2020 Ohio 6821
Ohio2020Background
- Discovery Oil & Gas contracted with Wildcat Drilling to drill a well; the contract contained broad pollution/contamination indemnity language obligating Wildcat to defend and indemnify Discovery "without regard to the negligence of any party."
- In 2015 an ODNR inspector discovered unlawful use of brine at the site; Discovery met with ODNR and paid a $50,000 fine related to Wildcat’s operations.
- Discovery withheld payment on Wildcat’s invoice pending Wildcat’s agreement to indemnify Discovery for the ODNR fine; Wildcat refused and sued for breach of contract; Discovery counterclaimed for indemnification.
- The trial court found both parties breached and awarded Discovery payment on the invoice net of the fine; the Seventh District reversed, holding Discovery was not entitled to indemnification because it settled without giving Wildcat the notice Globe Indemn. Co. requires.
- The Supreme Court of Ohio accepted a limited appeal on whether the Globe Indemn. Co. common-law notice/liability/reasonableness requirements apply to negotiated contractual indemnity provisions.
- The Supreme Court held that parties may contractually abrogate Globe’s common‑law requirements if their agreement clearly manifests that intent; because lower courts did not decide whether the parties’ contract evinced such intent, the court reversed the appellate judgment and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Discovery) | Defendant's Argument (Wildcat) | Held |
|---|---|---|---|
| Whether Globe Indemn. Co. notice/liability/settlement‑reasonableness requirements apply to an express contractual indemnity | Globe: Globe is common law and does not control a negotiated contractual indemnity; contract language controls | Wildcat: Globe applies; Discovery’s voluntary payment without notice deprived Wildcat of the opportunity to defend, so no indemnity | Supreme Court: Parties can abrogate Globe by clear contractual intent; Globe’s requirements do not automatically apply—remanded to trial court to decide whether the contract evinces that clear intent |
| Whether summary judgment on indemnity was proper given factual disputes about responsibility for contamination and notice | Discovery: contract plainly obligates Wildcat to indemnify; summary judgment was appropriate | Wildcat: factual disputes (source of brine, who controlled the well when contamination occurred, lack of notice) preclude summary judgment | Supreme Court: did not resolve factual questions; remanded because lower courts failed to analyze whether contract clearly abrogates Globe and because factual disputes bear on entitlement under contract |
Key Cases Cited
- Globe Indemn. Co. v. Schmitt, 142 Ohio St. 595 (Ohio 1944) (common‑law rule: after voluntary settlement indemnitee must show timely notice, legal liability, and fair/reasonable settlement)
- Worth v. Aetna Cas. & Sur. Co., 32 Ohio St.3d 238 (Ohio 1987) (the nature of indemnity is determined by parties’ intent as expressed in the contract)
- Allen v. Standard Oil Co., 2 Ohio St.3d 122 (Ohio 1982) (express contractual indemnity binds the indemnitor under the contract’s terms)
- Paul Cheatham I.R.A. v. Huntington Natl. Bank, 157 Ohio St.3d 358 (Ohio 2019) (parties may abrogate common law by contract but the intent to do so must be clearly indicated)
- New York Cent. R. Co. v. Linamen, 171 Ohio St. 87 (Ohio 1960) (applied Globe requirements and denied indemnity where notice and reasonableness of settlement were not shown)
- Aetna Cas. & Sur. Co. v. Hensgen, 22 Ohio St.2d 83 (Ohio 1970) (Globe does not apply where indemnification principles are not at issue)