COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
NO. 02-15-00297-CV
TETRA TECH, INC. APPELLANT
V.
NSAA INVESTMENTS GROUP, APPELLEE LLC
----------
FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY TRIAL COURT NO. 096-275702-14
MEMORANDUM OPINION1
I. Introduction
In a single issue, Appellant Tetra Tech, Inc. appeals the trial court’s
summary judgment for Appellee NSAA Investments Group, LLC in their dispute
1 See Tex. R. App. P. 47.4. over the interpretation of indemnity and hold-harmless language in a commercial
contract. We affirm.
II. Factual and Procedural Background
NSAA entered a construction loan agreement with One World Bank. To
facilitate the project’s financing, NSAA, Tetra Tech, One World, and the general
contractor entered into a “Funds Control & Inspection Services Agreement w/
Performance Guarantee” (FCA) for the project. The FCA appointed Tetra Tech as
One World’s agent, making it responsible for disbursement of construction loan
funds to NSAA and its contractors. The FCA also contained an indemnity clause,
which we reproduce in full in the analysis of the issue.
NSAA sued One World and then sought to subpoena Tetra Tech’s records
and to depose Angela Halverson, a Tetra Tech employee and the FCA’s
disbursement agent. Invoking the indemnity agreement, Tetra Tech sought to
recuperate its attorney’s fees, expenses, and costs incurred in responding to the
subpoena, including the expenses associated with locating and producing
approximately 300 pages of documents. Additionally, Tetra Tech sought
reimbursement for attorney’s fees, expenses, and costs related to preparing for
and presenting Halverson for deposition. One World paid its one-half of the
amount demanded by Tetra Tech, but NSAA refused, claiming that the indemnity
agreement did not require NSAA to reimburse for attorney’s fees, expenses, and
costs incurred in responding to subpoenas or deposition notices.
2 When NSAA declined to reimburse Tetra Tech, Tetra Tech sued NSAA for
breach of contract. On cross-motions for summary judgment, the trial court
granted summary judgment to NSAA and denied Tetra Tech’s motion. 2 This
appeal followed.
III. Discussion
In its single issue, Tetra Tech argues that the indemnity provision in the
commercial contract between Tetra Tech and NSAA requires NSAA to indemnify
Tetra Tech for attorney’s fees, expenses, and costs incurred by Tetra Tech in
responding to subpoenas from NSAA seeking documents and a notice for an out-
of-state deposition related to NSAA’s lawsuit against One World.
A. Standard of Review
In a summary judgment case such as this, the issue on appeal is whether
the movant met the summary judgment burden by establishing that no genuine
issue of material fact exists and that the movant is entitled to judgment as a matter
of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 848 (Tex. 2009). The summary judgment will be
affirmed only if the record establishes that the movant has conclusively proved all
essential elements of the movant’s cause of action or defense as a matter of law.
City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). We
2 Tetra Tech attached the wrong contract to its motion for summary judgment, but NSAA attached the correct one to its response and cross-motion for summary judgment.
3 review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d
860, 862 (Tex. 2010).
Questions of law are appropriate matters for summary judgment. Rhone-
Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999). Summary judgment is
proper in cases such as this where the parties do not dispute the relevant facts.
Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000); see G & H Towing Co. v.
Magee, 347 S.W.3d 293, 296–97 (Tex. 2011) (“The purpose of a summary
judgment is to ‘provide a method of summarily terminating a case when it clearly
appears that only a question of law is involved and that there is no genuine issue
of [material] fact.’”) (quoting Gaines v. Hamman, 358 S.W.2d 557, 563 (Tex.
1962)).
When both parties move for summary judgment and the trial court grants
one motion and denies the other, the reviewing court should review both parties’
summary judgment evidence and determine all questions presented. Mann
Frankfort, 289 S.W.3d at 848. The reviewing court should render the judgment
that the trial court should have rendered. See Myrad Props., Inc. v. LaSalle Bank
Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex. 2009); Mann Frankfort, 289 S.W.3d at 848.
This case turns on a purely legal issue—the interpretation of a provision in
the parties’ contract—a provision that Tetra Tech asserts is unambiguous.3
3 NSAA did not file an appellee’s brief or otherwise provide argument on appeal, but in NSAA’s summary judgment response and cross-motion for summary judgment, it also took the position that the provision is unambiguous.
4 B. Indemnity Clause
Indemnity provisions are construed under the normal rules of contract
construction, with the primary goal of determining the intent of the parties. Assoc.
Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 (Tex. 1998). In that
endeavor, the objective, not subjective, intent of the parties controls, and the
instrument alone is generally deemed to express that intent. Sun Oil Co. v.
Madeley, 626 S.W.2d 726, 731 (Tex. 1981). Because indemnity provisions are
construed under the normal rules of contract construction, if courts can give an
indemnity provision a definite or certain legal meaning, it is unambiguous and can
be construed as a matter of law. See Classic C Homes, Inc. v. Homeowners Mgmt.
Enters., Inc., No. 02-14-00243-CV, 2015 WL 5461517, at *3 (Tex. App.—Fort
Worth Sept. 17, 2015, no pet.) (mem. op.) (“An indemnity agreement is
unambiguous if it can be given a definite or certain legal meaning, and we will
construe an unambiguous indemnity agreement as a matter of law.”); see also
Assoc. Indem. Corp., 964 S.W.2d at 284.
Further, “We construe contracts ‘from a utilitarian standpoint bearing in mind
the particular business activity sought to be served’ and ‘will avoid when possible
and proper a construction which is unreasonable, inequitable, and oppressive.’”
Frost Nat’l Bank v. L & F Distrib., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting
Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).
The indemnity clause at issue provides as follows:
5 21. Indemnity: To the fullest extent permitted by law, lender, owner and contractor shall fully defend, indemnify and hold harmless Tetra Tech, Inc. and its officers, employees, agents, representatives, successors and assigns, from and against any and all claims, damages, losses, liabilities, suits, causes of action of whatever nature or character, whether known or unknown, at law or in equity, whether arising by statute or common law, and all legal fees in defending same, which may hereafter be asserted by any person or entity, penalties, expenses, and costs arising out of, related to, or in consequence of, directly or indirectly, (i) bodily injuries, including but not limited to death, at any time resulting there from and sustained by any person or persons, (ii) damage to property, including but not limited to loss of use thereof, and/or (iii) any other damage, injury or loss, arising out of, related to, or in consequence of, the performance of any work by Tetra Tech, Inc., whether or not the injury or damage is caused or alleged to be caused, in whole or in part, by any wrongdoing, strict liability, breach of contract or warranty, or negligence of Tetra Tech, Inc. or its officers, employees, agents, representatives, successors and assigns. [Emphasis added.]4
Tetra Tech contends that this clause provides indemnity for attorney’s fees,
expenses, and costs associated with responding to the subpoena for its records
and preparing for and attending the deposition of its employee, both related to the
NSAA-One World lawsuit. With regard to Tetra Tech’s attorney’s fees, we
disagree.
1. Attorney’s Fees
The indemnity clause provides indemnity for “any and all claims, damages,
losses, liabilities, suits, causes of action of whatever nature or character,
whether known or unknown, at law or in equity, whether arising by statute or
4 The original version, which is written entirely in capitalized letters, has been modified here for ease in reading.
6 common law, and all legal fees in defending same, which may hereafter be
asserted by any person or entity.” Assuming the term “all legal fees in defending
same” relates to “claims, damages, losses, liabilities, suits, [and] causes of action
of whatever nature or character,” and not just “causes of action,” as NSAA argued
before the trial court, Tetra Tech’s attorney’s fees would fall within the indemnity
agreement only if NSAA’s subpoena and deposition notice could fairly be
characterized as a claim, damage, loss, liability, suit, or cause of action. And
further assuming that the subpoena and deposition notice could be fairly
characterized as a claim, damage, loss, liability, suit, or cause of action, the
attorney’s fees would be subject to indemnification only to the extent that they were
incurred in “defending” against such claim, damage, loss, liability, suit, or cause of
action.
Citing Black’s Law Dictionary, Tetra Tech argues that the subpoena and
deposition notice constitute a “claim” because they are a “demand for . . . a legal
remedy to which one asserts a right.” Even if we were to accept this partially-
quoted definition as the legal definition of “claim” in this context, the subpoenas
and deposition in this case do not meet that definition. In the broad context,
subpoenas and depositions are not legal remedies. Rather, they are simply
discovery tools used to support an assertion of the right to a legal remedy. See
Tex. R. Civ. P. 176.1 (setting out subpoena form), 176.2 (stating that a subpoena
must command the person to whom it is directed to either attend and give
testimony at a deposition, hearing, or trial and/or produce and permit inspection
7 and copying of designated documents or tangible things in the person’s
possession, custody, or control), 176.3(b) (stating that a subpoena may not be
used for discovery to an extent, in a manner, or at a time other than as provided
by the rules governing discovery), 192.1(f) (oral or written depositions are
permissible forms of discovery), 199.2 (setting out the procedure for noticing an
oral deposition), 199.3 (stating that a party “may compel the witness to attend the
oral deposition by serving the witness with a subpoena under Rule 176”); see also
Paul D. Carrington, Moths to the Light: The Dubious Attractions of American Law,
46 U. Kan. L. Rev. 673, 682–83 (1998) (explaining that “[t]he need to prepare for
trial led to the empowerment of lawyers to conduct investigations using diverse
tools, some of which had origins in early practices of the English Court of
Chancery,” such as what are now subpoenas compelling testimony and production
of documents and testimony in the form of depositions). That is, if someone “has
a legal claim, he may use discovery to aid him in pressing that claim.” Chris
Martiniak, The Lawyer’s Preparations § 7.01[B][4], How to Take and Defend
Depositions (Aspen Publishers, Inc. 2007) (emphasis added).
And, as NSAA pointed out in its response and cross-motion for summary
judgment, even if one narrows the context to procedural remedies, a subpoena or
deposition notice is not an assertion of a right to a remedy. Compare Tex. R. Civ.
P. 176 and 199, with Tex. R. Civ. P. 22 (“A civil suit in the district or county court
shall be commenced by a petition filed in the office of the clerk.”) and 47 (setting
out requirements for original pleading setting forth a claim for relief). Rather, they
8 constitute the procedural remedy itself, used to obtain documents and testimony,
to support a claim.5
But if we are to accept the Black’s Law Dictionary definition that Tetra Tech
suggests,6 we will use the entire definition of the term—“A demand for money,
property, or a legal remedy to which one asserts a right; esp., the part of a
complaint in a civil action specifying what relief the plaintiff asks for. — Also termed
claim for relief (1808).” Claim, Black’s Law Dictionary (10th ed. 2014) (emphasis
added). In this definition, the term “legal remedy” is the third in a series of specific
5 In its response and motion NSAA argued to the trial court that as “a writ or order commanding a specific act,” a subpoena is the remedy itself. NSAA stated,
Parties do not demand a subpoena; counsel, in the capacity of “an officer of the court,” issue subpoenas “in the name of ‘The State of Texas’” (or other state), commanding production of documents, appearance at deposition, and so on. See Tex. R. Civ. P. 176. Just as a final judgment is fundamentally different from a petition, as an order is different from a motion, a subpoena is a different class of instrument from a claim. 6 The definition urged by Tetra Tech is only one of four—the third enumerated—of general definitions that Black’s Law Dictionary provides for the word “claim.” See Claim, Black’s Law Dictionary (10th ed. 2014). Black’s also defines a “claim” as
1. A statement that something yet to be proved is true . 2. The assertion of an existing right; any right to payment or to an equitable remedy, even if contingent or provisional . . . 4. An interest or remedy recognized at law; the means by which a person can obtain a privilege, possession, or enjoyment of a right or thing; CAUSE OF ACTION (1) .
Id. 9 words that describe a type of ultimate relief that a plaintiff may seek in a civil
lawsuit. Under the ejusdem generis rule of construction, its meaning is restricted
by the two preceding terms—money and property. Hilco Elec. Coop., Inc. v.
Midlothian Butane Gas Co., 111 S.W.3d 75, 81 (Tex. 2003) (stating that “when
words of a general nature are used in connection with the designation of particular
objects or classes of persons or things, the meaning of the general words will be
restricted to the particular designation” (citing Cleveland v. United States, 329 U.S.
14, 18, 67 S. Ct. 13, 15 (1946) (explaining that in applying the ejusdem generis
rule “the general words are confined to the class and may not be used to enlarge
it”))).7
The terms “money” and “property” describe two types of final relief that are
typically sought in a civil lawsuit—a claim for money damages or a claim for
possession of or title to property. See generally Tex. R. Civ. P. 47(c)(1)–(5)
(requiring that pleading setting forth a claim for relief set out the amount of
monetary relief sought and whether non-monetary relief is requested), 783–809
(setting out rules for trespass to try title cases). Therefore, under the ejusdem
generis rule, the phrase “or a legal remedy” must be limited to other types of
Black’s Law Dictionary’s definition of ejusdem generis includes the 7
following example of how the doctrine works: “[I]n the phrase horses, cattle, sheep, pigs, goats, or any other farm animals, the general language or any other farm animals—despite its seeming breadth—would probably be held to include only four-legged, hoofed mammals typically found on farms, and thus would exclude chickens.” Ejusdem generis, Black’s Law Dictionary (10th ed. 2014).
10 ultimate relief sought at the conclusion of a lawsuit, such as injunctive or
declaratory relief.8 See generally Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001–
.011 (West 2015) (declaratory relief), §§ 65.001–.045 (West 2008) (injunctions);
Tex. R. Civ. P. 680–693a (injunctions). Because a subpoena or a deposition is not
the type of relief to which a prevailing litigant would be entitled at the conclusion of
the lawsuit, the rules of construction preclude us from including subpoenas and
depositions within the definition urged by Tetra Tech. See Hilco Elec. Coop., 111
S.W.3d at 81.
Furthermore, if the word “subpoena” or “deposition” is substituted for the
word “claim” in the indemnification clause, consistent with Tetra Tech’s argument
that “claim” means “subpoena” or “deposition,” the indemnity agreement would
read as follows:
[NSAA] shall fully defend, indemnify and hold harmless Tetra Tech . . . from and against . . . any and all subpoenas [or depositions] . . . and all legal fees in defending same.
Such a reading would run afoul of the principle that contract interpretation should
be a utilitarian endeavor that does not lead to absurd results. Clark v. Cotten
Schmidt, L.L.P., 327 S.W.3d 765, 772 (Tex. App.—Fort Worth 2010, no pet.)
(stating that “[w]e construe contracts from a utilitarian standpoint bearing in mind
8 This interpretation is consistent with the remainder of the Black’s Law dictionary definition upon which Tetra Tech relies, “esp. the part of a complaint in a civil action specifying what relief the plaintiff asks for.” Claim, Black’s Law Dictionary (10th ed. 2014).
11 the particular business activity sought to be served” (quoting Frost Nat’l Bank, 165
S.W.3d at 312 (internal quotations omitted)); Pavecon, Inc. v. R-Com, Inc., 159
S.W.3d 219, 222 (Tex. App.—Fort Worth 2005, no pet.) (citing Reilly v. Rangers
Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987); Lane v. Travelers Indem. Co., 391
S.W.2d 399, 402 (Tex. 1965)).
Examining the business activity involved in the FCA, at its core, the
agreement specifically defines the scope of Tetra Tech’s work as the physical
inspection of the construction of a movie theater, with related reporting obligations.
As the supreme court has guided us, the indemnity agreement should be read with
this particular business activity in mind. See Frost Nat’l Bank, 165 S.W.3d at 312.
Reading the indemnity agreement in the context of the entire FCA, it serves to
indemnify Tetra Tech for its legal fees spent in defending against an injured person
or entity’s claim for damages9 that arise out of Tetra Tech’s performance of work
under the agreement. As pointed out by NSAA to the trial court below, for example,
if Tetra Tech overlooked a construction defect that subsequently injured someone,
resulting in that person’s suing Tetra Tech for personal injuries or lost earnings,
the agreement would indemnify Tetra Tech for the legal fees spent in defending
against that action. Or if Tetra Tech made a mistake in authorizing the
9 This would include bodily injuries under subsection (i), property damages under subsection (ii), or any other damage, injury, or loss under subsection (iii).
12 disbursement of construction loan funds, it would be indemnified for its legal fees
in defending against any suit for money damages that followed.
The construction that Tetra Tech urges does not conform to the facts of this
case. Witness subpoenas and deposition notices are not matters that are
generally defended against, but to the extent that in a given situation they might,10
those facts are simply not present here. Tetra Tech did not seek attorney’s fees
for filing defensive pleadings to avoid the subpoena or deposition. To the contrary,
Tetra Tech seeks fees for complying with the subpoena and participating in the
deposition.
Although in attorney Bruce M. Flowers’s affidavit—which was attached to
Tetra Tech’s motion for summary judgment—he states that Tetra Tech “has
engaged [the law firm] in regard to the [sic] defending against [the] deposition and
documents subpoena,” his subsequent recitation of the work actually performed
demonstrates that the legal activities related to the subpoena and deposition were
acts of compliance, not defiance.11 [Emphasis added.] Because the summary
10 For example, the filing of a motion to quash or motion for protective order might be construed as defending against a subpoena or deposition notice. 11 The services Flowers described that related to the subpoena and deposition included: responding to the document and deposition subpoena; reviewing pleadings, motions, and other documents filed in the NSAA-One World lawsuit, including documents that Tetra Tech produced; corresponding with NSAA’s and One World’s attorneys; conducting legal research and developing strategy; and “coordinating, preparing for, attending and subsequently reviewing the deposition of Tetra Tech employee, Angela Halverson[,] which occurred in Seattle[,] Washington.” All of the other legal activities Flowers enumerated were 13 judgment evidence does not show that Tetra Tech’s attorneys spent any time
“defending” against the subpoena or the deposition, the substitution of the words
“subpoena” or “deposition” for the word “claim” in this agreement is not consistent
with the facts of this case.
However, the same analysis does not apply with regard to indemnification
for expenses and costs, because the provision for recovery of expenses and costs
is not limited to those incurred in defense of a claim.
2. Expenses and Costs
As to expenses and costs, the indemnity agreement provides that NSAA
. . . shall fully defend, indemnify and hold harmless Tetra Tech, Inc. and its officers, employees, agents, representatives, successors and assigns, from and against any and all . . . penalties, expenses, and costs arising out of, related to, or in consequence of, directly or indirectly . . . any other damage, injury or loss, arising out of, related to, or in consequence of, the performance of any work by Tetra Tech, Inc. [Emphasis added.]
Tetra Tech argues that it is entitled to recovery of “related expenses and costs” to
“protect its legal rights, and those of its employee being deposed, in responding to
the subpoenas.”
Assuming, without holding, that Tetra Tech is entitled to indemnification for
expenses and costs, Tetra Tech offered no evidence as to the amount of out-of-
pocket expenses or costs related to either the subpoena or the deposition. The
not in defense of any claim brought against Tetra Tech, but rather were in furtherance of the lawsuit that Tetra Tech brought against NSAA.
14 Flowers affidavit provides the only summary judgment proof of how much money
Tetra Tech spent in response to the subpoena and notice of deposition served on
it in this litigation. Despite Tetra Tech’s assertion that these expenses and costs
“are set forth in the attached affidavit of Bruce M. Flowers,” they are not. The
Flowers affidavit provides only proof of attorney’s fees incurred and makes no
mention incidental expenses or costs. And, while it might be assumed that
expenses and costs were incurred by Tetra Tech’s attorney in travelling to
Washington to attend the deposition, the affidavit does not address these
expenses in any manner. The record is simply silent as to what those expenses
amounted to, assuming that any such expenses were actually incurred.
For all of these reasons, the trial court properly denied Tetra Tech’s motion
for summary judgment and granted NSAA’s cross-motion for summary judgment.
We overrule Tetra Tech’s sole issue.
IV. Conclusion
Having overruled Tetra Tech’s sole issue, we affirm the trial court’s
judgment.
/s/ Bonnie Sudderth BONNIE SUDDERTH JUSTICE
PANEL: GARDNER, GABRIEL, and SUDDERTH, JJ.
DELIVERED: June 16, 2016