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American Energy -- Permian Basin, LLC v. ETS Oilfield Services, LP

Court of Appeals of Oklahoma, Division IV

April 23, 2018

ETS OILFIELD SERVICES, LP, Defendant/Appellant.

          Mandate Issued: 05/24/2018


          E. Edd Pritchett, Jr., David L. Kearney, DURBIN, LARIMORE & BIALICK, Oklahoma City, Oklahoma, for Plaintiff/Appellee

          Drew A. Lagow, Nathaniel T. Smith, HOLDEN & MONTEJANO, Tulsa, Oklahoma, for Defendant/Appellant


         ¶1 This case stems from an accident that occurred at an oil well in Texas. ETS Oilfield Services, LP (ETS) appeals from the trial court's order granting summary judgment in favor of American Energy -- Permian Basin, LLC (AEP). ETS is a contractor for AEP. The dispositive issue on appeal is whether the parties intended in their written agreement for ETS to indemnify AEP from AEP's separately contracted duty to indemnify a third-party contractor sued by an ETS employee. We conclude that although the agreement between AEP and ETS contains general language susceptible to a broad interpretation, it lacks the unequivocally clear language necessary under Oklahoma law to make ETS responsible for indemnifying AEP from AEP's contractual duty to indemnify the third-party contractor. Consequently, we reverse and remand this case to the trial court with instructions to enter summary judgment in favor of ETS.


         ¶2 The present action stems from the filing of a lawsuit in the District Court of Regan County, Texas, by Joshua McBride -- an employee of Eagle Testing Services LP (Eagle) -- against C&J Well Services, Inc. (C&J). [1] McBride alleges in his petition in the underlying case that while working as "an employee for Eagle" he was "called to a location to do repair work on a work over rig" in Texas. [2] McBride alleges he

was sitting on the edge of the cellar, holding a rope to stabilize some equipment.... Suddenly, and without warning, a member of the [C&J] crew, who was working on the floor above, dropped a heavy pipe wrench, which fell, striking [McBride] on the top of his hardhat, jolting his spine[.]

         ¶3 Pursuant to indemnification provisions contained in an agreement between AEP and C&J, C&J tendered defense of the Texas lawsuit to AEP. It is undisputed AEP "accepted tender of the defense of [C&J] in the underlying suit" pursuant to the "separate [agreement] between AEP and [C&J] that provides the basis for AEP's duty to indemnify and defend [C&J] in the underlying [Texas] lawsuit."

         ¶4 A separate agreement also exists between AEP and ETS which also contains indemnification provisions. The evidentiary materials in the record on appeal indicate that ETS and C&J are both contractors for AEP. AEP's written agreements with ETS and C&J, both of which are found in the record on appeal, each contain (in addition to indemnification provisions and various other provisions) a provision stating that ETS and C&J "shall be deemed to be an independent Contractor[.]"

         ¶5 After accepting tender of the defense of C&J in the underlying suit, AEP, in a May 2016 letter to ETS, made "demand... upon [ETS] for defense and indemnification in connection with the claims and allegations made against [C&J]" in the Texas lawsuit. Upon ETS refusing to accept this demand, AEP filed the present action in the District Court of Oklahoma County seeking a declaratory judgment on its demand for indemnification -- which ETS describes as a demand for "pass-through" indemnity. The parties have filed competing motions for summary judgment.

         ¶6 In its order, the trial court granted summary judgment in favor of AEP. The order states that the trial court "finds that the language of the indemnity agreement between the parties is clear and explicit and requires [ETS] to indemnify [AEP] from and against any expenses, costs or liabilities it has incurred and will incur, of every kind and character without limit arising out of the lawsuit" filed by McBride against C&J.

         ¶7 From this order, ETS appeals.


¶8 Summary judgment is proper only if it appears to the court that there is no substantial controversy as to the material facts and that one of the parties is entitled to judgment as a matter of law. Only when the evidentiary materials eliminate all factual disputes relative to a question of law is summary judgment appropriate on that issue. The trial court's ruling on the legal issue is reviewed de novo as a question of law. However, an appellate court will reverse the grant of summary judgment if the materials submitted to the trial court indicate a substantial controversy exists as to any material fact.

Plano Petroleum, LLC v. GHK Exploration, L.P., 2011 OK 18, ¶ 6, 250 P.3d 328 (citations omitted) (internal quotation marks omitted). "When this Court reviews the trial court's grant of summary judgment, all inferences and conclusions drawn from the evidence must be viewed in the light most favorable to the party opposing the motion." Geyer Bros. Equip. Co. v. Standard Res., ...

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