Banta Oilfield Servs., Inc. v. Mewbourne Oil Co.

• Decision Date: 04 December 2018
• Docket Number: No. 06-17-00107-CV,06-17-00107-CV
• Citation: 568 S.W.3d 692
• Parties: BANTA OILFIELD SERVICES, INC., Appellant v. MEWBOURNE OIL COMPANY, Appellee
• Court: Texas Court of Appeals

568 S.W.3d 692

BANTA OILFIELD SERVICES, INC., Appellant

v.MEWBOURNE OIL COMPANY, Appellee

No. 06-17-00107-CV

Court of Appeals of Texas, Texarkana.

Date Submitted: August 1, 2018

Date Decided: December 4, 2018

Rehearing Denied December 28, 2018

Jacqueline M. Stroh, The Law Office of Jacqueline M. Stroh, PC, San Antonio, TX, John Dunlap, Joseph E. Byrne, Byrne, Cardenas & Aris LLP, Dallas, TX, for appellant.

J.J. Knauff, The Miller Law Firm, Dallas, TX, Gregory D. Smith, Smith Legal PLLC, Tyler, TX, for Appellee.

Before Morriss, C.J., Moseley and Burgess, JJ.

OPINION

Opinion by Justice Moseley

In 2014, Mewbourne Oil Company (Mewbourne), a Tyler, Texas, based entity,¹ was operating in the State of New Mexico, drilling for and producing oil and/or natural gas. Mewbourne decided to install a 300-gallon battery tank at a well site there and retained Banta Oilfield Services, Inc. (Banta) to assist in its installation. Mewbourne and Banta entered into a Master Services Agreement (MSA) drafted by Mewbourne, which they both concur governed their relationship.

Mewbourne also contracted with Steve Kent Trucking NM, LLC (Kent Trucking) to be a contractor at the well site in New Mexico. It also entered into an agreement with C&M Services, LLC (C&M) wherein C&M would provide services at the site. An individual named Daniel Vargas worked for Kent Trucking and/or C&M Services as either a direct employee, an agent, or a contractor. Vargas was injured at the New Mexico site when a chain slipped off a tank that was being moved by a Banta-owned-and-operated pole truck. Vargas' wife brought suit against Banta in New Mexico for Vargas' personal injuries.²

Banta sent a demand letter to Mewbourne seeking defense and indemnity from Mewbourne.³ Mewbourne refused Banta’s demand, informing Banta that Mewbourne was only a pass-through for defense and indemnification and that Banta should demand a defense and indemnity from Kent Trucking.⁴

Banta brought suit against Mewbourne seeking a judicial declaration that: (1) Texas substantive law applied to the interpretation of the MSA; (2) Mewbourne breached the agreement; (3) Mewbourne was obligated to defend and indemnify Banta in regard to Vargas' personal injury lawsuit; and (4) Mewbourne was responsible to Banta for court costs and attorney fees. In response, Mewbourne argued that New Mexico law applied and that (under it and the MSA) Banta would be responsible for its own actions. Although the parties agreed that their respective liability would be governed by the terms of the MSA, they disagreed as to the interpretation of the contract. In doing so, they disagreed as to whether Texas law applied to the controversy or whether it would be governed by New Mexico law. After the parties filed cross-motions for summary judgment, the trial court denied Banta’s motion and entered judgment in favor of Mewbourne, finding that New Mexico law applied to the parties' MSA and that Banta was estopped from arguing otherwise.

On appeal, Banta maintains (1) that Mewbourne’s grounds for summary judgment were its affirmative defenses of judicial estoppel and quasi-estoppel, neither of which apply to the facts of this case, and (2) that Banta proved as a matter of law its own entitlement to summary judgment. For the reasons below, we reverse the trial court’s order granting summary judgment in favor of Mewbourne, render judgment for Banta on its motion for summary judgment, and remand this case to the trial court for further determination.

I. Pleadings at Trial Court

As previously stated, Banta sued Mewbourne in the 114th Judicial District Court of Smith County for breach of contract. It also sought a declaratory judgment regarding the enforceability of the asserted defense and indemnity obligations.⁵ In addition, Banta requested an award of attorney fees. Banta’s position rested in large part on a provision in the MSA that stated (1) that any suit shall be brought exclusively in the state or federal courts located in Tyler, Smith County, Texas, and (2) that "[a]ll disputes, controversies, or claims arising out of or relating to this Agreement ... shall be governed and controlled by the substantive laws of the State of Texas, excluding any conflict of law or choice of law principles."

Shortly after filing suit, Banta moved for summary judgment on the enforceability of the indemnity provision under Texas law.⁶ Mewbourne also moved for summary judgment, arguing that New Mexico law applied and that the principles of judicial estoppel and quasi-estoppel were applicable based on Banta’s indemnity agreement in a case that involved a different contract, work site, and parties.⁷ See Pina v. Gruy Petroleum Mgmt. Co. , 139 N.M. 619, 136 P.3d 1029 (N.M. Ct. App. 2016).

Banta subsequently filed an amended motion for summary judgment wherein it asserted the same arguments contained in its original motion, but also offered additional proof to demonstrate the application of the indemnity agreement as it applied to Vargas' claim. Mewbourne filed an amended response to Banta’s amended motion for summary judgment. In its amended response, Mewbourne continued to argue the applicability of the principles of judicial estoppel and quasi-estoppel, but also added a choice-of-law analysis under the Restatement (Second) of Conflict of Laws and argued that the indemnity agreement was invalid under Texas law as applied to gross negligence and willful misconduct.

After the trial court held two hearings on the parties' cross-motions for summary judgment, it entered judgment in favor of Mewbourne and denied Banta’s motions for summary judgment. Banta appealed, maintaining that the trial court erred in granting Mewbourne’s motion for summary judgment and in failing to grant its motion for summary judgment. Banta also contends that it affirmatively demonstrated entitlement to summary judgment on Mewbourne’s indemnity obligation. Banta asks this Court to reverse the trial court’s judgment in favor of Mewbourne, reverse the trial court’s denial of Banta’s summary judgment motion, render judgment in favor of Banta on the enforceability of the indemnity provision against Mewbourne and Mewbourne’s breach thereof, and remand for a determination on the issues of damages and attorney fees.⁸

II. Standard of Review

Appellate courts review de novo the grant or denial of a motion for summary judgment. Hotze v. Miller , 361 S.W.3d 707, 712 (Tex. App.—Tyler 2012, pet. denied) (citing Tex. Mun. Power Agency v. Pub. Util. Comm'n , 253 S.W.3d 184, 192 (Tex. 2007) ). "The party moving for traditional summary judgment bears the burden of showing no genuine issue of material fact exists and it is entitled to judgment as a matter of law." Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009). Where, as here, "both sides move for summary judgment and the trial court grants one motion and denies the other, we review the summary judgment evidence presented by both sides and determine all questions presented." Id. After making a determination as to all of the questions presented, the appellate court must render the judgment the trial court should have rendered. See Nash v. Beckett , 365 S.W.3d 131, 136 (Tex. App.—Texarkana 2012, pet. denied).

III. Discussion

A. Mewbourne’s Motion for Summary Judgment

In Mewbourne’s motion for summary judgment and its supplement to its motion for summary judgment, Mewbourne argued that the application of judicial estoppel and quasi-estoppel prevented Banta from using "a Texas choice-of-law provision in the Banta/[Mewbourne] MSA to obtain indemnity when, in the past, Banta has used the [NMOAIS] to void indemnity obligations and to thwart a similar choice-of-law provision."⁹ The trial court found merit in Mewbourne’s argument and granted judgment in its favor. Therefore, in order for this Court to affirm the trial court’s judgment in favor of Mewbourne, we must initially address Mewbourne’s contention that the principles of judicial estoppel and quasi-estoppel are applicable to this case. See McConnell v. Southside Indep. Sch. Dist. , 858 S.W.2d 337, 339 (Tex. 1993) (finding an appellate court cannot affirm summary judgment on a basis not stated in a party’s motion for summary judgment).

1. Judicial Estoppel

"Judicial estoppel precludes a party who successfully maintains a position in one proceeding from afterwards adopting a clearly inconsistent position in another proceeding to obtain an unfair advantage." Ferguson v. Bldg. Materials Corp. of Am. , 295 S.W.3d 642, 643 (Tex. 2009) (per curiam) (citing Pleasant Glade Assembly of God v. Schubert , 264 S.W.3d 1, 6 (Tex. 2008) ). Judicial estoppel is a rule "of procedure based on justice and sound public policy." Long v. Knox , 155 Tex. 581, 291 S.W.2d 292, 295 (1956). Its main function "is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage." Pleasant Glade Assembly of God v. Schubert , 264 S.W.3d 1, 6 (Tex. 2008). "The doctrine is not intended to punish inadvertent omissions or inconsistencies but rather to prevent parties from playing fast and loose with the judicial system for their own benefit." Ferguson , 295 S.W.3d at 643 (citing Pleasant Glade Assembly of God , 264 S.W.3d at 7 ).

In order for the doctrine of judicial estoppel to apply, a party must show the following: "(1) the opposing party made a sworn, inconsistent statement^{[10 ]} in a prior judicial proceeding; (2) the opposing party making the statement gained some advantage by it; (3) the statement was not made inadvertently or because of mistake, fraud, or duress; and (4) the statement was deliberate, clear, and unequivocal." Galley v. Apollo Associated Servs., Ltd. , 177 S.W.3d 523, 528–29 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (citing Swilley v. McCain , 374 S.W.2d 871, 875–76 (Tex. 1964) ; Long v. Knox , 155 Tex. 581, 291 S.W.2d 292, 295 (1956) ; In re Estate of Huff , 15 S.W.3d 301, 309 (Tex. App.—Texarkana 2000, no pet.) ). Thus, in order for the trial...