Chapman v. Hiland Partners GP Holdings, LLC

• Decision Date: 14 July 2017
• Docket Number: No. 15-2103, No. 15-2396,15-2103
• Citation: 862 F.3d 1103
• Parties: Lenny M. CHAPMAN; Tracy M. Chapman, Plaintiffs v. HILAND PARTNERS GP HOLDINGS, LLC, a foreign company; Hiland Partners, LP, a foreign partnership; Hiland Operating, LLC, a foreign company, Defendants Lenny M. Chapman; Tracy M. Chapman, as assignees of Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC ; Hiland Operating, LLC, Third Party Plaintiffs-Appellees v. Missouri Basin Well Service, Inc., Third Party Defendant-Appellant B&B Heavy Haul, LLC, Third Party Defendant Missouri Basin Well Service, Inc., Cross Claimant-Appellant v. B&B Heavy Haul, LLC, Cross Defendant-Appellee Lenny M. Chapman; Tracy M. Chapman, Plaintiffs v. Hiland Partners GP Holdings, LLC, a foreign company; Hiland Partners, LP, a foreign partnership; Hiland Operating, LLC, a foreign company, Defendants Lenny M. Chapman; Tracy M. Chapman, as assignees of Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC ; Hiland Operating, LLC, Third Party Plaintiffs-Appellees v. Missouri Basin Well Service, Inc., Third Party Defendant-Appellant B&B Heavy Haul, LLC, Third Party Defendant Missouri Basin Well Service, Inc., Cross Claimant-Appellant v. B&B Heavy Haul, LLC, Cross Defendant-Appellee
• Court: U.S. Court of Appeals — Eighth Circuit

862 F.3d 1103

Lenny M. CHAPMAN; Tracy M. Chapman, Plaintiffs

v.HILAND PARTNERS GP HOLDINGS, LLC, a foreign company; Hiland Partners, LP, a foreign partnership; Hiland Operating, LLC, a foreign company, Defendants

Lenny M. Chapman; Tracy M. Chapman, as assignees of Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC ; Hiland Operating, LLC, Third Party Plaintiffs-Appellees

v.Missouri Basin Well Service, Inc., Third Party Defendant-Appellant

B&B Heavy Haul, LLC, Third Party Defendant

Missouri Basin Well Service, Inc., Cross Claimant-Appellant

v.B&B Heavy Haul, LLC, Cross Defendant-Appellee

Lenny M. Chapman; Tracy M. Chapman, Plaintiffs

v.Hiland Partners GP Holdings, LLC, a foreign company; Hiland Partners, LP, a foreign partnership; Hiland Operating, LLC, a foreign company, Defendants

Lenny M. Chapman; Tracy M. Chapman, as assignees of Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC ; Hiland Operating, LLC, Third Party Plaintiffs-Appellees

v.Missouri Basin Well Service, Inc., Third Party Defendant-Appellant

B&B Heavy Haul, LLC, Third Party Defendant

Missouri Basin Well Service, Inc., Cross Claimant-Appellant

v.B&B Heavy Haul, LLC, Cross Defendant-Appellee

No. 15-2103

No. 15-2396

United States Court of Appeals, Eighth Circuit.

Submitted: December 15, 2016

Filed: July 14, 2017

Bradley L. Booke, Robert P. Schuster, Robert P. Schuster, P.C., Jackson, WY, James Robert Hoy, Maring & Williams, Fargo, ND, David S. Maring, Maring & Williams, Patrick W. Durick, Meredith L. Vukelic, Pearce & Durick, Bismarck, ND, Dennis P. Wilkinson, Robert P. Schuster, P.C., Idaho Falls, ID, Margaret M. Clarke, Hall & Estill, Tulsa, OK, John M. Fitzpatrick, Stephen E. Oertle, Wheeler & Trigg, Denver, CO, for Third Party Plaintiffs–Appellees.

Joel A. Flom, Flom Law Office, Fargo, ND, Irene C. Keyse-Walker, Benjamin Creighton Sasse, Tucker & Ellis, Cleveland, OH, for Third Party Defendant–Appellant.

Gordon Henry Hansmeier, Christopher A. Wills, Rajkowski & Hansmeier, Saint Cloud, MN, for Cross Defendant–Appellee.

Before KELLY and MURPHY, Circuit Judges, and MONTGOMERY,¹ District Judge.

KELLY, Circuit Judge.

In this consolidated appeal, Missouri Basin Well Service, Inc. (Missouri Basin) appeals from the district court's² grant of summary judgment to Lenny and Tracy Chapman (the Chapmans) and from the district court's rulings on post-judgment motions. Having jurisdiction under 28 U.S.C. § 1291, we affirm the court's orders granting summary judgment to the Chapmans, granting the Chapmans' Rule 59(e) motion, and denying Missouri Basin's Rule 59(e) motion.

I. Background

Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC (collectively, Hiland) own and operate a natural gas plant in Watford City, North Dakota. Missouri Basin offers trucking services to oil and gas companies in North Dakota. Hiland entered into a Master Service Contract (Hiland MSC) with Missouri Basin in 2008 whereby Missouri Basin, as "Contractor," agreed to perform various services for Hiland. As part of the agreement, Missouri Basin agreed to "indemnify, defend and save harmless Hiland Group ... from and against any and all claims, demands, judgments, defense costs, or suits ... in any way, directly or indirectly, arising out of or related to the performance of this Contract." The Hiland MSC included an Oklahoma choice-of-law provision.

B&B Heavy Haul, LLC (B&B) entered into a Master Services Contract with Missouri Basin (B&B MSC) in May 2011, in which B&B, as "Carrier" agreed "to provide the transportation services required by [Missouri Basin] and Customer." In the B&B MSC, B&B agreed to "indemnify, defend, and save harmless [Missouri Basin] and the Customer from any and all claims, demands, judgments, defense costs, or suits ... in any way, directly or indirectly, arising out of or related to the performance of this Contract." The B&B MSC provided for the application of North Dakota law.

On October 18, 2011, Hiland requested Missouri Basin remove water from condensate tanks at the Watford plant. Missouri Basin contacted B&B, which sent Lenny Chapman to the gas plant. Chapman arrived shortly after midnight. He and an employee of Hiland began connecting the tank to the B&B truck that Chapman was driving. An explosion occurred and Chapman was seriously injured.

Chapman and his wife, Tracy, filed an action against Hiland, alleging negligence and loss of consortium. Hiland filed a third-party complaint against Missouri Basin and B&B, contending they were contractually obligated to indemnify and defend Hiland. Missouri Basin cross-claimed against B&B, seeking a defense and indemnificationif it was required to indemnify Hiland.

B&B filed a motion for partial summary judgment, contending the B&B MSC did not require it to indemnify Missouri Basin or Hiland for Hiland's negligence. On September 10, 2014, the district court granted B&B's motion, dismissing Hiland's third-party complaint against B&B and Missouri Basin's cross-claim against B&B. As for Hiland's third-party complaint, the court concluded as a matter of law that B&B had no legal duty under the B&B MSC to indemnify Hiland for its own negligence. The court further found that even if the B&B MSC could be construed to require B&B to indemnify Hiland for its own negligence, the contract was void and unenforceable under North Dakota law. With regard to Missouri Basin's cross-claim, the court concluded as a matter of law that B&B had no legal obligation to indemnify Missouri Basin for any indemnification obligations Missouri Basin might have to Hiland.

On October 1, 2014, the Chapmans entered into a "Confidential Release and Settlement Agreement and Addendum" (Settlement Agreement) with Hiland, settling their claims against Hiland for $10 million. Of that amount, $3 million was to be paid by Hiland and $7 million by Hiland's insurers. As part of the settlement, Hiland assigned all its indemnity claims against Missouri Basin to the Chapmans. The Chapmans filed an amended third-party complaint, asserting, "as assignees of [Hiland]," the "right to pursue the Hiland Defendants' indemnity claims against Missouri Basin arising from the Missouri Basin MSC." The Chapmans sought a judgment "for all amounts that the Hiland Defendants, or others on their behalf, have paid or will pay" to the Chapmans under the Settlement Agreement.

The Chapmans and Missouri Basin filed cross-motions for summary judgment. The parties disputed whether Oklahoma law or North Dakota law governed the Hiland MSC. Applying Oklahoma law, the district court found the indemnity provision in the Hiland MSC fully enforceable. On April 23, 2015, the court entered an order granting the Chapmans' motion for summary judgment, stating: "Missouri Basin is obligated to indemnify Third-Party Plaintiffs for all amounts that have been paid or will be paid as a result of the Confidential Release and Settlement Agreement and the Addendum." The judgment was entered on April 24, 2015.

Both the Chapmans and Missouri Basin filed post-judgment motions. The Chapmans requested the court reduce its judgment to a sum certain: $10 million plus interest. Missouri Basin opposed the Chapmans' motion, contending its indemnity obligation was limited to $3 million—the amount Hiland directly contributed to the settlement. In its post-judgment motion, Missouri Basin asked the court to reconsider its September 2014 order granting summary judgment in favor of B&B and its April 2015 order granting summary judgment in favor of the Chapmans. Missouri Basin argued the two orders were erroneous and contradictory. The court granted the Chapmans' motion and denied Missouri Basin's motion, and issued an amended judgment the next day.

II. Discussion

Missouri Basin appeals the district court's grant of summary judgment to the Chapmans, asserting the district court erred in applying Oklahoma rather than North Dakota law in construing the Hiland MSC. Missouri Basin also contends the district court erred in its post-judgment rulings.

A. Summary Judgment

"We review de novo a district court's grant of summary judgment, viewing the evidence in the light most favorable to the nonmoving party."Am. Fire & Cas. Co. v. Hegel , 847 F.3d 956, 958 (8th Cir. 2017) (quoting Barkley, Inc. v. Gabriel Bros. , 829 F.3d 1030, 1038 (8th Cir. 2016) ). Summary judgment is appropriate if there is "no dispute of material fact and reasonable fact finders could not find in favor of the nonmoving party." Id. (quoting Shrable v. Eaton Corp. , 695 F.3d 768, 770–71 (8th Cir. 2012) ).

The parties agree that North Dakota choice-of-law rules apply in this case. See Inacom Corp. v. Sears, Roebuck & Co. , 254 F.3d 683, 687 (8th Cir. 2001) (when sitting in diversity jurisdiction, district court applies the conflict-of-law rules for the state in which it sits). Relying on the choice-of-law provision in the Hiland MSC, the district court applied Oklahoma law to determine the enforceability of the indemnity provision in the MSC. See Snortland v. Larson , 364 N.W.2d 67, 68–69 (N.D. 1985) (applying Minnesota law to contract case because the parties chose Minnesota law); Am. Hardware Mut. Ins. v. Dairyland Ins. , 304 N.W.2d 687, 689 n.1 (N.D. 1981) (noting that "[p]arties may stipulate as to choice of law"); see also Macquarie Bank Ltd. v. Knickel , 793 F.3d 926, 933 (8th Cir. 2015) ("We believe that the North Dakota Supreme Court would resolve this dispute under Texas law, as called for by the Credit Agreement."). Because the district court decided that the Hiland MSC was governed by Oklahoma law, it concluded that "any arguments based on North Dakota law necessarily fail." We "review de novo the district court's choice-of-law determination." DCS Sanitation Mgmt., Inc. v. Castillo , 435 F.3d 892, 895 (8th Cir. 2006). We likewise review de novo the court's "interpretation of North Dakota law." Kovarik v. Am. Family Ins. Grp. , 108 F.3d 962, 964 (8th Cir. 1997).

Missouri Basin acknowledges that ...