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BDI, LLC v. Summit Drilling Company, Inc.

United States District Court, N.D. Oklahoma

June 20, 2017

BDI, LLC, Plaintiff,
v.
SUMMIT DRILLING COMPANY, INC., Defendant.

          OPINION AND ORDER

          CLAIRE V. EAGAN, UNITED STATES DISTRICT JUDGE

         Now before the Court is Defendant's Motion for Attorneys' Fees and Costs (Dkt. # 91). Defendant Summit Drilling Company, Inc. (Summit) asks the Court for an order directing plaintiff BDI, LLC (BDI) and/or its counsel to pay Summit's attorney fees and costs incurred in this litigation pursuant to Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, and the Court's inherent power to impose sanctions. BDI responds that defendant has failed to comply with Rule 11's safe harbor provision and its motion is untimely under Rule 54(d). Dkt. # 92. Summit replies that it is not asking for attorney fees pursuant to Rule 54 and, even if it has failed to comply with Rule 11, the Court may grant its motion under § 1927 or its inherent power. Dkt. # 95.

         I.

         Summit is a drilling company that BDI hired in 2014 to drill an oil well in Richardson County, Nebraska. Dkt. # 55-1, at 1. The parties entered into a standard drilling contract created by the International Association of Drilling Contractors (Drilling Bid Proposal and Footage Drilling Contract - U.S. # 14-2114, revised 2003). See id. The contract provides that:

When operating on a Day work Basis, [Summit]... assumes only the obligations and liabilities stated herein as being applicable during Daywork operations. Except for such obligations and liabilities specifically assumed by [Summit], [BDI] shall be solely responsible and assumes liability for all consequences of operations by both parties while on a Daywork Basis, including results and all other risks or liabilities incurred in or incident to such operations.

Dkt. # 55-1, at 1 (emphasis omitted). The contract also specifies that "[i]n the event the hole should be lost or damaged, while [Summit] is working on a Daywork Basis, [BDI] shall be solely responsible for such damage to or loss of the hole . ..." Id. at 4. Additionally, the contract states that:

it is the intent of the parties hereto that all releases, indemnity obligations and/or liabilities assumed by such parties under terms of this Contract... be without limit and without regard to the cause or causes thereof, including but not limited to ... any theory of tort, breach of contract, fault, the negligence of any degree or character, ... or any other theory of legal liability.

Id. at 5.

         Summit drilled the well to the depth set out in the contract, but BDI determined that it was likely unproductive and asked defendant to plug the well. Dkt. # 55, at 5; Dkt. # 76, at 5. Approximately a year later, BDI hired a different drilling company to re-open the well by performing a washdown, a procedure for opening a plugged well by drilling through the cement plugs. Dkt. # 55, at 2 & n. 1. After drilling through the upper cement plug, the drilling company hit an object that prevented further drilling. Dkt. # 55-2, at 33. After hitting the object, BDI president Mark Crawford sent a text message to Summit employee Scott Miller informing him of BDFs attempted washdown of the well and asking if Miller knew anything about a metal object left in the well. Id. Miller responded:

         I understand. I will ask. Shouldn't be anything down that hole other than cement!

I've talked to the guys that are still with us and no one knows of anything dropped down hole. Unfortunately that doesn't mean much at this point. If you do identify the metal, I'd like to know. Especially if it points to us. That's not the reputation I want to have.

Id. at 33-34. After the text message conversation, BDI unsuccessfully attempted to remove the object and complete the washdown. Dkt. # 76-2, at 22-23. The object rendered the well unusable, and BDI later drilled a new hole in the area to replace the inoperative well. Dkt. # 56, at 4.

         BDI and Crawford filed this suit against Summit, alleging that Summit left a piece of drilling pipe in the well and asserting claims for breach of contract, negligence, and fraud. Dkt. # 2-2. Summit moved to dismiss Crawford as a party, arguing that he was not the real party in interest. Dkt. # 7. BDI and Crawford did not oppose the motion and agreed to the dismissal of Crawford from the case. Dkt. # 11. After conducting discovery, Summit filed a motion for summary judgment (Dkt. # 55), arguing that BDI's breach of contract and negligence claims were barred by the parties' contract and that BDI had failed to provide sufficient evidence to support its fraud claim. BDI responded that it assumed only reasonably foreseeable risks in the contract, that the contract does not restrain consequential damages in this case, and that questions of fact remained as to Summit's alleged fraudulent misrepresentation. Dkt. # 76, at 10-15. Summit replied that BDI's response was untimely, the contract was valid and enforceable, and no factual disputes existed as to the fraud claim. Dkt. # 85. The same day that Summit filed its motion for summary judgment, BDI filed a partial motion for summary judgment (Dkt. # 56), arguing that Summit presented no evidence showing that the object in the well was not metal and that BDI had satisfied its burden under the doctrine of res ipsa loquitur. Summit responded that res ipsa could not be applied because the well was not in Summit's exclusive control and that it had presented evidence that the object in the well could have originated from at least three other sources. Dkt. # 71, at 17-23. Summit also argued that BDI's motion should be denied because BDI assumed the risk for damage to the well under the contract. Id. at 16, 23-24. BDI did not file a reply in support of its motion.

         The Court entered an opinion and order (Dkt. # 86) granting Summit's motion for summary judgment on all claims and finding as moot BDI's partial motion for summary judgment and three motions in limine. The Court found that BDI's breach of contract and negligence claims were barred by the contract. Under the contract, Summit was working on a daywork basis when it was plugging the well, and BDI unambiguously assumed all liability for the actions of both parties while Summit worked on a daywork basis unless stated otherwise in the contract. Dkt. # 86, at 5. The Court found no contract provision where Summit assumed liability for its work plugging the well. Id. at 5-6. Further, BDI specifically assumed sole responsibility for any damage to or loss of the hole while Summit worked on a daywork basis, including the cost of removing any debris. Id. at 6. The contract also provided that any release or assumption of liability was to be without limit and included any theory of tort or breach of contract. Id. The Court rejected plaintiff's assumption of risk defense because it was inapplicable to this case and the Kansas Supreme Court[1] explicitly abandoned the doctrine in 2013. Id. at 7 n.2. Therefore, based on the contract, the Court granted ...


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