Sun Oil Co. (Delaware) v. Renshaw Well Service, Inc.

• Decision Date: 31 August 1978
• Docket Number: No. 1163,1163
• Citation: 571 S.W.2d 64
• Parties: SUN OIL COMPANY (DELAWARE), Appellant, v. RENSHAW WELL SERVICE, INC., Appellee.
• Court: Texas Court of Appeals

Page 64

571 S.W.2d 64

SUN OIL COMPANY (DELAWARE), Appellant, v. RENSHAW WELL SERVICE, INC., Appellee.

No. 1163.

Court of Civil Appeals of Texas, Tyler.

Aug. 31, 1978.

Rehearing Denied Sept. 21, 1978.

Eugene W. Brees, Thompson, Knight, Simmons & Bullion, Dallas, for appellant.

John M. Smith, Roberts, Harbour, Smith, Harris, French & Ritter, Longview, for appellee.

DUNAGAN, Chief Justice.

This is a third-party action for indemnity brought by Sun Oil Company (Delaware), appellant, hereafter referred to as "Sun," against Renshaw Well Service, Inc., appellee, hereafter referred to as "Renshaw." Sun seeks to recover $10,000.00 which it paid in settlement of the claim of plaintiff, David Durbin, plus attorneys' fees and court costs. The third-party indemnity action was submitted to the trial court solely on stipulations of fact. This appeal follows the rendition of a take nothing judgment against Sun, which denied indemnity under the provisions of the contract between appellant and appellee.

Sun was the operator of the Shamburger Lake Unit (Paluxy) Field, Smith County, Texas, pursuant to a unit agreement entered into by its predecessor in interest, dated August 17, 1962. In April, 1972, Sun and Renshaw entered into a contract by which appellee was to perform certain well servicing and other work on wells located within the Shamburger Lake Unit. The contract contained a provision granting Sun a right to indemnity from Renshaw, as follows:

"INDEMNITY: Contractor (Renshaw) agrees to protect, defend, indemnify and hold Sun and the employees of Sun free and harmless from and against any and all claims, demands and causes of action of every kind and character (except underground damage) arising out of, incident to, or in connection with this agreement or performance of work or services hereunder or breach of the terms hereof, regardless of whether the liability therefor is based upon some alleged act or omission of Sun or of Contractor or of some third or other party, and including without limitation by enumeration all taxes, claims, debts, fines, penalties, forfeitures, patent infringements, loss of use, death, injury and damages to all persons and property, together with the amount of judgments, penalties, interest, court costs, legal and other fees and expenses in connection therewith. With respect to liability based upon some alleged act or omission of Sun or some such third or other party, not an agent or subcontractor of Contractor, this indemnity shall be limited to the kinds and amounts of insurance Contractor agrees to carry under this Contract and Services Agreement, or such greater amounts as Contractor does in fact carry."

The contract and accompanying rate schedule provided that there would be a charge for the work performed by Renshaw, plus an additional charge for road time. Under terms of the contract, Sun had no authority to direct, supervise or control Renshaw in the manner or method of performance of the work thereunder. On the date of the accident giving rise to plaintiff's suit herein, the contract and rate schedule were in full force and effect and covered the well servicing work which had been performed by Renshaw.

On June 19, 1973, appellee performed certain well servicing operations at the well known as M.S. Shamburger Well 2-1, which included fishing out a broken sucker rod, replacing worn rods and replacing the entire string of sucker rods back into the hole. The specific work which Renshaw had contracted to perform at M.S. Shamburger Well 2-1 was completed, to the satisfaction of appellant, and no further work remained to be done at that well site. Renshaw's employees were in the process of returning to appellee's headquarters to park the equipment when the accident occurred. Plaintiff, a Renshaw employee named David Durbin, was driving a well service truck on the dirt access road leading away from the well site. Approximately 585 yards away from M.S. Shamburger Well 2-1, plaintiff drove off the road while attempting to cross an earthen dam. The accident occurred within the Shamburger Lake Unit and it is undisputed that Sun was responsible for maintenance of the access road. At the time in question, this was the only access road that Sun provided for Renshaw's equipment to go to and from this particular well site. On the occasion in question, no Sun employee was present at either the well site or on any portion of the access road.

David Durbin received benefits of over $17,000 from the Workmen's Compensation carrier for Renshaw and thereafter, Durbin brought suit against Sun, alleging negligence in the maintenance of the access road. Subsequently, Sun filed a third-party action against Renshaw based on the indemnity agreement. Sun settled Durbin's negligence claim for $10,000, plus costs, while continuing to assert its third-party action against appellee. It was stipulated that the settlement was made in good faith and was fair and reasonable, and there is no dispute as to the propriety or amount thereof.

In support of its take nothing judgment against Sun, the trial court made the following conclusions of law:

"1.

The third-party Plaintiff, SUN OIL is not entitled to indemnity from the third-party Defendant RENSHAW, because of monies it paid to DAVID DURBIN.

2.

The injuries received by DAVID DURBIN did not arise out of nor incident to, nor in connection with the agreement by RENSHAW to perform services for SUN OIL or in performance of work or services by RENSHAW for SUN OIL.

3.

DAVID DURBIN's injury did not grow out of any work undertaken by RENSHAW for SUN OIL, but on the other hand grew out of the overturning of the truck that DAVID DURBIN was driving on a road owned by SUN OIL and for which SUN OIL was responsible for its maintenance.

4.

SUN OIL and RENSHAW did not intend by the indemnity agreement given by RENSHAW to protect, defend, indemnify, and hold SUN OIL harmless against any and all liability and damages resulting from injury to RENSHAW's employees regardless of how it arose or whose act allegedly caused it."

Appellant predicates its appeal upon two points of error which complain that the trial court erred (1) in concluding that Sun and Renshaw did not intend the indemnity agreement to protect Sun against the consequences of its own negligence and (2) in refusing to apply the indemnity agreement to the facts of this case. Appellee first responds that appellant is procedurally barred from invoking the indemnity agreement against appellee because appellant has failed to prove facts rendering it liable to plaintiff. Since this issue was not addressed in its original brief, a reply brief was filed by appellant which contends that no judicial determination of Sun's liability to plaintiff was necessary where (1) the indemnitor was notified of the claim, (2) the indemnitor denied any liability thereunder, and (3) subsequently a good faith, reasonable and prudent settlement of the claim was made by the indemnitee.

An indemnitor waives the right to insist upon a judicial determination of the indemnitee's liability by denying any obligation under the indemnity agreement. The indemnitor may not, however, be held liable for a purely voluntary payment by the indemnitee. Mitchell's, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775, 779 (Tex.Sup.1957). The Supreme Court of Texas, in addressing the point raised here by appellee, has said:

"As to the status of the indemnitee in a case wherein a settlement was made with the injured party, After denial of liability on the part of the indemnitor, we said: (quoting Mitchell's, Inc. v. Friedman, supra.)

' . . . Having settled the claim without obtaining a judicial determination of its liability, petitioner (indemnitee) assumed the risk of being able to prove the facts which Might have rendered it liable to the plaintiff as well as the reasonableness of the amount which it paid. It will be necessary, therefore, for petitioner to establish that from its standpoint the settlement was made in good faith and was reasonable and prudent under the circumstances.'

Gulf, Colorado & Santa Fe Railway Company v. McBride, 159 Tex. 442, 322 S.W.2d 492, 495 (Tex.Sup.1958).

In the instant case, however, appellee lacks the proper predicate to present this complaint on appeal. The court below was never afforded an opportunity to rule on this question and no motion for new trial was filed by either party. Rule 324, T.R.C.P., clearly states that " . . . it shall be necessary to file a motion for new trial in order to present a complaint which has not otherwise been ruled upon." Having raised this issue for the first time in its appellate brief, appellee has failed to properly preserve this point and we will not consider it.

The substance of appellant's first point of error asserts that the indemnity agreement between Sun and Renshaw clearly indicates an intention to protect Sun against the consequences of its own negligence. It is a well-settled rule in Texas that in order for an indemnitee to be shielded against the consequences of his own negligence, it is necessary that the obligation be expressed in unequivocal terms. Fireman's Fund Insurance Company v. Commercial Standard Insurance Company, 490 S.W.2d 818, 822 (Tex.1972); Joe Adams & Son v. McCann Construction Company, 475 S.W.2d 721, 723 (Tex.1971); Spence & Howe Construction Company v. Gulf Oil Corporation, 365 S.W.2d 631, 633 (Tex.1963). It is a matter of defining, in terms of physical or legal responsibility, the cause of the injury or damage for which indemnity is promised. It is unnecessary for us to address this question in order to dispose of this case. Therefore we will assume, without deciding, that (1) the indemnity agreement was intended to indemnify Sun against damages or injuries resulting from its own negligence and (2) Sun was liable to David Durbin for negligent maintenance of the access road.

The issue remaining is raised by appellant in its second point of error; whether the...