Lenny M. Chapman v. Missouri Basin Well Service
862 F.3d 1103
| 8th Cir. | 2017Background
- Hiland and Missouri Basin entered a 2008 Master Service Contract (Hiland MSC) with an Oklahoma choice-of-law clause; Hiland’s MSC contained a broad indemnity requiring Missouri Basin to "indemnify, defend and save harmless" Hiland for claims arising from contract performance.
- Missouri Basin subcontracted hauling services to B&B under a separate B&B Master Services Contract (B&B MSC) governed by North Dakota law; B&B’s MSC expressly identified it as an authorized for-hire motor carrier and contained indemnity language limited to claims arising from performance of that contract.
- An October 2011 incident at Hiland’s plant caused an explosion that seriously injured Lenny Chapman; the Chapmans sued Hiland and settled with Hiland for $10 million (Hiland paid $3M; insurers $7M), with Hiland assigning its indemnity claims against Missouri Basin to the Chapmans.
- The district court granted summary judgment for B&B on Hiland’s third-party claim (B&B had no duty to indemnify Hiland for Hiland’s own negligence under North Dakota law) and later granted summary judgment for the Chapmans against Missouri Basin, applying Oklahoma law to enforce the Hiland MSC indemnity provision.
- Missouri Basin argued North Dakota’s motor-carrier anti-indemnity statute voided the Hiland MSC indemnity as against public policy; the court and the Eighth Circuit held the Hiland MSC is not a "motor carrier transportation contract," so North Dakota’s statute did not apply and Oklahoma law governed, making the indemnity enforceable.
- Post-judgment: the district court granted the Chapmans’ Rule 59(e) motion to reduce the judgment to a sum certain ($10 million) including insurer-paid amounts, and denied Missouri Basin’s Rule 59(e) seeking reconsideration as untimely and raising new arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law / enforceability of Hiland MSC indemnity | Chapmans: Oklahoma-law choice is valid; indemnity enforceable; covers full settlement | Missouri Basin: North Dakota public policy (motor-carrier anti-indemnity statute) prevents application of Oklahoma law | Court applied North Dakota choice-of-law rules, honored the Oklahoma clause, and held indemnity enforceable because ND statute did not apply |
| Whether Hiland MSC is a "motor carrier transportation contract" under N.D. Cent. Code § 22-02-10 | Missouri Basin: Hiland MSC is a motor-carrier contract or covers services incidental to transportation, so ND anti-indemnity statute voids the clause | Chapmans: Hiland MSC covers general contractor services, not transportation; statute inapplicable | Court held Hiland MSC is not a motor-carrier transportation contract (it covers many non-transportation services), so § 22-02-10 does not apply |
| Scope of indemnity recovery after insurer involvement / settlement | Chapmans: As assignees of Hiland, they may recover the full settlement amount (including insurer-paid portion) because Missouri Basin refused defense | Missouri Basin: Its indemnity (if any) limited to Hiland’s $3M contribution, not insurer payments | Court held Missouri Basin must indemnify for the full $10M settlement; indemnitee’s good-faith settlement after denial of defense is binding under Oklahoma law |
| Rule 59(e) relief by Missouri Basin (timeliness and merits) | Missouri Basin: Sought reconsideration of prior orders and argued inconsistency; contends filing was timely | Chapmans / B&B: Motion was untimely and raised new arguments that could have been raised earlier | Court (and Eighth Circuit) held Missouri Basin’s Rule 59(e) was untimely or improperly raised new issues; denial was not an abuse of discretion |
Key Cases Cited
- Am. Fire & Cas. Co. v. Hegel, 847 F.3d 956 (8th Cir. 2017) (summary judgment standard review)
- Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d 683 (8th Cir. 2001) (apply forum state choice-of-law rules in diversity cases)
- DCS Sanitation Mgmt., Inc. v. Castillo, 435 F.3d 892 (8th Cir. 2006) (de novo review of choice-of-law determinations)
- Kovarik v. Am. Family Ins. Grp., 108 F.3d 962 (8th Cir. 1997) (predicting state law where state supreme court has not spoken)
- Innovative Home Health Care, Inc. v. P.T.–O.T. Assocs. of the Black Hills, 141 F.3d 1284 (8th Cir. 1998) (purpose and limits of Rule 59(e))
- Matthew v. Unum Life Ins. Co. of Am., 639 F.3d 857 (8th Cir. 2011) (abuse-of-discretion standard for Rule 59(e) rulings)