Bolack v. Chevron, U.S.A., Inc., 97-58

• Decision Date: 17 August 1998
• Docket Number: No. 97-58,97-58
• Parties: Tom BOLACK and Thomas Morgan, Appellants (Defendants), v. CHEVRON, U.S.A. INC., Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 237

963 P.2d 237

Tom BOLACK and Thomas Morgan, Appellants (Defendants), v. CHEVRON, U.S.A. INC., Appellee (Plaintiff).

No. 97-58.

Supreme Court of Wyoming.

Aug. 17, 1998.

Rehearing Denied Sept. 17, 1998.

Patrick J. Murphy of Williams, Porter, Day & Neville, P.C., Casper, for Appellant Tom Bolack.

Peter K. Michael and William M. McKellar of Boley & McKellar, P.C., Cheyenne, and H. Paul Cohen and Thomas W. Niebrugge of Weinman, Cohen & Niebrugge, P.C., Denver, for Appellant Thomas Morgan.

Morris R. Massey and Thomas F. Reese of Brown, Drew, Massey & Sullivan, Casper, for Appellee.

Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN and TAYLOR, ^* JJ.

TAYLOR, Justice.

Chevron, U.S.A. Inc. (Chevron) filed an action in the United States District Court for the District of Wyoming seeking payment from non-operating interest owners, Thomas Morgan (Morgan) and Tom Bolack (Bolack), under a Unit Operating Agreement. The amounts for which Chevron claimed arose from payments Chevron tendered in the settlement of four personal injury suits. Bolack Whether the Unit Operating Agreement for the Painter Reservoir Unit is rendered void and unenforceable by application of W.S. §§ 30-1-131, et. seq., to the extent that it requires non-negligent non-operators to contribute proportionately to the operator's settlements of claims for personal injuries to a well servicing contractor's employees where the operator's negligence caused or contributed to the cause of the personal injuries.

and Morgan refused to pay, claiming that Chevron's demand was barred by Wyoming's anti-indemnity statute, Wyo. Stat. § 30-1-131 (1997). Pursuant to Wyo. Stat. §§ 1-13-104 through 1-13-107 (1997) and W.R.A.P. 11, the United States District Court for the District of Wyoming presented the following certified question for review:

We answer in the affirmative.

I. FACTS

Chevron was the Unit Operator of the Painter Reservoir Unit Area in Uinta County, Wyoming in January 1993. At that time, Chevron owned a 75.42% working interest in the participating area, Bolack was a 7.99% non-operating working interest owner, and Morgan owned an 11.99% non-operating working interest. The interests of Chevron, Bolack and Morgan were subject to the Unit Operating Agreement executed by the parties.

As the Unit Operator, subject to limitations provided for in the Unit Operating Agreement, Chevron had the sole power to manage and conduct all operations in the unit. Morgan and Bolack, as non-operators under the Unit Operating Agreement, had no right to manage, control or supervise operations.

In January 1993, Chevron contracted with Cannon Well Service to perform a recompletion operation on one of the wells in the unit for the purpose of establishing production from the Twin Creek formation. Bolack and Morgan elected to join and share the costs of recompleting the well. On January 29, 1993, during the course of that reworking operation, the well caught fire and four employees from Cannon Well Service suffered burns. It is uncontested that Morgan and Bolack were not in any way involved in the acts or omissions which caused the injury to the four Cannon Well Service employees, and no one asserts that Morgan and Bolack were negligent.

Subsequently, all four employees filed personal injury lawsuits against Chevron in Uinta County. Those lawsuits were set for trial in February 1995. After extensive discovery, all of the claims were settled by Chevron before trial without the approval of Bolack and Morgan. Chevron elected to pay 2.61 million dollars of the settlement amount with its own funds.

In May, 1995, Chevron mailed billing invoices to Bolack and Morgan for their asserted percentage share of the 2.61 million dollars, plus attorneys fees paid to outside counsel. The Unit Operating Agreement provisions relied upon by Chevron in its demand are as follows:

1.4 "Costs" means all costs and expenses incurred in the development and operation of the Unit Area pursuant to this agreement or the Unit Agreement and all other expenses that are herein made chargeable as Costs, determined in accordance with the accounting procedure set forth in Exhibit 2 attached hereto, which shall govern in all matters covered thereby, except that in event of inconsistency between said accounting procedure and this agreement, this agreement shall control.

* * *

16.5 Uninsured Losses. Any and all payments made by Unit Operator in the settlement or discharge of any liability to third persons (whether or not reduced to judgment) arising out of an operation conducted hereunder and not covered by insurance herein provided to be maintained by Unit Operator shall be charged as Costs and borne by the Party or Parties for whose account such operation was conducted.

Exhibits 2 and 5 as attached to the Unit Operating Agreement state:

II. DIRECT CHARGES

Operator shall charge the Joint Account with the following items:

* * *

9. Legal Expense

Expense of handling, investigating and settling litigation or claims, discharging of liens, payment of judgments and amounts paid for settlement of claims incurred in or resulting from operations under the agreement or necessary to protect or recover the Joint Property, except that no charge for services of Operator's legal staff or fees or expense of outside attorneys shall be made unless previously agreed to by the Parties.

INSURANCE

* * *

Except as otherwise provided in Section 16.2, Operator shall not carry any other insurance for the joint account. The liability, if any, of the parties hereto in damages for claims growing out of personal injury to or death of third persons or injury or destruction of property of third parties resulting from the operation and development of the premises covered hereby shall be borne by the parties hereto in the proportions of their respective interests in the production therefrom; and each party individually may acquire such insurance as it deems proper to protect itself against such claims.

When Bolack and Morgan refused to pay any part of the invoices, Chevron filed this suit in the United States District Court for the District of Wyoming. Finding that there is a question of Wyoming law which may be determinative of the claim for relief asserted by Chevron, and finding no controlling precedent in Wyoming case law, the United States District Court certified the present question to this court pursuant to Wyo. Stat. §§ 1-13-104 through 1-13-107 and W.R.A.P. 11.

II. STANDARD OF REVIEW

The certified question requires interpretation of Wyo. Stat. §§ 30-1-131 and 30-1-132 (1997) ¹ to determine whether these provisions apply to the Unit Operating Agreement. Statutory interpretation begins by looking at the plain and ordinary meaning of the words contained therein to determine whether a statute is ambiguous. Parker Land and Cattle Co. v. Wyoming Game and Fish Com'n, 845 P.2d 1040, 1042-43 (Wyo.1993).

A "statute is unambiguous if its wording is such that reasonable persons are able to agree as to its meaning with consistency and predictability." * * * "[A] statute is ambiguous only if it is found to be vague or uncertain and subject to varying interpretations." * * * "[W]hether an ambiguity exists in a statute is a matter of law to be determined by the court."

Id. at 1043 (quoting Allied-Signal, Inc. v. Wyoming State Bd. of Equalization, 813 P.2d 214, 219-20 (Wyo.1991)). If we find the statute is unambiguous, we apply its plain meaning. Parker Land and Cattle Co., 845 P.2d at 1043.

We read a statute so that every word, clause and sentence is given effect so, if possible, no part of the statute is rendered inoperative or superfluous. State Dept. of Revenue and Taxation v. Pacificorp., 872 P.2d 1163, 1166 (Wyo.1994); Reliance Ins. Co. v. Chevron U.S.A. Inc., 713 P.2d 766, 770 (Wyo.1986). In construing the statute, our main objective is to effectuate the intent of the legislature. Moncrief v. Harvey, 816 P.2d 97, 105 (Wyo.1991).

III. DISCUSSION

Bolack and Morgan assert that Wyo. Stat. §§ 30-1-131 and 30-1-132 render the provisions of the Unit Operating Agreement unenforceable to the extent that Chevron seeks indemnity for its own negligence. Chevron denies that these statutory provisions apply to the Unit Operating Agreement for several reasons.

First, Chevron contends that the Unit Operating Agreement does not fall within the purview of Wyo. Stat. § 30-1-132 because it is not a contract for services. Relying on our holding in Reliance Ins. Co., 713 P.2d 766, Chevron maintains that the Unit Operating Agreement does not require Bolack or Morgan to perform services relating to the well, and, therefore, the Unit Operating Agreement is not an agreement governed by the anti-indemnity prohibitions. Although Chevron recognizes that our decision in Reliance Ins. Co. did not turn on whether services were being performed, Chevron asserts that the decision clearly determined "that an agreement which is voidable under § 30-1-131 must be one relating to the rendition of services * * * by the party from whom indemnity is sought. " (Emphasis added.) Interestingly, Chevron does not point to where that requirement is found in our decision, and we have searched in vain for such implication. Rather, we find that our discussion in Reliance Ins. Co. was limited to "rendering services" simply because that was the term in the statute relevant to the facts of that case.

Wyo. Stat. § 30-1-132 defines the agreements to which Wyo. Stat. § 30-1-131 will apply. The plain language of the statute states that "any agreement * * * concerning any operations related to [listing of specific activities], or otherwise rendering services in or in connection with any well * * * " are subject to the anti-indemnity provision. Wyo. Stat. § 30-1-132. We find no language which limits the application of Wyo. Stat. § 30-1-131...