Tutle & Tutle Trucking, Inc. v. Eog Res., Inc.

391 S.W.3d 240

TUTLE & TUTLE TRUCKING, INC., Appellant

v.EOG RESOURCES, INC., Appellee.

No. 10–11–00062–CV.

Court of Appeals of Texas, Waco.

Nov. 15, 2012.

Diana L. Faust, Cooper & Scully, Dallas, TX, for appellant.

J.J. Knauff Jr., The Miller Law Firm, Dallas, TX, for appellee.

Before Chief Justice GRAY, Justice DAVIS, and Justice SCOGGINS.

OPINION

REX D. DAVIS, Justice.

In one issue, Appellant Tutle & Tutle Trucking, Inc. complains about a summary judgment granted in favor of Appellee EOG Resources, Inc. In its summary-judgment order, the trial court concluded that, based on language contained in a Master Services Contract (MSC) between Tutle and EOG, Tutle owes duties to defend and indemnify EOG and its contractor, Frac Source Services, Inc., in the underlying personal-injury lawsuit. We will affirm.

I. Background

This dispute arose after Archie Henderson, a Tutle employee, sued Tutle and Frac Source to recover damages for injuries that he allegedly sustained on the job.¹ Henderson alleged:

On or about September 5, 2007, Plaintiff ARCHIE HENDERSON, an employee of Defendant TUTLE & TUTLE, was, in the course and scope of his employment, assisting FRAC SOURCE personal [sic] unloading sand from a FRAC SOURCE “Sand King” to a truck. The Sand King being used as [sic] the time of the incident was owned, operated, and controlled by Defendant FRAC SOURCE. As Plaintiff was assisting with unloading sand from the Sand King and as FRAC SOURCE personnel operated the Sand King, Plaintiff HENDERSON was struck by a falling conveyor that was part of the Sand King. This incident caused Plaintiff HENDERSON to suffer severe and permanent head, shoulder, and back injuries. Upon information and belief, Defendant FRAC SOURCE had modified or removed a safety device from the Sand King, thus rendering the equipment unreasonably dangerous. In addition, Defendant FRAC SOURCE employees failed to properly utilize the Sand King conveyor's secondary safety system.

After learning that it was sued in the Henderson suit, Frac Source made a demand on EOG to defend and indemnify it under a separate master service contract between EOG and Frac Source. EOG then made a demand on Tutle for defense and indemnity in the Henderson suit, even though Henderson did not sue EOG.

In asserting that Tutle has a duty to defend and indemnify it, EOG relied on several provisions contained in the MSC. Those relevant provisions are:

6A. CONTRACTOR [Tutle] AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD COMPANY [EOG], ITS PARENT, SUBSIDIARY AND AFFILIATED COMPANIES AND ITS AND THEIR CO–LESSEES, PARTNERS, JOINT VENTURERS, CO–OWNERS, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES (HEREINAFTER COLLECTIVELY REFERRED TO AS “COMPANY GROUP”) HARMLESS FROM AND AGAINST ALL DAMAGE, LOSS, LIABILITY, CLAIMS, DEMANDS AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, INCLUDING COSTS OF LITIGATION, ATTORNEYS' FEES AND REASONABLE EXPENSES IN CONNECTION THEREWITH, WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING BUT NOT LIMITED TO STRICT LIABILITY OR THE UNSEAWORTHINESS OR UNAIRWORTHINESS OF ANY VESSEL OR CRAFT, OR THE NEGLIGENCE OF ANY PARTY, INCLUDING BUT NOT LIMITED TO THE SOLE OR CONCURRENT NEGLIGENCE OF THE COMPANY GROUP, ARISING IN CONNECTION HEREWITH IN FAVOR OF CONTRACTOR'S AGENTS, INVITEES AND EMPLOYEES, AND CONTRACTOR'S SUBCONTRACTORS AND THEIR AGENTS, INVITEES AND EMPLOYEES ON ACCOUNT OF DAMAGE TO THEIR PROPERTY OR ON ACCOUNT OF BODILY INJURY OR DEATH.

6B. COMPANY AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD CONTRACTOR, ITS AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES (HEREINAFTER COLLECTIVELY REFERRED TO AS “CONTRACTOR GROUP”) HARMLESS FROM AND AGAINST ALL DAMAGE, LOSS, LIABILITY, CLAIMS, DEMANDS AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, INCLUDING COSTS OF LITIGATION, ATTORNEYS' FEES AND REASONABLE EXPENSES IN CONNECTION THEREWITH, WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING BUT NOT LIMITED TO STRICT LIABILITY OR THE UNSEAWORTHINESS OR UNAIRWORTHINESS OF ANY VESSEL OR CRAFT, OR THE NEGLIGENCE OF ANY PARTY, INCLUDING BUT NOT LIMITED TO THE SOLE OR CONCURRENT NEGLIGENCE OF THE CONTRACTOR GROUP, ARISING IN CONNECTION HEREWITH IN FAVOR OF COMPANY'S AGENTS, INVITEES AND EMPLOYEES, COMPANY'S CONTRACTORS (OTHER THAN CONTRACTOR) AND THEIR AGENTS, INVITEES AND EMPLOYEES, AND SUCH CONTRACTORS' SUBCONTRACTORS, OR THEIR AGENTS, INVITEES OR EMPLOYEES ON ACCOUNT OF DAMAGE TO THEIR PROPERTY OR ON ACCOUNT OF BODILY INJURY OR DEATH.

The language contained in paragraphs 6A and 6B of the MSC between EOG and Tutle is set forth in all capital letters and in an apparently slightly larger font than the rest of the contract. Another relevant provision of the MSC—paragraph 6E—was not capitalized or differentiated using an apparently larger font. Paragraph 6E provides:

6E. The terms and provisions of this Paragraph 6 shall have no application to claims or causes of action asserted against Company or Contractor by reasonof any agreement of indemnity with a person or entity not a party to this Agreement in those instances where such contractual indemnities are not related to or ancillary to the performance of the work contemplated under the Agreement or are indemnities uncommon to the industry. The terms and provisions of this Paragraph 6 shall expressly apply to claims or causes of action asserted against Company or Contractor by reason of any agreement of indemnity with a person or entity not a party to this Contract where such contractual indemnities are related to or ancillary to the performance of the work contemplated under the Agreement and or Company's project and are indemnities not uncommon in the industry.

When demanding that Tutle defend and indemnify it in the Henderson suit, EOG relied on paragraphs 6A and 6E of the MSC.

After receiving EOG's demands for defense and indemnity, Tutle filed a declaratory-judgment action against EOG, Frac Source, and Tutle's insurer, Carolina Casualty Company, seeking a declaration that Tutle owed no defense or indemnity obligation to EOG in the Henderson suit. In the alternative, Tutle sought a declaration that Tutle's insurance policy with Carolina covered any indemnity obligation that Tutle owed to EOG as an “insured contract.” EOG counterclaimed for a declaratory judgment that it was entitled to defense and indemnity from Tutle in the Henderson suit based on the MSC and because Henderson was an employee of Tutle who was furnishing services to EOG at the time of the accident. EOG also made a demand upon Tutle for indemnity that EOG owes to Frac Source under the “pass through” provision (paragraph 6E) of the MSC. In addition, EOG sought a declaration that Carolina owed a duty to EOG as its primary liability policy as a matter of law.

EOG moved for partial summary judgment, arguing that: (1) Tutle breached its contract with EOG; (2) Carolina had a contractual obligation to provide a defense and indemnity to EOG and Frac Source with regard to the claims asserted in the Henderson suit; (3) Tutle had a contractual obligation to provide a defense and indemnify EOG and Frac Source with regard to the claims asserted in the Henderson suit; and (4) Tutle and/or Carolina have a contractual obligation “to pay all costs, expenses, and reasonable attorney's fees incurred by or on behalf of EOG/Frac Source in the defense of the Underlying Lawsuit from at least April 2, 2008 through the present date and for all such future costs, expenses, and attorney's fees.”

Tutle filed its own motion for summary judgment, asserting that, as a matter of law, it owed no contractual duty to defend or indemnify Frac Source under the MSC because the applicable provisions did not satisfy Texas law's “fair-notice” requirements—the express-negligence test and conspicuousness. Tutle also contended that it did not owe a duty to defend or indemnify EOG under the MSC for obligations that EOG owed to Frac Source in the Henderson suit.

The trial court denied Tutle's motion and granted EOG's motion. In granting EOG's motion, the trial court specifically declared that Tutle: (1) breached the MSC it had with EOG; (2) has a contractual duty to defend and to indemnify EOG and Frac Source in the underlying Henderson suit; and (3) owes EOG reimbursement for all defense costs, expenses, and indemnity incurred in the Henderson suit. Thereafter, the trial court granted EOG's motion to sever all claims brought against EOG into a separate cause number, and this appeal followed.

II. Standard of Review

We review the grant or denial of a traditional motion for summary judgment de novo. See Creditwatch, Inc. v. Jackson, 157 S.W.3d 814, 816 n. 7 (Tex.2005). To be entitled to summary judgment, the movant must demonstrate that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. SeeTex.R. Civ. P. 166a(c); Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). When both parties move for summary judgment and the trial court grants one motion and denies the other, we review the summary-judgment evidence presented by both sides, determine all questions presented, and render the judgment the trial court should have rendered. Tex. Workers' Compensation Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex.2004).

III. The Fair–Notice Doctrine

In its sole issue, Tutle contends that the trial court erred in granting summary judgment in favor of EOG because the provisions in the MSC that EOG relies on do not meet the fair-notice requirements established by the Texas Supreme Court for interpreting the validity and enforceability of a contractual-indemnity obligation. And, because the MSC provisions allegedly do not meet the fair-notice requirements, Tutle asserts that the trial court erred in concluding that Tutle breached the contract and owes EOG and Frac Source duties to defend and indemnify them in the underlying Henderson suit. EOG counters that the provisions meet the fair-notice...