XTO Energy Inc. v. Frontier Drilling, LLC

549 F.Supp.3d 526

XTO ENERGY INC., Plaintiff,

v.FRONTIER DRILLING, LLC, et al., Defendants.

Civil Action No. 4:20-cv-00775-P

United States District Court, N.D. Texas, Fort Worth Division.

Signed July 14, 2021

Andrew D. Sims, Caroline Marie Cyrier, Harris Finley & Bogle PC, Fort Worth, TX, for Plaintiff.

Peter Joseph Bambace, Charles B. Holm, Kayla Chudej Miller, Holm Bambace LLP, Houston, TX, for Defendant Frontier Drilling, LLC.

Gregory Richardson Ave, Walters Balido & Crain LLP, Dallas, TX, for Defendant Great Northern Insurance Company.

ORDER AND OPINION

Mark T. Pittman, UNITED STATES DISTRICT JUDGE

Before the Court are cross motions for summary judgment. ECF Nos. 40–41, 42–43, 48–49, 50–51. Having reviewed each motion and their respective briefing, responses, and replies, the record, and the applicable law, the Court finds that XTO Energy Inc. ("XTO"), Cody Kirkpatrick, Kirkpatrick Oilfield Services, Inc., Johnny Noel Macon, Jr., RigUp, Inc., Rusco Operating, LLC, and Texoma Safety Consulting, LLC's Motions for Summary Judgment should be and are hereby GRANTED for the reasons stated below. Consequently, the Court finds that Frontier Drilling, LLC ("Frontier") and Great Northern Insurance Company's ("Great Northern") Motion for Summary Judgment¹ should be and is hereby DENIED.

FACTUAL BACKGROUND

A. Factual Overview

This case arises out of a master service agreement—International Association of Drilling Contractors (IADC) Drilling Bid Proposal and Daywork Drilling Contract—between Frontier and XTO ("Frontier-XTO MSA") for Frontier to furnish certain equipment, labor, and services as requested by XTO for its drilling operations. J.A. Ex. D, ECF No. 44-4; Nt. of Removal Ex. F (Orig. Pet.) at ¶ 14, ECF No. 1-6. XTO brought this lawsuit seeking a declaratory judgment against Frontier and Great Northern requiring Frontier and Great Northern to defend and indemnify XTO's contractors and subcontractors—Rusco Operating, LLC, RigUp, Inc., Cody Kirkpatrick, Kirkpatrick Oilfield Services, Inc., Johnny Noel Macon, Jr., and Texoma Safety Consulting, LLC ("Rusco Group")—in accordance with the Frontier-XTO MSA in an underlying wrongful death lawsuit.

B. Frontier-XTO MSA: Defense and Indemnity

On December 1, 2016, Frontier and XTO entered the Frontier-XTO MSA designating Frontier as the "Contractor" and XTO as the "Operator," which contained an indemnity agreement requiring Frontier and XTO to defend and indemnify each other for causes of actions brought by their own employees or subcontractors of any tier or their employees. XTO and Rusco Group Supp. App'x Ex. Q at 7, ECF No. 47-10; J.A. Ex. D at 1-11. In paragraph 14.8 of the Frontier-XTO MSA, Frontier explicitly agreed to defend and indemnify XTO from and against all claims brought by Frontier's employees or its subcontractors. J.A. Ex. D at 4. These duties are "without regard to and without any right to contribution from any insurance maintained by [XTO]." J.A. Ex. D at 4. Specifically, paragraph 14.8 states:

14.8 Contractor's [Frontier's] Indemnification of Operator [XTO]: Contractor shall release Operator of any liability for, and shall protect, defend and indemnify Operator from and against all claims, demands, and causes of action of every kind and character ... arising in connection herewith in favor of Contractor's employees or Contractor's subcontractors of any tier ... on account of bodily injury, death or damage to property. Contractor's indemnity under this Paragraph shall be without regard to and without any right to contribution from any insurance maintained by Operator pursuant to Paragraph 13.

Id. (emphasis added).

Paragraphs 14.13 and 27.11 extend the indemnities to contractors, subcontractors, insurers of each, and others. Id. at 5, 16. Further, paragraph 27.11 provides XTO's contractors and subcontractors of every tier, and their agents, employees, among others, the "benefits of [XTO]." Id. at 16. Specifically, paragraphs 14.13 and 27.11 state the following:

14.13 Indemnity Obligation: Except as otherwise expressly limited in this Contract, it is the intent of parties hereto that all releases, indemnity obligations and/or liabilities assumed by such parties under Subparagraphs 14.1 through 14.12 hereof, be without limit and without regard to the cause or causes thereof , including but not limited to, pre-existing conditions, defect or ruin of premises or equipment, strict liability, regulatory or statutory liability, products liability, breach of representation or warranty (express or implied), breach of duty (whether statutory, contractual or otherwise) any theory of tort, breach of contract, fault, the negligence of any degree or character (regardless of whether such negligence is sole, joint or concurrent, active, passive or gross) of any party or parties, including the party seeking the benefit of the release, indemnity or assumption of liability, or any other theory of legal liability. The indemnities, and releases and assumptions of liability extended by the parties hereto under the provisions in Subparagraph 14 shall inure to the benefit of such parties ... representatives, employees, consultants, agents, servants, contractors, subcontractors and insurers of each ....

***

27.11 Addition to Paragraph 14.13. The indemnifications of Section 14 of this Agreement in favor of Operator shall extend to Operator and Operator's other protected parties under this Contract. Operator's parent, subsidiary and affiliate companies, its contractors and subcontractors of every tier, and its and their agents, employees, directors, officers, managers, representatives, servants, invitees, and consultants are given the benefits of Operator ....

Id. at 5, 16 (emphasis added).

C. Frontier-XTO MSA: Insurance

The Frontier-XTO MSA also required Frontier and XTO to obtain liability insurance or self-insurance to support the mutual indemnification. See Id. at 16. Specifically, as to Frontier, the insurance requirement is as follows:

13. INSURANCE

During the life of this Contract, Contractor shall at Contractor's expense maintain, with an insurance company or companies authorized to do business in the state where the work is to be performed or through a self-insurance program, insurance coverages of the kind and in the amount set forth in "special provisions continued," supporting the insurable risks and liabilities specifically assumed by Contractor in this Contract .... For liabilities assumed hereunder by Contractor, its insurance shall be endorsed to provide that the underwriters waive their right of subrogation against Operator .... Operator and Contractor shall cause their respective underwriters to name the other additionally insured but only to the extend [sic] of the indemnification obligations assumed herein.

***

27.10 Addition to Paragraph 13.

The insurance protection hereunder in favor of Operator shall extend to Operator and Operator's other protected parties under this Contract. Operator's ... contractors and subcontractors of every tier, and its and theiragents, employees, directors, officers, managers, representatives, servants, invitees and consultants are given the benefits of Operator ....

All insurance policies required of Contractor, in any way related to the work and whether or not required by this Contract, shall, but only to the extent of the risks and liabilities assumed by Contractor in this Contract (1) name Operator and Operator's other protected parties under this Contract as additional insured ... (2) waive subrogation against Operator and Operator's other protected parties under this Contract and (3) be primary and non-contributory to any insurance of Operator and Operator's other protected parties under this Contract.

***

27.11 Addition to Paragraph 14.13.

....

Contractor and Operator agree that each will support its mutual indemnity obligations with liability insurance or self-insurance obtained for the benefit of the other party (and its respective other protected parties under this contract) as indemnitees with minimum limits not less than the minimum limits required in Exhibit "C." Such insurance shall not limit the parties’ indemnity obligations except to the extent mandated by applicable law.

Id. at 4, 15–16 (emphasis added to body of MSA).

The Frontier-XTO MSA emphasized Frontier's relationship to XTO as that of an independent contractor:

27.6 Independent Contractor. Contractor shall at all times be an independent contractor, and nothing in this Contract shall be construed as creating the relationship of principal and agent, or employer or employee, between Operator and Contractor or between Operator and Contractor's agents or employees. Contractor shall have no authority to hire any persons on behalf of Operator, and any and all persons whom Contractor may employ shall not be deemed employees of Operator. Contractor shall have control and management of the work, the selection of employees and the fixing of the hours of labor, and no right is reserved to Operator to direct or control the manner in which the work is performed, as distinguished from the result to be accomplished. Nothing herein contained shall be construed to authorize Contractor to incur any debt, liability, or obligation of any nature for or on behalf of Operator.

Id. at 14.

D. Great Northern Policy

As required by the Frontier-XTO MSA, Frontier obtained a $2,000,000 commercial general liability policy ("Policy") from Great Northern—a subsidiary of Chubb Limited ("Chubb")—which was effective from June 1, 2017 to June 1, 2018. J.A. Ex. F at 203. The Policy's additional insured endorsement specifically states:

Under Conditions, the following provision is added to the condition titled Other Insurance.

If you are obligated, pursuant to a written contract or agreement, to provide the person or organization described in the Schedule (that is also included in the Who Is An Insured section of this contract) with primary insurance such as is afforded by this policy, then this insurance is primary and we will

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