Title: Reliance Ins. Co. v. Chevron U.S.A. Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Reliance Ins. Co. v. Chevron U.S.A. Inc.1986 WY 24713 P.2d 766Case Number: 85-130Decided: 01/30/1986Supreme Court of Wyoming
RELIANCE INSURANCE 
COMPANY, PLAINTIFF, 

 
 
v. 

 
 
CHEVRON U.S.A. INC., 
NORTHERN GAS PRODUCTS COMPANY, DEFENDANTS. 

 
 
 
 
NORTHERN GAS PRODUCTS 
COMPANY, A DELAWARE CORPORATION, THIRD-PARTY PLAINTIFF, 

 
 
v. 

 
 
SEARLE BROS. CONSTRUCTION 
CO., A WYOMING CORPORATION, THIRD-PARTY DEFENDANT.

 
 
 
 
 
 
Representing 
Plaintiff:

Harold E. Meier of 
Schwartz, Bon, McCrary & Walker, Casper.

 
 
Representing 
Defendant:

Michael J. Sullivan of 
Brown, Drew, Apostolos, Massey & Sullivan, Casper, for Chevron U.S.A., 
Inc.

 
 
Before THOMAS, C.J., and 
ROONEY,* BROWN, CARDINE and URBIGKIT, 
JJ.

* Retired November 30, 
1985.

 
 

CARDINE, 
Justice.

 
 

[¶1.]     We are here presented 
with the following certified question from the United States District Court for 
the District of Wyoming:

 
 
"Do the provisions of §§ 
30-1-131 and 30-1-132, Wyoming Compiled Statutes, 1977, include the activities 
of the contractor as described in the stipulated fact situation so as to render 
void a contract provision indemnifying a party even though such party may have 
itself been negligent?"

 
 
We hold that the 
agreement between the contractor and Chevron, as reflected by the activities 
described in the stipulated fact situation, was an agreement to which §§ 
30-1-131 and 30-1-132, W.S. 1977 (June 1983 Replacement) do not apply. 
Therefore, §§ 30-1-131 and 30-1-132, taken together, do not void the indemnity 
provision at issue.

 
 
FACTS

 
 

[¶2.]     On December 19, 1977, 
Searle Brothers Construction Company entered into a construction contract with 
Chevron USA Inc. The contract did not specify the kind of work Searle would be 
performing for Chevron. Under the heading "Description of Work and Materials to 
be Furnished," the contract merely stated that Searle would "[f]urnish labor, 
materials and equipment as needed to perform work as instructed by Chevron 
representatives."

 
 

[¶3.]     The contract also 
contained an indemnity clause which stated:

 
 
"Contractor agrees, 
irrespective of negligence on the part of either Company or Contractor, to 
protect, defend, indemnify and hold Company, its agents and employees, harmless 
from and against all loss, damage, liability, claims and liens of every kind 
arising out of or attributable, directly or indirectly, to the operations of 
Contractor hereunder, including without limitation, all claims for injury to or 
death of persons, loss of or damage to property * * *."

 
 

[¶4.]     On August 28, 1982, a 
fire broke out at Chevron's oil and gas separation facility in the Painter Oil 
and Gas Field near Evanston, 
Wyoming. Because of the fire, large 
quantities of oil and water threatened to flow from the plant into local 
drainages. The Chevron plant manager contacted Searle and asked that it furnish 
two caterpillars to dig holding pits to contain the waste water and oil. Searle 
furnished two caterpillars as requested. In the process of digging the pits, one 
of the caterpillars struck a high pressure propane line owned by Northern Gas 
Products. A fire ensued which destroyed the caterpillar and caused Searle's 
operator serious burn injuries.

 
 

[¶5.]     Reliance Insurance 
Company, Searle's insurer, paid the claims for damage and personal injury caused 
by the fire and thereby became subrogated to Searle's position. As Searle's 
subrogee, Reliance then filed suit against Chevron and Northern in the United 
States District Court to recover the monies it had paid. Chevron moved for 
summary judgment claiming that the indemnity clause in its contract with Searle 
would bar Searle from recovery even if Chevron was negligent and, therefore, 
Searle's subrogee, Reliance, was also barred by the clause. Reliance responded 
that the indemnity clause upon which Chevron relied was rendered void and 
unenforceable by § 30-1-131, W.S. 1977 (June 1983 Replacement). The district 
court found against Reliance, holding that the indemnity provision in the 
contract was valid and enforceable. Reliance attempted an interlocutory appeal 
to the Tenth Circuit which refused to decide whether or not the indemnity clause 
was void and unenforceable pursuant to §§ 30-1-131 and 30-1-132, W.S. 1977 (June 
1983 Replacement). After remand, the district court certified the question to 
this court.

 
 
THE ANTI-INDEMNITY 
STATUTE

 
 

[¶6.]     Section 30-1-131, W.S. 
1977, provides as follows:

 
 
"(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 [§§ 27-12-101 to 27-12-805] of this state." (Emphasis 
added.)

 
 

[¶7.]     In their briefs and at 
oral argument, the parties have conceded that the indemnity clause in the 
Searle-Chevron contract is void and unenforceable if § 30-1-131, W.S. 1977, 
supra, applies to the contract. But, § 30-1-131 voids only those indemnity 
clauses which are part of "any agreement pertaining to any well for oil, gas or 
water, or mine for any mineral." Reliance contends that the Searle-Chevron 
agreement pertains to a well for oil or gas while Chevron counters that it does 
not.1 In order to discover which party is 
right, we must ascertain the scope of the agreement itself and then compare that 
agreement with § 30-1-132, W.S. 1977, supra, which specifies when an agreement 
pertains to an oil or gas well.

 
 
THE SEARLE-CHEVRON 
AGREEMENT

 
 

[¶8.]     As we indicated in the 
statement of facts, the Searle-Chevron agreement does not, by itself, involve 
any particular services. It merely provides that Searle will "[f]urnish labor, 
materials and equipment as needed to perform work as instructed by Chevron 
representatives." We would not decide this certified question if only the 
written agreement were before us because extrinsic evidence would then be 
necessary to flesh out the contract. Our role in certified question cases does 
not include fact finding. Section 1-13-106, W.S. 1977.

 
 

[¶9.]     Fortunately, the 
district court and the parties agree upon the facts in certifying this question 
to us. In its certification order the district court stated: "The parties are in 
essential agreement as to the facts as they relate to the activities of Searle 
Bros. and work being done under the contract." The parties have indicated, in 
their briefs and at oral argument, that the Searle-Chevron contract is to be interpreted 
to have a scope coextensive with the activities of Searle at the August 28th 
fire. In other words, we view this contract as one covering only Searle's 
fire-related activities near Chevron's Painter Field Separation Plant at the 
time of the accident.

 
 
SECTION 
30-1-132

 
 

[¶10.]  Having set forth the scope of the 
Searle-Chevron agreement, we must next decide whether that agreement is one 
"pertaining to any well for oil, gas, or water" as that phrase is defined in § 
30-1-132, W.S. 1977, supra.

 
 

"The term `agreement 
pertaining to any well for oil, gas, or water, or mine for 
any mineral' as used in section 1 hereof 
[§ 30-1-131], means any agreement or understanding, written or oral, concerning 
any operations related to drilling, deepening, reworking, repairing, improving, 
testing, treating, perforating, acidizing, logging, conditioning, altering, 
plugging, or otherwise rendering services in or in connection with any well 
drilled for the purpose of producing or disposing of oil, gas or other 
minerals, or water, and designing, excavating, constructing, improving, or 
otherwise rendering services in or in connection with any mine shaft, drift, or 
other structure intended for use in the exploration for or production of any 
mineral, or an agreement to perform any portion of any such work or services or 
any act collateral thereto, including the furnishing or rental of equipment, 
incidental transportation, and other goods and services furnished in connection 
with any such service or operation." (Emphasis added.) Section 30-1-132, W.S. 
1977 (June 1983 Replacement.)

 
 

[¶11.]  Section 30-1-132, W.S. 1977, supra, 
separately defines an agreement pertaining to a "well for oil, gas, or water" 
and an agreement pertaining to a "mine for any mineral." The first part, which 
we have emphasized, applies when oil, gas or water wells are involved. The 
second part, which follows the word "and," applies to agreements which concern 
mining, rather than drilling. Our interpretation of § 30-1-132 as a two-part 
statute is supported by the language contained in the two parts. Drilling, 
deepening, reworking, acidizing, and many of the other terms in the first part 
clearly apply to oil or gas well-drilling operations. On the other hand, mine 
shaft and drift are terms which relate to mining, and they are found in the 
second part of the statute. Were we not to differentiate between the two parts 
of § 30-1-132, some of the language would be superflous. For example, there 
would be no need to discuss the "rendering [of] services * * * in connection 
with any well drilled for the purpose of producing * * * oil" in the first part 
of the statute, if oil and gas activity were also covered by the phrase 
"rendering services * * * in connection with any * * * other structure intended 
for use in the exploration for or production of any mineral," which appears 
later in the statute. A statute should not be interpreted to render any portion 
of it meaningless. Thomson v. Wyoming In-Stream Flow Committee, Wyo., 651 P.2d 778, 787 
(1982).

 
 

[¶12.]  Much of Reliance's statutory argument is 
based upon inapplicable language from the second part of § 30-1-132. For 
instance, Reliance claims that Chevron's plant processed natural gas which was 
used to repressurize wells in the Painter Oil and Gas Field. Therefore, 
according to Reliance, when Searle dug pits to capture runoff from the fire at 
Chevron's plant, Searle was "rendering services * * * in connection with * * * 
[a] structure intended for use in the * * * production of any mineral." But, as 
we have said, this section of the statute defines an agreement pertaining to 
mining, not an agreement pertaining to a well for oil, gas or water. Even if we 
agreed with Reliance that this pit digging was a service in connection with 
Chevron's separation plant, we could not take the next step in Reliance's logic 
and say that the plant was a "mine shaft, drift, or other structure intended for 
use in the exploration for or production of any mineral." The part of § 30-1-131 
relied upon by Reliance does not include oil or gas production facilities but is 
instead limited to structures used in mining.

 
 

[¶13.]  The relevant first portion of § 30-1-132 
contains a list of activities to which an agreement must "relate" before that 
agreement can be said to pertain to a well for oil or gas. At the end of the 
list, the statute includes a catchall phrase which indicates that some unlisted 
contractual activities could also be included. Reliance does not attempt to link 
Searle's pit digging activities to any of the specifically listed activities. 
Instead, Reliance argues that by digging the pits Searle was "otherwise 
rendering services in or in connection with any well drilled for the purpose of 
producing or disposing of oil, gas or other minerals, or 
water."

 
 

[¶14.]  We disagree. We do not think that one who 
digs pits to collect waste fluids from a fire at a separation plant is rendering 
services in connection with an oil well. This is true even if the separation 
plant processes gas which is eventually reinjected into the oil field to 
repressurize oil wells. Searle was digging the pits so that waste from the fire 
would not flow into local drainages. It was not involved in actual fire fighting 
which would enable the plant to resume repressurization.

 
 

[¶15.]  The catchall phrase, "rendering services 
* * * in connection with any well," follows a list of specific activities which 
are closely related to well drilling. Under the rule of statutory construction, 
ejusdem generis, a general term which concludes a list of specifically 
enumerated terms should be restricted to the same genus as the things 
enumerated. Green River Development 
Company v. FMC Corporation, Wyo., 660 P.2d 339, 353 (1983). Therefore, the 
phrase, "rendering services * * * in connection with any well," should be 
construed to cover only those services closely related to well drilling. Not 
covered are services or activities having a remote or indirect connection to the 
kinds of services enumerated in § 30-1-132, supra.

 
 

[¶16.]  Finally, we note that the statutory 
scheme created by §§ 30-1-131 and 30-1-132 restricts the freedom to contract, a 
common law right. Statutes which preempt common law rights must be strictly 
construed. Mahaney v. Hunter Enterprises, 
Inc., Wyo., 426 P.2d 442, 444 
(1967).

 
 
CONCLUSION

 
 

[¶17.]  In conclusion, we think that the district 
court's initial interpretation of §§ 30-1-131 and 30-1-132 upon the parties' 
cross-motions for summary judgment was correct. The Searle-Chevron contract, as 
clarified by the parties' activities, was not an agreement "pertaining to [a] 
well for oil [or] gas" as that phrase is defined by § 30-1-132, W.S. 1977, 
supra. Therefore, § 30-1-131 does not apply to void the indemnification 
provision upon which Chevron relies.

 
 

[¶18.]  The answer to the certified question is 
"no."

 
 

1 Neither party claims 
that the agreement pertains to a mine for mineral.