Sonat Exploration Co. v. Cudd Pressure Control Inc.

• Decision Date: 09 May 2011
• Docket Number: No. 06–10–00096–CV.,06–10–00096–CV.
• Citation: 340 S.W.3d 570
• Parties: SONAT EXPLORATION COMPANY, Appellant,v.CUDD PRESSURE CONTROL, INC., Appellee.
• Court: Texas Court of Appeals

340 S.W.3d 570

SONAT EXPLORATION COMPANY, Appellant,

v.CUDD PRESSURE CONTROL, INC., Appellee.

No. 06–10–00096–CV.

Court of Appeals of Texas, Texarkana.

Submitted April 27, 2011.Decided May 9, 2011.

Joel L. Thollander, McKool Smith, PC, Austin, Rosemary Snider, Sam F. Baxter, McKool Smith, PC, Marshall, R. Keith Jarrett, Thomas P. Diaz, Liskow & Lewis, New Orleans, LA, for appellant.H. Dwayne Newton, Newton, Jones & Spaeth, Houston, James T. Foley, Foley & Colley, PC, Tyler, Michael H. Bagot Jr., Wagner, Bagot & Rayer, LLP, New Orleans, LA, for appellee.Christopher J. Tramonte, Tramonte & Associates, Houston, Arthur W. Landry, Arthur W. Landry & Jean Andry Landry, LLC, New Orleans, LA, for Intervenor Lumbermens Mutual.Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice CARTER.I. Background and Procedural Posture

After a lengthy journey through the appellate courts, this case has found its way back to our Court. The facts of the underlying accident and indemnity dispute were summarized in the Texas Supreme Court decision that remanded this matter to the trial court. Sonat Exploration Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228 (Tex.2008).

Sonat Exploration Company and Cudd Pressure Control, Inc., were parties to a Master Service Agreement (MSA) that governed oil field services Cudd performed for Sonat. The Contract required each company to indemnify the other for claims by their respective employees. In October 1998, four Cudd employees, along with three other workers, were killed while working on one of Sonat's wells in Louisiana. When the families of the Cudd employees sued Sonat in Texas, Cudd refused Sonat's indemnity demand.

Sonat settled the wrongful death claims and sued Cudd for indemnity under the MSA. The trial court ruled on cross-motions that the indemnity provision was enforceable under Texas law. Because Cudd contested the reasonableness of the settlements, that issue went to trial. The jury determined that Sonat's reasonable damages were $20.7 million. That jury award, together with stipulated attorney's fees and judicial interest, was reflected in the 2001 judgment entered by the trial court.

Cudd appealed the 2001 judgment. During the course of the appeal, Cudd and Sonat entered into a Rule 11 agreement in October 2003 whereby Cudd “will not appeal the trial court's ruling that Texas law applies to the Master Service Agreement ... and, in the event of remand, will not contend that any other state's laws apply to the MSA....” Also in accordance with the agreement, Sonat would dismiss with prejudice a separate suit against Cudd alleging the breach of an insurance procurement provision in the Contract.

While the Cudd/Sonat indemnity dispute was still on appeal here, Lumbermens Mutual Casualty Company (Cudd's excess liability carrier) filed a motion to intervene on appeal in order to raise the choice of law issue. This Court denied Lumbermens' motion to intervene. The Texas Supreme Court permitted the intervention after Lumbermens filed a petition for writ of mandamus “to raise on appeal the choice-of-law issue its insured abandoned....” In re Lumbermens Mut. Cas. Co., 184 S.W.3d 718, 729 (Tex.2006).

Lumbermens' intervention raised the choice of law issue, but Cudd avoided raising the issue as required by its Rule 11 agreement with Sonat. This Court then reversed the district court's judgment and held that Louisiana law applied to the MSA as urged by Lumbermens. Cudd Pressure Control, Inc. v. Sonat Exploration Co., 202 S.W.3d 901, 910 (Tex.App.-Texarkana 2006). The Texas Supreme Court affirmed this Court's choice of law holding. Sonat Exploration Co., 271 S.W.3d at 236. The Texas Supreme Court then remanded the indemnity dispute to the trial court “for further proceedings applying Louisiana law.” Id. at 238.

After remand, Cudd filed its second amended answer in May 2009. Sonat claims this amended answer amounts to a withdrawal of Cudd's earlier affirmative defense (filed prior to the Rule 11 agreement) that “Louisiana's Oilfield Anti–Indemnity Statute bars Sonat's Indemnity claims.” According to Sonat, Cudd's second amended answer makes no mention of “that affirmative defense under Louisiana law,” ¹ and claims the legal significance of this amended answer is central to this appeal.

After filing its second amended answer, Cudd filed a motion for summary judgment in July 2009, contending, among other things, that Sonat's negligence in causing the oil field blowout barred its indemnity claim under the LOAIA. In September 2009, Cudd filed its third amended answer, which included this additional affirmative defense: “Cudd pleads the effects of the applicable oilfield anti-indemnity statute as determined by the Texas Supreme Court.” ² In October 2009, the trial court denied Cudd's motion for summary judgment.³

Then, in January 2010, Lumbermens filed a petition in intervention which was stricken by the trial court in April of that year.⁴ Shortly thereafter, on April 9, Sonat filed a stipulation with the trial court resolving the issue of its negligence: “For purposes of this civil action (Cause No. 99–0199–1) and any associated appeals, Sonat stipulates that it bears some fault relating to the blowout of the Well.” ⁵ Cudd renewed its motion for summary judgment in May 2010, contending that in light of Sonat's stipulation of “some fault” relating to the well blowout, Cudd was entitled to judgment as a matter of law because Sonat's fault barred its indemnity claim under the LOAIA. The motion specifically stated “if Sonat had any fault whatsoever, the Louisiana Oilfield Anti Indemnity Act (LOAIA), La.Rev.Stat. Ann. 9:2780, bars Sonat's claim for indemnity....” Sonat filed a cross-motion for summary judgment on liability and damages.⁶ Lumbermens then filed a second petition in intervention along with its supplemental answer in June.⁷ Shortly thereafter, Sonat filed a second motion to strike Lumbermens' intervention. This motion was set for hearing on July 1, 2010. There is no record of a hearing on this motion, and there is no order striking Lumbermens' second petition in intervention.

The trial court entered its order granting renewed summary judgment in favor of Cudd and denying Sonat's cross-motion for summary judgment. Sonat appeals this judgment.⁸ We affirm the judgment of the trial court.

II. Standard of Review

“When both sides move for summary judgment, as they did here, and the trial court grants one motion and denies the other, reviewing courts consider both sides' summary-judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered.” Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 124 (Tex.2010) (citing Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415–16 (Tex.2000)).

III. Appellate Issues

On appeal, Sonat claims the trial court erred in granting summary judgment in Cudd's favor because Cudd withdrew the affirmative defense of the LOAIA on remand after the Texas Supreme Court's 2008 ruling. Sonat further claims the trial court erred in denying Sonat's summary judgment on damages, attorney's fees and judicial interest. Finally, Sonat contends that Lumbermens was not an intervenor in the proceedings below, and if it was, the trial court erred in failing to strike Lumbermens' second petition in intervention.

A. The Trial Court Correctly Applied the LOAIA

Sonat agrees that on remand, both sides wanted the trial court to decide the case on summary judgment by resolving a single issue: could Cudd take advantage of the LOAIA, which meant Sonat would lose, or had Cudd waived its opportunity to assert the LOAIA, in which case Cudd would lose. Sonat's argument in the trial court and on appeal is surprisingly straightforward, given the complex history of this litigation. Sonat simply claims that even though the Texas Supreme Court determined that Louisiana law applies to this indemnity dispute, the LOAIA is an affirmative defense, which must be pled and proved. Sonat contends that because Cudd failed to plead this affirmative defense, it was not entitled to rely on its provisions to bar Sonat's indemnity claim.

The indemnity agreement here provides that:

Contractor [i.e., Cudd] agrees to RELEASE, DEFEND, INDEMNIFY and HOLD HARMLESS Company [i.e., Sonat] ... from and against any and all claims ... directly or indirectly arising out of or related to bodily injury or death of or damage to property of Contractor ... in any way, directly or indirectly, arising out of, or related to, the performance or subject matter of this Agreement ... and expressly including any sole or concurrent negligence, fault or strict liability (of whatever nature or character) of Company....

The Texas Supreme Court determined Louisiana law applies to this indemnity dispute. Sonat Exploration Co., 271 S.W.3d at 236. In discussing its decision to remand this case to the trial court, the Texas Supreme Court observed that without a finding of negligence or strict liability on the part of Sonat, the plain terms of Louisiana law do not appear to apply:

Any provision contained in, collateral to, or affecting an agreement pertaining to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, is void and unenforceable to the extent that it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee.

La.Rev.Stat. § 9:2780(B).

Id. at 238.

Sonat maintains that this anti-indemnity provision is an affirmative defense which must be pled and proved, likening this statute to a comparable Texas statute known as the Texas...