Affirmed and Opinion filed October 11, =
2007.
In The
Fourteenth=20
Court of Appeals
_______________
NO. 14-06-00532-CV
_______________
AYRES WELDING COMPANY, INC.,=20
Appellant
V.
CONOCO, INC.,=20
Appellee
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On Appeal from the 280th District=20
Court
Harris County, Texas
Trial Court Cause No.=20
04-67947
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O P I N I=20
O N
In this contractual =
indemnity=20
dispute, Ayres Welding Company, Inc. (AAyres@) appeals a summary =
judgment=20
entered in favor of Conoco, Inc. (AConoco@) on the grounds =
that: (1) the=20
indemnity agreement between the parties does not obligate Ayres to =
indemnify Conoco for non-work related injuries to an Ayres =
employee; (2)=20
the indemnity agreement is unenforceable because it fails the =
express=20
negligence test; (3) fact issues preclude summary judgment; and =
(4) the=20
1.7 million dollar judgment amount exceeds the contractual =
cap. We=20
affirm.
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Background
Ayres and Conoco =
entered into a=20
contract (the Acontract@) for Ayres to =
perform welding=20
and maintenance work for Conoco. In 2001, Tommy Joe Day, an =
Ayres=20
employee, suffered serious injuries in a collision while riding in =
a=20
vehicle driven by a Conoco employee. Day sued Conoco, Conoco =
requested indemnity from Ayres under the contract=3Ds indemnity =
provisions, but=20
Ayres declined. Conoco thereafter settled Day=3Ds claim for $1.7 =
million, and=20
sued Ayres for contractual indemnity. Conoco and Ayres each =
moved=20
for summary judgment on the indemnity issue, and the trial court =
denied=20
Ayres=3Ds motion and granted=20
Conoco=3Ds. =20
Standard of Review
A traditional summary =
judgment=20
may be granted if the motion and summary judgment evidence show =
that there=20
is no genuine issue of material fact and the moving party is =
entitled to=20
judgment as a matter of law. See Tex. R. Civ. P. 166a(c). In =
reviewing=20
a summary judgment, we take as true all evidence favorable to the=20
nonmovant and indulge every reasonable inference, and resolve any =
doubts,=20
in the nonmovant's favor. Sudan v. Sudan, 199 S.W.3d =
291, 292=20
(Tex. 2006). When both parties move for summary judgment on =
the same=20
issues and the trial court grants one motion and denies the other, =
the=20
reviewing court considers the summary judgment evidence presented =
by both=20
sides, determines all questions presented, and renders the =
judgment the=20
trial court should have rendered. Valence Operating Co. =
v.=20
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
Scope of=20
Indemnity Obligation
The relevant portions =
of the=20
indemnity provisions at issue state:
14.1 =
APPLICATION OF=20
INDEMNITIES. EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, =
ANY=20
INDEMNIFICATION AND DEFENSE OBLIGATION IN THIS CONTRACT APPLIES =
REGARDLESS=20
OF (1) THE CAUSE OF OR REASON FOR ANY COVERED LOSS OR LIABILITY; =
(2) THE=20
SOLE, JOINT OR CONCURRENT NEGLIGENCE OR OTHER FAULT, WHETHER =
ACTIVE OR=20
PASSIVE, OF THE INDEMNIFIED PARTY; AND (3) WHETHER THE LOSS OR =
LIABILITY=20
RESULTS FROM ACTIONS OF [CONOCO], ITS AGENTS OR EMPLOYEES.=20
14.2 GENERAL=20
INDEMNIFICATION. [AYRES] shall INDEMNIFY AND HOLD [CONOCO] =
HARMLESS=20
from loss or liability . . . arising from any claim =
or cause=20
of action for . . . injury to . . . persons, caused by, =
arising=20
from, or incidental to the Work. =20
However, such indemnification shall not apply to claims for . . =
.=20
injury . . . caused by [CONOCO=3Ds] sole negligence.=20
[AYRES=3Ds] indemnity =
obligations=20
under this provision shall be limited to $1,000,000 per occurrence =
. . .=20
. =
14.4 EMPLOYEES OF=20
[AYRES]. Notwithstanding anything to the contrary in this =
Contract,=20
[AYRES] shall INDEMNIFY AND HOLD [CONOCO] HARMLESS from =
any loss=20
or liability . . . arising from any claim or cause of action for =
injury to=20
. . . [AYRES=3Ds] =
employees.
(emphasis=20
added).
Ayres=3Ds first issue asserts =
that=20
although section 14.4 obligates it to indemnify Conoco for an =
injury claim=20
by an Ayres employee, section 14.2 limits that obligation to =
matters=20
Acaused by, arising =
from, or=20
incidental to@ the Awork.@ Ayres argues =
that the=20
automobile accident was not caused by or incidental to work under =
the=20
contract because it occurred off the job site, after working=20
hours.
Conoco argues that =
section 14.2=20
is the general indemnity provision, and that section 14.4, which =
follows=20
it, provides an exception whereby Ayres must indemnify Conoco for =
any=20
damages or injuries sustained by an Ayres employee. Conoco =
asserts=20
that section 14.4 overrides section 14.2 because section =
14.4 states=20
that it applies notwithstanding anything to the contrary in the=20
contract.
We construe indemnity =
agreements under normal rules of contract construction. =
Gulf Ins.=20
Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. =
2000). Our=20
primary goal is to ascertain and give effect to the parties' =
intent as=20
expressed in the contract. Seagull Energy E&P, Inc. =
v. Eland=20
Energy, 207 S.W.3d 342, 345 (Tex. 2006). To discern the =
intent,=20
we must examine the entire contract in an effort to harmonize and =
give=20
effect to all provisions so that none will be rendered =
meaningless. =20
Id. Additionally, contract terms are to be given =
their plain,=20
ordinary, and generally accepted meanings and the more specific =
provisions=20
of a contract will control over the general. Dorsett, =
164=20
S.W.3d at 662 (Tex. 2005); Forbau v. Aetna Life Ins. Co., =
876=20
S.W.2d 132, 133B34 (Tex. =
1994).
In this case, section =
14.4=20
plainly states that Ayres will indemnify Conoco for liability =
arising from=20
injury to an Ayres employee notwithstanding anything to the =
contrary in=20
the contract, thus, including section 14.2. Because=20
Ayres=3Ds interpretation does =
not give=20
effect to this plain language, we are not at liberty to adopt =
it. =20
Accordingly, Ayres=3Ds first issue is=20
overruled.
Express=20
Negligence Test
Ayres=3Ds second issue argues =
that=20
section 14.4 does not meet the express negligence test because an=20
interpretation that Conoco should be indemnified for its own =
negligence=20
requires reading sections 14.4 and 14.1 together, even though =
neither=20
refers to the other. Ayres contends that having to make =
inferences=20
by piecing together different contract provisions is a problem the =
express=20
negligence test was adopted to prevent.
Conoco responds that =
multiple=20
provisions of the contract can be read together to meet the =
express=20
negligence test. Conoco thus argues that when section 14.4 =
is read=20
together with section 14.1, stating:
EXCEPT AS OTHERWISE PROVIDED IN THIS =
CONTRACT, ANY=20
INDEMNIFICATION AND DEFENSE OBLIGATION IN THIS CONTRACT APPLIES =
REGARDLESS=20
OF . . . (2) THE SOLE, JOINT OR CONCURRENT NEGLIGENCE OR OTHER =
FAULT,=20
WHETHER ACTIVE OR PASSIVE, OF THE INDEMNIFIED PARTY . . . ,=20
the =
parties=3D intent for Ayres to =
indemnify=20
Conoco for its own negligence is clear, and the express negligence =
test is=20
met.
Because =
indemnification of a=20
party for its own negligence is an extraordinary shifting of risk, =
fair=20
notice requirements, including the express negligence doctrine and =
the=20
conspicuousness requirement, =
apply to=20
such indemnity agreements. The=20
express negligence doctrine requires that an intent to indemnify a =
party=20
from the consequences of that party=3Ds own negligence be =
expressed=20
in specific terms within the four corners of the contract. =
See=20
Gulf Ins. Co., 22 S.W.3d at 423; Dresser Indus., Inc., =
853=20
S.W.2d at 508. The express negligence requirement is a rule =
of=20
contract interpretation and thus a question of law for the =
court. =20
Fisk Elec. Co. v. Constructors & Assocs., Inc., 888 =
S.W.2d 813,=20
814 (Tex. 1994).
The following =
language has been=20
held to meet the express negligence test: AOperator agrees to . =
. .=20
indemnify, and save Contractor harmless from and against all =
claims . . .=20
without limit and without regard to the cause or causes thereof or =
the=20
negligence of any party or parties . . . @ Maxus Exploration =
Co. v.=20
Moran Bros. Inc., 817 S.W.2d 50, 57 (Tex. 1991). The =
Texas=20
Supreme Court has further held that A[a]n indemnity =
agreement need=20
not be confined to one sentence@ and that a contract, =
taken=20
Aas a =
whole,@ can be sufficient to =
define=20
the parties=3D intent to indemnify =
a company=20
for that company=3Ds own negligence.=20
Enserch Corp. v. Parker, 794 S.W.2d 2, 8 (Tex. =
1990). =20
Therefore, a clause providing that a contractor will indemnify a =
company=20
for any claims, Aregardless of whether =
such=20
claims
are founded in whole =
or in part=20
upon alleged negligence of [Company],@ also meets the =
test. =20
Id. =
In this case, =
although the=20
express negligence language in section 14.1 is not contained in =
section=20
14.4, which provides Ayres=3Ds indemnity =
obligation in this=20
case, the language, Aany indemnification . =
. . in=20
this contract,@ found in section =
14.1,=20
unambiguously refers to the claims or causes of action described =
in=20
section 14.4. Because the contract, as a whole, is thus =
sufficient=20
to demonstrate an intent that Ayres indemnify Conoco for the =
consequences=20
of Conoco=3Ds own negligence, the =
express=20
negligence test is met. Accordingly, Ayres=3Ds second issue is=20
overruled.
Fact=20
Issues and Indemnity Cap
Ayres=3Ds third issue =
contends, in the=20
alternative, that fact issues precluded the summary judgment =
because: (1)=20
Conoco failed to establish that it was not solely negligent for=20
Day=3Ds injuries, as =
required for the=20
indemnity obligation to arise under section 14.2 of the contract; =
and (2)=20
if both its interpretation of the contract and Conoco=3Ds interpretation are=20
reasonable, the contract is ambiguous.
Ambiguity in a =
contract does=20
not exist merely because the parties assert forceful and =
diametrically=20
opposing interpretations, =
but only=20
if the contract language is susceptible to two or more =
reasonable=20
interpretations. Seagull Energy, 207 S.W.3d at =
345. =20
Whether a contract ambiguity exists is a question of law for the =
court to=20
decide. In re D. Wilson Const. Co., 196 S.W.3d at=20
781.
In this case, because =
Ayres=3Ds interpretation of =
the=20
provisions would require ignoring the plain language in section =
14.4, it=20
is not a reasonable interpretation that can render the contract=20
ambiguous. Similarly, because we have concluded above that =
section=20
14.2 does not apply, Conoco was not required to prove that it was =
not=20
solely negligent under that section. Accordingly, =
Ayres=3Ds third issue is=20
overruled.
Ayres=3Ds fourth issue =
asserts that=20
even if the contract requires Ayres to indemnify Conoco, section =
14.2=20
limits the amount of indemnity to $1 million dollars, =
and the=20
trial court erred by exceeding this cap in the final =
judgment. =20
Again, however, because section 14.2, which provides the indemnity =
cap on=20
which Ayres relies, is overridden by language of section 14.4 =
stating:=20
ANotwithstanding =
anything to the=20
contrary in this contract, [Ayres] shall indemnify and hold =
[Conoco]=20
harmless from any loss or liability [i.e., without =
limitation] . .=20
. arising from any claim or cause of action for injury . . . of=20
[Ayres=3Ds] employees . . =
.@ (emphasis added),=20
Ayres=3Ds fourth issue is =
also without=20
merit and is overruled. Accordingly, the judgment of the =
trial court=20
is affirmed.
/s/ =20
Richard H. Edelman
Senior Justice
Judgment rendered and =
Opinion=20
filed October 11, 2007.
Panel consists of =
Chief Justice=20
Hedges and Justices Fowler and Edelman.
=20
The Awork@ is defined in the contract as the =
welding and=20
general maintenance services and materials requested by Conoco and =
provided by Ayres.
=20
The conspicuousness requirement, which is not in issue in this =
case,=20
mandates Athat something must appear on the face =
of the=20
[contract] to attract the attention of a reasonable person when he =
looks=20
at it.@ Dresser Indus., Inc. v. Page =
Petroleum,=20
Inc., 853 S.W.2d 505, 508 (Tex. 1993).
=20
Id. The fair notice requirements are not applicable when =
the=20
indemnitee establishes that the indemnitor possessed actual notice =
or=20
knowledge of the indemnity agreement. Id. at 508 =
n.2. =20
However, because actual notice was not asserted in =
Conoco=3Ds motion for summary judgment, we do not =
address=20
it.
=20
In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex.=20
2006)
=20
For this contention, Ayres relies on the language in section 14.2 =
that=20
states, A[AYRES=3DS] indemnity obligations under this =
provision=20
shall be limited to $1,000,000 per occurrence.@
=20
Senior Justice Richard H. Edelman, sitting by=20
=
assignment. |