Atlantic Richfield Co. v. Petroleum Personnel, Inc.
| Decision Date | 26 April 1989 |
| Docket Number | No. C-8166,C-8166 |
| Citation | 768 S.W.2d 724 |
| Parties | ATLANTIC RICHFIELD COMPANY, Petitioner, v. PETROLEUM PERSONNEL, INC., Respondent. |
| Court | Texas Supreme Court |
William R. Kendall & James F. Buchanan, Kleberg & Head, Corpus Christi, for petitioner.
Thomas F. Nye, Brin & Brin, Corpus Christi, for respondent.
This case involves the application of the "express negligence test" to an indemnity contract between an owner and contractor.
Keith Cherniack sued Atlantic Richfield Company (ARCO), seeking damages for injuries he sustained while working on a platform owned by ARCO. ARCO then impleaded Cherniack's employer, Petroleum Personnel, Inc. (PPI), alleging that ARCO was entitled to indemnity from PPI pursuant to a contract entered into between the two parties. This contract contained the following indemnity provision:
CONTRACTOR [PPI] agrees to hold harmless and unconditionally indemnify COMPANY [ARCO] against and for all liability, cost, expenses, claims and damages which [ARCO] may at any time suffer or sustain or become liable for by reason of any accidents, damages or injuries either to the persons or property or both, of [PPI], or of the workmen of either party, or of any other parties, or to the property of [ARCO], in any matter arising from the work performed hereunder, including but not limited to any negligent act or omission of [ARCO], its officers, agents or employees.... (emphasis added).
Both ARCO and PPI moved for summary judgment based on the construction of the indemnity provision. The trial court severed the indemnity cause of action and granted summary judgment for PPI denying indemnity to ARCO. The court of appeals affirmed. 758 S.W.2d 843 (Tex.App.1988). That court held that the indemnity contract between ARCO and PPI did not satisfy the "express negligence test" stating, "the intent of the parties is not specifically stated within the four corners of the contract ... [and the phrase] 'any negligent act' is not sufficient to define the parties' intent." Id. at 844. Accordingly, the CA held the indemnity contract was unenforceable. We reverse the judgment of the court of appeals and remand the cause to the trial court for further proceedings.
In Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex.1987), this court adopted the express negligence test which provides that a party seeking indemnity from the consequences of its own negligence must express that intent in specific terms. Under this test, the intent of the parties must be specifically stated within the four corners of the contract in order for such an indemnity provision to be enforceable.
The contract between Ethyl and Daniel contained the following indemnity provision:
Contractor [Daniel] shall indemnify and hold Owner [Ethyl] harmless against any loss or damage to persons or property as a result of operations growing out of the performance of this contract and caused by the negligence or carelessness of Contractor, Contractor's employees, subcontractors, and agents or licensees.
At trial, Ethyl maintained that the language "any loss" and "as a result of the operations growing out of the performance of this contract" expresses an intent to cover the negligence of Ethyl. This court, however, in applying the express negligence test held that such provision does not specifically state an intent to indemnify Ethyl for Ethyl's own negligence. This court reasoned:
[T]he scriveners of indemnity agreements have devised novel ways of writing provisions which fail to expressly state the true intent of those provisions. The intent of the scriveners is to indemnify the indemnitee for its negligence, yet be just ambiguous enough to conceal that intent from the indemnitor.... We hold the better policy is to cut through the ambiguity of those provisions and adopt the express negligence doctrine.
Id. at 707-708. As a result, the indemnity contract was held to be unenforceable.
In Singleton v. Crown Central Petroleum Corp., 729 S.W.2d 690 (Tex.1987), the plaintiff sued Crown, the premises owner, and Mundy Construction Co., its contractor, for injuries caused by the acts of Mundy's employee. The jury found that Crown and Mundy were concurrently negligent. The trial court then required Mundy to indemnify Crown based upon an indemnity agreement which provided that:
Contractor [Mundy] agrees to ... indemnify ... owner [Crown] ... from and against any and all claims ... of every kind and character whatsoever, ... for or in connection with loss of life or personal injury ... directly or indirectly arising out of ... the activities of contractor ... excepting only claims...
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