Opinion=20
issued November 15, 2007
=
In The
Court of Appeals
For The
First District of =
Texas
NO. 01-07-00118-CV
__________
E.I. =
DU PONT DE=20
NEMOURS AND COMPANY, Appellant
V.
SHELL =
OIL COMPANY,=20
Appellee
On =
Appeal from=20
the 127th District Court
Harris =
County,=20
Texas
Trial =
Court Cause=20
No. 2005-11339
O P I =
N I O=20
N
<=
/SPAN>Appellant, E.I. Du Pont De Nemours and =
Company=20
(=E2=80=9CDu Pont=E2=80=9D), challenges the trial court=E2=80=99s =
rendition of summary judgment ![3DFootnote](3D"")
in favor of appellee, Shell Oil =
Company=20
(=E2=80=9CShell=E2=80=9D), in Du Pont=E2=80=99s suit against Shell =
for breach of an=20
indemnification agreement. In four issues, Du Pont contends that =
Shell=20
owed Du Pont a duty to indemnify it for =E2=80=9Cdefense costs =
that advanced both=20
[] the defense of Shell related to Waste Materials and [] the =
defense of=20
Du Pont (or another defendant) related to waste from another =
facility=E2=80=9D; Du=20
Pont properly allocated a percentage of these =E2=80=9Cdefense =
costs=E2=80=9D to Shell; Du=20
Pont properly segregated the defense costs =E2=80=9Cthat did not =
relate to the=20
defense of Waste Materials=E2=80=9D from the remainder of the =
defense costs that=20
did relate to Waste Materials; Shell owed Du Pont a duty to =
indemnify it=20
for =E2=80=9Ca share of the settlement funds it paid to resolve =
=E2=80=98Claims related to=20
Waste Materials=E2=80=99=E2=80=9D; and the trial court should have =
awarded it =E2=80=9Cdefense costs for its =
prosecution of its=20
indemnity claim.=E2=80=9D
<=
/SPAN>We=20
reverse and render. Factual and =
Procedural=20
Background
&nbs=
p;Pursuant=20
to a Detergents Toll Conversion Agreement =
(=E2=80=9CDTCA=E2=80=9D), Du Pont manufactured=20
Shop Ligand, a chemical, at a facility in Mobile, Alabama, using =
Shell=E2=80=99s=20
raw materials and for Shell=E2=80=99s use. Under the DTCA, Shell =
retained=20
ownership of the wastes and waste by-products from the Shop Ligand =
production process, referred to by the parties in the DTCA as the =
=E2=80=9CWaste=20
Materials.=E2=80=9D Moreover, Shell designated the transporter and =
the disposal=20
site of the Waste Materials and reimbursed Du Pont for =
transportation and=20
disposal costs. Finally, article 15 of the DTCA contained two =
indemnity=20
provisions, which generally provided that Shell would =
=E2=80=9Cdefend and=20
indemnify Du Pont . . . against all Claims related to Waste=20
Materials.=E2=80=9D
<=
/SPAN>Du=20
Pont shipped over 12 million pounds of Waste Materials to an =
injection=20
well in Bayou Sorrell, Louisiana. The injection well subsequently =
became=20
the subject of multiple lawsuits ultimately consolidated into a =
class=20
action suit in federal district court. Du Pont and Shell, as well =
as=20
hundreds of other defendants, were sued in this underlying =
litigation for=20
their roles in generating and disposing of wastes at the injection =
well.=20
The plaintiffs in the underlying litigation did not identify any=20
particular defendant as responsible for any specific waste. =
Rather, the=20
plaintiffs alleged that all of the defendants=E2=80=99 wastes =
commingled at the=20
site and these commingled wastes collectively harmed them. =
<=
/SPAN>All=20
parties agree that Shell and Du Pont were sued, in part, for their =
roles=20
in generating and transporting Waste Materials to the injection =
well; both=20
Shell and Du Pont were also sued for claims unrelated to Waste =
Materials.=20
Du Pont was sued for shipping to the injection well (1) the Waste=20
Materials and (2) 7.6 million pounds of waste from its =
=E2=80=9CPontchartrain=20
Facility=E2=80=9D in La Place, Louisiana.
<=
/SPAN>After=20
being sued, Du Pont requested that Shell, pursuant to the DTCA,=20
provide it a defense and =
indemnity in=20
the underlying litigation. Although Du Pont requested a response =
within 30=20
days, Shell responded to this demand over one year later. Shell =
recognized=20
its =
=E2=80=9Cresponsibility=E2=80=9D for the Waste=20
Materials, but denied responsibility for waste from other =
facilities.=20
Shell stated that it would not =E2=80=9Cdefend or indemnify any =
judgment against=20
Du Pont for other wastes=E2=80=9D and offered Du Pont a limited =
indemnity,=20
conditioned upon Du Pont=E2=80=99s waiving its right to recover =
settlement=20
payments if the plaintiffs and defendants in the underlying =
litigation=20
accomplished an =E2=80=9Cearly settlement.=E2=80=9D Shell also =
indicated that it was=20
unwilling to reimburse Du Pont for any defense costs expended =
prior to=20
Shell=E2=80=99s offer. Du Pont rejected Shell=E2=80=99s =
conditional indemnity and=20
continued its defense.
<=
/SPAN>The=20
plaintiffs and defendants eventually settled the underlying =
litigation.=20
Thereafter, Shell sent Du Pont another letter stating that it =
intended to=20
indemnify Du Pont only for shipments of Waste Materials. Shell =
asserted=20
that the parties needed to =E2=80=9Cdetermine how to split out =
those costs=20
solely related to the waste shipped from [the Mobile =
Facility] on=20
[Shell=E2=80=99s] behalf.=E2=80=9D (Emphasis added.) Shell =
requested that Du Pont submit=20
its costs with supporting documentation, and, in December 2004, Du =
Pont=20
sent Shell a letter breaking down its annual defense costs. Du =
Pont then=20
requested that Shell pay (1) a percentage of defense costs that =
related to=20
both Waste Materials and non-Waste Materials and (2) $31,000 in =
costs that=20
solely related to Waste Materials for which Shell was =
=E2=80=9Csolely=20
responsible.=E2=80=9D Shell refused to pay any amounts other than =
the $31,000 in=20
defense costs solely related to Waste Materials.
<=
/SPAN>Du=20
Pont filed suit, asserting that Shell breached its duty to defend =
and=20
indemnify it in the underlying litigation. Shell answered, and =
filed a=20
motion for partial summary judgment, seeking a declaration that it =
owed Du=20
Pont indemnity =E2=80=9Conly for defense costs directly =
related=E2=80=9D to=20
Waste Materials, and not a percentage of costs incurred by Du Pont =
=E2=80=9Cin its=20
overall defense.=E2=80=9D (Emphasis added.) The trial court =
granted Shell partial=20
summary judgment, but in its order it simply tracked the language =
of the=20
DTCA, declaring that Shell was required to indemnify Du Pont for =
=E2=80=9Cdefense=20
costs and settlement funds per [s]ection 15 of the [DTCA] incurred =
by Du=20
Pont which are related to the Waste Materials.=E2=80=9D =
<=
/SPAN>The=20
parties then filed cross motions for summary judgment. In its =
summary=20
judgment motion, Du Pont argued that the DTCA was unambiguous and =
required=20
Shell to defend and indemnify Du Pont for the majority of defense =
costs=20
expended in the underlying litigation because the defense costs =
=E2=80=9Crelated=20
to=E2=80=9D Waste Materials. Du Pont attached to its motion the =
affidavit of Bruce=20
Evanick, Du Pont=E2=80=99s counsel, and Du Pont later filed =
several supplemental=20
affidavits from Evanick. In these affidavits, Evanick explained =
that=20
pursuant to the DTCA, Du Pont was seeking to recover from Shell =
(1)=20
$498,212.60 in =E2=80=9Creasonable and necessary defense costs =
(including=20
attorney=E2=80=99s fees and other defense costs)=E2=80=9D and =
settlement costs, which=20
represented only =E2=80=9Can allocated=20
portion=E2=80=9D of its total defense and settlement costs related =
to Waste=20
Materials and (2) $224,620.90 for =E2=80=9Cattorney=E2=80=99s fees =
and costs=E2=80=9D incurred in=20
prosecuting its indemnity claim against Shell.
<=
/SPAN>In=20
regard to Du Pont=E2=80=99s claim for defense and settlement costs =
of the=20
underlying litigation, Evanick agreed=20
that, in addition to =
representing Du=20
Pont for disposing 12 million pounds of Waste Materials into the =
injection=20
well, his firm had also represented=20
Du Pont for disposing 7.6 million pounds of Pontchartrain Facility =
wastes=20
into the well. Evanick further agreed that, at times during the =
underlying=20
litigation, his firm represented two other defendants responsible =
for=20
commingled wastes at the injection well. In determining the amount =
of=20
defense costs properly chargeable to Shell, Evanick explained that he first =
identified=20
defense costs =E2=80=9Cthat did not relate to Waste =
Materials,=E2=80=9D i.e., those=20
defense costs that solely related to the Pontchartrain Facility =
wastes or=20
wastes generated by the other represented defendants. Du Pont did =
not seek=20
any of these defense costs from Shell. Next, Evanick identified =
defense=20
costs for which Shell was solely responsible. Du Pont sought to =
recover=20
100% of these defense costs =
from=20
Shell. Evanick explained, for example, that these defense =
costs included costs associated with =
reviewing=20
documents that related only to the Mobile Facility. Evanick was =
then left=20
with a remaining pool of defense costs that were =
=E2=80=9Cimpossible=E2=80=9D to segregate=20
or assign either as solely related to Waste Materials or non-Waste =
Materials, i.e., claims related to Pontchartrain Facility wastes =
and=20
wastes generated by other represented defendants. Evanick =
explained that=20
attributing these defense costs in=20
such a manner was impossible because of the commingling of all of =
the=20
defendants=E2=80=99 wastes at the injection well, the common =
claims asserted by=20
the plaintiffs, and the common defenses raised by the defendants. =
Thus,=20
Evanick opined that all of these remaining defense costs =E2=80=9Crelated to=E2=80=9D Waste =
Materials, even if they=20
also related to non-Waste Materials. In support of this opinion, =
Evanick=20
stated that, even if Du Pont had been sued only in regard to the =
Waste=20
Materials, Du Pont still would have incurred all of the remaining =
pool of=20
defense costs because he still would have performed =
all of the=20
underlying legal services in defense of these claims on Du =
Pont=E2=80=99s behalf.=20
As such, Evanick contended =
that Shell=20
was contractually responsible for all of these defense =
costs related to Waste Materials, which =
amounted=20
to over one million dollars, under the indemnity =
agreement.
<=
/SPAN>Nevertheless,=20
Evanick stated that because his firm also represented Du Pont and, =
at=20
times, other defendants in regard to commingled wastes, and =
because Du=20
Pont, Shell, and these other defendants all benefitted from these =
defense=20
costs, Du Pont sought from =
Shell only=20
a prorated share of these costs.
Evanick explained, in =
considerable detail,=20
the method he used to determine the appropriate pro rated share =
that was=20
charged to Shell.
Specifically, after setting aside =
the=20
defense costs unrelated to =
Waste=20
Materials as well as defense costs=20
solely related to Waste Materials, Evanick set forth the total =
annual=20
defense costs incurred in =
defense of=20
claims related to Waste Materials, detailed the time periods for =
which he=20
also represented parties other than Shell in regard to non-Waste=20
Materials, assigned a percentage of defense costs based on these factors related to =
Waste=20
Materials for which Shell would be responsible, and calculated the =
reasonable amount of these costs allocable to Shell for each=20
year. Evanick also =
calculated, based=20
on these factors, a percentage of the settlement costs for which =
Shell was=20
responsible. In sum, Evanick stated that Shell was responsible for =
$458,212.60 in defense costs and $40,000 in settlement =
costs for a total of $498,212.60 in allocated defense and settlement=20
costs.
<=
/SPAN>In its summary judgment motion, Shell =
reiterated=20
its position that it was responsible only for =E2=80=9Ccosts =
actually=20
related to wastes from the Mobile Facility=E2=80=9D in the =
amount of=20
$31,000.
<=
/SPAN>In=20
its final judgment, the trial court overruled Shell=E2=80=99s =
objections to Du=20
Pont=E2=80=99s summary judgment evidence. However, after finding =
that there were=20
no contested issues of material fact, the trial court denied Du =
Pont=E2=80=99s=20
summary judgment motion =E2=80=9Cexcept as to $31,00 in =
damages,=E2=80=9D and granted=20
Shell summary judgment =E2=80=9Cas to defenses and denied as to =
claims for=20
affirmative relief.=E2=80=9D
Standard of=20
Review
<=
/SPAN>To=20
prevail on a summary judgment motion, a movant has the burden of =
proving=20
that it is entitled to judgment as a matter of law and that there =
is no=20
genuine issue of material fact. Tex. R. Civ. P. 166a(c); =
Cathey=20
v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). When both parties =
move for=20
summary judgment and the trial court grants one motion and denies =
the=20
other, the reviewing court should review the summary judgment =
evidence=20
presented by both sides and determine all questions presented and =
render=20
the judgment that the trial court should have rendered. Tex. =
Workers=E2=80=99=20
Comp. Comm=E2=80=99n v. Patient Advocates of Tex., 136 S.W.3d =
643, 648 (Tex.=20
2004). A court should construe an unambiguous contract as a matter =
of law,=20
and, on appeal, the court=E2=80=99s ruling is subject to de novo =
review. See=20
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. =
2003);=20
MEMC Elec. Materials, Inc. v. Albemarle Corp., No. =
01-05-00420-CV,=20
2007 WL 493963, at *3 (Tex. App.=E2=80=94Houston [1st Dist.] Feb. =
15, 2007, pet.=20
denied). Indemnification=20
for Defense Costs
<=
/SPAN>In its first and second issues, Du Pont =
contends=20
that Shell owed Du Pont a duty to indemnify it for =
=E2=80=9Cdefense costs that=20
advanced both [] the defense of Shell related to Waste Materials =
and []=20
the defense of Du Pont (or another defendant) related to waste =
from=20
another facility=E2=80=9D; Du Pont properly allocated a percentage =
of these=20
=E2=80=9Cdefense costs=E2=80=9D to Shell; and Du Pont properly =
segregated the defense=20
costs =E2=80=9Cthat did not relate to the defense of Waste =
Materials=E2=80=9D from the=20
remainder of the defense costs that did relate to Waste=20
Materials.
<=
/SPAN>Indemnity agreements must be strictly =
construed,=20
pursuant to the usual principles of contract interpretation, in =
order to=20
give effect to the parties=E2=80=99 intent as expressed in the =
agreement. See=20
Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. =
2000);=20
Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, =
952=E2=80=9353=20
(Tex. 1983); Crowder v. Scheirman, 186 S.W.3d 116, 119 =
(Tex.=20
App.=E2=80=94Houston [1st Dist.] 2005, no pet.). We must give terms in an indemnity =
agreement their=20
plain, ordinary, and generally accepted meaning. Lehmann v. =
Har-Con=20
Corp., 76 S.W.3d 555, 562 (Tex. App.=E2=80=94Houston [14th =
Dist.] 2002, no=20
pet.). An indemnity agreement is unambiguous if it can be given a =
definite=20
or certain legal meaning, and we will construe an unambiguous =
indemnity=20
agreement as a matter of law. J.M. Davidson, Inc., 128 =
S.W.3d at=20
229.
<=
/SPAN>Here,=20
the DTCA provided, in =
relevant=20
part,
&nbs=
p;Section=20
15.2 [Shell] shall defend and indemnify Du Pont . . . against all =
claims,=20
suits, actions, liabilities, losses and expenses (including =
reasonable=20
attorney=E2=80=99s fees) including but not limited to injury, =
disease, or death of=20
persons or damage to property including environmental damage =
(hereinafter=20
referred to as =E2=80=9CClaims=E2=80=99) related to the =
materials=20
. . . .
<=
/SPAN>Section=20
15.4 [Shell] shall defend and indemnify Du Pont . . . against all =
Claims=20
related to Waste Materials . . . .
(Emphasis added.)
<=
/SPAN>Both=20
parties agree that the indemnity provisions are unambiguous. =
However, the=20
parties seek opposing constructions of the indemnity provisions =
based on=20
the term =E2=80=9Crelated to.=E2=80=9D Du Pont asserts that the =
indemnity provisions mean=20
exactly what they say, i.e., that Shell owed Du Pont indemnity for =
costs=20
for claims related to Waste Materials. Shell, on the other =
hand,=20
contends that the plain meaning of the indemnity provisions =
=E2=80=9Cleaves no=20
doubt that Shell owed Du Pont indemnity only for costs that were=20
actually related to=E2=80=9D the Waste Materials. =
Similarly, in its=20
pre-litigation correspondence, trial court pleadings, and partial =
summary=20
judgment motion, Shell asserted that its indemnity obligations =
applied=20
only to defense costs =E2=80=9Cdirectly =
attributable,=E2=80=9D =E2=80=9Csolely related=20
to,=E2=80=9D =E2=80=9Cspecifically related=20
to,=E2=80=9D or =E2=80=9Cdirectly related to=E2=80=9D =
the Waste Materials.
<=
/SPAN>Our=20
focus is on determining the intent of the parties as expressed in =
the=20
agreement. Crowder, 186 S.W.3d at 119. The DTCA defines =
=E2=80=9Cclaims=E2=80=9D to include =E2=80=9Call claims,=20
suits, actions, liabilities, losses and expenses (including =
reasonable=20
attorney=E2=80=99s fees) including but not limited to injury, =
disease or death of=20
persons or damage to property including environmental =
damage.=E2=80=9D The term=20
=E2=80=9Crelated to=E2=80=9D means to =E2=80=9Chave reference =
to=E2=80=9D or =E2=80=9Cconcern.=E2=80=9D The New Oxford American =
Dictionary=20
1437 (2001); see also Univ. of Tex. Law School v. Tex. =
Legal=20
Found., 958 S.W.2d 479, 483 (Tex. App.=E2=80=94Austin 1997, no =
pet.)=20
(=E2=80=9COrdinarily, the words =E2=80=9Crelated to=E2=80=9D mean =
=E2=80=9Cpertaining to,=E2=80=9D =E2=80=9Cassociated=20
with,=E2=80=9D or =E2=80=9Cconnected with.=E2=80=9D) (citing Webster=E2=80=99s Third New =
International=20
Dictionary 1916 (Philip E. Gove ed. 1986); Black=E2=80=99s Law Dictionary =
1288 (6th=20
ed. 1990)). Here, the plaintiffs in the underlying litigation =
alleged that=20
they were harmed by commingled wastes shipped to the injection =
well by=20
hundreds of defendants, including Du Pont. Du Pont was sued, in =
part, for=20
its shipment of Waste Materials to the well. Thus, the =
plaintiffs=E2=80=99 claims=20
against Du Pont, and the defense costs expended to defend Du Pont =
in=20
regard to these claims, related to Waste Materials and triggered =
Shell=E2=80=99s=20
indemnity obligations.
<=
/SPAN>While=20
Shell appears to agree with this general proposition, it proposes =
a=20
construction of the indemnity provisions that is contrary to the=20
provisions=E2=80=99 plain terms, rendering Shell=E2=80=99s indemnity obligations, =
at least under=20
these circumstances, virtually worthless. Shell sought, and =
effectively=20
obtained, a summary judgment on the basis that it owed Du Pont =
indemnity=20
only for defense costs solely related to Waste Materials. =
Yet, this=20
qualifying terminology is nowhere in the indemnity agreement. =
Here, although Du Pont was sued both for =
the=20
disposing of Waste Materials and non-Waste Materials into the =
well, it is=20
undisputed that these wastes were commingled in the well and were =
alleged=20
to have collectively harmed the plaintiffs. Du Pont presented =
undisputed=20
evidence that there was (1) a small amount of segregable defense =
costs=20
that did not relate to the Waste Materials (for which it did not =
seek to=20
recover), (2) a small amount of segregable defense costs solely related to Waste Materials =
(for which=20
it sought to fully recover), and (3) a remaining pool of defense=20
costs that Du Pont would =
have=20
expended even if it had only been sued in regard to the Waste =
Materials=20
(rendering the claims and the costs associated with defending =
these claims=20
necessarily related to Waste Materials). Under the plain terms of =
the=20
DTCA, Shell was not merely=20
responsible for the minimal amount of defense costs solely related =
to=20
Waste Materials. We enforce =
the DTCA=20
as written, reject Shell=E2=80=99s assertion that it is liable =
only for defense=20
costs in the amount of =
$31,000=20
solely related to Waste Materials, and hold that Shell was=20
contractually required to indemnify Du Pont for defense =
costs expended in defense of the claims =
related to=20
Waste Materials, even if those costs also benefitted the defense =
of claims=20
related to non-Waste Materials. See Lehmann, 76 S.W.3d at =
561=E2=80=9362=20
(construing indemnity provision to provide common sense reading =
and giving=20
terms in indemnity agreement plain, ordinary, and generally =
accepted=20
meaning).
&=
nbsp;Although=20
Du Pont presented undisputed evidence that it expended =
approximately one=20
million dollars in costs that advanced the defense of claims related =
to both=20
Waste and non-Waste Materials, Du Pont did not seek to recover all =
of=20
these costs. Rather, because these defense costs related both to Waste Materials =
and=20
non-Waste Materials and, accordingly, benefitted multiple parties, =
Du Pont=20
sought an allocated portion of these defense costs from Shell in the amount of =
$498,212.60=20
(including $40,000 in allocated settlement costs).
<=
/SPAN>Both=20
parties cite Tony Gullo Motors I, L.P. v. Chapa, as =
controlling=20
authority on the issue of segregation. 212 S.W.3d 299 (Tex. 2006). =
In Tony Gullo =
Motors, Chapa,=20
the plaintiff, asserted claims for breach of contract, violations =
of the=20
Deceptive Trade Practices Act, and fraud. Id. at 303. The =
jury=20
awarded Chapa $20,000 in attorney=E2=80=99s fees =E2=80=9Cin this =
case,=E2=80=9D and Tony Gullo Motors objected on the basis =
that=20
attorney=E2=80=99s fees were not recoverable on Chapa=E2=80=99s =
fraud claim. Id. at=20
310. Noting that =E2=80=9Cfee claimants have always been required =
to segregate=20
fees between claims for which they are recoverable and claims for =
which=20
they are not,=E2=80=9D the court sought to rein in an exception =
that it had=20
previously recognized for=20
=E2=80=9Cinextricably intertwined=E2=80=9D fees. Id. at 311 =
(citing Stewart Title Guaranty Co. v.=20
Sterling, 822 S.W.2d 1, =
10 (Tex.=20
1991)). Finding that this=20
=E2=80=9Cinextricably intertwined=E2=80=9D exception had been =
difficult to consistently=20
apply and had flooded =
courts with=20
claims for otherwise unrecoverable=20
fees, the supreme court explained that to the extent it suggested =
in=20
Sterling =E2=80=9Cthat a common set of underlying facts =
necessarily made=20
all claims arising therefrom =E2=80=98inseparable=E2=80=99 and all =
legal fees recoverable,=20
it went too far.=E2=80=9D Id. at 313.
<=
/SPAN>The=20
court =E2=80=9Creaffirm[ed] the rule that if any =
attorney=E2=80=99s fees relate solely=20
to a claim for which such fees are unrecoverable, a claimant =
must=20
segregate recoverable from unrecoverable fees.=E2=80=9D Id. =
(emphasis=20
added).
But=20
the court also noted that,
[M]any if not most legal fees in such =
cases=20
cannot and need not be precisely allocated to one claim or the=20
other. Many of the services involved in preparing a contract =
or DTPA=20
claim for trial must still be incurred if tort claims are =
appended to=20
it; adding the latter claims does not render the former =
services=20
unrecoverable. Requests for standard disclosures, proof of =
background=20
facts, depositions of the primary actors, discovery motions and =
hearings,=20
voir dire of the jury, and a host of other services may be =
necessary=20
whether a claim is filed alone or with others. To the extent such =
services=20
would have been incurred on a recoverable claim alone, they are =
not=20
disallowed simply because they do double service.
Id. (emphasis added).
<=
/SPAN>Tony=20
Gullo Motors, although distinguishable from the instant case =
because=20
Du Pont is not seeking to recover intertwined fees on separate,=20
nonrecoverable claims, supports Du Pont=E2=80=99s indemnification =
request for=20
defense costs expended to =
defend=20
Claims that relate to Waste Materials, even if such costs do not =
solely=20
relate to Waste Materials. In Tony Gullo Motors, the =
court=20
confirmed that =E2=80=9Cit is only when discrete legal services =
advance=20
both a recoverable and unrecoverable claim that they are so =
intertwined=20
that they need not be segregated.=E2=80=9D Id. at =
313=E2=80=9314 (emphasis added).=20
Similarly, here, Du Pont =
presented=20
undisputed evidence that, based on the commonality of the claims =
and=20
defenses and the commingling of the Waste Materials with the =
non-Waste=20
Materials, even if Du Pont had been sued only in regard to Waste=20
Materials, Du Pont would =
have=20
incurred defense costs for the same discrete legal services for =
which it=20
sought recovery from Shell. Because the discrete legal services =
provided=20
to Du Pont for which it seeks recovery advanced both Du =
Pont=E2=80=99s defense for=20
claims related to Waste Materials as well as claims related to =
non-Waste=20
Materials, Tony Gullo Motors supports Du Pont=E2=80=99s =
claims for recovery=20
of the requested defense costs fees from Shell.
<=
/SPAN>This=20
Court has recently discussed a similar issue in regard to =
segregation in=20
Devon SFS Operating, Inc. v. First Seismic Corp., No.=20
01-04-00077-CV, 2006 WL 374257, at *14 (Tex. App.=E2=80=94Houston =
[1st Dist.] Feb.=20
16, 2006, no pet.) (mem. op.). In Devon SFS Operating, =
Inc.,=20
an indemnity action, the appellant complained that =
the amount of attorney=E2=80=99s fees =
and costs awarded to=20
the appellee included amounts =E2=80=9Cattributable solely to =
defending=E2=80=9D a third=20
party for whom recovery of fees and costs was not authorized under =
the=20
relevant agreement. Id. We noted, however, that the trial =
court=E2=80=99s=20
record actually reflected that the fees and costs directly =
allocable to=20
the third party had been =E2=80=9Cpromptly identified, segregated =
and noted as=20
nonrecoverable.=E2=80=9D Id. We further noted that, in =
response to the=20
appellant=E2=80=99s complaints in the trial court, the appellee =
had=20
proportionately reduced the claimed amounts of attorney=E2=80=99s =
fees and costs=20
based on =E2=80=9Cpercentages of time allocable to [the] =
defense=E2=80=9D of this third=20
party. Id. Finally, and most similar to the instant case, =
we noted=20
that although the appellee had proportionately reduced the amount =
of=20
requested fees and costs, it had not made any proportionate =
reduction for=20
fees and costs that it =E2=80=9Cwould have incurred in any =
event because=20
[the claimed fees] related=E2=80=9D not only to the defense of the =
party (for whom=20
recovery of fees and costs was not authorized) but also to its =
defense=20
(for which recovery of fees and costs was authorized). Id.=20
(emphasis added). We affirmed the award, stating that the =
appellant had=20
not refuted the evidence that all of the claimed fees and costs =
were=20
=E2=80=9Cintegral to=E2=80=9D the appellee=E2=80=99s defense, even =
though some of the fees and=20
costs also related to the defense of the third party for whom =
recovery of=20
such costs was not authorized. Id.
<=
/SPAN>As=20
in Devon SFS Operating, Inc., here, the record establishes =
that Du=20
Pont segregated defense costs expended in defense of claims solely =
related=20
to non-Waste Materials=E2=80=94including any such defense costs =
solely related to=20
the defense of claims related to Pontchartrain Facility waste and =
wastes=20
generated by the other represented defendants. Du Pont also =
segregated a=20
limited amount of fees expended to defend claims solely related to =
Waste=20
Materials. Du Pont was then left with a remaining pool of defense =
costs=20
that related to Waste Materials, even though such defense costs =
also=20
advanced the defense of claims related to non-Waste Materials.=20
Again, although Du Pont =
might have=20
been entitled to seek recovery of these defense costs under the =
plain=20
terms of the agreement, Du Pont instead sought a percentage of =
these=20
defense costs after analyzing the time periods for which =
Evanick=E2=80=99s firm=20
represented Du Pont=E2=80=99s interest in regard to the 7.6 =
million pounds of=20
non-Waste Materials as well as the time periods Evanick=E2=80=99s =
firm represented=20
other defendants who were responsible for commingled wastes at the =
injection well. After considering the above facts, isolating the =
defense=20
costs related to Waste Materials, and assigning Shell an =
appropriate=20
percentage of these defense costs on an annual basis, Evanick =
concluded=20
that Shell owed Du Pont, under its indemnity agreement, defense =
costs=20
(including reasonable attorney=E2=80=99s fees) and settlement =
costs in the amount=20
of $498,212.60.
<=
/SPAN>Shell=20
complains that Evanick=E2=80=99s affidavits are conclusory, =
constitute=20
inadmissible hearsay, improperly attempt to invade the province of =
the=20
jury =E2=80=9Cto rule on the unambiguous contractual indemnity =
provision at=20
issue,=E2=80=9D and, thus, are incompetent and inadmissible =
summary judgment=20
evidence. Shell claims that, in his third affidavit, Evanick could =
show=20
only that approximately $30,000 of Du Pont=E2=80=99s defense costs =
=E2=80=9Cactually=20
related=E2=80=9D to Waste Materials. We note first, with the =
majority of these=20
=E2=80=9Cevidentiary=E2=80=9D complaints, Shell simply recasts its =
contention that it=20
should only be liable for defense costs solely related to Waste =
Materials.=20
We have rejected this contention.=20
Second, Evanick=E2=80=99s affidavits are not conclusory. The term =
=E2=80=9Cconclusory=E2=80=9D is=20
defined as =E2=80=9C[e]xpressing a factual inference without =
stating the=20
underlying facts on which the inference is based.=E2=80=9D Black=E2=80=99s Law Dictionary =
284 (7th=20
ed. 2001); see also Interconex, Inc. v. Ugarov, 224 S.W.3d =
523, 532=20
n.2 (Tex. App.=E2=80=94Houston [1st Dist.] 2007, no pet). Evanick =
testified that=20
he based his affidavit on his personal knowledge, he had =
personally=20
reviewed all invoices and fee and cost entries, and he isolated =
the=20
defense costs that related to Waste Materials. Evanick attached to =
his=20
affidavit all invoices for legal services performed and defense =
costs=20
incurred. Evanick explained that the majority of the defense costs =
expended in defending claims related to Waste Materials could not =
be=20
segregated from the costs expended in defending claims related to=20
non-Waste Materials, the defense costs related to the general =
defense of=20
the underlying action, and such costs included preparing for and =
attending=20
depositions of fact witnesses and experts. Evanick also stated =
that the=20
plaintiffs and defendants in the underlying litigation asserted =
common=20
claims and defenses and that the defendants in the underlying =
litigation=20
formed a joint defense group to present a uniform defense. Evanick =
then=20
provided a detailed analysis of how he allocated certain =
percentages of=20
the defense costs to Shell.
<=
/SPAN>We=20
hold that the trial court erred in granting Shell=E2=80=99s =
summary judgment=20
motion and denying Du Pont=E2=80=99s summary judgment motion =
because Du Pont=20
conclusively established that it incurred over one million dollars =
in=20
defense costs related to Waste Materials, Du Pont properly sought =
a=20
percentage of these defense costs from Shell, and Shell owed Du =
Pont an=20
allocated portion of defense costs in the amount of=20
$498,212.60 (including =
$40,000 in=20
allocable settlement costs).
<=
/SPAN>We=20
sustain Du Pont=E2=80=99s first and second issues.
Indemnification=20
for Settlement Costs
<=
/SPAN>In=20
its third issue, Du Pont contends that the trial court should have =
awarded=20
it =E2=80=9Ca share of the settlement funds it paid to resolve =
=E2=80=98Claims related to=20
Waste Materials.=E2=80=99=E2=80=9D In response, Shell asserts that =
Du Pont never produced=20
any competent summary judgment evidence that the settlement was =
related to=20
Waste Materials.
<=
/SPAN>For=20
a settling indemnitee to recover an amount of the settlement from =
its=20
indemnitor, the indemnitee must show its potential liability to a =
claimant=20
and show that the settlement was reasonable, prudent, and made in =
good=20
faith under the circumstances. Amerada Hess Corp. v. Wood Group =
Prod.=20
Tech., 30 S.W.3d 5, 11 (Tex. App.=E2=80=94Houston [14th Dist.] =
2000, pet.=20
denied) (citing Fireman=E2=80=99s Fund Ins. Co. v. Commercial =
Standard Ins.=20
Co., 490 S.W.2d 818, 824 (Tex. 1972), overruled on other =
grounds by=20
Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex. =
1987));=20
see also XL Specialty Ins. Co. v. Kiewit Offshore Servs., =
Ltd., 426=20
F. Supp. 2d 565, 577=E2=80=9378 (S.D. Tex. 2006).
<=
/SPAN>Here,=20
although Shell has not challenged the reasonableness or good=20
faith of Du Pont=E2=80=99s =
settlement, we=20
conclude that Evanick=E2=80=99s affidavits=20
provide undisputed evidence that Du Pont settled claims related to =
Waste=20
Material; the settlement was prudent, reasonable, and =
substantially less=20
than the costs of a continued defense; and the settlement was made in good =
faith.=20
Shell=E2=80=99s real =
complaint in this issue,=20
and throughout this appeal, is that because it is responsible only =
for=20
defense costs incurred in defending claims solely related to Waste =
Materials ($31,000), it is not responsible for any portion of Du =
Pont=E2=80=99s=20
settlement costs. However, having rejected Shell=E2=80=99s =
contention, we hold=20
that the trial court erred in granting Shell=E2=80=99s summary =
judgment motion and=20
denying Du Pont=E2=80=99s summary judgment motion because Du Pont =
conclusively=20
established that its settlement costs related to Waste Materials, =
it=20
properly sought a reasonable percentage of these settlement costs =
from=20
Shell, and Shell owed it an allocated portion of settlement costs =
in the=20
amount of $40,000.
<=
/SPAN>We=20
sustain Du Pont=E2=80=99s third issue.
Recovery of Costs=20
for Indemnity Action
<=
/SPAN>In=20
its fourth issue, Du Pont contends that the trial court should =
have=20
awarded it =E2=80=9Cdefense costs for its prosecution of its =
indemnity=20
claim.=E2=80=9D
<=
/SPAN>Here,=20
Du Pont presented undisputed evidence that it sustained =
$242,620.90 in=20
=E2=80=9Cattorney=E2=80=99s fees and costs=E2=80=9D in prosecuting =
its indemnity claim against=20
Shell. Shell does not challenge the reasonableness or necessity of =
the=20
amount of fees or costs, or even Du Pont=E2=80=99s entitlement to =
recover these=20
fees and costs upon Shell=E2=80=99s breach of the indemnity =
provisions. Rather, it=20
claims that Du Pont is not entitled to these fees and costs =
because it was=20
not entitled to indemnity for fees and costs except those solely =
related=20
to the Waste Materials. Shell asserts that it had already agreed =
to pay Du=20
Pont this amount=E2=80=94$31,000. Having rejected Shell=E2=80=99s =
contention, and having=20
held that the trial court erred in granting Shell=E2=80=99s =
summary judgment and=20
in denying Du Pont summary judgment on its claim for defense and=20
settlement costs related to Waste Materials, we further hold that =
the=20
trial court erred in denying Du Pont summary judgment on Du =
Pont=E2=80=99s claim=20
for fees and costs in prosecuting its indemnity claim. We further =
hold=20
that Du Pont has conclusively established that it is entitled to =
recover=20
its fees and costs for prosecution of its indemnity claim in the =
amount of=20
$242,620.90. See =
Tex. Civ. Prac. & Rem. Code =
Ann.=20
=C2=A7 38.001 (Vernon Supp. 2006) (providing for recovery =
of reasonable=20
attorney=E2=80=99s fees, in addition to amount of damages and =
costs, for=20
prevailing party on breach of contract action); see also Devon =
SFS=20
Operating, Inc., 2006 WL 374257, at *11 (citing section 38.001 =
in=20
affirming award of contractually authorized fees, expenses, and =
costs=20
to prevailing party in =
indemnity=20
action).
<=
/SPAN>We=20
sustain Du Pont=E2=80=99s fourth=20
issue.
Conclusion
<=
/SPAN>We=20
reverse the judgment of the trial court in favor of Shell. We =
render=20
judgment in favor of Du Pont in the amount of $458,212.60 in =
defense costs=20
and $40,000 in settlement costs, for=20
a total of $498,212.60 in =
allocated=20
defense and settlement costs. We further render judgment in favor of Du Pont in =
the amount=20
of $242,620.90 for fees and costs expended in =
prosecuting its=20
indemnity claim against Shell. We=20
further render judgment in favor of Du Pont in the amount of $25,000 in fees and =
costs=20
incurred in bringing this appeal. Finally, we render judgment in =
favor of=20
Du Pont in the amount of =
$15,000 in=20
fees and costs should Shell unsuccessfully appeal this matter to =
the Texas=20
Supreme Court.
=
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; Terry=20
Jennings
=
&=
nbsp; &n=
bsp; &nb=
sp; &nbs=
p; =
; Justice
Panel consists of =
Justices=20
Nuchia, Jennings, and=20
Keyes. |