Preview
Filed: 6/5/2019 4:39 PM
JOHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 34142185
By: Shailja Dixit
6/5/2019 4:40 PM
CAUSE NO: 17-CV-1242
BLANCHARD REFINING COMPANY § IN THE DISTRICT COURT OF
LLC and MARATHON PETROLEUM §
COMPANY LP §
§
Plaintiffs §
§ GALVESTON COUNTY
v. §
§
INDUSTRIAL SPECIALISTS, LLC §
§
§
Defendant. § 212TH JUDICIAL DISTRICT
DEFENDANT INDUSTRIAL SPECIALISTS, LLC’S
REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT
TO THE HONORABLE COURT:
Defendant Industrial Specialists, LLC (“ISI”) files this Reply in Support of its Motion for
Summary Judgment (“Motion”) on Plaintiffs Blanchard Refining Company LLC’s and Marathon
Petroleum Company LLC’s (collectively “Marathon”) claims for declaratory judgment and breach
of the Major Service Contract between Marathon and ISI dated March 14, 2013 (“Contract”). ISI
respectfully requests that this Court grant its motion pursuant to Texas Rule of Civil Procedure
166a, and in support thereof, would show the following:
I. INTRODUCTION
Marathon’s Response (“Response”) attempts to ignore two core principles established by
the Texas Supreme Court: 1) a party cannot settle more than its proportionate share of a common
liability, so when a party settles a claim, that is all the settlement covers; and 2) a party that does
settle its proportionate liability cannot recover indemnity for such liability without meeting the
express negligence test. Instead, Marathon attempts to avoid any discussion of these principles of
black letter law by arguing that ISI’s position creates a slippery slope towards outlawing indemnity
for settled claims. To the contrary, however, parties in Texas have and will continue to pursue
indemnity claims for settlements under the very same rules that bar Marathon’s claim in the instant
case. In fact, the existence of the legislative regime preserving contractual indemnity claims makes
the absence of authority blessing what Marathon is attempting even more striking. Marathon
cannot settle liability for its own fault in the Underlying Lawsuits and then bring suit seeking
indemnity for more than it could ever have recovered in the Underlying Lawsuits. The Response’s
laser-focus on overarching policy concerns and unrelated motions1 is understandable in light of
the fact that it cites no Texas authority holding that: 1) a party can settle more than its
proportionate share of a common liability; or 2) that an indemnitee attempting to enforce an
agreement with an exception for its own negligence can settle the underlying claims and then seek
an allocation of fault in a different lawsuit without complying with Chapter 33 of the Civil Practice
and Remedies Code. The absence of such authority is fatal to Marathon’s claims when applied to
the plain language of the indemnity provision contained in Section 13.1 of the Contract.
II. ARGUMENT AND AUTHORITIES
A. ISI’s position does not prohibit parties from seeking indemnity for settled
claims—only unprecedented requests for subsequent allocations of responsibility.
The central tenet of the Response is that ISI’s position on the applicability of both Jinkins
and its progeny and Section 33.013 of the Civil Practice and Remedies Code (regarding joint and
several liability) to the instant case cannot be correct, because if they were, indemnitees in Texas
1
Marathon’s recitation of the case’s procedural history misstates the basis for ISI’s Motion to Dismiss and
conveniently omits the fact that its own Motion for Partial Summary Judgment—in which
Marathon advocated the exact same construction of Section 13.1 as in the Response—was also
denied by the Court. The Motion to Dismiss focused exclusively on the express negligence
doctrine. See Motion at n.43. ISI never moved to dismiss Marathon’s claims based upon the rule
announced in Jinkins or based upon the plain meaning of the words “loss,” “lability,” or “damage.”
Moreover, ISI’s briefing on the rule regarding concurrent negligence was contained in its Response
to Marathon’s Motion for Partial Summary Judgment. If anyone is rehashing previously rejected
arguments, its Marathon.
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would be forced to take every personal injury case to trial in order to preserve their claims for
contractual indemnity.2
This is a gross overstatement. Only when the trier of fact must comparatively allocate
responsibility for the underlying claims does Jinkins potentially restrict a party seeking indemnity
from settling the underlying lawsuit. This is not a new development. In fact, the dissent in Jinkins
made this very same argument—that limiting parties’ rights to settle beyond their proportionate
share for contribution purposes would discourage settlement—to no avail. Beech Aircraft Corp.
v. Jinkins, 739 S.W.2d 19, 23 (Tex. 1987) (Ray, J., dissenting). Tellingly, Marathon does not cite
to a single post-Jinkins Texas opinion authorizing an indemnitee to voluntarily settle the entirety
of a claim and then seek a subsequent trial against the indemnitor allocating responsibility for the
underlying injuries. In fact, Texas courts have held just the opposite:
However, we also find that the indemnification agreement is not
effective in establishing a claim for contractual
contribution. . . . There is no agreement that appellees will
reimburse appellants for any voluntary settlements made with any
plaintiffs. The contract provision does not mention “contribution,”
and fails to discuss any apportionment of fault. . . . [T]he clause is
ineffective in establishing a contractual contribution for a voluntary
settlement. Appellants voluntarily paid $3,000,000 to plaintiffs
in the underlying case. By doing so appellants have destroyed
any forum for determining who was at fault. Appellants are not
entitled to reimbursement for their voluntary settlement of
$3,000,000.
MAN GHH Logistics GMBH v. Emscor, Inc., 858 S.W.2d 41, 43-44 (Tex. App.—Houston [14th
Dist.] 1993, no writ) (emphasis added). Construing MAN, a District Court in the Eastern District
of Texas summed up ISI’s position succinctly:
2
See Response at p. 7 (“Under the rule ISI now advocates. . . any third party owed indemnity. . . would
have no incentive to settlethe personal injury lawsuit because. . . doing so forfeits that party’s
contractual right to seek indemnity.”).
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The MAN court also referenced the fact that, under Texas law, a
party can only settle for its proportionate share of liability, noting
that by paying a large settlement to the plaintiffs in the underlying
case, “appellants have destroyed any forum for determining who
was at fault.” [internal citation omitted].
Sabine argues that the indemnification provisions in the
Contract do discuss apportionment of fault by stating that
Minserco will indemnify Sabine to the extent of Minserco’s
negligent conduct. This is a distinction that is not apparent in a
comparison with the Man case. Clearly, the Man court felt that
this was not the type of apportionment of fault required for
contractual contribution. How an indemnification agreement
can properly set out apportionment of fault in such a settlement
situation is a matter yet to be considered under Texas law.
The Sabine Min. Co. v. Minserco, Inc., No. 6:05-cv-478, 2006 WL 3751184 at *4 (E.D. Tex. 2006)
(emphasis added). What Marathon is requesting in this case is extraordinary—it should come as
no surprise that established Texas law would prevent it. See Amerisure Mut. Ins. Co. v. American
Home Assur. Co., No. 4:07-cv-01760, 2008 WL 8053468 at n.1 (S.D. Tex. 2008) (noting that Fisk
Electric Co. v. Constructors & Assocs. “notified prudent litigants that they must pursue any
indemnity claim before settling”).
Furthermore, had Marathon sought to include ISI in the Settlement of the Underlying
Lawsuits and agreed to cap ISI’s potential liability at 49% of the amount Marathon paid—the
maximum amount that could have been awarded had the Underlying Lawsuits proceeded to trial—
in exchange for an express agreement to reserve the right to subsequently litigate their
proportionate responsibility, such an arrangement would not have run afoul of Jinkins. See
Southwestern Bell Telephone Co. v. General Cable Industries, Inc., 966 S.W.2d 166 (Tex. App—
El Paso 1998, pet. denied). In Southwestern Bell, two potentially responsible parties agreed to
settle the injured claimant’s lawsuit for $1.675 million paid entirely by Southwestern Bell
Telephone Company (“SWBT”), with the two parties expressly reserving SWBT’s claim against
General Cable and agreeing that the settlement was reasonable under the circumstances. After the
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trial court granted summary judgment in favor of General Cable against SWBT based upon Jinkins,
the El Paso Court of Appeals reversed that decision. In doing so, the court noted that:
While a single joint tortfeasor certainly may not settle the plaintiff’s
entire claim, all of the joint tortfeasors may, as in this case, settle
their proportionate shares of liability and in so doing legitimately
settle the plaintiff’s entire claim. Thus, we do not have before us an
ineffectual attempt by a defendant to settle more than its
proportionate share of liability as in International Proteins and
Jinkins.
Id. at 170. Furthermore, the court noted that the policy considerations in Jinkins3 “do not exist
when two defendants settle a plaintiff’s entire claim while reserving their right to litigate their
respective responsibility for the established damages.” Id. at 171.4
Marathon had numerous opportunities to settle the Underlying Lawsuits and then pursue a
contractual indemnity claim against ISI. It could have insisted that the indemnity provision in
Section 13.1 contain “regardless of fault” language. It chose not to do so. It could have filed a
third-party claim against ISI in the Underlying Lawsuits, but chose not to do so. Likewise, it could
have substantively engaged ISI in negotiations directly with Claimants (rather than merely
demanding reimbursement from ISI after it had reached an agreement). It chose not to do so. That
the result of those actions led Marathon to make decisions that would bar its own indemnity claim
is no basis for re-writing the Contract. See Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640,
646 (Tex. 1996). Marathon is in this position as a result of its own improvidence—not because
ISI is requesting an alleged change in Texas’ indemnity law.
3
See Motion at pp. 14-15.
4
The parties entered into a similar arrangement in Fireman’s Fund Ins. Co. v. Commercial Standard Ins.
Co, 490 S.W.2d 818, 820 (Tex. 1972) (noting that Commercial Standard obtained written consent
from Wallace and Fireman’s Fund to pay the $20,000 settlement with an agreement from those
parties that Commercial may bring a declaratory judgment action to determine “the liability of
Wallace to indemnify Byrne or General Motors’ for the amount of the settlement and expenses of
the defense”).
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B. The Response fails to show any situation in which a party can settle more than its
proportionate share of a common liability in Texas—Marathon could only pay for
Marathon’s fault.
It is axiomatic in Texas that a party can only settle his proportionate share of a common
tort liability. Jinkins, 739 S.W.2d at 21-22; see also Motion at pp. 13-15. Unsurprisingly,
Marathon is not able to point to a single Texas authority holding that a party may settle more than
its proportionate share of a common liability. Instead, Marathon attempts a sleight of hand by
asserting that the principle announced in Jinkins and its progeny is quarantined to situations in
which a party seeks a claim for contribution.5 Marathon’s contention is fatally flawed for three
reasons.
First, if the logic of Jinkins applied solely to contribution claims, then courts of appeals
throughout Texas would not cite its holding without expressly limiting its reach to such claims.
Yet, courts consistently cite Jinkins more broadly.6 While it is undeniable that the result in Jinkins
prohibits such contribution claims, the Court’s basis for announcing that rule was the principle
that a party cannot settle more than its proportionate share of a common liability. See Minserco,
Inc., 2006 WL 3751184 at *3 (stating that the bar on such contribution claims “is because under
5
See Response at p. 6 (“The critical distinction here is that Marathon is not asserting a right to contribution
. . . ; it is asserting an express, bargained-for right to contractual indemnity.”)
6
See, e.g., Herzog Contracting Corp. v. Burlington Northern Railroad Co., No. 14-96-000864-CV, 1997
WL 473681 (Tex. App.—Houston [14th Dist.] Aug. 21, 1997, no pet.) (mem. op., not designated
for publication) (“A defendant can legally settle only his proportionate share of the common
liability of the plaintiff’s action.”); Southwestern Bell Telephone Co., 966 S.W.2d at 170 (“a
defendant can settle only its proportionate share of a common liability and may not settle the
plaintiff’s entire claim as the three defendants attempted to do.”); Bennett Truck Transport, LLC v.
Williams Bros. Const., 256 S.W.3d 730, 734 (Tex. App.—Houston [14th Dist.] 2008, no pet.)
(“Jinkins prohibits a defendant from settling a plaintiff’s entire claim by paying more than its
proportionate share of responsibility and then hoping to obtain reimbursement from other joint
tortfeasors.”); Paragon General Contractors, Inc. v. Larco Const., Inc., 227 S.W.3d 876, 888 (Tex.
App.—Dallas 2007, no pet.) (referring to Jinkins and stating “[t]he supreme court has held that a
party can settle only its proportionate share of responsibility”).
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Texas law, a joint tortfeasor can only settle its proportionate share of a common plaintiff’s cause
of action”). That principle is the basis upon which ISI seeks summary judgment.
Second, Marathon identifies no particular reason why a party would be able to settle more
than its own proportionate share of a common liability if it has an indemnity agreement but not in
the absence thereof. How would such a distinction apply in situations in which a party has a valid
indemnity agreement against one joint tortfeasor but not others? Marathon’s framework would
necessarily introduce significant confusion into Texas tort and settlement jurisprudence.
Third, ISI’s position is consistent with a specific statement of public policy—Texas’ desire
to prevent satellite litigation regarding the construction of indemnity agreements—whereas
Marathon’s is diametrically opposed. Citing the First Court of Appeals holding in Gilbane Bldg.
Co. v. Keystone Structural Concrete, Ltd.,7 the Fifth Circuit Court of Appeals held that “allowing
the indemnitee to relitigate its liability in a separate suit ‘retards rather than advances the policy of
preventing satellite litigation regarding interpretation of indemnity contracts.’” In re West Hills
Park Joint Venture, 587 Fed. Appx. 89, 92 (5th Cir. 2014); see also Amerisure Mut. Ins. Co., 2008
WL 8053468 at *3 (“[A]llowing Amerisure to litigate the question of whose negligence caused
the accident that gave rise to the underlying lawsuit post-settlement, and without an indemnity
agreement that meets the express negligence test, would . . . require precisely the kind of satellite
litigation disapproved of in Texas.”). If, as ISI contends, a party can only settle its proportionate
share of a common liability, then the only types of satellite litigation regarding indemnity
obligations will be related to agreements that meet the express negligence test and contain
“regardless of fault” language. Marathon’s regime, conversely, would incentivize every
7
263 S.W.3d 291 (Tex. App.—Houston [1st Dist.] 2007, no pet.).
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indemnitee to file a separate lawsuit, because they could always recover more from indemnitors in
satellite lawsuits than in the original litigation.
Marathon’s reliance on a footnote contained in a recent federal case out of Corpus Christi
does not change this analysis. In fact, the footnote in question does not even reference the relevant
principle regarding a defendant’s ability to settle more than its proportionate responsibility. See
AIG Specialty Ins. Co. v. Ace American Ins. Co., No. 2:18-cv-16, 2019 WL 1243911 at n. 5 (S.D.
Tex. Mar. 18, 2019). That is unsurprising in light of the fact that a Jinkins claim was not even part
of Turner Industries Group, LLC’s (“Turner”) original motion for summary judgment. In fact,
Turner filed a subsequent motion for reconsideration that fully briefed the Jinkins issue for the first
time on April 1, 2019. The Court issued an order on the subsequent motion on May 31, 2019,
noting:
Turner argues: (1) the MSA was not a comparative indemnity
agreement; (2) Sherwin voluntarily settled the claims asserted
solely against Sherwin and cannot, in turn, sue Turner for
indemnity for the same claims; (3) the MSA’s indemnity
agreement on which Sherwin relies does not pass the express
negligence test; and (4) because the written indemnity agreement
does not survive the express negligence test, the claim is barred by
workers compensation law.
Only the last two issues were raised by Turner’s original motion.
See AIG Specialty Ins. Co. v. Ace American Ins. Co., No. 2:18-cv-16, Rec. Doc. 70 (S.D. Tex. May
31, 2019) (emphasis added). The Court further went on to explain “[w]hether ASIC could
successfully bring any claim for Turner’s negligence or legal fault (as opposed to Sherwin’s
liability) was also not addressed in the prior briefing, but was expressly left as an open question.”
Id. at p. 8. Consequently, the court declined “to rule on summary judgment issues presented for
the first time in the context of a motion for reconsideration.” Id. at p. 9. These subsequent
clarifications moot the import of the lone footnote upon which Marathon pins its hopes.
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Marathon’s remaining arguments against the application of Jinkins (invoking TEX. CIV.
PRAC. & REM. CODE § 33.017 and TEX. LAB. CODE § 417.004) are similarly specious. The
prohibition against a defendant settling other parties’ fault is not expressly enumerated in Chapter
33, rendering §33.017 irrelevant. Moreover, enforcing the bright line rule from Jinkins does not
impinge upon the parties’ freedom to contract for indemnity. Marathon had opportunities to pursue
its claim against ISI in a manner consistent with Texas law. See supra at pp. 2-5. That it ignored
those opportunities does not mean that the Contract is not being enforced as written or that ISI’s
position runs afoul of the indemnity scheme created by the Texas Legislature.
C. Section 13.1 requires Marathon to prove it was at least 51% responsible for the
fire in this lawsuit—the “potential liability” standard is inapplicable.
ISI’s Motion does not contend that Marathon must prove that it “necessarily would have
been found at least 51% responsible for the claimant’s injures in the underlying lawsuits.”8 Indeed,
such a finding would be impossible, as Marathon’s Settlement has “destroyed any forum for
determining who was at fault.” MAN GHH Logistics GMBH., 858 S.W.2d at 44.
Rather, in the event that the Court concludes Marathon could settle more than its
proportionate share of responsibility for the January 11, 2016 fire (which is expressly denied), the
plain meaning of the words “liability,” “loss,” and “damage” require that Marathon prove that it
was at least 51% liable in this litigation or the indemnity provision is inapplicable. Crucially, the
Response concedes the following contentions:
• Marathon is not entitled to indemnity for its own negligence;
• Marathon has the burden to prove the amounts paid in the
Settlement are covered by Section 13.1 of the Contract
(Motion at p. 16)9; and
8
See Response at p. 8.
9
See also Fireman’s Fund Ins. Co., 490 S.W.2d at 823 (“Since there was a settlement made with Gamble
by Byrne and Commercial Standard without any judicial determination of whether General Motors
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• The plain and ordinary meaning of the words “liability,”
“loss,” and “damage” all refer to compulsory obligations
(via either judgment or settlement) in this context (Motion at
pp.16-18).
Furthermore, Marathon does not cite—and ISI is not aware—of any Texas precedent holding that
responsibility for tort damages can be allocated outside the framework established by Chapter 33
of the Civil Practice and Remedies Code. Consequently, unless Marathon’s proportionate
responsibility for the fire is found to be greater than 50 percent in this lawsuit, its Settlement
necessarily only covered damages attributable to its own negligence. TEX. CIV. PRAC. & REM.
CODE §33.013; see also Motion at p. 11-12. Despite bearing the burden of proof as to whether the
Settlement is covered by Section 13.1, Marathon contends that it is not at least 51% at fault.10 In
that scenario, the Settlement payment is not a loss, liability, or damage except to the extent of
Marathon’s own negligence, excluding it from indemnity coverage.
Marathon’s only substantive response relates to its reliance on the “potential liability”
standard11 enumerated in Fireman’s Fund Ins. Co. v. Commercial Standard Ins. Co., 490 S.W.2d
818 (Tex. 1972). But Fireman’s Fund Ins. Co.is outdated law—it was decided a full fifteen years
before the Supreme Court of Texas issued its opinion in Jinkins and the proportionate
responsibility statute was created by the Texas Legislature. Crucially, the post-Jinkins cases cited
by the Response in support of the applicability of the “potential liability” test did not include
was negligent . . . Byrne and Commercial Standard properly assumed the burden of showing
. . . that the accident was not in fact due to any negligence on the part of General Motors.”).
10
Exhibit G to the Motion.
11
Response at p. 9 (“Accordingly, the Marathon Plaintiffs need not prove the definitive percentage of fault
that would have been attributed to them in the underlying lawsuit; rather, all that must be
established is that the Marathon Plaintiffs were potentially liable beyond their own proportionate
responsibility to the claimants and that they settled that potential liability in a reasonable, prudent,
and good faith manner.”).
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comparative indemnity language.12 The “potential liability” test makes sense under those
circumstances because no allocation of responsibility is required—either the indemnitee is entitled
to 100% of the settlement or none of it. Thus, the test for whether the indemnitee can recover the
funds paid in settlement relates to the indemnitee’s potential liability to the underlying claimant
and whether the settlement amount was reasonable.
Conversely, Marathon contends that Section 13.1 provides for comparative indemnity,13
meaning the trier of fact will have to allocate responsibility between Marathon, ISI, and others
before rendering judgment. The “potential liability” standard is ill-equipped to apportion the $86
million Settlement between amounts attributable to covered and uncovered losses. In fact, the
Fourteenth Court of Appeals expressly rejected the applicability of the “potential liability” test to
the risk of joint and several liability:
. . . Crown first contends that it was an insured under the policy
because it was potentially liable for Coastal’s conduct. Because
the Stewart plaintiffs alleged joint and several liability, Crown
contends that under TEX. CIV. PRAC. & REM. CODE ANN. §33.013, it
could have been liable, not only for its own percentage of
negligence, but also Coastal’s conduct.
We disagree. Being liable to pay a portion of a judgment
rendered against another defendant under §33.013 is not the
same as being liable for another’s conduct. Section 33.013 does
not impose liability on Crown for Coastal’s conduct; instead, it
requires Crown to potentially pay the portion of the judgment
rendered against Coastal for Coastal’s own conduct.
12
See Amerada Hess Corp. v. Wood Group Prod. Tech., 30 S.W.3d 5 (Tex. App.—Houston [14th Dist.]
pet denied) (containing language in which Contractor agreed to indemnify Hess from all claims
“whether or not caused by the sole, joint and/or concurrent negligence” of Hess); Aerospatiale
Helicopter Corp. v. Universal Health Services, Inc., 778 S.W.2d 492, 501 (Tex. App.—Dallas
1989, writ denied) (excluding indemnity for a loss which is the proximate result of the indemnitee’s
sole negligence).
13
ISI contests whether Section 13.1 expressly provides for comparative indemnity. See Motion at pp. 22-
26; infra at pp. 12-15.
-11-
Coastal Transport Co. v. Crown Central Petroleum Corp., 20 S.W.3d 119, 123 (Tex. App.—
Houston [14th Dist.] 2000, pet. denied). Furthermore, that same court has ruled that parties cannot
raise the specter of potential joint and several liability to justify what Marathon is attempting to do
here. See Herzog, 1997 WL 473681 at n.3.
At the end of the day, Marathon cannot merely contend it was “potentially liable” in excess
of its proportionate share of responsibility and then recover the full $86 million. Instead, it has the
burden to show that its Settlement included covered losses by proving it was at least 51% at fault
for the fire. It has done just the opposite.
D. The Response fails to show that Section 13.1 expressed a clear intent to provide
for a comparative indemnity, rendering it void as a matter of law.
1. Marathon’s reliance on Gulf Ins. Co. v. Burns is misplaced—it did not
overrule Ethyl in the context of situations involving concurrent negligence.
The Response pins its hopes on a single paragraph of dicta in the Texas Supreme Court’s
decision in Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 420 (Tex. 2000). Specifically,
Marathon alleges that in Burns, the Supreme Court of Texas held that the rule announced in Ethyl
is inapplicable in the instant case because Marathon is not seeking indemnity for the portion of the
loss attributable to its own negligence. It did no such thing. To the contrary, Marathon’s attempt
to overread the importance of Burns exposes the paucity of authority supporting its position.
In reality, Burns resulted in the Supreme Court of Texas reversing the Thirteenth Court of
Appeals and rendering a judgment that Nash, the agent, could not recover under the relevant
indemnity agreement—the same result ISI seeks in its Motion. It did so because it found that the
exception to the indemnity obligation negated coverage—the same result ISI seeks here. The
relevant indemnity language in Burns was as follows:
A. Company shall indemnify and hold harmless Agent against any
claims or liabilities Agent may become obligated to pay to or in
behalf of any insured based on actual or alleged error of Company
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in its processing or handling Direct Billed or any other business
placed by Agent with Company, except to the extent Agent has
caused, contributed to or compounded such error.
Burns Motors, Inc., 22 S.W.3d at 420 (emphasis added). Construing this language, the Court held
that because an agreed judgment established that the agent knowingly made misrepresentations,
the agent fully “caused, contributed to, or compounded” the error that caused the injuries, and thus
the indemnity agreement did not apply. Id. at 423.
The Supreme Court did not address whether compliance with the express negligence rule
is required in situations involving concurrent negligence and, despite citing Ethyl, makes no
reference to any proposed comparative indemnity, instead deciding that the text of the Agreement
“unambiguously excludes indemnification under these circumstances.” Id. at 424. In the instant
case, responsibility for the January 11, 2016 fire is inseparably mixed together amongst Marathon,
ISI, and at least three other contractors. Consequently, Burns did not abrogate the rule announced
in Ethyl, as demonstrated succinctly by the Fifth Circuit Court of Appeals:
The express negligence rule applies if Quorum seeks
indemnification for its own acts of negligence or for the joint or
concurrent negligence of Quorum and the Hospital. “Indemnitees
seeking indemnity for the consequences of their own negligence
which proximately causes injury jointly or concurrently with the
indemnitor’s negligence must also meet the express negligence
test.” Ethyl, 725 S.W.2d at 708. If Quorum is seeking
indemnification for the consequences of the Hospital's negligence,
the express negligence doctrine does not apply. See id.; Gulf Ins. Co.
v. Burns Motors, Inc., 22 S.W.3d 417, 423-24 (Tex. 2000).
Quorum Health Res., L.L.C. v. Maverick Cty. Hosp. Dist., 308 F.3d 451, 459–60 (5th Cir. 2002)
(emphasis added). Marathon seeks indemnity for damages arising from concurrent acts of
negligence by both itself and ISI. Burns provides no refuge from the requirements of the express
negligence rule as a result.
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2. “To the extent” is not magic language that relieves parties seeking
comparative indemnity from expressly stating that intention.
Marathon also relies upon a portion of an opinion from the Dallas Court of Appeals which
states that the phrase “‘to the extent caused’ suggests a comparative negligence construction under
which each party is accountable ‘to the extent’ their negligence contributes to the injury.” See Tri-
State Ins. Co. v. Rogers-O’Brien Const. Co., No. 05-95-01639-CV, 1997 WL 211534 (Tex. App.—
Dallas 1997, writ denied) (emphasis added). The Response’s reliance on Tri-State is misplaced,
as in that case the parties entered into a fault-based indemnity they thought was a regardless-of-
fault indemnity. Id. at *5 (“We conclude that the indemnity provision in the Rogers-
O’Brien/Ellsworth subcontract does not meet the express negligence doctrine”). 14 Tellingly, Tri-
State acknowledged that “[b]y adding a phrase explaining that whether the injury is also caused in
part by Rogers-O’Brien’s negligence would not be taken into account, the parties clarified their
intent that Ellsworth would indemnify Rogers-O’Brien for Ellsworth’s negligence.” Id. This
language was necessary precisely because it is not enough for the parties to use “to the extent”
language to suggest comparative indemnity—instead they must expressly state their intent to do
so within the four corners of the relevant contract.15 Houston Lighting & Power Co. v. Atchison,
Topeka, & Santa Fe Ry. Co., 890 S.W.2d 455, 459 (Tex. 1994).
14
The most directly applicable case remains Aerospatiale Helicoptor Corp. v. Universal Health Services,
Inc., which contains a broad indemnity agreement with an exception for the indemnitor’s sole
negligence. See Motion at pp. 25-26.
15
Furthermore, Marathon’s assertion that there are no cases invalidating indemnity provisions with “except
to the extent” language is incorrect. See AVCO Corp., Textron Lycoming Reciprocating Engine
Div. of AVCO Corp. v. Interstate Southwest, Ltd., 251 S.W.3d 632, 666-67 (Tex. App.—Houston
[14th Dist.] 2007, pet. denied) (invaliding indemnity agreement that contained “except to the extent
that such Damages are directly caused by the negligence of [Lycoming]” as violating the express
negligence rule).
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Section 13.1, conversely, contains no such language explaining whether the exception for
Marathon’s negligence applies to ISI’s indemnity obligation if the injuries are caused by the
concurrent negligence of both parties. Consequently, Section 13.1 fails the express negligence
test. See Motion at pp. 23-26.
III. CONCLUSION AND PRAYER
For these reasons, Defendant Industrial Specialists, LLC prays that this Court grant its
Motion for Summary Judgment, dismiss Marathon’s claims for breach of contract and declaratory
judgment with prejudice, and award ISI its costs and reasonable and necessary attorney’s fees in
an amount to be determined in a trial by jury, and grant it all other relief to which it may be entitled,
in equity or at law.
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Respectfully Submitted,
LISKOW & LEWIS
/s/ Michael A. Golemi
Michael A Golemi
State Bar No. 24047536
James T. Kittrell
State Bar No. 24078795
Jody M. Schisel-Meslin
State Bar No. 24110336
1001 Fannin, Suite 1800
Houston, Texas 77002
Telephone: (713) 651-2900
Facsimile: (713) 651-2908
Email: magolemi@liskow.com
Email jkittrell@liskow.com
Email: jmschisel-meslin@liskow.com
AND
Mark D. Latham
Louisiana Bar No. 19673
One Shell Square
701 Poydras Street, Suite 5000
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E-mail: mdlatham@liskow.com
ATTORNEYS FOR DEFENDANT
INDUSTRIAL SPECIALISTS, LLC
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Filed: 6/5/2019 4:39 PM JOHN D. KINARD - District Clerk Galveston County, Texas Envelope No. 34142185 By: Shailja Dixit 6/5/2019 4:40 PM CAUSE NO: 17-CV-1242 BLANCHARD REFINING COMPANY § IN THE DISTRICT COURT OF LLC and MARATHON PETROLEUM § COMPANY LP § § Plaintiffs § § GALVESTON COUNTY v. § § INDUSTRIAL SPECIALISTS, LLC § § § Defendant. § 212TH JUDICIAL DISTRICT DEFENDANT INDUSTRIAL SPECIALISTS, LLC’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT TO THE HONORABLE COURT: Defendant Industrial Specialists, LLC (“ISI”) files this Reply in Support of its Motion for Summary Judgment (“Motion”) on Plaintiffs Blanchard Refining Company LLC’s and Marathon Petroleum Company LLC’s (collectively “Marathon”) claims for declaratory judgment and breach of the Major Service Contract between Marathon and ISI dated March 14, 2013 (“Contract”). ISI respectfully requests that this Court grant its motion pursuant to Texas Rule of Civil Procedure 166a, and in support thereof, would show the following: I. INTRODUCTION Marathon’s Response (“Response”) attempts to ignore two core principles established by the Texas Supreme Court: 1) a party cannot settle more than its proportionate share of a common liability, so when a party settles a claim, that is all the settlement covers; and 2) a party that does settle its proportionate liability cannot recover indemnity for such liability without meeting the express negligence test. Instead, Marathon attempts to avoid any discussion of these principles of black letter law by arguing that ISI’s position creates a slippery slope towards outlawing indemnity for settled claims. To the contrary, however, parties in Texas have and will continue to pursue indemnity claims for settlements under the very same rules that bar Marathon’s claim in the instant case. In fact, the existence of the legislative regime preserving contractual indemnity claims makes the absence of authority blessing what Marathon is attempting even more striking. Marathon cannot settle liability for its own fault in the Underlying Lawsuits and then bring suit seeking indemnity for more than it could ever have recovered in the Underlying Lawsuits. The Response’s laser-focus on overarching policy concerns and unrelated motions1 is understandable in light of the fact that it cites no Texas authority holding that: 1) a party can settle more than its proportionate share of a common liability; or 2) that an indemnitee attempting to enforce an agreement with an exception for its own negligence can settle the underlying claims and then seek an allocation of fault in a different lawsuit without complying with Chapter 33 of the Civil Practice and Remedies Code. The absence of such authority is fatal to Marathon’s claims when applied to the plain language of the indemnity provision contained in Section 13.1 of the Contract. II. ARGUMENT AND AUTHORITIES A. ISI’s position does not prohibit parties from seeking indemnity for settled claims—only unprecedented requests for subsequent allocations of responsibility. The central tenet of the Response is that ISI’s position on the applicability of both Jinkins and its progeny and Section 33.013 of the Civil Practice and Remedies Code (regarding joint and several liability) to the instant case cannot be correct, because if they were, indemnitees in Texas 1 Marathon’s recitation of the case’s procedural history misstates the basis for ISI’s Motion to Dismiss and conveniently omits the fact that its own Motion for Partial Summary Judgment—in which Marathon advocated the exact same construction of Section 13.1 as in the Response—was also denied by the Court. The Motion to Dismiss focused exclusively on the express negligence doctrine. See Motion at n.43. ISI never moved to dismiss Marathon’s claims based upon the rule announced in Jinkins or based upon the plain meaning of the words “loss,” “lability,” or “damage.” Moreover, ISI’s briefing on the rule regarding concurrent negligence was contained in its Response to Marathon’s Motion for Partial Summary Judgment. If anyone is rehashing previously rejected arguments, its Marathon. -2- would be forced to take every personal injury case to trial in order to preserve their claims for contractual indemnity.2 This is a gross overstatement. Only when the trier of fact must comparatively allocate responsibility for the underlying claims does Jinkins potentially restrict a party seeking indemnity from settling the underlying lawsuit. This is not a new development. In fact, the dissent in Jinkins made this very same argument—that limiting parties’ rights to settle beyond their proportionate share for contribution purposes would discourage settlement—to no avail. Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 23 (Tex. 1987) (Ray, J., dissenting). Tellingly, Marathon does not cite to a single post-Jinkins Texas opinion authorizing an indemnitee to voluntarily settle the entirety of a claim and then seek a subsequent trial against the indemnitor allocating responsibility for the underlying injuries. In fact, Texas courts have held just the opposite: However, we also find that the indemnification agreement is not effective in establishing a claim for contractual contribution. . . . There is no agreement that appellees will reimburse appellants for any voluntary settlements made with any plaintiffs. The contract provision does not mention “contribution,” and fails to discuss any apportionment of fault. . . . [T]he clause is ineffective in establishing a contractual contribution for a voluntary settlement. Appellants voluntarily paid $3,000,000 to plaintiffs in the underlying case. By doing so appellants have destroyed any forum for determining who was at fault. Appellants are not entitled to reimbursement for their voluntary settlement of $3,000,000. MAN GHH Logistics GMBH v. Emscor, Inc., 858 S.W.2d 41, 43-44 (Tex. App.—Houston [14th Dist.] 1993, no writ) (emphasis added). Construing MAN, a District Court in the Eastern District of Texas summed up ISI’s position succinctly: 2 See Response at p. 7 (“Under the rule ISI now advocates. . . any third party owed indemnity. . . would have no incentive to settlethe personal injury lawsuit because. . . doing so forfeits that party’s contractual right to seek indemnity.”). -3- The MAN court also referenced the fact that, under Texas law, a party can only settle for its proportionate share of liability, noting that by paying a large settlement to the plaintiffs in the underlying case, “appellants have destroyed any forum for determining who was at fault.” [internal citation omitted]. Sabine argues that the indemnification provisions in the Contract do discuss apportionment of fault by stating that Minserco will indemnify Sabine to the extent of Minserco’s negligent conduct. This is a distinction that is not apparent in a comparison with the Man case. Clearly, the Man court felt that this was not the type of apportionment of fault required for contractual contribution. How an indemnification agreement can properly set out apportionment of fault in such a settlement situation is a matter yet to be considered under Texas law. The Sabine Min. Co. v. Minserco, Inc., No. 6:05-cv-478, 2006 WL 3751184 at *4 (E.D. Tex. 2006) (emphasis added). What Marathon is requesting in this case is extraordinary—it should come as no surprise that established Texas law would prevent it. See Amerisure Mut. Ins. Co. v. American Home Assur. Co., No. 4:07-cv-01760, 2008 WL 8053468 at n.1 (S.D. Tex. 2008) (noting that Fisk Electric Co. v. Constructors & Assocs. “notified prudent litigants that they must pursue any indemnity claim before settling”). Furthermore, had Marathon sought to include ISI in the Settlement of the Underlying Lawsuits and agreed to cap ISI’s potential liability at 49% of the amount Marathon paid—the maximum amount that could have been awarded had the Underlying Lawsuits proceeded to trial— in exchange for an express agreement to reserve the right to subsequently litigate their proportionate responsibility, such an arrangement would not have run afoul of Jinkins. See Southwestern Bell Telephone Co. v. General Cable Industries, Inc., 966 S.W.2d 166 (Tex. App— El Paso 1998, pet. denied). In Southwestern Bell, two potentially responsible parties agreed to settle the injured claimant’s lawsuit for $1.675 million paid entirely by Southwestern Bell Telephone Company (“SWBT”), with the two parties expressly reserving SWBT’s claim against General Cable and agreeing that the settlement was reasonable under the circumstances. After the -4- trial court granted summary judgment in favor of General Cable against SWBT based upon Jinkins, the El Paso Court of Appeals reversed that decision. In doing so, the court noted that: While a single joint tortfeasor certainly may not settle the plaintiff’s entire claim, all of the joint tortfeasors may, as in this case, settle their proportionate shares of liability and in so doing legitimately settle the plaintiff’s entire claim. Thus, we do not have before us an ineffectual attempt by a defendant to settle more than its proportionate share of liability as in International Proteins and Jinkins. Id. at 170. Furthermore, the court noted that the policy considerations in Jinkins3 “do not exist when two defendants settle a plaintiff’s entire claim while reserving their right to litigate their respective responsibility for the established damages.” Id. at 171.4 Marathon had numerous opportunities to settle the Underlying Lawsuits and then pursue a contractual indemnity claim against ISI. It could have insisted that the indemnity provision in Section 13.1 contain “regardless of fault” language. It chose not to do so. It could have filed a third-party claim against ISI in the Underlying Lawsuits, but chose not to do so. Likewise, it could have substantively engaged ISI in negotiations directly with Claimants (rather than merely demanding reimbursement from ISI after it had reached an agreement). It chose not to do so. That the result of those actions led Marathon to make decisions that would bar its own indemnity claim is no basis for re-writing the Contract. See Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 1996). Marathon is in this position as a result of its own improvidence—not because ISI is requesting an alleged change in Texas’ indemnity law. 3 See Motion at pp. 14-15. 4 The parties entered into a similar arrangement in Fireman’s Fund Ins. Co. v. Commercial Standard Ins. Co, 490 S.W.2d 818, 820 (Tex. 1972) (noting that Commercial Standard obtained written consent from Wallace and Fireman’s Fund to pay the $20,000 settlement with an agreement from those parties that Commercial may bring a declaratory judgment action to determine “the liability of Wallace to indemnify Byrne or General Motors’ for the amount of the settlement and expenses of the defense”). -5- B. The Response fails to show any situation in which a party can settle more than its proportionate share of a common liability in Texas—Marathon could only pay for Marathon’s fault. It is axiomatic in Texas that a party can only settle his proportionate share of a common tort liability. Jinkins, 739 S.W.2d at 21-22; see also Motion at pp. 13-15. Unsurprisingly, Marathon is not able to point to a single Texas authority holding that a party may settle more than its proportionate share of a common liability. Instead, Marathon attempts a sleight of hand by asserting that the principle announced in Jinkins and its progeny is quarantined to situations in which a party seeks a claim for contribution.5 Marathon’s contention is fatally flawed for three reasons. First, if the logic of Jinkins applied solely to contribution claims, then courts of appeals throughout Texas would not cite its holding without expressly limiting its reach to such claims. Yet, courts consistently cite Jinkins more broadly.6 While it is undeniable that the result in Jinkins prohibits such contribution claims, the Court’s basis for announcing that rule was the principle that a party cannot settle more than its proportionate share of a common liability. See Minserco, Inc., 2006 WL 3751184 at *3 (stating that the bar on such contribution claims “is because under 5 See Response at p. 6 (“The critical distinction here is that Marathon is not asserting a right to contribution . . . ; it is asserting an express, bargained-for right to contractual indemnity.”) 6 See, e.g., Herzog Contracting Corp. v. Burlington Northern Railroad Co., No. 14-96-000864-CV, 1997 WL 473681 (Tex. App.—Houston [14th Dist.] Aug. 21, 1997, no pet.) (mem. op., not designated for publication) (“A defendant can legally settle only his proportionate share of the common liability of the plaintiff’s action.”); Southwestern Bell Telephone Co., 966 S.W.2d at 170 (“a defendant can settle only its proportionate share of a common liability and may not settle the plaintiff’s entire claim as the three defendants attempted to do.”); Bennett Truck Transport, LLC v. Williams Bros. Const., 256 S.W.3d 730, 734 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (“Jinkins prohibits a defendant from settling a plaintiff’s entire claim by paying more than its proportionate share of responsibility and then hoping to obtain reimbursement from other joint tortfeasors.”); Paragon General Contractors, Inc. v. Larco Const., Inc., 227 S.W.3d 876, 888 (Tex. App.—Dallas 2007, no pet.) (referring to Jinkins and stating “[t]he supreme court has held that a party can settle only its proportionate share of responsibility”). -6- Texas law, a joint tortfeasor can only settle its proportionate share of a common plaintiff’s cause of action”). That principle is the basis upon which ISI seeks summary judgment. Second, Marathon identifies no particular reason why a party would be able to settle more than its own proportionate share of a common liability if it has an indemnity agreement but not in the absence thereof. How would such a distinction apply in situations in which a party has a valid indemnity agreement against one joint tortfeasor but not others? Marathon’s framework would necessarily introduce significant confusion into Texas tort and settlement jurisprudence. Third, ISI’s position is consistent with a specific statement of public policy—Texas’ desire to prevent satellite litigation regarding the construction of indemnity agreements—whereas Marathon’s is diametrically opposed. Citing the First Court of Appeals holding in Gilbane Bldg. Co. v. Keystone Structural Concrete, Ltd.,7 the Fifth Circuit Court of Appeals held that “allowing the indemnitee to relitigate its liability in a separate suit ‘retards rather than advances the policy of preventing satellite litigation regarding interpretation of indemnity contracts.’” In re West Hills Park Joint Venture, 587 Fed. Appx. 89, 92 (5th Cir. 2014); see also Amerisure Mut. Ins. Co., 2008 WL 8053468 at *3 (“[A]llowing Amerisure to litigate the question of whose negligence caused the accident that gave rise to the underlying lawsuit post-settlement, and without an indemnity agreement that meets the express negligence test, would . . . require precisely the kind of satellite litigation disapproved of in Texas.”). If, as ISI contends, a party can only settle its proportionate share of a common liability, then the only types of satellite litigation regarding indemnity obligations will be related to agreements that meet the express negligence test and contain “regardless of fault” language. Marathon’s regime, conversely, would incentivize every 7 263 S.W.3d 291 (Tex. App.—Houston [1st Dist.] 2007, no pet.). -7- indemnitee to file a separate lawsuit, because they could always recover more from indemnitors in satellite lawsuits than in the original litigation. Marathon’s reliance on a footnote contained in a recent federal case out of Corpus Christi does not change this analysis. In fact, the footnote in question does not even reference the relevant principle regarding a defendant’s ability to settle more than its proportionate responsibility. See AIG Specialty Ins. Co. v. Ace American Ins. Co., No. 2:18-cv-16, 2019 WL 1243911 at n. 5 (S.D. Tex. Mar. 18, 2019). That is unsurprising in light of the fact that a Jinkins claim was not even part of Turner Industries Group, LLC’s (“Turner”) original motion for summary judgment. In fact, Turner filed a subsequent motion for reconsideration that fully briefed the Jinkins issue for the first time on April 1, 2019. The Court issued an order on the subsequent motion on May 31, 2019, noting: Turner argues: (1) the MSA was not a comparative indemnity agreement; (2) Sherwin voluntarily settled the claims asserted solely against Sherwin and cannot, in turn, sue Turner for indemnity for the same claims; (3) the MSA’s indemnity agreement on which Sherwin relies does not pass the express negligence test; and (4) because the written indemnity agreement does not survive the express negligence test, the claim is barred by workers compensation law. Only the last two issues were raised by Turner’s original motion. See AIG Specialty Ins. Co. v. Ace American Ins. Co., No. 2:18-cv-16, Rec. Doc. 70 (S.D. Tex. May 31, 2019) (emphasis added). The Court further went on to explain “[w]hether ASIC could successfully bring any claim for Turner’s negligence or legal fault (as opposed to Sherwin’s liability) was also not addressed in the prior briefing, but was expressly left as an open question.” Id. at p. 8. Consequently, the court declined “to rule on summary judgment issues presented for the first time in the context of a motion for reconsideration.” Id. at p. 9. These subsequent clarifications moot the import of the lone footnote upon which Marathon pins its hopes. -8- Marathon’s remaining arguments against the application of Jinkins (invoking TEX. CIV. PRAC. & REM. CODE § 33.017 and TEX. LAB. CODE § 417.004) are similarly specious. The prohibition against a defendant settling other parties’ fault is not expressly enumerated in Chapter 33, rendering §33.017 irrelevant. Moreover, enforcing the bright line rule from Jinkins does not impinge upon the parties’ freedom to contract for indemnity. Marathon had opportunities to pursue its claim against ISI in a manner consistent with Texas law. See supra at pp. 2-5. That it ignored those opportunities does not mean that the Contract is not being enforced as written or that ISI’s position runs afoul of the indemnity scheme created by the Texas Legislature. C. Section 13.1 requires Marathon to prove it was at least 51% responsible for the fire in this lawsuit—the “potential liability” standard is inapplicable. ISI’s Motion does not contend that Marathon must prove that it “necessarily would have been found at least 51% responsible for the claimant’s injures in the underlying lawsuits.”8 Indeed, such a finding would be impossible, as Marathon’s Settlement has “destroyed any forum for determining who was at fault.” MAN GHH Logistics GMBH., 858 S.W.2d at 44. Rather, in the event that the Court concludes Marathon could settle more than its proportionate share of responsibility for the January 11, 2016 fire (which is expressly denied), the plain meaning of the words “liability,” “loss,” and “damage” require that Marathon prove that it was at least 51% liable in this litigation or the indemnity provision is inapplicable. Crucially, the Response concedes the following contentions: • Marathon is not entitled to indemnity for its own negligence; • Marathon has the burden to prove the amounts paid in the Settlement are covered by Section 13.1 of the Contract (Motion at p. 16)9; and 8 See Response at p. 8. 9 See also Fireman’s Fund Ins. Co., 490 S.W.2d at 823 (“Since there was a settlement made with Gamble by Byrne and Commercial Standard without any judicial determination of whether General Motors -9- • The plain and ordinary meaning of the words “liability,” “loss,” and “damage” all refer to compulsory obligations (via either judgment or settlement) in this context (Motion at pp.16-18). Furthermore, Marathon does not cite—and ISI is not aware—of any Texas precedent holding that responsibility for tort damages can be allocated outside the framework established by Chapter 33 of the Civil Practice and Remedies Code. Consequently, unless Marathon’s proportionate responsibility for the fire is found to be greater than 50 percent in this lawsuit, its Settlement necessarily only covered damages attributable to its own negligence. TEX. CIV. PRAC. & REM. CODE §33.013; see also Motion at p. 11-12. Despite bearing the burden of proof as to whether the Settlement is covered by Section 13.1, Marathon contends that it is not at least 51% at fault.10 In that scenario, the Settlement payment is not a loss, liability, or damage except to the extent of Marathon’s own negligence, excluding it from indemnity coverage. Marathon’s only substantive response relates to its reliance on the “potential liability” standard11 enumerated in Fireman’s Fund Ins. Co. v. Commercial Standard Ins. Co., 490 S.W.2d 818 (Tex. 1972). But Fireman’s Fund Ins. Co.is outdated law—it was decided a full fifteen years before the Supreme Court of Texas issued its opinion in Jinkins and the proportionate responsibility statute was created by the Texas Legislature. Crucially, the post-Jinkins cases cited by the Response in support of the applicability of the “potential liability” test did not include was negligent . . . Byrne and Commercial Standard properly assumed the burden of showing . . . that the accident was not in fact due to any negligence on the part of General Motors.”). 10 Exhibit G to the Motion. 11 Response at p. 9 (“Accordingly, the Marathon Plaintiffs need not prove the definitive percentage of fault that would have been attributed to them in the underlying lawsuit; rather, all that must be established is that the Marathon Plaintiffs were potentially liable beyond their own proportionate responsibility to the claimants and that they settled that potential liability in a reasonable, prudent, and good faith manner.”). -10- comparative indemnity language.12 The “potential liability” test makes sense under those circumstances because no allocation of responsibility is required—either the indemnitee is entitled to 100% of the settlement or none of it. Thus, the test for whether the indemnitee can recover the funds paid in settlement relates to the indemnitee’s potential liability to the underlying claimant and whether the settlement amount was reasonable. Conversely, Marathon contends that Section 13.1 provides for comparative indemnity,13 meaning the trier of fact will have to allocate responsibility between Marathon, ISI, and others before rendering judgment. The “potential liability” standard is ill-equipped to apportion the $86 million Settlement between amounts attributable to covered and uncovered losses. In fact, the Fourteenth Court of Appeals expressly rejected the applicability of the “potential liability” test to the risk of joint and several liability: . . . Crown first contends that it was an insured under the policy because it was potentially liable for Coastal’s conduct. Because the Stewart plaintiffs alleged joint and several liability, Crown contends that under TEX. CIV. PRAC. & REM. CODE ANN. §33.013, it could have been liable, not only for its own percentage of negligence, but also Coastal’s conduct. We disagree. Being liable to pay a portion of a judgment rendered against another defendant under §33.013 is not the same as being liable for another’s conduct. Section 33.013 does not impose liability on Crown for Coastal’s conduct; instead, it requires Crown to potentially pay the portion of the judgment rendered against Coastal for Coastal’s own conduct. 12 See Amerada Hess Corp. v. Wood Group Prod. Tech., 30 S.W.3d 5 (Tex. App.—Houston [14th Dist.] pet denied) (containing language in which Contractor agreed to indemnify Hess from all claims “whether or not caused by the sole, joint and/or concurrent negligence” of Hess); Aerospatiale Helicopter Corp. v. Universal Health Services, Inc., 778 S.W.2d 492, 501 (Tex. App.—Dallas 1989, writ denied) (excluding indemnity for a loss which is the proximate result of the indemnitee’s sole negligence). 13 ISI contests whether Section 13.1 expressly provides for comparative indemnity. See Motion at pp. 22- 26; infra at pp. 12-15. -11- Coastal Transport Co. v. Crown Central Petroleum Corp., 20 S.W.3d 119, 123 (Tex. App.— Houston [14th Dist.] 2000, pet. denied). Furthermore, that same court has ruled that parties cannot raise the specter of potential joint and several liability to justify what Marathon is attempting to do here. See Herzog, 1997 WL 473681 at n.3. At the end of the day, Marathon cannot merely contend it was “potentially liable” in excess of its proportionate share of responsibility and then recover the full $86 million. Instead, it has the burden to show that its Settlement included covered losses by proving it was at least 51% at fault for the fire. It has done just the opposite. D. The Response fails to show that Section 13.1 expressed a clear intent to provide for a comparative indemnity, rendering it void as a matter of law. 1. Marathon’s reliance on Gulf Ins. Co. v. Burns is misplaced—it did not overrule Ethyl in the context of situations involving concurrent negligence. The Response pins its hopes on a single paragraph of dicta in the Texas Supreme Court’s decision in Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 420 (Tex. 2000). Specifically, Marathon alleges that in Burns, the Supreme Court of Texas held that the rule announced in Ethyl is inapplicable in the instant case because Marathon is not seeking indemnity for the portion of the loss attributable to its own negligence. It did no such thing. To the contrary, Marathon’s attempt to overread the importance of Burns exposes the paucity of authority supporting its position. In reality, Burns resulted in the Supreme Court of Texas reversing the Thirteenth Court of Appeals and rendering a judgment that Nash, the agent, could not recover under the relevant indemnity agreement—the same result ISI seeks in its Motion. It did so because it found that the exception to the indemnity obligation negated coverage—the same result ISI seeks here. The relevant indemnity language in Burns was as follows: A. Company shall indemnify and hold harmless Agent against any claims or liabilities Agent may become obligated to pay to or in behalf of any insured based on actual or alleged error of Company -12- in its processing or handling Direct Billed or any other business placed by Agent with Company, except to the extent Agent has caused, contributed to or compounded such error. Burns Motors, Inc., 22 S.W.3d at 420 (emphasis added). Construing this language, the Court held that because an agreed judgment established that the agent knowingly made misrepresentations, the agent fully “caused, contributed to, or compounded” the error that caused the injuries, and thus the indemnity agreement did not apply. Id. at 423. The Supreme Court did not address whether compliance with the express negligence rule is required in situations involving concurrent negligence and, despite citing Ethyl, makes no reference to any proposed comparative indemnity, instead deciding that the text of the Agreement “unambiguously excludes indemnification under these circumstances.” Id. at 424. In the instant case, responsibility for the January 11, 2016 fire is inseparably mixed together amongst Marathon, ISI, and at least three other contractors. Consequently, Burns did not abrogate the rule announced in Ethyl, as demonstrated succinctly by the Fifth Circuit Court of Appeals: The express negligence rule applies if Quorum seeks indemnification for its own acts of negligence or for the joint or concurrent negligence of Quorum and the Hospital. “Indemnitees seeking indemnity for the consequences of their own negligence which proximately causes injury jointly or concurrently with the indemnitor’s negligence must also meet the express negligence test.” Ethyl, 725 S.W.2d at 708. If Quorum is seeking indemnification for the consequences of the Hospital's negligence, the express negligence doctrine does not apply. See id.; Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423-24 (Tex. 2000). Quorum Health Res., L.L.C. v. Maverick Cty. Hosp. Dist., 308 F.3d 451, 459–60 (5th Cir. 2002) (emphasis added). Marathon seeks indemnity for damages arising from concurrent acts of negligence by both itself and ISI. Burns provides no refuge from the requirements of the express negligence rule as a result. -13- 2. “To the extent” is not magic language that relieves parties seeking comparative indemnity from expressly stating that intention. Marathon also relies upon a portion of an opinion from the Dallas Court of Appeals which states that the phrase “‘to the extent caused’ suggests a comparative negligence construction under which each party is accountable ‘to the extent’ their negligence contributes to the injury.” See Tri- State Ins. Co. v. Rogers-O’Brien Const. Co., No. 05-95-01639-CV, 1997 WL 211534 (Tex. App.— Dallas 1997, writ denied) (emphasis added). The Response’s reliance on Tri-State is misplaced, as in that case the parties entered into a fault-based indemnity they thought was a regardless-of- fault indemnity. Id. at *5 (“We conclude that the indemnity provision in the Rogers- O’Brien/Ellsworth subcontract does not meet the express negligence doctrine”). 14 Tellingly, Tri- State acknowledged that “[b]y adding a phrase explaining that whether the injury is also caused in part by Rogers-O’Brien’s negligence would not be taken into account, the parties clarified their intent that Ellsworth would indemnify Rogers-O’Brien for Ellsworth’s negligence.” Id. This language was necessary precisely because it is not enough for the parties to use “to the extent” language to suggest comparative indemnity—instead they must expressly state their intent to do so within the four corners of the relevant contract.15 Houston Lighting & Power Co. v. Atchison, Topeka, & Santa Fe Ry. Co., 890 S.W.2d 455, 459 (Tex. 1994). 14 The most directly applicable case remains Aerospatiale Helicoptor Corp. v. Universal Health Services, Inc., which contains a broad indemnity agreement with an exception for the indemnitor’s sole negligence. See Motion at pp. 25-26. 15 Furthermore, Marathon’s assertion that there are no cases invalidating indemnity provisions with “except to the extent” language is incorrect. See AVCO Corp., Textron Lycoming Reciprocating Engine Div. of AVCO Corp. v. Interstate Southwest, Ltd., 251 S.W.3d 632, 666-67 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (invaliding indemnity agreement that contained “except to the extent that such Damages are directly caused by the negligence of [Lycoming]” as violating the express negligence rule). -14- Section 13.1, conversely, contains no such language explaining whether the exception for Marathon’s negligence applies to ISI’s indemnity obligation if the injuries are caused by the concurrent negligence of both parties. Consequently, Section 13.1 fails the express negligence test. See Motion at pp. 23-26. III. CONCLUSION AND PRAYER For these reasons, Defendant Industrial Specialists, LLC prays that this Court grant its Motion for Summary Judgment, dismiss Marathon’s claims for breach of contract and declaratory judgment with prejudice, and award ISI its costs and reasonable and necessary attorney’s fees in an amount to be determined in a trial by jury, and grant it all other relief to which it may be entitled, in equity or at law. -15- Respectfully Submitted, LISKOW & LEWIS /s/ Michael A. Golemi Michael A Golemi State Bar No. 24047536 James T. Kittrell State Bar No. 24078795 Jody M. Schisel-Meslin State Bar No. 24110336 1001 Fannin, Suite 1800 Houston, Texas 77002 Telephone: (713) 651-2900 Facsimile: (713) 651-2908 Email: magolemi@liskow.com Email jkittrell@liskow.com Email: jmschisel-meslin@liskow.com AND Mark D. Latham Louisiana Bar No. 19673 One Shell Square 701 Poydras Street, Suite 5000 New Orleans, Louisiana 70139 Telephone: (504) 581-7979 Facsimile: (504) 556-4120 E-mail: mdlatham@liskow.com ATTORNEYS FOR DEFENDANT INDUSTRIAL SPECIALISTS, LLC -16-