Getty Oil Co. v. Insurance Co. of North America, 845 S.W.2d 794

Getty Oil Co. v. Insurance Co. of North America

845 S.W.2d 794

Tex.

1993

Check Treatment

*1 GETTY OIL COMPANY Inc., Petitioners,

Texaco OF NORTH COMPANY

INSURANCE Industries,

AMERICA, NL Inc. and Yo Respondents. Companies,

uell

No. D-1937.

Supreme Court of Texas.

Nov.

Rehearing Overruled March *2 Schoonmaker, Houston,

C. Michael W. Jahnke, City, Prasifka, New York David W. Houston, Ill., Engelhardt, Chicago, Thomas Luyties, Houston, K. William for re- *3 spondents.

OPINION PHILLIPS, Chief Justice. purchaser chemicals of certain brought and its in suit the seller surers, claiming they were contractu ally obligated provide cover judgment against purchaser in a wrongful precipitated by the death action explosion trial of the chemicals. The granted summary judgment for the defen (1) provi grounds: dants on four contract requiring purchase sion the seller to liabili ty buyer for the violated the Statute, Tex. Texas Oilfield (now codified art. 2212b Rev.Civ.Stat.Ann. and & Rem.Code amended Tex.Civ.Prac. (Vernon Supp. & 127.001-.007 §§ 1992)); (2) the same contractual express negli law violated common rule; (3) gence litigation of a prior indemnity provision precluded the related res present judi- doctrine of suit under the cata; precluded specific issues were ap estoppel. The court collateral judica- theory peals affirmed (Tex.App. ta. 819 — Houston 1991). We affirm the in part, part, reverse court of court for the trial and remand cause to proceedings. further Background I. Procedural Facts and (“Getty”) purchased Company Getty Oil Industries, from NL Inc. chemicals various explo- (“NL”) Getty’s production oil Midland, Texas, operations in the ration purchase numbered “HB- A order area. 1, 1983, August in effect from 5357” was following It included the July provisions: Smith, Roady, Mel L. Joe G. Patrick AND INDEMNITY: INSURANCE Bellatti, Mary A. Karen Hughes, Ann sole agrees to maintain at Seller’s Seller Cook, Houston, petitioners. S. opera- from the time expense, cost Lee, hereunder until Or- Lorance, Jr., are commenced Byron Bay- tions Tom Tom discharged, fully performed der is ko, Allen, Linda Carnegie, Jack John C. G. evidencing such insurance with insurers types all minimum insurance of follows, and furnish certificates limits as acceptable to Purchaser: Purchasing Department Purchaser’s STATUTORY COMPENSATION WORKMEN’S $500,000 LIABILITY EMPLOYERS’ 500,000 BODILY INJURY LIABILITY: GENERAL 500,000 INJURY LIABILITY: BODILY AUTOMOBILE *4 Duncan, well, killing a an inde- by Getty carried Carl coverages All pendent working Getty. contractor for Seller, hereby, required or nor protect to and Purchaser ... shall extend brought and survivors Duncan’s estate coverages and to the full amount of such wrongful and actions in the death survival sufficiently endorsed to waive shall be Matagorda County 130th Judicial Court by all claims the underwriters or any subsidiaries, and Getty, and against NL and its against against Purchaser ... Getty insurers others.1 filed a cross-claim NL, negligence proxi- alleging that NL’s indemnify, defend and hold Seller shall Duncan, that mately injury caused the any harmless Purchaser ... and all the chemicals manufactured NL were actions, costs, losses, claims, expenses, defective, and that NL breached warranties subrogations, dam- judgments, or other the sale of the chemi- connection with resulting injury any person ages Getty a contractual cals. also asserted death), (including injury resulting in indemnity against NL under the right of damage (including loss or destruction above), (quoted and a terms of HB-5357 property of whatsoever nature of negli- NL’s claim because of contribution arising out of or incident person[)] negli- gence. jury Getty found 100% this performance of the terms of causing gent grossly negligent and (including, limit- by Seller but not Order judg- The trial court rendered accident. to, employees, agents, ed Seller’s subcon- $3,757,000 for jury ment on the verdict tractors, designated by and others Seller $25,000,000 punitive damages and actual in, about, perform work or services rendered damages. The trial court also to, the work and services un- attendant “all for con- judgment Cross-Actions Order.) der the terms of this Seller shall upon the and/or based tributions losses, responsible for not be held Getty appealed the are denied.” contracts claims, actions, subrogations, expenses, denying it contri portion of the costs, judgments, damages, or other di- ap indemnity, and the court of bution and rectly, solely, proximately caused judgment of the trial peals affirmed the Purchaser. Insurance negligence Duncan, Corp. v. Getty Oil court. covering indemnity agreement shall (Tex.App. Corpus Christi — provided by Seller. be insurers, n.r.e.). Getty’s ref’d writ Seller, liability of as herein above Company, Travellers Insurance Travellers in- limited provided, shall English & Ameri Indemnity Company, and coverage required of Seller. surance the claim Company, settled can Insurance million. $14 22,1983, a of chemi- November barrel On an insurance Getty delivered NL under Or- then filed cal demulsifier .claim hon- they refused to After exploded vicinity in the of NL’s insurers. HB-5357 der No. Service, doing 1984, Texaco, work at company that had been acquired Getty. Accord- In Inc. joined Roa, site, Tony one of its party accident ingly, defendant. Texaco was as employees. Well plaintiffs also acted Rimes claim, partially pri- NL and its least relieved the defendants of or the sued carriers, covering Getty’s liability. Insur- mary and excess insurance (“INA”) America Company ance North 3, 1990, May granted On trial court (“Youell”), Companies2 re- Youell and summary judg- the defendants’ motions for that, Getty alleged pursuant spectively.3 granted ment. The trial court also of the HB-5357 “Insurance to the terms motion to sever defendants’ the third Indemnity” provision, NL’s insurance insurers, against Getty's claims and or- in the should cover go for- dered that the severed actions Getty brought claims Duncan case. until resolution of the action ward between NL for breach of the contract appealed the defendants. behalf, purchase in its violation defendants, judgment for summary (Tex. 1.203 of Tex.Bus. & Com.Code res judica- the court of affirmed on UCC) (Vernon 1968) (obligation good grounds, holding ta claims faith), duty good faith and seeking breach of the barred it were because was theory dealing, negligence, violation same relief under a different fair unsuccessfully sought Act in the first suit. 819 Deceptive Trade Practices Texas Getty now seeks reversal (DTPA), 17.41-63 S.W.2d at 915. Tex.Bus. & Com.Code§§ *5 judgment appeals’ of the court of and (Vernon Supp.1992), and common 1987 & summary Youell, judgment.4 trial court’s Against INA and law fraud. the contract claims for breach of asserted II. Res Judicata coverage, extend it insurance violation (Vernon 1981)(re- art. 3.62 of Tex.Ins.Code A. v. NL (failure claim), of the pealed) pay breach fol recently that Texas We clarified dealing, negli- good faith and fair duty of res approach the “transactional” lows DTPA, gence, and common violation v. Trust judicata. Barr Resolution law fraud. (Tex. 1992). Under Corp., 837 S.W.2d 627 an earlier suit approach, judgment in NL, jointly moved for INA and Youell by a second action “precludes (1) that summary judgment, arguing only actu privies their on matters not make an terms of HB-5357 did litigated, also on causes action ally but (2) policies; under NL’s additional insured out of the same defenses which arise Indemnity scheme of the Insurance and might have been subject matter and which prohibited the Texas Oil- HB-5357 was 630; at Tex litigated in the suit.” Id. first Statute, Tex.Rev.Civ. field Iron v. Crow Rights Comm. as Water (now codified and Stat.Ann. art. 2212b 768, (Tex.1979). Works, 582 S.W.2d & Rem.Code amended at Tex.Civ.Prac. .007); Getty’s claims Getty’s present conclude §§ 127.001— judicata subject and collateral matter were barred res of the same suit arises out against NL joined Get- assert estoppel. The defendants also its earlier cross-claim as defendants, The Restatement third in the Duncan suit. ty’s insurers as ed (Second) Judgments, recognizes Getty’s policies with them claiming that County, and then transferred Galveston is a consortium offshore 2. Youell & Cos. County, it was as syndicates. agreement where companies Lloyds to Harris signed District Court. to the 280th Getty originally in the 10th District filed suit in submitted briefs County. curiae have defendants re 4.Three amici in Court Galveston Getty's position: Mid-Conti- support Texas District Court for to the United States moved Association, Compa- Oil Shell Oil and Gas federal court nent of Texas. The Southern District Corporation. ami- ny, and Three Getty’s Amerada Hess were barred claims held support in Appeals also briefs ci curiae have submitted judicata, United States Court but the Respondents’ position: the International judgment, hold Circuit vacated the for the Fifth (IADC); the Drilling Contractors diversity citizenship Association of ing complete was (AGC), of Texas General Contractors lacking. Getty Corp., Texaco v. Ins. Associated Oil a Div. of (5th Servicing Con- America, of Oilwell the Association F.2d 1254 Cir. North 841 Co. of (AOSC). 1988). state court in tractors case remanded to was 799 test, prosecuted suggests fac- another claim has been to a transactional determining conclusion, may tors to consider joined claims two single are facts constitute a “transaction” action; single shall in a but time, space, origin, “their relatedness only grant relief that action in accor- motivation, whether, together, taken with the relative substantive dance pur- unit trial they form convenient parties. rights of the (Second) Judg- poses.” Restatement Valley See Parkhill Produce Co. Pecos (1980). Getty’s present 24 ments cmt. b (Tex. Co., Ry. 348 S.W.2d 208 Southern against same action NL arose from the 1961, ref’d Civ.App. Antonio writ — San For adjudicated in the Dun- accident n.r.e.). have example, we held that present suit can suit. also concerns may bring against a claim indemnitee contract, HB-5357, the same and the same judgment assigned indemnitor before contract, of that the “Insurance section Gulf, against indemnitee. See Colora Indemnity” Finally, Getty section. seeks McBride, Ry. Fe against the same relief NL here as in its do & Santa Co. 446, 492, (Tex. Get- earlier cross-claim: reimbursement for Tex. S.W.2d liability to estate ty’s Duncan’s and benefi- Friedman, 1958); Mitchell’s, Inc. v. Thus, ciaries. both actions 424, 431, (Tex. Tex. NL derived from the same transaction.5 1957); Service, K Inc. v. & S Oil Well (Tex.Civ. Corp., 491 Cabot argues judicata that res cannot bar ref’d App. Corpus Christi writ present claims NL because — judgment claims accrue n.r.e.). Forcing these did not until wait suit to is, was rendered in the Duncan suit. That suit “would *6 Getty liability had no and hence no need for policy the to en contravene courts coverage liability until as- was courage litiga and to settlements minimize contingent signed. nature of these tion.” Id. claims, however, preclude op- does not the Getty advantage itself of this rule took judicata. eration of res in Barr held NL, in against initial cross-action subsequent suit if it that will be barred “[a] Getty claim the asserted its subject out of of a arises the same matter fact indemnity provision of HB-5357. The which, suit previous through the exer- Getty had claim for no diligence, litigated cise of could have been NL until court rendered against the trial prior in a suit.” at 837 S.W.2d judgment preclude did not this cross-claim. present could have asserted its claims Likewise, brought have its oth- could suit, Duncan their with resolution be- against NL in contingent er cross-claims ing contingent plaintiffs’ on claims. fact 51(b) action. The pro- Texas Rule of the Duncan Civil Procedure contingent against vides: NL on Get- claims were incurring liability in the suit ty Duncan a claim Joinder Remedies. Whenever preclude operation cognizable only is one heretofore after does not and of itself comports against additional This with a recent Fifth Mont under the conclusion nearly that the was involving The trial court held action decision facts. vision. Circuit identical judicata. Fifth af- res Circuit Drilling Exploration barred Mont Boat Ocean Co. v. firmed, holding Services, (5th Cir.1986). as follows: F.2d In Rental 799 213 case, contractually agreed Mont to in- had Although tort-indemnity theory ODE- demnify purchase liability to insur- ODECOand case] asserted in former differs [the CO ODECOas additional ance that would name theory presses, it contractual now 1978, employee In was insured. an ODECO right same: seeks to redress is the ODECO injured and sued both ODECOand Mont. ODE- obligations as a reimbursement for incurred asserting brought against a litigation.... CO cross-claim Mont [prior] Because result of the indemnity. court contribution and The trial cause of action for tort ODECO’s $340,000 against judgment solely substantially as its the same facts rendered based ODECO, liable, indemnity, judicata res found Mont not and rendered for contractual claim against judgment against ODECO on its claims bars the belated assertion. brought at 217. a second suit 799 F.2d Mont. ODECO then 800 Slivka, also Swiss Avenue Bank v. judicata.6 res 724 394, 1986, (Tex.App. S.W.2d — Dallas not hold a defendant We do writ). merely These cases reiterate the a against must assert a cross-claim co-de 97(e) principle party of Rule that a is not simply fendant because it arises required against a assert cross-claim subject plaintiffs same matter as claim. party. Neither otherwise non-adverse 97(e) clearly Tex.R.Civ.P. makes such a Chandler nor Slivka involved a situation permissive; may cross-claim the defendant not all of where asserted some but it, 97(e) required Rule assert is not to. but its cross-claims. judica-

comports principle that res with adverse applies only parties. ta Where required bring any parties aligned are in the first two action against NL in the Duncan its cross-claims them, no issues are drawn between those bring suit. Once it chose to some of preclude in that action does not claims, however, under res required it was parties. later claims between those all same ac- judicata bring them in the Baker, 725, (Tex. Smith 380 S.W.2d agree we Accordingly, tion. 1964, n.r.e.); Civ.App. ref’d writ — Waco appeals’ holding as this issue. Antonio, City Green San S.W.2d (Tex.Civ.App. Antonio — San B. v. INA Youell n.r.e.); Second Nat’l Bank of writ ref’d Fuqua, Houston v. Get- also held that court of (Tex.Civ.App. writ ref’d Youell, — Waco ty’s against claims INA NL’s n.r.e.). However, where a defendant does carriers, primary and excess co-party, assert cross-claim Although judicata. res were barred adverse, they principles become parties INA and were not Youell judicata apply. The be res cross-claimant suit, that res Duncan court reasoned plaintiff judicata purposes, comes a “against judicata bars a second suit and is to assert all claims required privies." or their same arising from the cross-defendant sub added). 910 (emphasis original ject matter of the cross-claim. Cf. (Second) Judgments Restatement law, judg Texas a former Under *7 (“Where interposes a defendant against suit all who ment bars a second valid claim as a counterclaim and a to the “privity” with the were him judgment against final is rendered v. Wanda Petroleum first suit. Benson counterclaim, appli are the rules of bar Co., 468 361, (Tex.1971). There 363 S.W.2d judgment.”). cable to the that can general privity of is no definition judicata applied in all res automatically v. Cashaway relies on Chandler Getty cases; case must of each Materials, circumstances Inc., 950, Building 584 S.W.2d County Mu Dairyland be examined. See 1979, writ), (Tex.App. 954 Paso — El Childress, v. Ins. Texas tual Co. judicata “ap held that res where the court of Benson, (Tex.1983); 770, 773-74 S.W.2d of which plies to the cause action privity with a 363. Those in 468 S.W.2d at plaintiff not cross- actually by filed con may persons exert include who filed might which have been actions inter action, persons whose unless, course, over defendant, compulso trol of or suc- party, See represented are applicable.” rule is ests ry counterclaim Also, any not have if reason could trying If all of these claims believed against prejudicial, adjudication claim just would been of its in the same action have obtained a the trial court to bifurcate it could have moved with- NL under additional 174(b), insurers, trial Tex.R.Civ.P. the vides: presence which as of NL’s out or to furtherance convenience "in not have next section could discussed in the separate may prejudice court] avoid order [the suit, joined then trial in the Duncan been counterclaim, cross-claim, claim, or trial stayed claim severed this court could have claim, any separate or third-party issue or of on the judgment was rendered it until after claims, cross-claims, counter- number of primary claims. claims, claims, third-party issues.” or 343, (Tex.Civ.App. party. S.W.2d in interest to the See cessors — Austin n.r.e.). ref’d land, writ 650 S.W.2d at 774. Dairy asserted its could not have Since if INA and Getty replies that even in the against INA or Youell present claims NL, judicata res privity Youell were suit,8 precluded it is now Duncan Getty’s present claims not bar would bringing these claims. judicata Getty could not have against them because accordingly judgment reverse the suit. in the those claims Duncan asserted affirming the trial appeals the court of specifi policies themselves The insurance INA summary judgment court’s being any claim from cally prohibited ground judicata, and Youell on the of res brought against INA or Youell before portion of the cause to and we remand this judgment liability was reduced to insured’s proceedings. further the trial held that when compromised.7 We have or exist, policy provisions “a such “no action” Estoppel III. Collateral right action party’s third granted summary court also The trial not arise until he has secured insurer does respondents on the basis of judgment for judgment against agreement or a such estoppel. The court of collateral American Ins. Co. v. the insured.” Great question. (Tex. did not reach 264, 265-66 Murray, 437 S.W.2d 1969); County see also Farm Mut. State estop- The doctrine of collateral Ollis, v. Ins. Co. Texas relitigation ultimate issues pel precludes (Tex.1989). litigated actually and essential of fact Moreover, 38(c) prohibited Tex.R.Civ.P. prior in a suit. Tarter v. joining and Youell in the Getty from INA Ass’n, 744 Metropolitan Savings & Loan provides, This rule with re- Duncan suit. (Tex.1988), Bonniwell parties: spect joinder to the of third Corp., 663 S.W.2d Beech Aircraft (c) applied, in tort This rule shall not be (Second) Judg (Tex.1984); Restatement eases, permit joinder so as to of a (1980). argues that NL first ments 27§ company, relitigate the issue of Getty seeks to company unless statute or such in connec Duncan’s accident arose person injured to the contract liable pur performance of the tion with NL’s damaged. important be This issue is chase order. in provide 38(c) requires NL prohibit has held to cause HB-5357 Rule been “arising only for losses resembling joinder of insurers in situations surance for Pittman, performance to the 337 out of or incident Langdeau this case. comports with the Restatement Policy result The INA General Insurance contained 8. This *8 (1980): following (Second) Judgments the condition: 51§ of Against Company 5. Action relationship such that persons have a If two against Company un- No action shall lie the vicariously responsible for the is one of them obligation of the insured’s less ... the amount insurers], and its conduct of the other [NL finally pay determined ei- to shall have been per- brought by injured the an action is by judgment against the insured after ther cross-claim], [Getty’s against them son one of by agreement of the actual trial or insured, written following judgment in the action has the the Company. claimant and the the injured person against preclusive the effects following policy con- The Youell contained the against subsequent the other. action in dition: (1) injured person judgment against the A J. LOSS PAYABLE reasserting his [Getty] him from that bars action against defendant in the first the claim a definite claim for Assured shall make against any extinguishes claim he has [NL] may be loss for which the Underwriters responsible for person insurers] [the the'other policy within twelve liable under this unless: the conduct the Assured’s shall after ... months (a) second action asserted in the The claim and rendered certain either have been fixed grounds not have upon that could is based judgment against by the Assured after agreement final policy] [payment the under been asserted by the written of actual trial claimant, action.... Assured, in the first the defendant the and Underwriters. by terms of this Order NL Getty attempting relitigate that is to a fac- [NL]...."9 contends that the jury decided this issue the Dun- tual in by jury issue decided adversely Getty case, Duncan case. can to in the estoppel and NL’s ar- collateral gument must therefore fail. estoppel

Collateral requires that issue argues Getty decided in the NL further that first action be attempting relitigate legal identical to is to pending the issue in the issue action. Ass’n, See Price previously Employers’ v. Texas Ins. Duncan decided suit: right Getty has a of 940 (Tex.App. Tyler — estoppel pre n.r.e.). 'd NL. Collateral also jury writ ref in the Duncan relitigation cludes the of essential issues of negligent suit found that NL that litigated law were and determined in a placed warnings it adequate on the Price, 940-41; prior at chemicals, action. 782 S.W.2d jury but neither the nor trial Dallas, Republic Withers v. Nat’l Bank expressly court found the accident did of (Tex.Civ.App 248 S.W.2d perfor not arise out of or incident to NL’s . —Beau n.r.e.); mont writ ref’d Restatement purchase mance of the NL order. con (Second) (1980). Judgments It was tends, however, phrase “incident in the Duncan suit determined performance” to in HB-5357 refers [NL’s] NL, right had no but only to losses negligence, caused NL’s relitigate attempting is not to jury’s necessarily and thus the answers Rather, seeking damages issue it is here. equate finding to a that Duncan’s accident for NL’s extend insurance cover failure to performance was not incident to the age Although latter Getty. to action case, Duncan HB-5357. The in the as the arose from the same transaction however, apparently made finding re and, respect Getty’s claim former with to garding Also, question. this we do not NL, judicata, is barred language necessarily consider the as of HB-5357 based a different as narrow NL contends. construc legal present and does not same issue. injury perfor tion —that an is “incident to indicated, estoppel only ap As collateral long mance” as as it results from chemicals plies where the identical litigat issue was delivered NL contract —is also Price, in the prior ed suit. arguable under the language literal agreement. have not focused reasons, foregoing For court of proper interpretation on the lan this appeals’ judgment cannot be affirmed on guage briefing argument their estoppel. the basis collateral Court,10 and thus we are unable under present record to conclude that NL’s Anti-Indemnity IV Statute obligation provide applied only negligence. accidents caused NL’s The Texas Oilfield Stat- ute, (now finding, Without such a we cannot conclude Tex.Rev.Civ.Stat.Ann. art. 2212b expressly appears 9. This limitation NL cite Adams & Sons McCann the in- does Joe HB-5357, Co., (Tex.1971), demnity section but not 475 S.W.2d 721 Construction contend, insurance section. however, indemnity agree- does where the Court held that an obligation provide that NL’s indemnify insur- requiring ment subcontractor beyond ance extends risks those associated general injuries contractor sustained performance purchase order. "through or on act in connec- account *9 pled as in follows its Fourth Amended Petition: did tion with the the [subcontractor]” work of solely by gener- apply injuries the to caused [HB-5357], contractually Pursuant to NL was though of negligence, al an act contractor’s even maintain, cost, obligated obtain to at NL’s contributing cause-in- the subcontractor was a liability protect Getty insurance to liabil- however, holding, the fact. was based on ity personal injuries occurring for in connec- express negligence in doctrine. As discussed performance NL-Getty tion with the the of V, supra, has been held to Section this doctrine Contract. apply only indemnity provisions, not insur- to to Getty acknowledges reply in to likewise its brief ance-shifting provisions, is prove and thus McCann Court it this that must sale NL "the helpful in- product interpreting additional under the the the contract of involved provision the Duncan accident.” sured of HB-5357. responsibility for the results of its and amended at Tex.Civ.Prac. & avoid codified negligence. own 127.001-.007), provides that Rem.Code §§ gas agreement pertaining to an oil or 819 S.W.2d at an purports indemnify void if it to a

well is ap court of argues the liability damage from loss or for aris- party peals the at issue erred because provision, is "additional insured” ing negligence.11 out its own Prior to an only applies to Anti-Indemnity Statute the the enactment Article 2212b in indemnity provisions, are different. which operators many companies oil oil well provisions make the Prohibited agreements “hold harmless” oil had with (NL) for liable the indemnitee’s indemnitor drilling and contractors. well service negligence. Additional insured (Getty’s) agreements required the generally These hand, provisions, on other make the the indemnify operators for contractors to the (INA insurance-purchaser’s insurers negligence con- losses caused Youell) liable for loss caused tractor, negligence for and often of the negligence. The (Getty’s) insured’s insur Many operator and third as well. ance-purchaser responsible only pay for is agreements placed that such an believed premiums, presumably ing the insurance Moreover, per- less than the actual loss. undue financial burden on what were far premiums is the cost of certain and exact. to small less ceived be contractors with Thus, protected by still contractors are bargaining power operators than the with Anti-Indemnity large and un Statute from they negotiating were contracts. whom caused an indemnitee’s certain liabilities Study House Interim Committee on negligence. 63rd Agreements, Report, Harmless Hold Respondents argue recognizing a Leg., at [hereinafter House in- distinction between Study legislature In Committee]. provisions would allow surance attempted inequity perceived to cure this accomplish indirectly it otherwise what 2212b, prohibits by enacting Article directly: avoiding liability could not achieve agreements party indemnify for its negligence. for its own Section negligence. own specifically pro- Anti-Indemnity Statute vides: held that agreement Each to an defined statute, the “additional insured” responsible Act of this shall be Section facially is it of HB-5357 invalid because of his own actions and for for the results indemnify NL makes for own persons actions of those over whom negligence.12 It reasoned: he exercises control. upholding provision] effect [T]he [the if the They contend that additional liability would allow be to to avoid provision of contract is not rendered this negligence. for its This sole result ... unenforceable, Getty will able to evade statutory goal actions, responsibility contravene[s] for contraven- hibiting allowing statutory this command.13 agreements party to tion of independent directly provides: contractor who is re- 2 of Article 2212b 11.Section sponsible to the indemnitee. covenant, promise, agreement, under- or [A] in, to, standing affect- contained collateral or present question case does not 12. This oil, ing agreement pertaining water, to a well for indemnity provision is of HB-5357 mineral, gas, mine or or is void terms of the void under the indemnify purports if and unenforceable Statute, express opinion issue. we [Getty] against loss or the indemnitee damages arising either or bod- Curiae International Association death Amicus Contractors, aligned Respondents, Drilling ily injury persons, injury property, or loss, required arising argues damage, expense that if contractor other further negligence covering bodily injury, injury purchase insurance death or from either *10 loss, parties, will be damage, expense, operator third it forced property, which an and or or significant of costs in the form dramati- con- bear caused or results from the sole or to cally is or, premiums if [Getty], insur- negligence increased insurance of the indemnitee current unavailable, indemnitee, necessity to self- agent employee becomes the an the or ance of 804

NL, particular, assuring performance that an argues indemnity of 2212b, 4(c) pro- agreement of also contained in the of article the burden contract. § only curing may insurance be shifted when express opinion we no as to While wheth- supports obligation the insurance an Getty is an er additional insured under indemnity against injury claims for vide agree insurance policies, NL’s we employees. contractor’s own Because the contract in the that independent an Duncan was contractor significantly instant case is different from Getty, working employ- and not an NL 819 S.W.2d that Fireman’s Fund. See contractor, exception limited ee or this does indemnity provision para- at 912. The shifting” not authorize “insurance graphs supported by an 3-4 HB-5357 of the scheme contract. and provision separate from addi- insurance provision insured tional to the additional 5 of We conclude that section arti paragraphs para- 1-2. The last sentence simply policy cle 2212b states the behind provides “[ijnsurance covering graph 3 agreements, prohibition indemnity provided indemnity shall be agreement this does not have effect. Sec 14 substantive not the provision, first Seller.” This 5, respon interpreted broadly if as as tion 2, begins “All paragraph sentence of which urge, prohibit dents would by Seller coverage insurance carried ... insurance, obtaining clearly liability its own Purchaser,” protect shall extend not the intent the statute. agreement. More- supports indemnity over, provision re- insured the additional the lan We further conclude that coverage quires that NL insurance extend guage applies exclusively of article 2212b required [by not “whether or 4(c) agreements. indemnity Section does Thus, provisions other of the contract].” shifting” prohibit not “insurance schemes the con- the additional insured parameters; fall within rath that do not indemnity agree- support tract does not agreements permits certain er obligation. ment, separate but rather is a supported liability they if are concurring disagree and dis- with the requirements. other and meet section’s suscep- contract is senting opinion that the (now 2212b, 4(c) codified and amend Art. § interpretation. tible other reasonable 127.005). ed at Tex.Civ.Prac. & Rem.Code § provision, The additional insured which pur statute does indemnity agreement, support does regulate any agreements for the port to language of the prohibited by the is not they are in purchase of insurance unless Anti-Indemnity Statute. agreements. support argue the three Respondents also argue Respondents anti-indemnity additional having states oilfield other support insurance-pur- of HB-5357 does permitted have not statutes indemnity agreement follows the one in this chasing agreements it. like Rig v. McBroom They cite Fireman’s Fund Ins. Co. v. case.15 See Babineaux (5th Co., Svc., Inc., 1284 Bldg. 806 F.2d Standard Ins. Commercial law); Cir.1987) (Tex.1972), (applying Louisiana Nesom in which we Inc., F.Supp. U.S.A., provi- v. Chevron reasoned (E.D.La.1984); Prod. Co. Action construed Amoco of a contract should be as sion Gilbertson, Changing insure, resulting ly & Insur- safety Battiato and increased risks Risks?, negligently. Market—Who Will Bear operator’s ance freedom to act 17.04 at L. INST. 17-16 ROCKY MTN. MIN. Anderson, (1986); Anatomy L. Owen indicated, opinion express we 14. As Contract, Tulsa Drilling L.J. and Gas Oil indemnity agreement validity of HB- (1990). 5357, including supporting insurance re- states, quirement. gas producing such as Other oil Dakota, Alaska, Arizona, California, South target Texas, Louisiana, con- anti-indemnity Wy- statutes Only have New Mexico Gilbertson, & su- par- Battiato anti-indemnity struction contracts. oming statutes directed have general- gas pra, at 15-16. ticularly operations. at oil

805 Gilbertson, Serv., 208, 52, W. Inc., P.2d John M. Battiato & Joel 107 N.M. 755 Well Co., (1988); Murray Trunkline Market — Who Changing v. Gas Insurance Will 55 Rocky 28, (La.Ct.App.1989). Risks?, 32 So.2d 544 Bear the Mtn.Min.L.Inst. 32 Cf. Emerson, v. Supply (1986). Fuel Co. legislature Mountain 17-18 If 17.04 at our § 1351, (validity of (Wyo.1978) P.2d 1354 578 expand desired to the Texas Anti-Indemni reached, but court provision insurance not ty the breadth of the Louisiana Act to expressed such a doubt statute, could done Because it have so. valid).16 urge that Respondents would interpret not, Court should not did jurisdictions, particularly we follow these re language to include such a statutory Mexico, anti-indemnity whose oilfield New striction. Texas passage influenced statute Respondents practical ef- argue Study Committee, su- See House statute. provision in fect of the additional insured i, pra, at 7. indemnify Getty by relieving is to HB-5357 cases, however, dispositive are These not negligence, for its responsibility it of sole Amoco, In the in- the case before us. it thus violates the intention of the and that directly dispute was surance Anti-Indemnity we not statute. While do agree- support prohibited indemnity of a coverage, deny effect we discussed, 755 P.2d at 53. As ment. expand language of our decline to provision of HB-5357 is additional insured encompass in- statute support separate covenant and does not procurement provisions that are surance agreement.17 indemnity indemnity agreements actually not distinguishable are Louisiana cases directly support agree- do not Anti-Indemnity stat- because that state’s Rather, language ments. construe the we expressly prohibits ute additional insured permit parties strictly of the statute shift the of insurance. clauses that burden freely regard agreements contract (West 1986). 9:2780(G) La.Rev.Stat.Ann. § language. statutory covered Babineaux, 2; F.2d 1284 n. also 806 at Thus, provision of the additional insured Anderson, L. Anatomy Owen the Anti-Indem- HB-5357 is covered Contract, 25 Tulsa Drilling Oil and Gas nity statute. 359, (1990). Thus, 424 L.J. the Louisiana statute, statute broader than the Texas Express Doctrine Negligence V. prohibits only which certain The trial court rendered sum agreements. Tex.Rev.Civ.Stat. art. 2212b (now respondents on the mary judgment 2 codified and amended at Tex.Civ. § 127.003); ground express negligence doc- Prac. & Rem.Code see also § con- anti-indemnity not believe that the maritime and cites no oilfield statute do anti-indemnity statutes discussed Respondents’ position. Getty struction cases to counter does, however, interpreting helpful in our oil- these are cases interpreting note oth that courts policies anti-indemnity be- statute. The field types anti-indemnity er statutes have differen foreign reflect the statutes do not hind these indemnity and additional in tiated between industry ex- in Texas. For concerns of ample, statute, oil See, provisions. e.g., Voisin v. O.D.E.C.O. sured anti-indemnity Illinois construction 1174, Co., (5th Cir.1984), Drilling F.2d 1177 744 29, (1985), para. was ch. 61 Ill.Rev.Stat. 1757, 1053, denied, U.S. 105 S.Ct. 84 cert. 470 protect worker and "to the construction enacted (1985) (Longshoremen’s Har 820 L.Ed.2d suffering general public construction- 5(b), Compensation Act 33 § bor Workers’ 107, Bosio, injuries.” 107 506 related Ill.Dec. 905(b) (1976)); Kinney G.W. Lisk § U.S.C.A. goal clearly policy differs This N.E.2d at 998. 215, 283, Co., 557 N.E.2d 76 N.Y.2d N.Y.S.2d act, goal of Texas oilfield from the (1990) (N.Y.Gen.Oblig.Law 5-322.1 § inequi- protect contractors from enacted 1989) (construction (McKinney anti-indemni- provisions. Tex.Rev.Civ. table indemnification Inc., Branigar Organization, ty)); Bosio (now and amended 2212b codified Stat. art. Ill.App.3d 107 Ill.Dec. 506 N.E.2d 996 127.002). & Rem.Code § at Tex.Civ.Prac. (con (Ill.Rev.Stat. (1985) (1987) para. ch. struction)); Contracting Wyoming Supreme v. Ash Cone Bros. Co. Court’s for the 17. The basis Inc., (Fla. land-Warren, because the Fuel is unclear So.2d dicta Mountain part (Fla.Stat. Dist.Ct.App.1984) not made ch. contract was 725.06 (construction anti-indemnity)). 578 P.2d at record in case. *12 al insured under policies trine invalidates the additional NL’s insurance Youell, of HB-5357. This common law doc- with INA or vision or extent of such trine, Ethyl Corp. v. as stated Daniel coverage, if it exists. Co.,

Construction (Tex.1987), provides that: Concurring dissenting opinion by seeking indemnify the indem- [P]arties GONZALEZ, J., joined by MAUZY and consequences nitee from the of its own DOGGETT, JJ. express

negligence must that intent in within the specific terms ... four cor- GONZALEZ, concurring Justice ners of the contract. dissenting. Although appeals recognized agree judicata I Court that express negligence doctrine has by Getty I bars action NL. applied only been to “contractual agree summary judgment also that the provisions,” it reasoned as follows: INA and Youell should be reversed and undoubtedly Texas courts would extend remanded to the trial court. The Court provisions this limitation to insurance concludes, however, paragraph two of covering indemnity obligation provi- the contract is an additional insured purport protect the indemnitee from in- directly support sion that does not negligence. the results of its sole agreement. doing, demnity In so the court above, 819 S.W.2d at 914. As discussed ambiguous is takes contract however, the additional insured makes a factual determination as to its support not HB-5357 does reason, meaning. join For I cannot agreement. As amicus curiae Texas Mid- I majority opinion. would hold that points Continent Oil Gas Association law, ambiguous contract is as a matter of out, express negligence doctrine in Tex ap- judgment reverse the of the court of applied only indemnity provi as has been peals, and remand the cause to the trial sions, insurance-shifting provisions. court for a trier of fact to determine wheth- Atlantic Co. v. Petroleum Richfield paragraph two of er the intended Personnel, Inc., (Tex.1989); 768 S.W.2d 724 provi- HB-5357 to an additional insured Masonry, Inc. v. Owens-Illi Coast Gulf support sion or an insurance nois, Inc., (Tex.1987) (per 739 S.W.2d 239 indemnity agreement. curiam); Singleton v. Pe Crown Central pertinent rules of contract construc- (Tex.1987) Corp., troleum 729 S.W.2d 690 Coker, tion are set out Coker curiam); Inc., (per Goodbodys, Whitson (Tex.1983): S.W.2d (Tex.App. — Dallas denied). writ If the written instrument is so worded express negli- decline to extend the given

We that it can be a certain or definite gence provisions doctrine to contractual legal meaning interpretation, then it is indemnity agreements than in this other con- ambiguous and the court will case, and we thus hold that this doctrine A strue the contract as a matter of law. the additional insured contract, however, does not invalidate ambiguous when its is provision of HB-5357. meaning is uncertain and doubtful or it is reasonably susceptible than one to more

VI. Conclusion ambigu- meaning. a contract is Whether question ous of law for the court is judgment of the court of We affirm looking decide at the circumstances Getty’s against NL. appeals as to claims entered. present when the contract was judgment reverse the of the court of We ambiguity, claims INA When a contract contains an appeals as to Youell, summary granting of a motion for and remand those claims to the the inter- proceedings improper because trial court for further consis- is becomes opinion. express opin- pretation of the instrument tent with this issue, omitted). (citations regarding Getty is an addition- fact ion in- susceptible to in HB-5357 is the term “additional reasonably This contract interpretation.1 Getty con- than more one thereof used. sured” derivative paragraph is an two of HB-5357 tends Paragraph one of the contract reads “IN- *13 provision and not does additional AND INDEMNITY” and sets SURANCE indemnity agreement, directly, cover types limits of insurance cover- out the and anti-indemnity statute never and the age required NL is to have under the con- type to this of intended affect insurance provision extending tract. Both the NL’s any arrange- agreement or other insurance indemnity Getty and the insurance over not a direct indemnification. ment is in out agreement are set this section. Getty, agrees relying This Court with liability states, paragraph “[t]he then last indemnity provision al- fact that (NL), provided, herein shall of Seller as procurement ready contains an insurance by coverage be limited the insurance not from the provision separate and distinct required of Seller.” therefore, provision; “additional insured” provision already contem- indemnity contract, construing a courts should In coverage separate insurance and is plates as a to look at the contract whole order dependent upon coverages con- not Coker, give provisions. effect to all provision. tained the “additional insured” 393; 650 S.W.2d at Universal C.I.T. Credit argument contends that this is Court Daniel, Corp. v. 150 Tex. strengthened by languages the “ad- 154, 158(1951). single provision No will be ditional insured” which states effect; rather, given all controlling provi NL’s extend and insurance shall to must be considered reference to sions required [by protect Getty “whether not or Daniel, writing. entire 243 S.W.2d at provisions the other of the contract].” 393; Myers Mgm’t Minerals Coast Gulf interpretation This is a reasonable of these (Tex.1962). Corp., 361 However, only it is not the provisions. whole, as a Taken this “INSURANCE interpretation. reasonable seems to con AND INDEMNITY” section argue INA and Youell this insur- coverages template the insurance set contemplates direct ance indemni- including provisions, in these the so out coverage, obligating fication NL to contrac- paragraph, di “additional insured” called tually indemnify Getty, directly and thus potential liability of NL rectly any cover indemnity supports agreement. This in- provision. terpretation is also reasonable. Nowhere under the ers, provisions agents, employees and insurance carriers 1. The contract at issue read as fol- losses, claims, actions, costs, any lows: and all subrogations, INSURANCE AND INDEMNITY: Seller expenses, judgments, or other agrees to sole ex- damages resulting injury person maintain Seller’s cost and pense, operations time are commenced death), from the resulting damage (including injury or fully performed Order and hereunder until is destruction) property (including of or loss discharged, types insurance all and with min- arising any person out nature of whatsoever follows, as and furnish certificates imum limits performance incident to the terms Purchasing Department evidenc- to Purchaser’s ing by Order (including this Seller but limited acceptable such with insurers sub-contractors, to, agents, employees, Seller’s Purchaser: by perform designated Seller to and others required then sets various contract out [The about, to, in, attendant work or services coverage required and limits Or- and under the terms this work services the contract] responsible be der). Seller held shall Seller, coverages by carried All Insurance claims, losses, subrogations, expenses, ac- any tions, required hereby, shall extend whether or not to costs, damages, di- judgments, or other Purchaser, protect and its co-owners proximately solely, caused rectly, (if any), joint the full venturers amount covering negligence of Purchaser. Insurance sufficiently en- and shall be coverages such provided agreement shall all claims dorsed underwriters waive Purchaser, Seller. of insurers its Seller, above as herein co-owners, venturers, agents, employees joint vided, be limited the insurance shall not carriers. and insurance coverage required indemnify, defend hold of Seller. Seller shall Purchaser, co-owners, joint harmless ventur- in order Courts should construe contracts parties. give effect to the intention of the Rowe, 593 S.W.2d

Har ris

(Tex.1979). In this case the intention of parties pres not clear. Both interpretations, logical

ent reasonable subjecting the contract to two reason

thus meanings, the determi acceptable

able question of fact. Ac

nation of which is a I

cordingly, would reverse *14 remand to the trial

the court of

court for a trier of fact to determine the parties.2

true intent of the DOGGETT, JJ., join

MAUZY and

concurring dissenting opinion

DEL INDEPENDENT VALLE SCHOOL Petitioners,

DISTRICT, al., et LOPEZ, Jr.,

Enrique G. al., Respondents.

et D-2367. No. Austin, petitioners. Fleming, for T. John Supreme Court of Texas. Austin, Judith Sanders- Bagley, Judith Antonio, Garza, Castro, James C. San Jose Dec. Cigarrora, Harrington, and Maria-Elena Austin, respondents. for Application Writ of Error for On Appeals the Court of Third of Texas District OPINION DOGGETT, Justice. that the proceeding,

In this we determine appeal for interlocutory dismissal of an erroneous. jurisdiction want Anti-Indemnity statute an addi- of whether it violates 2. While this Court has determined that is not covered Because Section tional have to be resolved. would statute, ques- open provides it has left applicable in this case statute applies to an insur- tion of whether the statute indemnity agreement an oilfield that a directly sup- procurement ance own responsible the results of his "shall Thus, indemnity agreement. if the ports an 2212b, actions,” I art. Tex.Rev.Civ.Stat. provision does fact determines that this trier of agreement is void. hold that this would indemnity agreement, question support