Pennant Service Co., Inc. v. True Oil Co.
2011 WY 40
| Wyo. | 2011Background
- Van Norman sued True Oil for injuries; Pennant contracted to indemnify True Oil under the MSC.
- True Oil settled with Van Norman for $500,000, with Pennant and its insurer invited to participate but did not act.
- Following the settlement, True Oil and Pennant litigated a third‑party contract dispute focused on indemnification and breach of MSC.
- Trial court held Pennant breached the MSC and awarded True Oil $500,000 (the settlement amount) plus fees; Pennant appealed.
- True Oil sought attorney’s fees and prejudgment interest; the district court limited/precluded some fees and denied prejudgment interest; the Wyoming Supreme Court affirmed in part and reversed in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether True Oil may recover indemnity damages without proving actual damages from Pennant’s breach. | True Oil relies on stipulation of reasonableness and potential liability. | Pennant contends damages must be proven; no proof of damages from breach. | Affirmed: damages up to the settlement amount were recoverable under indemnity. |
| Whether the indemnity standard of 'potential liability' applies and whether the settlement stipulation suffices. | Stipulation to reasonableness establishes potential liability. | Settlement sufficiency and lack of objective proof of liability. | Adopted the 'potential liability' standard; stipulation aided recovery; not required to prove actual liability. |
| Whether True Oil is entitled to attorney’s fees incurred prior to December 7, 2005. | Indemnity clause permits recovery of defense costs including attorney’s fees. | Indemnity does not cover fees incurred to establish indemnity rights; anti‑indemnity statute limits recovery. | True Oil entitled to attorney’s fees incurred before March 16, 2005; not entitled to fees after December 7, 2005. |
| Whether prejudgment interest should be awarded on the liquidated settlement amount. | Because the $500,000 settlement was liquidated and known, prejudgment interest should apply. | Discretionary—not automatically available; amount and timing matter. | Reversed: prejudgment interest awarded on the liquidated sum. |
Key Cases Cited
- Pan American Petroleum Corp. v. Maddux Well Serv., 586 P.2d 1220 (Wyo. 1978) (set forth potential liability standard for indemnitees when indemnitor declines approval or defense)
- Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853 So.2d 1079 (Fla. Dist. Ct. App. 5th Dist. 2003) (describes burden of potential liability in settling indemnitee cases)
- Ford v. Ford, --- (---) (discusses potential liability concept (cited for the standard))
- Gainsco Ins. Co. v. Amoco Production Co., 53 P.3d 1051 (Wyo. 2002) (indemnity/public policy under §30-1-131; scope of indemnity in oilfield context)
- Northwinds of Wyoming, Inc. v. Phillips Petroleum Co., 779 P.2d 753 (Wyo. 1989) (limits on indemnity rights; applicability of anti‑indemnity statute)
- Mountain Fuel Supply Co. v. Emerson, 578 P.2d 1351 (Wyo. 1978) (indemnity for indemnitee’s own negligence; limits under anti‑indemnity statute)
- Roussalis v. Wyoming Medical Center, Inc., 4 P.3d 209 (Wyo. 2000) (freedom to contract with limits; respect for contract terms)
- Hofstad v. Christie, 2010 WY 134, 240 P.3d 816 (Wyo. 2010) (describes standard of review for bench trials)
- Laramie Rivers Co. v. Pioneer Canal Co., 565 P.2d 1241 (Wyo. 1977) (prejudgment interest on liquidated sums when notice given)