NuStar Energy, L.P., and Kaneb Management Company, L.L.C. v. Diamond Offshore Company
2013 Tex. App. LEXIS 7033
| Tex. App. | 2013Background
- The appeal concerns Diamond Offshore’s and Kaneb’s cross-motions for summary judgment interpreting an asset and stock purchase agreement from 1989 regarding asbestos-liability allocation.
- Diamond seeks a declaration that it did not assume certain asbestos-related claims; Kaneb seeks opposite relief.
- Section 10.13 of the Agreement allocates liability for employee injuries identifiably sustained by Employees on or before Closing, and Section 2.1 allocates liability for liabilities accruing after Closing generally.
- The trial court held the contract not ambiguous and granted Diamond summary judgment, denying Kaneb’s cross-motion, and specified liability allocations.
- The appellate court reverses, finds Section 10.13 not expired but Ambiguous, and remands for further proceedings consistent with its opinion.
- The decision emphasizes that extrinsic evidence is only relevant if the contract is ambiguous, and that the contract should be construed as a whole under Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Section 10.13 expired and applicable? | Kaneb: Section 10.13 expired; not applicable. | Diamond: Section 10.13 not expired; governs allocation. | Section 10.13 has not expired but is ambiguous. |
| Does Section 10.13 unambiguously allocate the asbestos claims over Section 2.1? | Kaneb: Section 10.13 unambiguously controls; Diamond misreads. | Diamond: Section 10.13 unambiguously favors Diamond’s view. | Contract is ambiguous; Section 10.13 and 2.1 conflict without clear preemption. |
| Can extrinsic evidence resolve the ambiguity? | Extrinsic evidence clarifies intent; admitted. | Extrinsic evidence cannot cure an unambiguous contract. | Extrinsic evidence relevant only if ambiguity exists; here ambiguity exists; remand. |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (summary-judgment standards; proof on facts must be viewed in light of all evidence)
- El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802 (Tex. 2012) (contract interpretation; ambiguity context; substantive review for ambiguity)
- Grynberg v. Grey Wolf Drilling Co., L.P., 296 S.W.3d 132 (Tex. App.—Houston [14th Dist.] 2009) (specific provisions control over general ones in conflict)
- Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) (specific-vs-general provisions; conflict resolution)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (objective intent governs contract interpretation; not post hoc myths about intent)