2022 Ohio 1125
Ohio Ct. App.2022Background
- Discovery Oil contracted Wildcat Drilling on Dec. 19, 2014 to drill a well; the contract contained broad indemnity and defense clauses for pollution, fines, and related liabilities.
- ODNR found brine was used in drilling; Discovery Oil negotiated and paid a $50,000 fine to ODNR on March 3, 2015 without notifying Wildcat or giving Wildcat an opportunity to participate in that settlement.
- Wildcat sued Discovery for an unpaid invoice; Discovery counterclaimed seeking indemnification for the ODNR fine and related expenses.
- The trial court initially awarded Discovery indemnification; this court reversed, concluding Globe Indemn. Co. v. Schmitt requires notice and opportunity to defend before an indemnitee may settle and recover from an indemnitor.
- The Ohio Supreme Court accepted limited review, held that Globe’s common-law requirements may be abrogated by contract if the contract clearly evinces that intent, and remanded for the trial court to decide whether the parties’ contract clearly abrogated Globe.
- On remand the trial court found the contract did not clearly abrogate Globe’s requirements (noting the duty to "defend" implies notice), granted summary judgment for Wildcat, and this court affirmed.
Issues
| Issue | Plaintiff's Argument (Wildcat) | Defendant's Argument (Discovery) | Held |
|---|---|---|---|
| Whether the contract evinces a clear intent to abrogate Globe’s common-law indemnity requirements | Contract does not clearly eliminate pre-settlement notice or the opportunity to defend; duty to "defend" implies notice | Broad, unlimited indemnity language ("any fine," "without limit") shows intent to abrogate Globe even without talismanic language | Court: No. The indemnity language does not clearly remove Globe’s notice/reasonableness protections; duty to defend supports maintaining notice requirement |
| Whether Discovery provided adequate pre-settlement notice under Globe | Argues constructive or later notice and factual disputes exist about timing and ability to interpose a defense | Wildcat: appellate court already found Discovery intentionally withheld notice; remand limited to contract language | Court: Did not revisit notice; relied on prior appellate finding that notice was lacking and applied law-of-the-case; no genuine issue on remand |
| Whether Wildcat’s remand summary-judgment affidavit was deficient | Wildcat relied on existing record and prior proceedings; affidavit unnecessary to resolve the narrow contractual question | Discovery: affidavit said facts were only "to best of my knowledge" and motion lacked record citations | Court: No reversible error — the remand raised a legal question addressed to contract text already in the record; affidavit challenge is meritless |
| Whether the Supreme Court’s intervening Buddenberg decision creates a new basis to revive Discovery’s statutory civil-liability claim | Wildcat: prior appellate resolution of statutory claim was final and not premised on absence of conviction; remand was limited to indemnity issue | Discovery: Buddenberg held a criminal conviction is not required under R.C. 2307.60, creating an exception to law-of-the-case | Court: No. Buddenberg did not alter the prior holding that Discovery’s counterclaim did not allege injury to person or property as required; law-of-the-case or scope-of-remand bars reconsideration |
| Whether facts from a separate Summit County case create a factual dispute warranting relief on remand | Wildcat: separate dispute concerns a different contract and judgment assignment; irrelevant to the narrow remand issue | Discovery: alleged related entity improperly withheld funds, implying credit or estoppel should apply here | Court: No. New allegations from a separate case were beyond the scope of the Supreme Court’s limited remand and were not properly litigated on remand |
Key Cases Cited
- Globe Indemn. Co. v. Schmitt, 53 N.E.2d 790 (Ohio 1944) (established common-law post-settlement indemnity requirements: timely notice, indemnitor’s ability to defend, and fairness/reasonableness of settlement)
- Wildcat Drilling, LLC v. Discovery Oil & Gas, LLC, 173 N.E.3d 1156 (Ohio 2020) (Ohio Supreme Court: Globe requirements may be contractually abrogated only if contract clearly indicates that intent; remanded to evaluate the contract)
- Total Quality Logistics, LLC v. JK & R Express, LLC, 173 N.E.3d 1168 (Ohio 2020) (contractual language can abrogate common-law rules without talismanic wording; courts look to intent manifested by contract)
- Buddenberg v. Weisdack, 162 N.E.3d 603 (Ohio 2020) (holding a criminal conviction is not required to maintain a civil action under R.C. 2307.60)
- Worth v. Huntington Bancshares Inc., 540 N.E.2d 249 (Ohio 1989) (contractual indemnity can obligate indemnitor to pay attorney fees regardless of outcome where contract so provides)
- Glaspell v. Ohio Edison Co., 505 N.E.2d 264 (Ohio 1987) (broad indemnity language can shift risk for harms connected to contractual privileges/access)
- Cheatham I.R.A. v. Huntington Natl. Bank, 137 N.E.3d 45 (Ohio 2019) (parties may contract in derogation of common law but the intent to do so must be clearly indicated)