Ep Energy E&P Co. v. Cudd Pressure Control, Inc.
| Decision Date | 23 December 2014 |
| Docket Number | NO. 14-13-00734-CV,14-13-00734-CV |
| Court | Texas Court of Appeals |
| Parties | EP ENERGY E&P COMPANY, L.P. F/K/A EL PASO PRODUCTION, Appellant v. CUDD PRESSURE CONTROL, INC., Appellee |
On Appeal from the 270th District Court Harris County, Texas
Appellant EP Energy E&P Company, L.P., sued appellee Cudd Pressure Control, Inc., for an alleged breach of a Rule 11 agreement entered into by the parties in a prior lawsuit. EP Energy contends that the trial court erred in granting summary judgment in favor of Cudd on EP Energy's breach of contract claim. We affirm.
The facts and procedural background leading up to this appeal are well established in prior opinions. See Sonat Exploration Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228 (Tex. 2008); In re Lumbermens Mut. Cas. Co., 184 S.W.3d 718 (Tex. 2006); Sonat Exploration Co. v. Cudd Pressure Control, Inc., 340 S.W.3d 570 (Tex. App.—Texarkana 2011, no pet.); Cudd Pressure Control, Inc. v. Sonat Exploration Co., 202 S.W.3d 901 (Tex. App.—Texarkana 2006), aff'd, 271 S.W.3d 228 (Tex. 2008). We recount only the facts and procedural background necessary to place the current dispute in context.
In May 1998, Sonat Exploration Company1 and Cudd signed a Master Service Agreement to carry out oilfield services for Sonat's wells. The Master Service Agreement required the parties to indemnify each other for claims brought by each company's employees and also required that Cudd name Sonat as an additional insured on its insurance policies. In October 1998, a blowout occurred at one of Sonat's wells in Louisiana and killed seven workers, including four Cudd employees. Survivors of Cudd's employees sued Sonat in Texas2 and Cudd refused to indemnify Sonat.
Sonat filed a cross-claim in Harrison County against Cudd for indemnity based on the Master Service Agreement, which later was severed to create a stand-alone action. Sonat also filed a separate lawsuit against Cudd in Harrison County for Cudd's failure to name Sonat as an additional insured on its insurance policies.
Sonat settled the underlying personal injury suits brought by the survivors of Cudd's employees and pursued its indemnity suit against Cudd in Harrison County, in which "[o]ne of the issues presented was whether Texas or Louisiana law applied to the indemnity claim." In re Lumbermens, 184 S.W.3d at 721. The parties contended that the issue was "potentially dispositive because under Louisiana statutory law the MSA's indemnity provision was void, while under Texas law it was valid." Id. The trial court granted partial summary judgment in favor of Sonat in the indemnity suit; it held that "Texas law applied and Sonat was entitled to indemnity for the damages it had paid to settle the Cudd employees' lawsuits." Id. "The case went to trial on damages only, and the jury returned a $20.7 million verdict in Sonat's favor upon which the trial court rendered judgment" in conformity with the verdict. Id.
Cudd appealed to the Texarkana Court of Appeals and the parties entered into a Rule 11 agreement. The Rule 11 agreement between Sonat and Cudd stated, in relevant part, as follows:
In the [indemnity suit], Cudd will not appeal the trial court's ruling that Texas law applies to the Master Service Agreement between Cudd and Sonat/El Paso and, in the event of remand, will not contend that any other state's laws apply to the MSA (nor will it so advocate in any other lawsuit between Sonat and Cudd arising out of the October 24, 1998 blowout); and
Sonat/El Paso agree to dismiss, with prejudice, all breach of contract claims against Cudd (except the failure to defend/indemnify claims currently pending in [the indemnity suit]), in all actions (including No. 00-0775-1) and will not bring any such claims in the future against Cudd arising out of the October 24, 1998 blowout.
Following the Rule 11 agreement, Cudd refrained from arguing the choice-of-law issue on appeal. Sonat dismissed its separate Harrison County lawsuit predicated on Cudd's failure to name Sonat as an additional insured.
Choice of law nonetheless was litigated on appeal because Cudd's insurer, Lumbermens Mutual Casualty Company, intervened in the appeal and argued that Louisiana law applied to the Master Service Agreement. The Texas Supreme Court granted Lumbermens' writ of mandamus and allowed the intervention, holding that Lumbermens could raise the choice-of-law issue through the doctrine of virtual representation. Id. at 729. At this point, only Lumbermens was advocating for Louisiana law while Cudd remained silent on the issue.
After Lumbermens intervened in the indemnity case on appeal, the Texarkana Court of Appeals reversed the trial court's judgment in favor of Sonat and held that Louisiana law applied to the Master Service Agreement. Cudd Pressure Control, Inc., 202 S.W.3d at 911. The Texas Supreme Court affirmed the holding that Louisiana law applied, and remanded to the district court in Harrison County "for further proceedings applying Louisiana law." Sonat Exploration, 271 S.W.3d at 238. In so doing, the Texas Supreme Court specifically referenced the Louisiana Oilfield Anti-Indemnity Act ("the Act"). Id. The parties agree that the Act, if applicable, makes the Master Service Agreement's indemnity provision unenforceable. Id.; see La. Rev. Stat. § 9:2780. In determining whether to render judgment in favor of Cudd on appeal or instead to remand for further trial court proceedings, the Texas Supreme Court stated that the Act would apply to foreclose Sonat's indemnity claim only if Sonat was found to be negligent or strictly liable— an issue that had not yet been determined. Sonat Exploration, 271 S.W.3d at 238. Accordingly, the supreme court remanded for further trial court proceedings. Id.
When the case was remanded to the district court in Harrison County, Cudd filed a motion for summary judgment arguing that the Act would render the Master Service Agreement's indemnity provision unenforceable if Sonat was found to be at fault for the fatal blowout.
Cudd then filed a third amended answer which included two new affirmative defenses. The first affirmative defense stated that "Cudd pleads the effects of the applicable oilfield anti-indemnity statute as determined by the Texas Supreme Court." The second affirmative defense also cited Louisiana law. For the purposes of that lawsuit, Sonat filed a stipulation in the trial court that it did bear some fault relating to the well blowout.
After this stipulation of fault, the district court in Harrison County applied the Act to the Master Service Agreement and granted Cudd's motion for summary judgment. The Texarkana Court of Appeals affirmed the trial court's judgment, holding that Cudd raised the Act as an affirmative defense and did not waive the defense. Sonat Exploration, 340 S.W.3d at 577.
EP Energy then sued Cudd for breach of contract in Harris County. According to EP Energy's allegations, Cudd breached its Rule 11 agreement to refrain from contending that "any other state's laws apply to the MSA" when Cudd added affirmative defenses in its third amended answer in the Harrison County indemnity suit. Both parties moved for summary judgment. The trial court granted Cudd's traditional motion for summary judgment and denied EP Energy's cross-motion for summary judgment; in so doing, the trial court determined that Cudd had not breached the Rule 11 agreement. EP Energy now challenges this determination in the present appeal.
We review a trial court's grant of summary judgment de novo. NuStar Energy, L.P. v. Diamond Offshore Co., 402 S.W.3d 461, 465 (Tex. App.—Houston [14th Dist.] 2013, no pet.). The movant for a traditional summary judgment bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). When both sidesmove for summary judgment and the trial court grants one motion and denies the other, reviewing courts consider both sides' summary judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 124 (Tex. 2010).
In its sole issue on appeal, EP Energy contends that the trial court erred in granting summary judgment in favor of Cudd and denying EP Energy's cross-motion for summary judgment because Cudd's litigation conduct breached the Rule 11 agreement with respect to choice of law.
A party may seek to enforce a Rule 11 agreement under contract law. ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 309 (Tex. App.— Houston [1st Dist.] 2005, pet. denied). To prevail on a breach of contract claim, a party must show: (1) the existence of a valid contract; (2) that the plaintiff performed or tendered performance; (3) that the defendant breached the contract; and (4) that the plaintiff was damaged as a result of the breach. Frost Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex. App.—Houston [14th Dist.] 2000, no pet.). A breach of contract occurs when a party fails or refuses to do something he has promised to do. Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).
It is undisputed that the parties entered into a valid Rule 11 agreement. Rule 11 agreements are "contracts relating to litigation." Trudy's Tex. Star, Inc. v. City of Austin, 307 S.W.3d 894, 914 (Tex. App.—Austin 2010, no pet.). The parties signed this agreement and filed it with the district court in Harrison County. It is also undisputed that EP Energy performed under this agreement by dismissing its separate breach of contract suit against Cudd predicated on Cudd's failure to nameSonat as an additional insured on Cudd's insurance policies. Therefore, the only issues to be decided are whether Cudd breached the Rule 11 agreement, and if so,...
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