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Williams v. Inflection Energy, LLC

United States District Court, M.D. Pennsylvania

July 16, 2019

MICHAEL WILLIAMS, Plaintiff,
v.
INFLECTION ENERGY, LLC, U.S. WELL SERVICES, LLC, AND U.S. WELL SERVICES, INC., Defendants and Third-Party Plaintiff,
v.
HYPERION SAFETY SERVICES, LLC, Third-Party Defendant.

          MEMORANDUM OPINION

          MATTHEW W. BRANN UNITED STATES DISTRICT JUDGE.

         U.S. Well Services, LLC (“Well Services”) has moved for partial summary judgment on its third-party complaint against Hyperion Safety Services, LLC (“Hyperion”). For the following reasons, that motion will be granted in part.

         I. BACKGROUND

         In considering issues germane to Well Services' present motion, the relevant material facts are not in dispute. Well Services and Hyperion entered into a master services agreement (“MSA”) under which Hyperon agreed to indemnify Well Services for injuries incurred by Hyperion employees on Well Services' wells. Hyperion employee and Plaintiff Michael Williams injured himself on such a well in Lycoming County, Pennsylvania, and alleged various personal injury claims against Well Services. Well Services filed a third-party complaint against Hyperion seeking, inter alia, indemnification for Plaintiff Williams's injuries pursuant to the MSA.[1] Hyperion answered and denied that it had obligation to indemnity Well Services.[2] Well Services presently moves for partial summary judgment against Hyperion, asking this Court to find that Hyperion is contractually obligated to defend, indemnify, and hold Well Services harmless against Plaintiff Williams's claims.[3] Hyperion and Plaintiff Williams oppose Well Services' motion.[4]

         II. DISCUSSION

         A. Standard of Review

         Summary judgment is granted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[5] A dispute is “genuine if a reasonable trier-of-fact could find in favor of the non-movant, ” and “material if it could affect the outcome of the case.”[6] To defeat a motion for summary judgment, then, the nonmoving party must point to evidence in the record that would allow a jury to rule in that party's favor.[7] When deciding whether to grant summary judgment, a court should draw all reasonable inferences in favor of the non-moving party.[8]

         B. The MSA Requires Hyperion to Indemnify Well Services and Is Not Voided by the Texas Oilfield Anti-Indemnity Act.

         At issue is whether the MSA contractually obligates Hyperion to defend and indemnify Well Services against Plaintiff Williams's claims.[9] Hyperion argues that the MSA's indemnification provisions have been voided by the Texas Oilfield Anti-Indemnity Act (“TOAIA”).[10] Well Services, however, contends that the parties' obligations fall within an exception to TOAIA.[11] This Court agrees with Well Services.

         TOAIA generally renders void as against public policy certain agreements in the oil, gas, and mineral exploration industry “that provide for indemnification of a negligent indemnitee.”[12] TOAIA, however, does not void mutual indemnity obligations supported by liability insurance.[13] Specifically, § 127.005(b) validates a “mutual indemnity obligation, [if] the indemnity obligation is limited to the extent of the coverage and dollar limits of insurance or qualified self-insurance each party as indemnitor has agreed to provide in equal amounts to the other party as indemnitee.”[14] In Ken Petroleum Corp. v Questor Drilling Corp., [15] the Texas Supreme Court interpreted § 127.005(b) to mean that “mutual indemnity obligations can be valid … (1) even if the parties agree to provide liability insurance in differing amounts; (2) the indemnity obligations are enforceable to the coverage and dollar limits that apply equally to both parties; and (3) the indemnity agreement need not specify the amount of liability insurance.”[16]

         Here, the MSA's mutual indemnity obligation falls within the § 127.005(b) exception. The MSA creates indemnity obligations that are mutual-Hyperion must indemnify Well Services and Well Services must indemnify Hyperion.[17]Both Hyperion and Well Services have supported their indemnity obligations by purchasing insurance.[18] To the extent the MSA does not identify how much insurance each party must obtain, or otherwise require Hyperion and Well Services to purchase insurance in equal amounts, [19] any such omissions, per Ken Petroleum, would not invalidate the mutual indemnity obligations established by the MSA.[20]Rather, Ken Petroleum renders those indemnity obligations enforceable under § 127.005(b), limited to the amount of insurance that is equally provided.[21]

         Hyperion argues that the indemnity obligations within the MSA are void because they are not limited by the amount of insurance each party obtained.[22] But Texas courts have concluded that analogous language providing indemnity “without limit” does not invalidate an indemnification obligation in an MSA.[23] Rather, courts have held those contracts to be enforceable “up to the dollar limits that apply equally to both parties.”[24]

         In sum, because the MSA's mutual indemnification obligations fall within the § 127.005(b) exception to TOAIA, those obligations are valid and enforceable as a matter of law. Because the MSA obligates Hyperion to “release, defend and indemnify [Well Services] from and against all Losses arising in connection herewith in favor of any member of Contractor Group on account of bodily injury, death, or damage to property, regardless of fault, ”[25] Hyperion is contractually obligated to release, defend, and indemnify Well Services against Plaintiff Williams's claims “up to the dollar limits that apply equally to both parties.”[26]

         III. ...


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