Richmond v. Amoco Production Company
| Citation | 390 F. Supp. 673 |
| Decision Date | 04 March 1975 |
| Docket Number | No. TY-73-CA-75.,TY-73-CA-75. |
| Parties | Joel B. RICHMOND, Plaintiff, v. AMOCO PRODUCTION COMPANY, Defendant and Third-Party Plaintiff, v. DRESSER ENGINEERING COMPANY OF OKLAHOMA, Third-Party Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
Rex Houston, Henderson, Tex., for plaintiff.
Herbert Boyland, Longview, Tex., for defendant and third-party plaintiff, Amoco Production Co.
Royal H. Brin, Jr., Dallas, Tex., for third-party defendant, Dresser Engineering Co. of Okl.
This is a third-party action for contractual indemnity brought by Amoco Production Company against Dresser Engineering Company of Oklahoma. Amoco seeks to recover $71,275.20 which it paid in settlement of the claim of the plaintiff, Joel B. Richmond, plus attorneys' fees, court costs and expenses in the amount of $7,448.79 that were incurred in defending the plaintiff's lawsuit. Jurisdiction is based on diversity of citizenship with more than $10,000.00 in controversy.
The parties have stipulated that the settlement with Joel B. Richmond was reasonable and made in good faith and the attorneys' fees and expenses were reasonable and necessary. Further, it is agreed that the injuries to Joel B. Richmond were proximately caused by the negligence of Amoco. Finally both parties have stipulated that the provisions of the contract are to be interpreted and governed by the law of Texas. The case was tried to the Court without the intervention of a jury on September 9, 1974, and the following will constitute the Court's findings of fact and conclusions of law for the purposes of Rule 52, Federal Rules of Civil Procedure.
On October 15, 1971, Amoco and Dresser entered into a contract which contemplated that Dresser would design and construct a new facility at Amoco's Elk Basin plant in Park County, Wyoming. After this construction was completed in late July, 1972, production was halted by Amoco at the Wyoming facility to allow Dresser to "tie-in" the new facilities with the existing plant. After the completion of the "tie-in" Dresser turned the plant over to Amoco and the plant's reactors, which produced hydrogen sulfide, were started up.
Two days later, early in the morning of August 2, 1972, Bernard Schacht, an Amoco shift foreman detected gas leaking from a flange or valve that Dresser had previously installed. Upon detecting the leak, he immediately shut down the reactor. However, he testified that it would then taken some four to five hours for the reactor to cool down and cease driving gas into the line.
Thereafter, the Amoco crew attempted to stop the leak by tightening the flange bolts but when this failed, they notified Dresser. Dresser sent one of its employees, Joel B. Richmond, to try to solve the problem. Dresser did not furnish Mr. Richmond with a gas mask or gas detection equipment even though they were aware that there was a leak in the line and there had been gas in the area. Harold Martin, Dresser's construction superintendent on the job, testified that he felt the line was purged and ready to work on when he sent Mr. Richmond, because Amoco had not specified any special precautions to be taken. As it turned out, there was still gas in the line, and when the plaintiff parted the flange, he was overcome and fell some fifteen feet off the platform upon which he was working and sustained serious injuries.
Dresser, who supplied the valve in question and constructed the new facility, had the sole responsibility to correct any defects in their construction. This is precisely what Mr. Richmond was attempting to accomplish at the time of his injury. Mr. Martin confirmed that it was a defect in Dresser's installation which caused the leak to occur.
The Court is of the opinion that under the contract in question and the prevailing law in Texas that it is not necessary to determine whether Dresser was concurrently negligent with Amoco, or whether Amoco was solely at fault. The question for this Court's determination is whether the contract between the parties clearly manifests an intention for Amoco to be indemnified for its own acts of negligence.
The relevant portions of the contract are set forth below:
Additionally, Dresser agreed to provide for its protection and that of Amoco general liability coverage on its own employees and those of Amoco.
There have been numerous cases decided by Texas Courts in recent years which have construed contractual indemnity provisions. The latest exposition on the subject by the Texas Supreme Court is Fireman's Fund Ins. Co. v. Commercial Stand. Ins. Co., 490 S.W.2d 818 (Tex.1972). In Fireman's Fund the Court began its discussion by emphasizing that the contract of indemnity must be stated in clear and unequivocal terms in order to give protection to the indemnitee for its own acts of negligence. Further, the Supreme Court stated that Texas has moved "as near as is judicially possible" to the "express negligence" rule without formally adopting it, and that broad general statements will not afford protection to the indemnitee. The Court then outlined the three exceptions to this rule which are presently recognized in Texas:
". . . (1) agreements in which one person clearly undertakes to indemnify another against liability for injuries or damages caused by defects in certain premises or resulting from the maintenance or operation of a specified instrumentality as in Mitchell's, Inc. v. Friedman, supra 157 Tex. 424, 303 S.W.2d 775, and Houston & T. C. R. Co. v. Diamond Press Brick Co., 111 Tex. 18, 222 S.W. 204, 226 S.W. 140 (1920); (2) agreements which fall within the peculiar circumstances of the indemnitor having complete supervision over the property and employees of the indemnitee in connection with the performance of the indemnitor's contract, as in Spence & Howe, supra; and (3) contracts in which there is an unequivocal provision that indemnitor will protect and indemnify the indemnitee from any and all liability by reason of injuries to indemnitor's employees as in Ohio Oil, supra." 490 S.W.2d at 822.
Because the contract in question does not satisfy the "express negligence" rule as envisioned by the Texas Supreme Court, Amoco must fit within one of the three exceptions. Amoco contends that they fit squarely within the Ohio Oil1 exception outlined above. Dresser disagrees with this contention and claims that under Fireman's Fund and other cases interpreting Texas law2 the contract is just not clear enough to protect Amoco against its own acts of negligence.
The question presented herein is simple. If the indemnity contract comes within the Ohio Oil exception, then Amoco is entitled to indemnity. Otherwise they are not. Set forth below are the indemnity provisions which the Texas Supreme Court felt were sufficient to allow the indemnitee, Ohio Oil Company, to be indemnified for its own acts of negligence:
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