DDD Energy, Inc. v. Veritas DGC Land, Inc.

60 S.W.3d 880, 154 Oil & Gas Rep. 124, 2001 Tex. App. LEXIS 7214, 2001 WL 1289978
CourtCourt of Appeals of Texas
DecidedOctober 25, 2001
Docket14-99-01176-CV
StatusPublished
Cited by24 cases

This text of 60 S.W.3d 880 (DDD Energy, Inc. v. Veritas DGC Land, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DDD Energy, Inc. v. Veritas DGC Land, Inc., 60 S.W.3d 880, 154 Oil & Gas Rep. 124, 2001 Tex. App. LEXIS 7214, 2001 WL 1289978 (Tex. Ct. App. 2001).

Opinion

*882 CORRECTED OPINION

JOHN S. ANDERSON, Justice.

This is an appeal from a summary judgment in favor of appellee, Veritas DGC Land, Inc. (“Veritas”). Appellant, DDD Energy, Inc.(“DDD”), sued Veritas seeking a declaratory judgment that Veritas is obligated to defend and indemnify DDD, pursuant to a contract between them, from third party claims made against DDD. The judgment below granted judgment for Veritas as to all the third party claims against DDD because the indemnity clause relied on by DDD is not enforceable. We affirm in part and reverse in part.

Background

Michael L. Vickers (“Landowner”) entered into an oil and gas lease agreement with Playa Exploration, Inc. Playa assigned undivided interests in the oil and gas lease to King Ranch Oil and Gas, Inc., TGX Corporation, and DDD. Thereafter, DDD entered into an agreement for geophysical services with Veritas, who was to conduct field geophysical surveys and related services on Vicker’s land. The indemnity provisions in the geophysical services agreement between DDD and Veritas provide in part:

Section V-Operations:
Veritas shall indemnify, defend, ... [DDD] for all claims, damages, causes of actions, and liabilities resulting from Veritas’ failure to conduct seismic operations in an orderly and workmanlike manner....
Section X-Liability Indemnity:
Veritas shall protect, indemnify, defend and save [DDD], ... harmless from and against all claims, ... and causes of actions ... asserted by third parties on account of ... damage to property of such third parties, which ... damage is the result of the negligent act or omission, breach of this Basic Agreement or the Supplemental Agreement, or willful misconduct of Veritas.... Likewise, [DDD] shall protect, indemnify, defend and save Veritas, ... harmless from and against all claims, ... causes of action ... asserted by third parties on account of ... damage to property of such third parties, which ... damage is the result of the negligent act or omission of willful misconduct of [DDD] ...

This agreement provides that Veritas shall indemnify DDD for the negligent acts of Veritas, and DDD shall indemnify Veri-tas for the negligent acts of DDD. It does not provide that Veritas shall indemnify DDD for DDD’s own negligence.

Veritas subontracted Brush Cutters to conduct brush clearing operations on Landowner’s property. After discovering damage to his property, including the destruction of numerous oak and mesquite trees, Landowner filed suit against DDD, in Brooks County for (1) breach of duty to manage and administer the lease, (2) breach of contract, (3) negligence, (4) malicious trespass, (5) negligent misrepresentation, (6) breach of fiduciary duty, (7) gross negligence, and (8) intentional tort. DDD brought suit against Veritas in Harris County seeking a declaratory judgment that Veritas is obligated to defend and indemnify DDD, under the terms of the parties’ agreement, against claims based on damage to Landowner caused by Veri-tas’ negligence. Both parties filed motions for summary judgment. DDD sought partial summary judgment declaring Veritas is required to defend and indemnify DDD from the claims asserted in the Brooks County law suit. Veritas’ motion for summary judgment asserted three bases: DDD’s breach of contract claim does not present a justiciable issue; the indemnity provision relied on by DDD is unenforceable as a matter of law; and *883 Veritas is not liable for damage caused by its subcontractor. The trial court granted Veritas’ motion only on the basis the indemnity clause was unenforceable, and denied the other two grounds brought by Veritas. On appeal, DDD contends the trial court incorrectly held the indemnity clause is unenforceable and asserts three separate arguments: the express negligence rule does not govern this case because only Veritas was negligent; the fair notice requirements are not applicable here because Veritas had actual notice of the indemnity provision; and, even if the express negligence rule is applicable, it does not bar DDD’s request for indemnification as to the non-negligence claims asserted by Landowner against DDD. No appellate issue is brought by DDD regarding its partial motion for summary judgment.

Standard of Review

When reviewing a summary judgment, we follow these well established rules: (1) the movant has the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmov-ant and any doubts resolved in favor of the nonmovant. Am. Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). This court reviews a summary judgment de novo to determine whether a party’s right to prevail is established as a matter of law. Howard v. INA County Mut. Ins. Co., 938 S.W.2d 212, 216 (Tex.App.—Dallas 1996, writ denied). Summary judgment for a defendant is proper only when the defendant negates at least one element of each of the plaintiffs theories of recovery, or pleads and conclusively establishes each element of an affirmative defense. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997).

I.

Express Negligence Doctrine

The only ground upon which the trial court granted summary judgment for Veritas was Veritas’ assertion that the indemnity clause asserted by DDD did not meet the express negligence test. Risk shifting clauses must satisfy two fair notice requirements: the express negligence doctrine and the conspicuousness requirement. Littlefield v. Schaefer, 955 S.W.2d 272, 274 (Tex.1997). Under the express negligence doctrine, a party contracting for indemnity from the consequences of its own negligence must express that intent in specific terms within the four corners of the contract. Fisk Elec. Co. v. Constructors & Assoc., Inc., 888 S.W.2d 813, 814 (Tex.1994). The express negligence test was established by the supreme court to cut through the ambiguity of indemnity provisions, thereby reducing the need for satellite litigation regarding interpretation of indemnity clauses. Id. (citing Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex.1987)). Parties seeking to indemnify themselves for their own negligence must express that intent in specific terms. Id. Indemnity provisions that do not state the intent of the parties within the four corners of the instrument are unenforceable as a matter of law. Id. The express negligence requirement is not an affirmative defense, but a rule of contract interpretation which is determinable as a matter of law. Id.

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Bluebook (online)
60 S.W.3d 880, 154 Oil & Gas Rep. 124, 2001 Tex. App. LEXIS 7214, 2001 WL 1289978, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ddd-energy-inc-v-veritas-dgc-land-inc-texapp-2001.