Lexington Insurance v. Precision Drilling Co., 830 F.3d 1219

Background

Darrell Jent was seriously injured on an oil rig; Precision Drilling (owner) paid a settlement and sought reimbursement from its insurer, Lexington.
Lexington issued (and was paid for) two policies that, on their face, covered the accident; Precision claims coverage under those policies.
Lexington moved for summary judgment, arguing Wyoming’s Anti‑Indemnity Statute bars coverage when a third party (not the insured) purchased the policy, so insurer not liable; district court granted Lexington summary judgment and awarded fees.
The relevant Wyoming statute generally voids contractual indemnities for an oil/gas operator’s negligence but expressly preserves “the validity of any insurance contract.”
Lexington urged (1) a reading that the insurance exception applies only if the insured purchased the policy (to avoid moral hazard), (2) application of the absurdity doctrine to override the statute’s plain text, and (3) reliance on True Oil (a prior Tenth Circuit decision) in its favor.
The Tenth Circuit reversed, vacated fees/costs, and remanded for further proceedings (including unresolved factual questions such as whether Precision qualifies as an additional insured).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Wyoming’s Anti‑Indemnity Statute bars coverage when a third party purchased the insurance	Precision: statute expressly preserves "the validity of any insurance contract," so coverage stands	Lexington: exception should be read to apply only where the insured purchased the policy; third‑party purchase is functionally an indemnity and invites moral hazard	Court: rejected Lexington’s restricted reading; the statute’s plain text covers any insurance contract regardless of purchaser; reverse summary judgment
Whether courts may invoke the absurdity doctrine to avoid the statute’s plain text	Precision: no need; text is clear and should be enforced	Lexington: applying the statute to allow coverage when a third party paid is absurd and inconsistent with legislative purpose	Court: refused to apply broad absurdity doctrine to override plain statutory language; only narrow scrivener‑error form may be used and does not apply here
Whether legislative intent or policy can override unambiguous statutory language	Precision: plain language controls; speculative legislative intent cannot trump text	Lexington: legislature couldn’t have intended this result; public policy against indemnifying negligent operators should limit insurance exception	Court: textual clarity controls; court will not speculate about unexpressed legislative intent or rewrite statute
Whether True Oil binds this outcome	Precision: True Oil is distinguishable	Lexington: relied on True Oil to support limiting coverage	Court: True Oil is unpublished/persuasive only and factually distinguishable (there coverage depended on an indemnity agreement), so it does not control

Key Cases Cited

Union Pac. Res. Co. v. Dolenc, 86 P.3d 1287 (Wyo. 2004) (discussing public‑policy considerations in anti‑indemnity context)
United States v. Ron Pair Enters., Inc., 489 U.S. 235 (1989) (where statute’s language is plain, courts must enforce it)
Robbins v. Chronister, 435 F.3d 1238 (10th Cir. 2006) (rejecting broad use of absurdity doctrine to override plain statutory text)
Mountain Cement Co. v. S. of Laramie Water & Sewer Dist., 255 P.3d 881 (Wyo. 2011) (Wyoming courts will not avoid plain statutory language because of its consequences)
Halliburton Co. v. McAdams, Roux & Assocs., 773 P.2d 153 (Wyo. 1989) (textual fidelity and limits on judicial rewriting of statutes)
Gemsco, Inc. v. Walling, 324 U.S. 244 (1945) (legislative history cannot overcome a statute’s plain words)