Case Title: PENNANT SERVICE COMPANY, INC. v. TRUE OIL COMPANY, LLC; TRUE OIL COMPANY, LLC v. PENNANT SERVICE COMPANY, INC.

Citation: 

Docket Number: S-09-0234

State: wyoming

Court: Wyoming Supreme Court

Date: 2011-03-08T00:00:00Z

Document:
PENNANT SERVICE COMPANY, INC. v. TRUE OIL COMPANY, LLC; TRUE OIL COMPANY, LLC v. PENNANT SERVICE COMPANY, INC.2011 WY 40Case Number: No, S-09-0234, S-09-0235Decided: 03/08/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2010

 
 

PENNANT 
SERVICE COMPANY, INC., a Colorado corporation,Appellant (Third-Party 
Defendant),v.TRUE OIL COMPANY, LLC,Appellee (Third-Party 
Plaintiff).TRUE OIL COMPANY, LLC,Appellant (Third-Party 
Plaintiff),v.PENNANT SERVICE COMPANY, INC., Appellee 
(Third-Party Defendant).

 
 
Appeal 
from the District Court of Sweetwater County

 
 

Representing 
Pennant Service Company, Inc.:

Rex 
O. Arney and Orintha E. Karns of Brown, Drew & Massey, LLP, Sheridan, 
WY.  Argument by Ms. 
Karns.

 
 

Representing 
True Oil Company, LLC:

Scott 
P. Klosterman and Patrick J. Murphy of Williams, Porter, Day & Neville, 
P.C., Casper, WY.  Argument by Mr. 
Murphy.

 
 
 
 
Before 
KITE, C.J., and GOLDEN, HILL, VOIGT*, and BURKE, 
JJ.

 
 
*Chief 
Justice at time of oral argument.

 
 

HILL, 
J., 
delivers the opinion of the Court; BURKE, J., files a special 
concurrence/dissent.

 
 

HILL, 
Justice.

 
 
[¶1]      This is an 
appeal and a cross-appeal between True Oil Company, LLC, and Pennant Service 
Company, Inc., a Colorado corporation.  
Both companies were originally involved in a negligence action brought by 
Christopher Van Norman after he was injured in an oil well accident.  True Oil settled out of court with Van 
Norman for $500,000.00.  The 
original suit was resolved in 2005, leaving only a third-party suit that alleged 
breach of contract and indemnification between True Oil and Pennant.  After a bench trial on those issues, the 
trial court found in favor of True Oil.  
Pennant was found to have breached the contract, and the court awarded 
True Oil $500,000.00 in damages.  
This appeal followed.

 
 
ISSUES

 
 
Case 
09-0234

 
 
[¶2]      Pennant states 
its issues as follows:

 
 
A.        Was 
the indemnitee entitled to damages after failing to prove its damages came as a 
result of the breach of contract?

B.        In 
the alternative, if the indemnitee is entitled to the award of damages from the 
indemnification clause, then:

1.  Did 
the trial court err by ruling that an indemnitee's burden of showing potential 
liability is met merely by the existence of the original plaintiff's 
claim?

2.  Did 
the trial court err by ruling that when only an indemnity issue is presented, 
there is no right to a jury trial?1

 
 
True 
Oil states the issues this way:

 
 

A.           
Should 
each of Pennant Well Service, Inc.'s, appellate arguments be resolved in favor 
of True Oil Company, LLC, as a result  
of Pennant Well Service, Inc.'s, admissions, stipulation, concession, and 
failure to raise these arguments in district court?

B.           
Did 
the district court correctly find that the indemnitee, True Oil Company, LLC, 
was entitled to $500,000.00 in breach of contract damages from indemnitor, 
Pennant Well Service, Inc.?

 
 
Case 
09-0235

 
 
In 
its cross appeal, True Oil presents the following issues:

 
 

1.            
Did 
the district court abuse its discretion when it failed to award attorney's fees 
to True when an express contractual provision exists for such an award, and True 
proved its fees at trial without rebuttal from Pennant?

2.            
Did 
the district court abuse its discretion when it failed to award prejudgment 
interest to True on the liquidated settlement sum of $500,000.00 and the 
attorney's fees it incurred?

 
 
Pennant 
rephrases the issues as follows:

 
 

A.           
Whether 
a provision for attorney's fees contained solely in an indemnification clause 
allows an indemnitee to recover attorney fees for a direct negligence action 
where the indemnification clause is void pursuant to Wyo. Stat. Ann. § 
30-1-131.

B.           
Whether 
a provision for attorney's fees contained solely in an indemnification clause 
allows an indemnitee to recover attorney fees in an action between the parties 
to the contract attempting to establish a right to 
indemnification.

C.           
Whether 
prejudgment interest is available on a settlement amount involving the 
discretion and opinion of the party seeking the interest.

D.           
Whether 
prejudgment interest is available on attorney's fees in the absence of 
applicable statutory authority and absence of notice.

 
 
FACTS

 
 
[¶3]      On July 3, 
2001, Christopher Van Norman was severely burned as the result of a flash fire 
on an oil and gas well owned by True Oil Company, LLC (True Oil), a Wyoming 
based company that owns and operates various oil and gas wells throughout 
Wyoming.  Van Norman was employed by 
Pennant Service Company, Inc., a Colorado corporation that contracted with True 
Oil to provide the necessary equipment, as well as a four-person crew to perform 
"workover" operations on the True Oil well.

 
 
[¶4]      Van Norman filed 
suit against True Oil, Halliburton, Inc., Weatherford, and eventually Pennant 
alleging, among other things, that "True Oil failed to properly and safely 
supervise said project, and otherwise failed to implement basic and important 
safety precautions and/or to supervise the proper placement of equipment at the 
well thereby creating or failing to prevent a dangerous work environment for 
[Van Norman]," and that "Pennant and its employees, excluding himself, were 
negligent and that such negligence is imputed to True Oil under the legal theory 
of respondeat superior."2

 
 
[¶5]      True Oil filed a 
third-party complaint against Pennant, alleging that Pennant breached the terms 
of its Master Service Contract (MSC).  
True Oil alleged that Pennant breached the MSC by: (1) failing to provide 
fully trained personnel capable of operating its equipment and performing its 
work; (2) failing to provide a full crew to perform its work; (3) failing to 
perform its work in a good and workmanlike manner; (4) failing to perform its 
work in compliance with all state and federal laws, rules, and regulations; and 
(5) failing to furnish True with insurance coverage.  In its answer to True Oil's third-party 
complaint, Pennant admitted that it agreed to indemnify True Oil for the amount 
of any judgment or settlement that might be entered against True Oil which is 
attributable to the negligence of Pennant and its employees.  Settlement discussions ensued between 
True Oil and Van Norman.  Neither 
Pennant nor its insurer, Mid-Continent, participated despite invitations to do 
so.  On December 7, 2005, True Oil 
accepted Van Norman's demand to settle all claims for the total sum of Five 
Hundred Thousand Dollars ($500,000.00).  
In consideration for this sum, Van Norman agreed to dismiss with 
prejudice all of his claims against True Oil for its own potential negligence, 
as well as True Oil's vicarious liability for Pennant's negligence arising out 
of the July 3, 2001 accident.

 
 
[¶6]      Regarding the 
settlement between Van Norman and True Oil, Pennant signed a stipulation 
agreeing to the "reasonableness" of the settlement, and by 2006, all that 
remained of the underlying litigation was the third-party claims between True 
Oil and Pennant.  A bench trial was 
held in August of 2008, after which the trial court found Pennant to have 
breached its contract with True Oil, and that the damages were equal to the 
settlement amount True Oil had paid Van Norman.  Furthermore, Pennant was to pay the 
attorney's fees and costs from the time the amended complaint was filed alleging 
vicarious liability.  This appeal 
followed.

 
 
STANDARD 
OF REVIEW

 

 
[¶7]      We very recently 
stated in Hofstad v. Christie, 2010 
WY 134, ¶ 7, 240 P.3d 816, 818 (Wyo. 2010):

 
 
Following 
a bench trial, this court 
reviews a district court's findings and conclusions using a clearly erroneous 
standard for the factual findings and a de novo standard for the 
conclusions of law.  Piroschak v. 
Whelan, 2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo. 2005) (citing 
Hansuld v. Lariat Diesel Corp., 2003 WY 165, ¶ 13, 81 P.3d 215, 218 
(Wyo. 2003) and Rennard 
v. Vollmar, 977 P.2d 1277, 1279 (Wyo. 1999)).

 

 
The 
factual findings of a judge are not entitled to the limited review afforded a 
jury verdict. While the findings are presumptively correct, the appellate court 
may examine all of the properly admissible evidence in the record. Due regard is 
given to the opportunity of the trial judge to assess the credibility of the 
witnesses, and our review does not entail re-weighing disputed evidence. 
Findings of fact will not be set aside unless they are clearly erroneous. A 
finding is clearly erroneous when, although there is evidence to support it, the 
reviewing court on the entire evidence is left with the definite and firm 
conviction that a mistake has been committed.

 
 

Piroschak, 
¶ 7, 106 P.3d  at 890. Findings may not be set aside because we would have 
reached a different result. Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004).  Further,

 
 
we 
assume that the evidence of the prevailing party below is true and give that 
party every reasonable inference that can fairly and reasonably be drawn from 
it. We do not substitute ourselves for the trial  court as a finder of 
facts; instead, we defer to those findings unless they are unsupported by the 
record or erroneous as a matter of law.

 
 

Id. 
(quotation marks omitted) (some citations omitted).

 
 
DISCUSSION

 
 
[¶8]      Pennant argues 
that True Oil failed to prove that its damages for indemnification were 
reasonably foreseeable as a result of the breach of contract by Pennant.  Also, Pennant argues that True Oil 
presented no evidence at trial that its damages (from Pennant's alleged breaches 
of contract) were foreseeable and naturally flowed from the breaches of the MSC, 
and failed to provide any evidence that the damages were within the 
contemplation of the parties at the time of contracting.  In response, True Oil asserts that it 
was not required to prove its damages because Pennant stipulated to the 
"reasonableness" of True Oil's settlement with the original plaintiff.  True Oil maintains that even if this 
Court finds that the stipulation is not proof of Pennant's potential liability, 
the evidence shows that True Oil was potentially liable for Pennant's 
negligence.

 
 
[¶9]      This case began 
when Christopher Van Norman sued True Oil, among others, for his injuries 
suffered at work.  True Oil filed a 
third-party complaint against Pennant Service Company which essentially became a 
breach of contract action between the two companies.  True Oil claimed that indemnification was 
the remedy for Pennant's breach of contract.  Pennant was asked repeatedly to either 
participate in the settlement negotiations with Van Norman or to approve the 
settlement.  However, Pennant never 
participated in the negotiations, but in the end stipulated to the 
"reasonableness" of the settlement.  
As the district court stated:

 
 
[T]he 
action between True and Pennant is not one alleging that Pennant acted 
negligently against True.  It is 
instead an action based on Pennant's refusal to participate or indemnify True 
for its settlement with the plaintiff in a negligence 
action.

 
 
The 
issue the Court is called upon to address is as follows:  Would Pennant be in breach of contract 
if it were not required to indemnify True Oil for True's good-faith settlement 
with Van Norman?  The short answer 
to this question is yes.

 
 
[¶10]   We begin our efforts to explain our 
more detailed answer to this question by examining the law associated with 
indemnity.  Indemnity has its roots 
in equitable principles of restitution and unjust enrichment.  2 George E. Palmer, The Law of 
Restitution § 10.6(c) (1978).  "A person who has been unjustly enriched 
at the expense of another is required to make restitution to the other."  Restatement of Restitution § 1 
(1937).  Schneider Nat., Inc. v. Holland Hitch 
Co., 843 P.2d 561 (Wyo. 1992).  
The traditional basis for distinguishing indemnity from tort based 
liability relied on unequal fault of the actors.  Id.

 
 
[Any] 
attempt to reconcile the numerous decisions and particularly the sweeping 
pronouncements often found in them, is an exercise in frustrating utility. The 
law as to indemnity among tortfeasors, like that of contribution among them, is 
in a state of development, flux and evolution, and the two, in some aspects, 
appear to merge[.] 

 
 
1 
Stuart M. Speiser, Charles F. Krause & Alfred W. Gans, The American Law 
of Torts § 3:26 at 518 (1983) (footnotes omitted).  In general, the action for indemnity was 
premised on the desirable shifting of liability from a party who has paid 
damages but who should not have had to bear the entire burden alone.  6 Marilyn Minzer, Jerome H. Nates, Clark 
D. Kimball & Diana T. Axelrod, Damages in Tort Actions § 50.21 
(1989).  The Restatement (Second) of 
Torts § 886B(1) (1979) states:

 
 
(1)  If 
two persons are liable in tort to a third person for the same harm, and one of 
them discharges the liability of both, he is entitled to indemnity from the 
other if the other would be unjustly enriched at his expense by the discharge of 
the liability.

 
 
[¶11]   Wyoming endorses the universal view 
that where "an indemnitor declines to approve a proposed settlement or assume 
the burden of defense, then the indemnitee is only required to prove a potential 
liability to the original plaintiff in order to support a claim against the 
indemnitor."  Pan American Petroleum Corp. v. Maddux Well 
Serv., 586 P.2d 1220, 1225 (Wyo. 1978).  A showing of "potential liability" is 
required because the indemnitee must not be a mere volunteer who has settled the 
underlying claim when there was no exposure to legal liability that obligated 
him or her to do so.  Camp, Dresser & McKee, Inc. v. Paul N. 
Howard Co., 853 So. 2d 1072, 
1079-80 (Fla. Dist. Ct. App. 5th Dist. 2003).  Only if the indemnitor is not 
given notice and an opportunity to assume responsibility for the claim must the 
settling indemnitee show that it was actually liable to the plaintiff.  Id.  Although this Court has not yet 
articulated the standard or test for proving potential liability, we are 
persuaded by the following description:

 
 
            
The threshold for "potential liability" is not high, nor should it 
be.  Where notice has been given to 
the indemnitor and the indemnitor has elected not to act to protect himself, he, 
in effect, consents to allow the indemnitee to act for him and will not be heard 
to complain about the outcome  except in the very limited circumstance where 
the indemnitee was not, in fact, at risk, but nevertheless paid money that it 
would never have owed to the plaintiff  [T]he test for potential liability may 
be both subjective and objective, i.e., was the indemnitee at any risk of loss 
due to the claim and did the indemnitee have reason to believe he was at risk at 
the time the settlement was entered into?

 
 

Camp, 
853 So. 2d  at 1083.

 
 
[¶12]   "The rule is the same in a case 
such as this where theories both within and without the indemnity agreement are 
asserted against the indemnitee and the indemnitor does not assume the defense 
of the claims within the contract's coverage."  Camp, 853 So. 2d  at 1080 (citing 
Heckart v. Viking Exploration, Inc., 673 F.2d 309, 313 (10th Cir. 1982)). 
 The indemnitee may settle for a 
reasonable amount and then recover that amount from the indemnitor by showing 
that it was not liable on any theory outside the indemnity agreement and was 
potentially liable on a theory covered by the agreement.  Id.  If, before settlement is concluded, the indemnitor is offered a choice between 
approving the settlement or 
taking over the defense of the claim, and refuses to do either, the indemnitee can recover by showing 
potential liability to the original plaintiffs 
and need not prove actual liability.  Parfait v. Jahncke Serv., Inc., 
484 F.2d 296, 304-05 (5th Cir. 1973).

 
 
[A] 
settling indemnitee can recover 
from an indemnitor upon proof of 
the indemnitee's potential 
liability if the settlement terms are reasonable and if 
the indemnitor has notice of the 
suit, has notice of the settlement terms, and has failed to 
object to those terms even though he has had a reasonable opportunity to approve 
or disapprove the settlement.

 
 

Burke 
v. Ripp, 
619 F.2d 354, 360 (5th Cir. 1980) (Goldberg, J., 
concurring).

 
 
[¶13]   We also appreciate the following 
discussion from a recent Michigan case, Detroit Edison Co. v. City of 
Detroit, 2009 Mich. App. 
LEXIS 1441 (Mich. Ct. App. June 25, 2009):

Regarding 
a settling indemnitee's burden of establishing its liability to the underlying 
plaintiff to be entitled to indemnification from an indemnitor, the Court in St. 
Luke's Hosp. v. Giertz, 458 
Mich. 448, 454; 581 N.W.2d 665 (1998), quoted with approval the 
following from 41 Am. Jur. 2d, Indemnity, § 46, p. 380 (emphasis added): 

 
 
A 
person legally liable for damages who is entitled to indemnity may settle the 
claim and recover over against the indemnitor, even though he has not been 
compelled by judgment to pay the loss. In order to recover, the indemnitee 
settling the claim must show that the indemnitor was legally liable, and that 
the settlement was reasonable. In the event that an indemnitor is not 
afforded the alternative of participating in a settlement or conducting the 
defense against the original claim, an indemnitee settling the claim will have 
the burden of establishing actual liability to the original plaintiff rather 
than the lesser burden of showing potential liability.  [Italics in 
original.]

 
 
In 
this case, the submitted evidence showed that defendant was afforded an 
opportunity to participate in the underlying settlement negotiations, but 
declined to do so. Therefore, it was only necessary that plaintiff show its 
potential liability in the 
underlying action to recover on its claim for indemnification from 
defendant.

 
 
Under 
the potential liability 
standard, plaintiff was only required to show that the settlement was reasonable 
and that the underlying factual situation was one covered by the indemnity 
contract.

 
 
To 
determine the reasonableness of the settlement, it is necessary to consider the 
amount of the settlement in light of the risk of exposure. The risk of exposure 
is the probable amount of a judgment if the original plaintiff were to prevail 
at trial, balanced against the possibility that the original defendant would 
have prevailed. Id. at 355-356.

.

 
 
Whether 
the underlying factual situation is covered by the indemnity agreement requires 
only a straight-forward analysis of the underlying facts and the terms of the 
indemnity contract. Grand Trunk, supra at 357. An indemnity contract is 
construed in the same fashion as are contracts generally. Hubbell, Roth & 
Clark, Inc. v. Jay Dee Contractors, Inc., 249 Mich. App. 288, 291; 642 N.W.2d 700 (2001). Where the language of the contract is clear and unambiguous, 
interpretation is limited to the actual words used. An unambiguous contract must 
be enforced according to its terms. Burkhardt v. Bailey, 260 Mich. App. 
636, 656; 680 N.W.2d 453 (2004). The allegations of the complaint seeking 
indemnification, as well as  the underlying complaint must be examined to 
determine whether there is an indemnity obligation. Sherman 
v. DeMaria Bldg. Co., 203 
Mich. App. 593, 601-602; 513 N.W.2d 187 (1994); Paul v. Bogle, 
193 Mich. App. 479, 496; 484 N.W.2d 728 (1992).

 
 
In 
this case, the indemnity clause required defendant to indemnify plaintiff where 
there is (1) loss or damage to any person, (2) resulting directly or indirectly 
from the use, misuse, or presence of plaintiff's electricity on the city's 
premises or elsewhere, (3) after the electricity passes the point of delivery to 
defendant. The underlying action involved a claim for loss to a person who was 
killed by the presence of electricity supplied by plaintiff after it was 
delivered to defendant. The underlying claim clearly falls within the scope of 
the parties' indemnity agreement.

 
 
Finally, 
we wish to briefly address defendant's argument that there is an internal 
inconsistency between finding that plaintiff had "potential liability" and the indemnity 
clause provision precluding its application if the loss or damage in the 
underlying case was "occasioned by active negligence of plaintiff, its agents or 
employees."  As discussed below, it 
is not inconsistent to conclude that plaintiff had "potential liability" while at the same 
time concluding that there was no genuine issue of material fact that the 
exception to the indemnity provision regarding active negligence does not 
apply.

 
 
Our 
Court has made clear that the "potential liability" test first 
discussed in Ford, 
supra, does not require any plenary discussion or analysis of the 
indemnitee's liability in the underlying case. Grand 
Trunk, supra at 
359-360. Instead, as the Ford Court explained, "potential liability" in these cases 
"means nothing more than that the indemnitee acted reasonably in settling the 
underlying suit." Ford, 
supra at 
278. What is "reasonable in settling the underlying suit" is 
determined by considering the following two criteria:

 
 
The 
reasonableness of the settlement consists of two components, which are 
interrelated. The fact-finder must look at the amount paid in settlement of the 
claim in light of the risk of exposure. The risk of exposure is the probable 
amount of a judgment if the original plaintiff were to prevail at trial, 
balanced against the possibility that the original defendant would have 
prevailed. [Id.]

 
 
            
.

 
 
Thus, 
under the controlling case law, although the "risk of exposure" is a 
consideration in determining the reasonableness of the settlement in the 
underlying suit, the risk of exposure is determined by determining the probable 
amount of a judgment if the plaintiff were to prevail at trial, balanced against 
the possibility that the original defendant would have prevailed. Coming to this 
more general conclusion is quite different than the more specific and more 
demanding clause within the indemnification agreement, which 
requires that it be proven that 
the injury or damage was 
occasioned by the negligence of plaintiff. Thus, the standards are different and 
the generalized facts and circumstances presented by plaintiff regarding the 
settlement and underlying case were sufficient to satisfy this "potential liability" standard, but do 
not establish a genuine issue of material fact regarding active negligence under 
the indemnity provision.  [Citations 
and footnote omitted.]

 
 
[¶14]   In this case, the trial court did 
not apply the "potential liability" test.  
However, we can presume that the court did not apply the potential 
liability test in this case because True Oil was not required to make a showing 
of potential liability  rather, by stipulating to the reasonableness of the 
$500,000.00 settlement paid by True Oil, Pennant essentially pointed out True's 
potential liability.  The record 
reflects as much.  After Pennant and 
True Oil filed a Joint Statement of the Parties, in which the stipulation is found, 
Pennant's counsel stated at trial:

 
 
[I]nitially, 
we were going to be here on the reasonableness of the settlement between True 
and Van Norman.  However, the 
reasonableness of that $500,000.00 settlement is no longer an issue  we are now 
down to the more usual comparative fault apportionment 
analysis.

 
 
[¶15]   Before the stipulation to the 
reasonableness of the settlement occurred, Pennant was aware that the vicarious 
liability of True Oil was an issue.  
In prior proceedings in the district court, the court ruled that Van 
Norman should be allowed to amend his complaint to add a vicarious liability 
claim against True Oil.  After that, 
True Oil filed its third-party complaint against Pennant.  Pennant's insurer, Mid-Continent 
Casualty Company, denied True Oil's demand for insurance coverage and a defense 
for the vicarious liability allegation.  
Mid-Continent filed a declaratory judgment action in the federal district 
court, seeking a determination on those demands.  The federal court noted that there was a 
realistic possibility of liability in the facts and circumstances that existed 
following the amendment of the Van Norman complaint, to include a vicarious 
liability claim against True Oil.  The court stated:

 
 
Pennant 
agreed to indemnify True in the MSC.  
Coverage for this agreement is provided for in the CGL.  The agreement 
providing for indemnification from all claims and damages caused by the 
negligence of others, which would include the claims of vicarious liability in 
this case, is valid and enforceable under applicable Wyoming 
law.

 
 
[¶16]   Although it was not labeled as 
such, we agree with the court that potential liability was established when the 
Van Norman complaint was amended to include a claim for vicarious liability. 
 This conclusion was based upon much 
more than the mere allegation, but the showing by True Oil throughout the 
lawsuit that it was potentially liable.  
Pennant mistakenly relies on Pan 
American Petroleum Corp., 586 P.2d  at 1225, which 
states:

 
 
[I]f 
an indemnitor declines to approve a proposed settlement or assume the burden of 
the defense, then the indemnitee is only required to prove a potential liability 
to the original plaintiff in order to support a claim against the 
indemnitor.

 
 
However, 
Pennant stipulated to the reasonableness of the settlement in this case and had 
to have considered the possibility of indemnification in accordance with the 
contract.  Pennant was asked 
repeatedly to participate in the settlement negotiations with Van Norman, or to 
approve the settlement amount.  
Pennant did not object or respond in any manner until it stipulated to 
the reasonableness of the amount of the settlement.

 
 
[¶17]   Regarding the breach of contract 
claims, to which Pennant does not object on appeal, the district court found as 
follows:

 
 
            
38.  In its Third-Party Complaint, True has alleged that 
Pennant breached the terms of the Master Service Contract by: (1) failing to 
provide fully trained personnel capable of operating its equipment and 
performing its work; (2) failing to provide a full crew to perform its work; (3) 
failing to perform its work in a good and workmanlike manner; (4) failing to 
perform its work in compliance with all state and federal laws, rules and 
regulations; and (5) failing to furnish True with insurance 
coverage.

 
 
39.  Pennant 
was responsible for providing safety training to all Pennant 
employees.

 
 
.

 
 
62.  The 
proximate cause of the accident which injured Christopher Van Norman on July 3, 
2001, was Pennant's decision to circulate the well to the flat tank, rather than 
to a flare pit which was being dug at the time of the 
accident.

 
 
          
63.  100% of the fault must be allocated to 
Pennant.

 
 
 
 
[¶18]   Pennant argues that "only those 
damages which are the natural and foreseeable result of a breach of contract are 
recoverable."  True Oil actually 
agrees with that statement, and contends that the $500,000.00 settlement payment 
was absolutely within the contemplation of the parties in the MSC.  The indemnification clause in the MSC 
reads as follows:

 
 

6.            
Indemnification.  To the fullest extent permitted by law, 
the Contractor shall and does agree to indemnify, protect, defend and hold 
harmless the Company, its affiliated companies, their joint owners, officers, 
directors, shareholders, employees and agents (collectively "Indemnitee") from 
and against all claims, damages, losses, liens, causes of action, suits, 
judgments, penalties, fines and expenses, including attorney fees, of any 
nature, kind or description whatsoever (collectively "Liabilities") of any 
person or entity whomsoever arising out of, caused in whole or in part by or 
resulting directly or indirectly from any act or omission, including negligence, 
of Contractor or its sub-contractors, their agents, anyone directly or 
indirectly employed by them or anyone they have the right to control or exercise 
control over, even if these liabilities are caused in part by the negligence or 
omission of any Indemnitee.

 
 
Pennant 
executed this contract which expressly states that Pennant must indemnify True 
Oil for settlements or judgments to Pennant's employees arising out of Pennant's 
acts or omissions.  Pennant was well 
aware of True Oil's vicarious liability risk, and Pennant agreed, through the 
contract, to indemnify True Oil for any damages resulting therefrom.  Furthermore, by stipulating to the 
reasonableness of the $500,000.00 settlement paid by True Oil to Van Norman, 
Pennant supported True Oil's "potential liability" for Pennant's 
negligence.

 
 
[¶19]   We are convinced that the issue of 
reasonable apprehension of liability was clearly established in this instance, 
and that the damages in this case were proven to a reasonable degree of 
certainty.  Sannerud v. Brantz, 879 P.2d 341, 345 
(Wyo. 1994).  As evidenced by the 
contract, Pennant and True Oil each contemplated indemnification damages for 
bodily injuries when they signed.  
The district court's award of $500,000.00 to True Oil is 
affirmed.

 
 
True 
Oil's Cross-Appeal

 
 

1. 
Attorney fees

 
 
[¶20]   We review a district court's 
decision regarding the award of attorney's 
fees and costs for abuse of discretion.  A court abuses its discretion only when 
it acts in a manner which exceeds the bounds of reason under the circumstances. 
 The burden is placed upon the party 
who is attacking the trial court's ruling to establish an abuse of discretion. 
 Shepard v. Beck, 2007 WY 53, 
¶ 14, 154 P.3d 982, 
988 (Wyo. 2007).

 
 
[¶21]   In its cross-appeal, True Oil 
claims that the trial court erred in declining to award attorney 
fees.  In the Amended 
Judgment and Order issued by the 
trial court, the court limited attorney fees and costs awarded to True Oil to 
those incurred from the date of Van Norman's amended complaint (March 15, 2005), 
until the date of True Oil's settlement with Van Norman (December 27, 2005) on 
the basis that during that period, True Oil was entitled to a defense of the 
vicarious liability claim.  
Regarding the attorney's fees incurred by True Oil from October of 2001 
to March of 2005, the trial court denied the award of fees on the basis that 
True Oil was defending against claims of its own negligence.  
And finally, regarding attorney's fees incurred by True Oil after 
December 7, 2005, the court denied any award of fees and did not include a basis 
for the denial in its order.

 
 
[¶22]   In Weiss v. Weiss, 2009 WY 124, ¶ 8, 
217 P.3d 408, 410 (Wyo. 2009), this Court held:

 
 
Although 
Wyoming generally subscribes to the American rule regarding the recovery of 
attorney's fees, under which rule each party pays his or her own fees, a 
prevailing party may be reimbursed for attorney's fees when provided for by 
contract or statute.  [citations 
omitted.]

 
 
[¶23]   In Meyer v. Hatto, 2008 WY 153, ¶ 26, 
198 P.3d 552, 557-558 (Wyo. 2008), this Court held more 
specifically:

 
 
A 
prevailing party  is generally entitled to be reimbursed for his attorney's 
fees and costs when an express contractual authorization exists for such an 
award. 

 
 
While 
the general rule is that a valid provision for attorney's fees in a [contract] 
is as much an obligation of the contract as any part of it, the trial court 
still has discretion in exercising its equitable control to allow only such sum 
as it thinks reasonable.  A trial 
court in its discretion may properly disallow attorney's fees altogether on the 
basis that such recovery would be inequitable.

 
 

Combs 
v. Walters, 518 P.2d 1254, 1255 (Wyo. 1974) (citations omitted).

 
 
[¶24]   With these principles in mind, we 
now turn to the question of attorney's fees between Pennant and True Oil.  The express contractual provision 
regarding indemnification reads as follows:

 
 

6.    
Indemnification.  To the fullest extent permitted by law, 
the Contractor shall and does agree to indemnify, protect, defend and hold 
harmless the Company, its affiliated companies, their joint owners, officers, 
directors, shareholders, employees and agents (collectively, "Indemnitee") from 
and against all claims, damages, losses liens, causes of action, suits, 
judgments, penalties, fines and expenses, including attorney fees, of any 
nature, kind or description whatsoever (collectively, "Liabilities") of any 
person or entity whomsoever arising out of, caused in whole or in part by or 
resulting directly or indirectly from any act or omission, including negligence 
of Contractor [Pennant] or its sub-contractors, their agents, anyone directly or 
indirectly employed by them or anyone they have the right to control or exercise 
control over, even if these liabilities are caused in part by the negligence or 
omission of any indemnitee.  
[Emphasis added.]

 
 
This 
Court interprets an indemnity provision as it does any other contract, affording 
the language its plain meaning.  Jacobs Ranch Coal Co. v. Thunder Basin Coal 
Co., LLC, 2008 WY 101, ¶ 24, 191 P.3d 125, 133 (Wyo. 2008).  According to True Oil, this contractual 
provision is clear and complete evidence of the parties' intent that Pennant pay 
for all damages and losses, including attorney's fees, caused in whole or in 
part from any act or omission on the part of Pennant.  True Oil maintains its position that 
Pennant's breach of its contractual obligations was the sole cause of the 
accident and injuries to Christopher Van Norman, and accordingly, Pennant owes 
True Oil its attorney's fees.  
Conversely, Pennant argues that the indemnity clause in the MSC does not 
"unequivocally confer an indemnity obligation on Pennant in a suit between the 
parties."

 
 
Attorney's 
Fees incurred prior to March 16, 2005

 
 
[¶25]   
The district court denied attorney's fees incurred by True Oil prior 
to March 16, 2005, stating that from October of 2001 to March 16, 2005, True Oil 
was "defending against claims of its own negligence."  Although Wyoming law does not allow True 
Oil to be indemnified for its attorney's fees for its own negligence, True Oil 
asserts it should be indemnified for its attorney's fees incurred in defending 
allegations of its own negligence.

 
 
[¶26]   In the district court's findings of 
fact, it stated that Pennant was 100% at fault, and that Pennant breached the 
MSC in all manners alleged by True Oil.  
The court then awarded True Oil $500,000.00 in 
damages.

 
 
[¶27]   Wyoming has an oil field specific 
anti-indemnity statute which invalidates indemnification clauses under certain 
circumstances.  Wyo. Stat. Ann. § 
30-1-131 (LexisNexis 2009) states as follows:

 
 

§30-1-131.  Provisions 
for indemnity in certain contracts; invalidity.

 

 
(a)  All 
agreements, covenants or promises contained in, collateral to or affecting any 
agreement pertaining to any well for oil, gas or water, or mine for any mineral, 
which purport to indemnify the indemnitee against loss or liability for damages 
for:

(i)  Death 
or bodily injury to persons;

(ii)  Injury 
to property; or

(iii)  Any 
other loss, damage, or expense arising under either (i)  or (ii) 
from:

(A)  The 
sole or concurrent negligence of the indemnitee or the agents or employees of 
the indemnitee or any independent contractor who is directly responsible to such 
indemnitee; or

(B)  From 
any accident which occurs in operations carried on at the direction or under the 
supervision of the indemnitee or an employee or representative of the indemnitee or in accordance with methods and means specified by 
the indemnitee or employees or representatives of the indemnitee, are against 
public policy and are void and unenforceable to the extent that such contract of 
indemnity by its terms purports to relieve the indemnitee from loss or liability 
for his own negligence. This provision shall not affect the validity of any 
insurance contract or any benefit conferred by the Worker's Compensation Law 
[§§ 27- 
14-101 through 27-14-805] of this state.

 
 
"An 
agreement containing a provision violative of the anti-indemnity statute is not 
void and unenforceable in total, but only to the extent that it violates the 
statute.  Further, indemnification 
is not prohibited except for the indemnitee's own negligence."  Gainsco Ins. Co. v. Amoco Production Co., 
2002 WY 122, ¶ 82, 53 P.3d 1051, 1075 (Wyo. 2002).  
However, although indemnification is not available for liability 
arising from negligence, reasonable attorney's fees and costs expended in the 
defense of the underlying action are available to be recovered.  Northwinds of Wyoming, Inc. v. Phillips 
Petroleum Co., 779 P.2d 753, 759 (Wyo. 1989).

 
 
[¶28]   Regarding § 30-1-131,  Pennant argues that the statute voids 
the indemnification clause contained in the contract to the extent that it 
protects True Oil from loss for its own negligence.  Pennant questions True's reliance upon 
Mountain Fuel Supply Co. v. Emerson, 
578 P.2d 1351 (Wyo. 1978) and Northwinds.  In Northwinds, this Court held that "the 
district court correctly determined that Phillips was entitled to its reasonable 
attorneys' fees and costs expended in defense of the underlying action." 779 P.2d  at 760.  This, argues True Oil, 
indicates that Wyoming law supports True's argument that it should be 
indemnified for attorney's fees and costs incurred in defending allegations of 
its own negligence.  However, 
Pennant points out that Northwinds 
does not apply § 30-1-131, and thus True Oil's reliance on Northwinds is misplaced.  Pennant has similar difficulties with 
True Oil's reliance on Mountain Fuel 
Supply.  There, True Oil urges 
that because the instant case and Mountain Fuel Supply both contain almost 
mirror-like indemnity clauses, and because the court in Mountain Fuel Supply held the following, it is 
entitled to indemnification for attorney's fees.

 
 
            
Although the parties' agreement may be void to the extent that it 
attempted to indemnify Mountain Fuel from its own negligence, this is not to say 
that the agreement is void to the extent that it implicitly sought to indemnify 
Mountain Fuel from Emerson's negligence.  
Such an agreement is not prohibited by §30-28.3, supra.  As a result, if Mountain Fuel is found 
not negligent, and Emerson is found negligent,  then Mountain Fuel is 
entitled to indemnification for its costs and legal fees as provided in the 
parties' agreement. 

 
 

Id., 578 P.2d  at 1358.  However, Pennant points out that to the 
extent the agreement in Mountain Fuel 
Supply sought to indemnify Mountain 
Fuel Supply from Emerson's negligence, such an agreement is not prohibited, 
and Mountain Fuel Supply was entitled 
to fees in that situation.

 
 
[¶29]   True Oil's bottom line argument is 
that the anti-indemnity statute has no application to this case because the 
indemnitee, True Oil, was not negligent.  
True Oil states that it is not attempting to avoid liability for its own 
negligence; rather, it argues that it is attempting to recover a loss 
(attorney's fees) that is expressly provided for in the MSC.  Pennant agreed to indemnify and hold 
True Oil harmless from "all  damages, losses  and expenses, including 
attorneys' fees,  arising out of [Pennant's acts, omissions and/or 
negligence]."

 
 
[¶30]   We agree with True Oil and find the 
beginning of our analysis in the simplest of places  the freedom to 
contract.  In Roussalis v. Wyoming Medical Center, Inc., 
4 P.3d 209, 247 (Wyo. 2000), this 
Court held that it does not lightly interfere with the freedom of contract 
between parties, and reiterated its reluctance to nullify the provisions of a 
contract made by competent parties.  Furthermore, we note that the district 
court determined the accident that injured Van Norman was caused 100% by 
Pennant.  Thus, the indemnification 
provision in the MSC was not a basis to be relied upon by the district court in 
denying True Oil's request for attorney's fees.  It is a valid and enforceable part of 
the MSC.  Consistent with our ruling 
in Gainsco, we take note that in a 
similar case, Mid-Continent Casualty Co. 
v. True Oil Co., Case No. 05-CV-258J, Order on Cross Motions for Summary 
Judgment, p.18 (U.S.D.C. Wyo. 2006), the federal district court 
concluded:

 
 
 
the contract is invalidated only to 
the extent that the agreement is one purporting to relieve True Oil from 
liability for its own negligence and not from vicarious liability claims brought 
under a respondeat superior theory. [Emphasis in 
original.]

 
 
[¶31]   Relieving True Oil of any 
negligence, but then denying its attorney's fees in defending itself against 
Pennant was an abuse of discretion by the district court.  True Oil is thus entitled to its 
attorney's fees incurred in defending the claims associated to this case, prior 
to March 16, 2005.

 
 
Attorney's 
fees incurred after December 7, 2005

 
 
[¶32]   The district court denied True 
Oil's request for reimbursement of its attorney's fees incurred after December 
7, 2005, without giving any basis or explanation.

 
 
[¶33]   The majority rule is that a party is not entitled to its fees and costs 
incurred in establishing its right to indemnity:

 
 
The 
general, and virtually unanimous rule appears to limit the allowance of such 
fees to the defense of the claim indemnified 
against and not to extend such allowance for services rendered in establishing 
the right to indemnification. 
41 Am.Jur.2d, Indemnity, 
§ 36 (Supp.   1974); 42 C.J.S. Indemnity, 
§ 13d (1944) . . . [I]n the absence of express contractual terms to the 
contrary, an indemnitee may not recover legal fees incurred in establishing his 
right to indemnification.

 
 

Jones 
v. Strom Construction Co., Inc. 
(1974), 84 Wash. 2d 518, 527 P.2d 1115, 1119. 

 
 

Amazi 
v. Atlantic Richfield Co., 
816 P.2d 431, 434-35 (Mont. 1991).  See also Citadel Corp. v. All-South Subcontractors, 
Inc., 458 S.E.2d 711, 712-713 
(Ga. App. 1995); Seifert v. Regents of 
University of Minnesota, 505 N.W.2d. 83, 86-87 (Minn. App. 
1993).

 
 
[¶34]   The indemnification clause at issue 
in the present case provides for the recovery of legal expenses, including 
attorney's fees incurred in the defense of a claim.  Nothing in the clause suggests that it 
provides for the recovery of legal expenses incurred in establishing the right 
to indemnity.  It is true in part 
that the attorney's fees that True Oil incurred in prosecuting its third-party 
complaint were those necessary to prove that Pennant breached the MSC, and that 
Pennant's breach was the sole cause of the accident injuring Van Norman.  However, True Oil's attorney's fees 
incurred after December 7, 2005, were generally spent on its attempt to 
establish its right to indemnification.  
The MSC between True Oil and Pennant does not expressly provide for the 
recovery of attorney's fees incurred in an action to establish indemnity.  Accordingly, the trial court did not 
abuse its discretion when it determined that True Oil was not entitled to 
attorney's fees incurred after December 7, 2005.

 
 

2. 
Prejudgment Interest

 
 

[¶35]   
True 
Oil also claims error in the trial court's refusal to award prejudgment 
interest. Prejudgment 
interest is an appropriate element of damages in some cases.  Millheiser v. Wallace, 2001 WY 40, 
¶ 11, 21 P.3d 752, 756 (Wyo. 2001).  True Oil takes issue with the trial 
court's Amended Judgment and Order 
because it does not contain any explanation of the denial of prejudgment 
interest.  True Oil argues that in 
exercising its judgment, the trial court should have considered its finding that 
Pennant was 100% at fault for causing the accident in this case, and 
accordingly, the court could not have denied True Oil prejudgment interest on 
the basis of equitable considerations.

 
 
[¶36]   Prejudgment interest is an accepted 
form of relief in Wyoming where the claim is "liquidated," which is defined as 
one that is readily computable by basic mathematical calculation.  Stewart Title Guar. Co. v. Tilden, 2008 
WY 46, ¶ 21, 181 P.3d 94, 101-102 (Wyo. 2008).

 
 
Prejudgment 
interest is allowed on the theory that an injured party should be fully 
compensated for his or her loss.  It 
is the compensation allowed by law as additional damages for lost use of money 
due as damages during the lapse of time between the accrual of the claim and the 
date of judgment.  It is appropriate 
when the underlying recovery is compensatory in nature and when the amount at 
issue is easily ascertainable and one upon which interest can be easily 
computed.

 
 

Id., 
¶ 28, 181 P.3d  at 103-04 (citing 44 Am.Jur. 2d Interest and Usury § 39 
(2007)).  Prejudgment interest 
constitutes a penalty for failure to pay money when due.  Rissler & McMurry Co. v. Atlantic 
Richfield Co., 559 P.2d 25, 32 (Wyo. 1977)).

 
 
[¶37]   The general principle is that "he who retains money which he ought to pay to another 
should be charged interest upon it.'"  5 Arthur Linton Corbin, Corbin on Contracts, § 1046, at 280 n.69 (1964)).  The successful claimant is compensated 
for the lost "use value" of the money owed.  Hansen v. Rothaus, 730 P.2d 662 
(Wash. 1986). That is, an award of prejudgment 
interest is in the nature of preventing the unjust enrichment of 
the defendant who has wrongfully delayed payment.  See 1 Dan B. Dobbs, Law of Remedies, 3.6(3), at 348-49 (2d ed. 1993) ("in 
many cases the interest award is necessary to avoid unjust enrichment of a 
defendant who has had the use of money or things which rightly belong to the 
plaintiff").

 
 
[¶38]   On December 7, 2005, True Oil paid 
$500,000.00 to Christopher Van Norman to settle all claims asserted against it 
by him.  True Oil asserts that this 
amount was readily computable and, thus, liquidated.  According to True Oil, the district 
court erred by not including prejudgment interest in its Amended Judgment and 
Order.

 
 
[¶39]   We believe Wells Fargo Bank v. Hodder, 2006 WY 128, ¶ 60, 
144 P.3d 401, 420-21 (Wyo. 2006), is instructive in this instance.  There, we stated:

 
 
Prejudgment 
interest is an appropriate element of damages in some cases. Millheiser v. 
Wallace, 2001 WY 40, ¶ 11, 21 P.3d 752, 755 (Wyo. 2001). We have 
approved the award of prejudgment interest on liquidated sums in breach of 
contract actions when the amount due is readily computable by simple 
mathematical calculation. Id. 

 
 
[¶40]   In Laramie Rivers Co. v. Pioneer 
Canal Co., 565 P.2d 1241, 1245 (Wyo. 1977), we clarified that a mere 
difference of opinion as to the amount due or as to liability does not preclude 
prejudgment 
interest if the amount sought to be recovered is a sum certain, 
and the party from whom payment is sought receives notice of the amount sought. 
 In Laramie Rivers, the 
amount sought to be recovered was established prior to entry of judgment by a 
written billing statement for a fixed amount.  This Court remanded the case to the 
district court for determination of when the debtor received notice of the fixed 
amount claimed.

 
 
[¶41]   In the instant case, the amount 
sought to be recovered was a sum certain of which Pennant had notice prior to 
the trial court's decision.  Both 
parties were well aware of the settlement amount between True Oil and Van 
Norman, as was the court.  As True 
Oil suggests, and we agree, the $500,000.00 sum awarded by the court was a 
liquidated sum.  Given the 
circumstances present in this case, we reverse the trial court's ruling that 
this was not an appropriate case for prejudgment 
interest.

 
 
CONCLUSION

 
 
[¶42]   We affirm the ruling on the breach 
of contract claim.  Pennant breached 
its contract with True Oil, and the court's award of $500,000.00 to True Oil is 
affirmed.

 
 
[¶43]   Regarding attorney's fees, we 
conclude that the trial court was half right in its decision.  Reversing the trial court, we conclude 
that True Oil is entitled to its attorney's fees incurred in defending the 
claims associated with this case, prior to March 16, 2005.  However, we affirm the court's ruling 
that True Oil is not entitled to attorney's fees incurred after December 7, 
2005.

 
 
[¶44]   Finally, the trial court's ruling 
that this was not an appropriate case for prejudgment 
interest is reversed.

  

BURKE, 
Justice, 
concurring in part and dissenting in part.

 
 
[¶45]   I concur in part and dissent in 
part.  I disagree with the 
majority's decision to reverse the district court's denial of True's claim for 
attorney fees incurred prior to the filing of the amended complaint.  I would affirm on this issue because, 
prior to the filing of the amended complaint, True was being sued solely for its 
own negligence.  Any agreement to 
indemnify True for its own negligence was void pursuant to Wyo. Stat. Ann. § 
30-1-131(a)(iii) (LexisNexis 2009):

 
 

§ 
30-1-131. Provisions for indemnity in certain contracts; 
invalidity.

 

 
(a)       All agreements, covenants or promises 
contained in, collateral to or affecting any agreement pertaining to any well for oil, gas or 
water, or mine for any mineral, which purport to indemnify the indemnitee 
against loss or liability for damages for:

 

 

(i)            
Death 
or bodily injury to persons; 

 

 
(ii)        
Injury to property; or 

 

 
(iii)       Any other 
loss, damage, or expense arising under either (i) or (ii) from: 

 

 
(A) 
The sole or concurrent negligence of the indemnitee or the agents or employees 
of the indemnitee or any independent contractor who is directly responsible to 
such indemnitee; or 

 

 
(B) 
From any accident which occurs in operations carried on at the direction or 
under the supervision of the indemnitee or an employee or representative of the 
indemnitee or in accordance with methods and means specified by the indemnitee 
or employees or representatives of the indemnitee, are against public policy and are void and 
unenforceable to the extent that such contract of indemnity by its terms 
purports to relieve the indemnitee from loss or liability for his own 
negligence.  This provision 
shall not affect the validity of any insurance contract or any benefit conferred 
by the Worker's Compensation Law [§§ 27-14-101 through 27-14-805] of this state. 

 
 
(Emphasis 
added.)3  The contractual 
obligation at issue here and the impact of Wyo. Stat. Ann. § 30-1-131 on that 
obligation was addressed, albeit in a slightly different context, by the federal 
district court for the District of Wyoming in Mid-Continent Casualty Co. v. True Oil 
Co., Case No. 05-CV-258-J (U.S.D.C. Wyo. 2006), referenced in the majority 
opinion.  

 
 

[¶46]   There were two lawsuits in federal 
court regarding Mid-Continent's obligation to defend and indemnify True for 
claims asserted by Mr. Van Norman in this case.  The first action was initiated by True 
after Mid-Continent had rejected True's initial demand that Mid-Continent 
provide a defense and indemnify True for claims made by Mr. Van Norman.  Mid-Continent based its denial on its 
claim that the indemnity provision in True's contract with Pennant "was void as 
violating public policy of Wyo. Stat. § 30-1-131."  Judge Johnson agreed with Mid-Continent 
and granted its motion for summary judgment.  True appealed and the decision was 
affirmed.  According to Judge 
Johnson: "This 
Court, and the Tenth Circuit, determined that the indemnity provision whereby 
Pennant agreed to hold True Oil harmless for 
True Oil's own negligence arising out of the work to be performed by Pennant had 
no effect due to Wyo. Stat. § 30-1-131, the Wyoming oilfield anti-indemnity 
statute."     

 
 
[¶47]   Shortly after Judge Johnson entered 
summary judgment against True, the district court in this action allowed Mr. Van 
Norman to file his amended complaint.  
This led to a second round of litigation in federal court.  This time, Judge Johnson determined that 
True was entitled to indemnification for the vicarious liability 
claims:

 
 
The 
Court need not reiterate all facts and arguments that have been raised and asserted in this litigation 
further to determine that Mid-Continent's arguments are without merit.  Pennant agreed to indemnify True in the 
MSC.  Coverage for this agreement is 
provided for in the CGL.  The agreement to indemnify is void only to the extent that it 
was one which purported to relieve True Oil from loss of liability caused by 
True Oil's own negligence.  The 
agreement providing for indemnification from all claims and damages caused by the negligence of others, which would 
include the claims of vicarious liability in 
this case, is valid and enforceable under applicable Wyoming law.

 
 


 
 

The 
Tenth Circuit recognized that were it not for the operation of 
Wyo. Stat. Ann. 
§ 30-1-131, an 
insured 
contract would exist between Pennant and 
True 
and -- and, accordingly, True Oil would be 
an 
additional insured 
on Pennant's 
CGL 
policy 
with Mid-Continent.  True Oil Co. v. Mid-Continent 
Casualty 
Co., 
173 Fed. Appx. at 650.  The Tenth 
Circuit did not go on, 
however, to 
consider whether the contract was valid and enforceable to 
the 
extent that 
it 
did not violate the Wyoming anti-indemnity statute.  This Court believes that had the circuit 
court considered the issue if it had been before that 
court, 
it 
would 
have reached the 
same 
conclusion that this Court reaches here.  
This Court finds that the contract is invalidated only 
to the extent that 
the agreement 
is one purporting to relieve True Oil from liability for its own 
negligence 
and not from vicarious liability claims brought under a respondeat 
superior 
theory.

 
 

Accordingly, 
the Court finds that the motion for 
partial summary 
judgment filed by True, seeking a determination that it is entitled 
to seek 
indemnification for the late-raised allegations of vicarious liability in the 
Van Norman litigation, should be granted.  
To the extent that Mid-Continent's motion and responses seek a contrary 
determination, the request will be denied.

 
 
(Footnotes 
and emphasis omitted.)

 
 

[¶48]   Despite 
finding for True on its indemnity claim arising from the vicarious liability 
allegations in the amended complaint, Judge Johnson specifically denied True's 
claim for attorney fees incurred prior to the filing of the amended complaint: 

 
 

True 
has argued that Mid-Continent must pay all costs incurred by 
True in 
defending all of this related litigation.  
This Court disagrees.  
It 
is true 
that 
Wyoming 
law requires an insurer to defend an entire action.  Shoshone First 
Bank 
v. Pacific Employers Ins. Co., 
2 P.3d 510 (Wyo. 2000).  Mid-Continent has 
tendered a defense to True for the vicarious liability allegations asserted 
against 
it in 
the Van Norman litigation, under a reservation of rights.  True urges 
this Court 
to determine as a matter of law that True is entitled to recover all 
costs 
associated 
in this litigation, under Shoshone First 
Bank.

 
 

The 
Court does not agree that Shoshone First 
Bank 
compels 
the 
result True 
urges.  Shoshone First Bank does state that, 
"unless a 
policy 
between an insured and an insurer provides for allocation of defense costs in 
the instance 
in which some claims are 
covered and some are not, Wyoming will not allow allocation of defense 
costs from the insurer to the insured."   Id., 2 P.3d  at 517.  In that case, where the policy 
did not provide coverage for prosecuting a counterclaim, the Wyoming court 
determined the insurer was not required to assume the expense of prosecuting the 
insured's counterclaim and permitted the insurer to allocate and 
recover those costs.

 
 


 
 

This 
case has essentially been presented as two separate pieces 
of litigation.  The Court believes that Mid-Continent 
is not required to 
pay 
the 
costs 
incurred by True in the Van Norman litigation prior to the amendment 
of the 
complaint, as that was not a matter for which there was coverage 
and 
it has been 
determined that Mid-Continent properly refused to defend.  No "apportionment" 
of covered and non-covered claims is necessary in this 
case.  None of 
the law 
cited 
by True obliges Mid-Continent to pay costs of defending 
where 
there was no coverage.

 
 
(Emphasis 
added.)  In this case, the district 
court's decision denying attorney fees for the period prior to the filing of the 
amended complaint dovetailed with the conclusions reached by Judge Johnson in 
the federal litigation.

 
 
[¶49]   The majority's decision to reverse 
the district court and award attorney fees is essentially premised upon "the 
freedom to contract" and our precedent as reflected in Northwinds of Wyo. v. Phillips 
Petroleum, 779 P.2d 753 (Wyo. 1989) and Mountain Fuel Supply Co. v. Emerson, 578 P.2d 1351 (Wyo. 1978).  Both cases 
are clearly distinguishable from the instant case and the "freedom to contract" 
has limits.  Here, the "freedom to 
contract" is restricted by Wyo. Stat. Ann. § 30-1-131, which specifically 
provides that agreements to indemnify an entity for its own negligence "are 
against public policy and are void and unenforceable."  Northwinds is inapplicable because this 
Court was not applying Wyo. Stat. Ann. § 30-1-131 to the indemnity provision at 
issue.4  In Mountain Fuel Supply, the Court awarded 
attorney fees based upon an indemnity provision that was voided in part because 
it provided indemnification for the indemnitee's own negligence.  However, in Mountain Fuel Supply, the indemnitee 
faced potential liability for the negligence of the indemnitor from the 
inception of the action.5  
That did not happen here and both Judge Johnson and the district court 
rejected True's claims to the contrary.  
According to Judge Johnson:

 
 
True 
has argued that it and Mid-Continent were aware, as early as November 2001, that a vicarious liability 
claim might be asserted in the Van Norman litigation.  Accepting for purposes of the argument that is 
so, the fact is that no claim against True Oil for vicarious liability 
was properly pled in the Van Norman 
litigation until 2005 after this Court's earlier summary judgment disposition.

 
 
In 
the instant case, the district court reached a similar conclusion.  In Exhibit E to True's third party 
complaint against Pennant, True stated: 

 
 
We 
appeared before Judge James this morning to argue True Oil Company's Motion in Limine to prevent the 
Plaintiff from raising or arguing the issue of True's vicarious liability for 
any negligence of Pennant and Plaintiff Van Norman's opposition to that motion 
as well as his Motion to Amend 
Complaint to add a vicarious liability allegation.  The Plaintiff was taking the position 
that the original Complaint is broad enough to include vicarious liability and 
argued that True's written demands on Pennant and Mid-Continent in late 2001 
reflected that True was at least anticipating a vicarious liability claim. 

 
 
The 
Judge heard all of the arguments and determined that the Complaint was not broad 
enough to include a vicarious liability claim but that justice required that the 
Plaintiff be allowed to amend his Complaint to allege a respondeat superior relationship between 
True and Pennant and the allegation that True is therefore, vicariously liable 
for any negligence of Pennant or its employees.  During that same hearing Judge James 
granted our oral motion to permit True to file a Third-Party Complaint against 
Pennant pursuant to the terms of the Master Service Contract, seeking to recover 
any costs, attorneys' fees and judgment against True, if any, based upon True's 
vicarious liability for Pennant's negligence.6

 
 
[¶50]   In summary, there was no duty to 
defend or indemnify True for its attorney fees prior to the filing of the 
amended complaint in 2005.  Prior to 
that time, True was being sued solely for its own negligence.  The decision reached by the majority is 
at odds with the result reached in federal court and this state's public policy 
as reflected in Wyo. Stat. Ann. § 30-1-131.  The district court's decision denying 
attorney fees prior to the amendment of the complaint should be 
affirmed.

 
 
FOOTNOTES

 
 
1The 
district court found that neither party had demanded a jury trial and that 
decision was not appealed.  
Accordingly, we shall not consider this issue 
further.

 
 
2Weatherford 
and Halliburton were each dismissed from the suit on March 11, 2005, and August 
16, 2005, respectively.

 
 
  3It 
is undisputed that the indemnity agreement at issue in this case is an 
"agreement  pertaining to any well for oil, gas or water  which purport[s] to 
indemnify the indemnitee against loss or liability for 
damages."

 
 

4See 
Northwinds, 779 P.2d  at 757 n.5.  
"Neither party suggests that this is a case to which Wyo. Stat. § 
30-1-131 (1977) applies.  Section 
30-1-131 embodies the legislative public policy determination that contract 
provisions indemnifying against loss or liability resulting from one's own 
negligence in an agreement pertaining to wells for oil, gas, or water or mines 
for minerals shall be void and unenforceable.  We agree that § 30-1-131 has no 
applicability to the instant case." (Internal citation omitted.)

5Mountain 
Fuel Supply 
was decided well before the adoption of comparative fault as reflected in Wyo. 
Stat. Ann. § 1-1-109.  In Mountain Fuel Supply, the indemnitee 
faced potential liability for the full amount of damages because of joint and 
several liability.  See Haderlie v. Sondgeroth, 866 P.2d 703, 708 (Wyo. 1993).  
Prior to the filing of the amended complaint in this case, True faced 
potential liability only for damages attributable to its own fault.  See Wyo. Stat. Ann. § 
1-1-109.

 
 
6There 
is no transcript of the hearing on the motion to amend the complaint in the 
record on appeal.  Exhibit E was a 
March 8, 2005 letter to Pennant from True's counsel.