Tex. App.2010Background
- Crimson Exploration (formerly Gulfwest Energy) entered an indemnity agreement with Intermarket in 2004 to assist in identifying buyers for Crimson.
- Intermarket and Crimson’s executives were interconnected, with Manolis controlling Intermarket and Loehr involved as Crimson director; PCA was also involved in coordinating investment banking services.
- PCA sued Intermarket and Crimson affiliates in 2005 for fraud-related claims; Crimson did not indemnify Intermarket or McMillan upfront.
- Crimson sued for breach of indemnity in 2007; Crimson also asserted a declaratory judgment counterclaim regarding indemnity, defense obligations, and related fees.
- The trial court granted summary judgment for appellees on breach of indemnity; later judgments addressed Crimson’s declaratory judgment counterclaims and the amount of damages.
- Appellees sought attorney’s fees incurred in defense of the PCA suit; at issue was whether such fees fell within indemnity and whether damages were proven reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did appellees prove indemnity for PCA defense fees? | Crimson: no duty to indemnify for defense costs absent duty to defend. | Crimson: indemnity requires a duty to indemnify tied to related actions; may be separate from duty to defend. | Indemnity duties can exist independently of a duty to defend. |
| Is there a damages award for defense fees within indemnity? | Crimson: damages not proven; PCA suit damages not established. | Crimson: indemnity covers losses/expenses; damages need not be proven as to reasonableness. | Damages must prove reasonableness of attorney fees; award vacated and remanded for damages determination. |
| Was Crimson entitled to summary judgment on declaratory judgment claims regarding duty to defend? | Crimson: seeks declaratory relief on ongoing duty to defend and related obligations. | Appellees: no justiciable controversy on duty to defend; issues duplicative of indemnity claims. | Trial court properly granted summary judgment; no ongoing duty to defend established; take-nothing on duty to defend claim. |
| Was the take-nothing judgment on the declaratory claim proper? | Crimson: should have a declaratory ruling on ongoing defense obligations. | No justiciable controversy and indemnity issues control; declaratory relief inappropriate. | Take-nothing judgment on Crimson’s declaratory judgment claim affirmed. |
Key Cases Cited
- D.R. Horton-Texas, Ltd. v. Markel Int'l Ins. Co., Ltd., 300 S.W.3d 740 (Tex. 2009) (duty to defend and duty to indemnify are distinct)
- Safeco Ins. Co. of America v. Gaubert, 829 S.W.2d 274 (Tex.App.-Dallas 1992) (interpretation of indemnity terms; intent governs)
- Great Am. Reserve Ins. Co. v. Britton, 406 S.W.2d 901 (Tex. 1966) (reasonableness of attorney’s fees as factual issue)
- Don's Building Supply v. OneBeacon Ins. Co., 267 S.W.3d 20 (Tex. 2008) (damages required to indemnify; damages eligibility)
- Charette v. Fitzgerald, 213 S.W.3d 505 (Tex.App.-Houston [14th Dist.] 2006) (statutory/contractual fee considerations and indemnity)
- Hasty, Inc. v. Inwood Buckhorn Joint Venture, 908 S.W.2d 494 (Tex. App.-Dallas 1995) (attorney’s fees evidence standards)