Getty Oil Co. v. Insurance Co. of North America
| Decision Date | 11 November 1992 |
| Docket Number | No. D-1937,D-1937 |
| Citation | 845 S.W.2d 794 |
| Parties | GETTY OIL COMPANY and Texaco Inc., Petitioners, v. INSURANCE COMPANY OF NORTH AMERICA, NL Industries, Inc. and Youell and Companies, Respondents. |
| Court | Texas Supreme Court |
The purchaser of certain chemicals brought suit against the seller and its insurers, claiming that they were contractually obligated to provide insurance to cover a judgment against the purchaser in a wrongful death action precipitated by the explosion of the chemicals. The trial court granted summary judgment for the defendants on four grounds: (1) a contract provision requiring the seller to purchase liability insurance for the buyer violated the Texas Oilfield Anti-Indemnity Statute, Tex.Rev.Civ.Stat.Ann. art. 2212b (); (2) the same contractual provision violated the common law express negligence rule; (3) the prior litigation of a related indemnity provision precluded the present suit under the doctrine of res judicata; and (4) specific issues were precluded by collateral estoppel. The court of appeals affirmed on the theory of res judicata. 819 S.W.2d 908 (Tex.App.--Houston 1991). We affirm the judgment of the court of appeals in part, reverse in part, and remand the cause to the trial court for further proceedings.
Getty Oil Company ("Getty") purchased various chemicals from NL Industries, Inc. ("NL") for Getty's oil production and exploration operations in the Midland, Texas, area. A purchase order numbered "HB-5357" was in effect from August 1, 1983, to July 31, 1984. It included the following provisions:
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All insurance coverages carried by Seller, whether or nor required hereby, shall extend to and protect Purchaser ... to the full amount of such coverages and shall be sufficiently endorsed to waive any and all claims by the underwriters or insurers against Purchaser ...
Seller shall indemnify, defend and hold harmless Purchaser ... from any and all losses, claims, actions, costs, expenses, judgments, subrogations, or other damages resulting from injury to any person (including injury resulting in death), or damage (including loss or destruction to property of whatsoever nature of any person[ ) ] arising out of or incident to the performance of the terms of this Order by Seller (including, but not limited to, Seller's employees, agents, subcontractors, and others designated by Seller to perform work or services in, about, or attendant to, the work and services under the terms of this Order.) Seller shall not be held responsible for any losses, expenses, claims, subrogations, actions, costs, judgments, or other damages, directly, solely, and proximately caused by the negligence of Purchaser. Insurance covering this indemnity agreement shall be provided by Seller.
The liability of Seller, as herein above provided, shall not be limited by the insurance coverage required of Seller.
On November 22, 1983, a barrel of chemical demulsifier delivered by NL under Order No. HB-5357 exploded in the vicinity of a Getty well, killing Carl Duncan, an independent contractor working for Getty.
Duncan's estate and survivors brought wrongful death and survival actions in the 130th Judicial Court of Matagorda County against Getty, NL and its subsidiaries, and others. 1 Getty filed a cross-claim against NL, alleging that NL's negligence proximately caused the injury to Duncan, that the chemicals manufactured by NL were defective, and that NL breached warranties in connection with the sale of the chemicals. Getty also asserted a contractual right of indemnity against NL under the terms of HB-5357 (quoted above), and a contribution claim because of NL's negligence. The jury found Getty 100% negligent and grossly negligent in causing the accident. The trial court rendered judgment on the jury verdict for $3,757,000 actual damages and $25,000,000 punitive damages. The trial court also rendered judgment that "all Cross-Actions for contributions and/or indemnity based upon the contracts are denied." Getty appealed the portion of the judgment denying it contribution and indemnity, and the court of appeals affirmed the judgment of the trial court. Getty Oil Corp. v. Duncan, 721 S.W.2d 475 (Tex.App.--Corpus Christi 1986, writ ref'd n.r.e.). Getty's insurers, Travellers Insurance Company, Travellers Indemnity Company, and English & American Insurance Company, settled the claim for $14 million.
Getty then filed an insurance claim with NL's insurers. After they refused to honor the claim, Getty sued NL and its primary and excess insurance carriers, Insurance Company of North America ("INA") and Youell and Companies 2 ("Youell"), respectively. 3 Getty alleged that, pursuant to the terms of the HB-5357 "Insurance and Indemnity" provision, NL's insurance should cover Getty for its liability in the Duncan case. Getty brought claims against NL for breach of the contract to purchase insurance in its behalf, violation of Tex.Bus. & Com.Code § 1.203 (Tex. UCC) (Vernon 1968) (obligation of good faith), breach of the duty of good faith and fair dealing, negligence, violation of the Texas Deceptive Trade Practices Act (DTPA), Tex.Bus. & Com.Code §§ 17.41-.63 (Vernon 1987 & Supp.1992), and common law fraud. Against INA and Youell, Getty asserted claims for breach of the contract to extend it insurance coverage, violation of Tex.Ins.Code art. 3.62 (Vernon 1981) (repealed) (failure to pay claim), breach of the duty of good faith and fair dealing, negligence, violation of the DTPA, and common law fraud.
NL, INA and Youell jointly moved for summary judgment, arguing that (1) the terms of HB-5357 did not make Getty an additional insured under NL's policies; (2) the Insurance and Indemnity scheme of HB-5357 was prohibited by the Texas Oilfield Anti-Indemnity Statute, Tex.Rev.Civ.Stat.Ann. art. 2212b (); and (3) Getty's claims were barred by res judicata and collateral estoppel. The defendants also joined Getty's insurers as third party defendants, claiming that Getty's policies with them at least partially relieved the defendants of covering Getty's liability.
On May 3, 1990, the trial court granted the defendants' motions for summary judgment. The trial court also granted the defendants' motion to sever the third party claims against Getty's insurers, and ordered that the severed actions not go forward until resolution of the action between Getty and the defendants. Getty appealed the summary judgment for defendants, and the court of appeals affirmed on res judicata grounds, holding that Getty's claims were barred because it was seeking the same relief under a different theory that it unsuccessfully sought in the first suit. 819 S.W.2d at 915. Getty now seeks a reversal of the court of appeals' judgment and the trial court's summary judgment. 4
We recently clarified that Texas follows the "transactional" approach to res judicata. See Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex.1992). Under this approach, a judgment in an earlier suit "precludes a second action by the parties and their privies not only on matters actually litigated, but also on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit." Id. at 630; Texas Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex.1979).
We conclude that Getty's present suit arises out of the same subject matter as its earlier cross-claim against NL asserted in the Duncan suit. The Restatement (Second) of Judgments, which recognizes the transactional test, suggests that factors to consider in determining whether facts constitute a single "transaction" are "their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes." Restatement (Second) of Judgments § 24 cmt. b (1980). Getty's present action against NL arose from the same accident that was adjudicated in the Duncan suit. The present suit also concerns the same contract, HB-5357, and the same section of that contract, the "Insurance and Indemnity" section. Finally, Getty seeks the same relief against NL here as in its earlier cross-claim: reimbursement for Getty's liability to Duncan's estate and beneficiaries. Thus, both Getty's actions against NL derived from the same transaction. 5
Getty argues that res judicata cannot bar its present claims against NL because these claims did not accrue until judgment was rendered in the Duncan suit. That is, Getty had no liability and hence no need for insurance coverage until liability was assigned. The contingent nature of these claims, however, does not preclude the operation of res judicata. We held in Barr that "[a] subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which,...
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