PENNANT SERVICE CO., INC. v. True Oil Co.
2011 WY 40
| Wyo. | 2011Background
- Van Norman sued True Oil and others for injuries from a July 3, 2001 oil-well incident; Pennant provided an MSC indemnifying True Oil for damages arising from Pennant's acts or omissions.
- True Oil settled with Van Norman for $500,000; Pennant did not participate in settlement discussions but stipulated to the reasonableness of the settlement.
- The remaining dispute was a third-party contract claim: True Oil sought indemnification from Pennant for the settlement and related damages.
- The district court found Pennant breached the MSC and awarded True Oil $500,000 plus other costs, but addressed issues regarding potential liability, foreseeability, and the scope of indemnity under Wyoming law.
- Wyoming anti-indemnity statute § 30-1-131 prohibits indemnity for the indemnitee’s own negligence, but does not invalidate a valid indemnity provision for vicarious liability or other theories outside the indemnitee’s own negligence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indemnity covers settlement damages for Breach of contract. | True Oil contends the indemnity clause expressly covers damages including attorney's fees arising from Pennant’s acts; stipulation to settlement supports potential liability. | Pennant argues the indemnity clause does not unequivocally cover indemnity for damages in a direct negligence action; pre-suit defenses are not covered. | Yes; damages were within indemnity scope and the settlement was within potential liability. |
| Whether True Oil is entitled to attorney’s fees incurred defending the indemnity dispute pre- or post-amendment of the complaint. | True Oil seeks recovery of fees incurred defending the case before, and including, the vicarious liability claims; contract allows indemnity for such costs. | Indemnity for attorney’s fees is limited to defense of the indemnified claim, not for establishing the right to indemnity; pre-amendment fees may be barred by § 30-1-131. | True Oil is entitled to attorney’s fees incurred before March 16, 2005, but not those incurred after December 7, 2005. |
| Whether prejudgment interest is available on the liquidated settlement amount. | True Oil asserts the $500,000 settlement is liquidated and prejudgment interest should apply. | Pennant contends no prejudgment interest due where the amount is settled and not otherwise dictated by statute. | Prejudgment interest is available on the liquidated settlement amount. |
Key Cases Cited
- Pan American Petroleum Corp. v. Maddux Well Serv., 586 P.2d 1220 (Wyo.1978) (indemnity requires potential liability when indemnitor may disapprove settlement)
- Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853 So.2d 1079 (Fla. Dist.Ct.App. 5th Dist.2003) (test for potential liability may be subjective and objective)
- Northwinds of Wyoming, Inc. v. Phillips Petroleum Co., 779 P.2d 753 (Wyo.1989) (statutory anti-indemnity limits indemnity for indemnitee’s own negligence; fees may be recoverable)
- Gainsco Ins. Co. v. Amoco Production Co., 53 P.3d 1051 (Wy.2002) (indemnity validity limited by anti-indemnity statute; fees may be recoverable)
- Mountain Fuel Supply Co. v. Emerson, 578 P.2d 1351 (Wyo.1978) (indemnity issues governed by contract and public policy, with limits on indemnitee’s own negligence)