PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

MARTIN K. EBY CONSTRUCTION 

COMPANY, INC., 

 Plaintiff - Appellee, 

v. 

ONEBEACON INSURANCE 

COMPANY, as successor to Commercial 

Union Insurance Company, 

 Defendant, 

and 

KELLOGG BROWN & ROOT, LLC, 

 Defendant - Appellant. 

-------------------------------------------------- 

CONTINENTAL CASUALTY 

COMPANY; NATIONAL FIRE 

INSURANCE COMPANY OF 

HARTFORD, as successor by merger with 

Transcontinental Insurance Company; 

COLUMBIA CASUALTY COMPANY; 

VALLEY FORGE INSURANCE 

COMPANY, 

 Plaintiffs, 

v. 

No. 13-3076 

(D.C. No. 6:08-CV-01250-MLB) 

FILED 

United States Court of Appeals 

Tenth Circuit 

February 3, 2015

Elisabeth A. Shumaker 

Clerk of Court

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2 

ONEBEACON INSURANCE 

COMPANY, as successor to Commercial 

Union Insurance Company, 

 Defendant, 

and 

TRAVELERS CASUALTY AND 

SURETY COMPANY, as successor to 

Aetna Casualty and Surety Company; 

UNITED STATES FIDELITY AND 

GUARANTY COMPANY; ST. PAUL 

FIRE AND MARINE INS. CO.; ATHENA 

ASSURANCE COMPANY; MARTIN K. 

EBY CONSTRUCTION COMPANY, 

INC., 

 Defendants - Appellees, 

and 

KELLOGG BROWN & ROOT, LLC, 

 Defendant - Appellant. 

_________________________________ 

ORDER

_________________________________ 

Before BACHARACH, MCKAY, and MCHUGH, Circuit Judges. 

_________________________________ 

This matter is before the court on appellant Kellogg Brown & Root’s Petition for 

Panel Rehearing. Consistent with our order dated December 31, 2014, we also have 

responses from the appellees. Upon consideration, we grant panel rehearing in part with 

respect to proposition IV in the rehearing request. We otherwise deny the petition in full. 

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3 

An amended opinion is attached to this order. The clerk is directed to substitute this 

opinion for the one that issued originally on December 9, 2014. 

Entered for the Court 

ELISABETH A. SHUMAKER, Clerk 

Appellate Case: 13-3076 Document: 01019380151 Date Filed: 02/03/2015 Page: 3 
PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT

MARTIN K. EBY 

CONSTRUCTION COMPANY, 

INC., 

 Plaintiff-Appellee, 

 v. No. 13-3076 

ONEBEACON INSURANCE 

COMPANY, as Successor to 

Commercial Union Insurance 

Company, 

and 

KELLOGG BROWN & ROOT, 

LLC., 

 Defendant-Appellant. 

CONTINENTAL CASUALTY 

COMPANY; NATIONAL FIRE 

INSURANCE COMPANY OF 

HARTFORD, as Successor by 

Merger with Transcontinental 

Insurance Company; COLUMBIA 

CASUALTY COMPANY; VALLEY 

FORGE INSURANCE COMPANY, 

 Plaintiffs, 

v. 

ONEBEACON INSURANCE 

COMPANY, as Successor to 

Commercial Union Insurance 

Company, 

FILED 

United States Court of Appeals 

Tenth Circuit 

February 3, 2015

Elisabeth A. Shumaker 

Clerk of Court

Appellate Case: 13-3076 Document: 01019380151 Date Filed: 02/03/2015 Page: 4 
2 

 Defendant, 

and 

TRAVELERS CASUALTY AND 

SURETY COMPANY, as Successor 

to Aetna Casualty and Surety 

Company; UNITED STATES 

FIDELITY AND GUARANTY 

COMPANY; ST. PAUL FIRE AND 

MARINE INS. CO.; ATHENA 

ASSURANCE COMPANY; 

MARTIN K. EBY 

CONSTRUCTION COMPANY, 

INC., 

 Defendants-Appellees, 

and 

KELLOGG BROWN & ROOT, 

LLC, 

 Defendant-Appellant. 

Appeal from the United States District Court 

For the District of Kansas 

(D.C. No. 6:08-CV-01250-MLB 

And 2:08-CV-02392-MLB) 

Lauren B. Harris, Porter Hedges LLP, Houston, Texas (David M. Rapp and 

Eric Barth, Hinkle Law Firm, LLC, Wichita, Kansas, and Jonna N. 

Summers, Porter Hedges, LLC, with her on the briefs) for PlaintiffAppellant Kellogg Brown & Root, LLC. 

James Oliver, Foulston Siefkin LLP, Overland Park, Kansas (Randall K. 

Rathburn, Depew Gillen Rathburn & McInteer LC, and Jeffery A. Jordan, 

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3 

Foulston Siefkin LLP, Overland Park, Kansas, with him on the brief) for 

Defendant-Appellee Martin K. Eby Construction Co., Inc. 

Donna J. Vobornik, Dentons US LLP, Chicago, Illinois (Geoffrey J. Repo 

and William T. Barker, Dentons US LLP, Chicago, Illinois, with her on the 

brief) for Defendants-Appellees Travelers, et al. 

Before BACHARACH, McKAY, and McHUGH, Circuit Judges. 

BACHARACH, Circuit Judge. 

 This appeal involves indemnity and insurance. 

 The indemnity issues arise out of a promise by Martin K. Eby 

Construction Company’s predecessor to build a water pipeline. To build 

the water pipeline, Eby engaged another company (the predecessor to 

Kellogg Brown & Root, LLC), promising indemnity for claims resulting 

from Eby’s work. 

 While building the water pipeline, Eby accidentally hit a methanol 

pipeline, causing a leak. At the time, no one knew about the leak. It was 

discovered over two decades later, and the owner of the methanol pipeline 

had to pay for the cleanup. 

 The owner of the methanol pipeline sought to recover the expenses 

from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred 

over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s 

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indemnity promise, suing Eby and its liability insurer, Travelers Casualty 

and Surety Co. The district court granted summary judgment to Eby and 

Travelers, leading Kellogg to appeal. Some of our issues involve Eby; 

others involve Travelers. 

 To resolve the Kellogg-Eby portion of the appeal, we must address 

the enforceability of Eby’s promise of indemnity. This promise is broad 

enough to cover the pipeline owner’s claims against Kellogg for its 

inaction after Eby caused the leak. But we can enforce the indemnity 

promise only if it was expressly stated and conspicuous. This indemnity 

clause was not conspicuous; thus, it is unenforceable. 

 The Kellogg-Travelers appeal turns on Kellogg’s argument that 

Travelers’ insurance policy covered liabilities assumed by its insured 

(Eby). 

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But, because the indemnity clause is unenforceable, it is as if Eby never 

agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption 

of Kellogg’s liabilities, Travelers did not insure Kellogg. 

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 Accordingly, Kellogg is not entitled to indemnity from Eby or 

insurance coverage from Travelers, and Eby and Travelers were entitled to 

summary judgment. We affirm. 

I. Standard of Review 

 We engage in de novo review over the summary judgment rulings. 

Holmes v. Colo. Coal. for Homeless Long Term Disability Plan, 762 F.3d 

1195, 1199 (10th Cir. 2014). This review requires us to consider the 

evidence in the light most favorable to Kellogg. See Lenox MacLaren 

Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114, 1118 (10th Cir. 2014). 

Viewing the evidence in this light, we decide whether a genuine issue of 

material fact exists on coverage for indemnity or insurance. See SEC v. 

Thompson, 732 F.3d 1151, 1156-57 (10th Cir. 2013). We conclude that no 

such issue exists, and we affirm the award of summary judgment to Eby 

and Travelers. 

II. Eby’s Indemnity Obligation to Kellogg: The Fair Notice Rule 

 Eby acknowledges that the indemnity clause covers the claims that 

had been asserted against Kellogg, but argues that the coverage is 

unenforceable. We agree. 

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 A. The Applicability of the Fair Notice Rule to Eby’s Promise 

 of Indemnity 

 To determine enforceability, we must understand the scope of Eby’s 

promise. Eby promised to indemnify Kellogg for all claims, including 

attorneys’ fees and expenses, “directly or indirectly arising from or caused 

by or in connection with the performance or failure to perform any work” 

by Eby (or its predecessor). Appellant’s App. at 504. This promise covers 

the pipeline owner’s claims against Kellogg, but indemnity coverage is 

unenforceable under the fair notice rule. 

1. Coverage for Kellogg’s Malfeasance 

 Kellogg argues that Eby’s promise covers only claims involving 

Eby’s malfeasance, not Kellogg’s. But this is not what the clause says: It 

says that Eby will indemnify Kellogg for all claims arising “directly or 

indirectly” from Eby’s work. Thus, the indemnity clause covers claims 

involving Kellogg’s failure to comply with a duty created by something 

Eby had done. 

 This clause fits our facts. Eby hit the methanol pipeline and caused 

the leak, and the pipeline owner claimed that Kellogg should have taken 

corrective action. Thus, the claims involved Kellogg’s wrongdoing, not 

Eby’s. But Kellogg allegedly incurred a duty only because Eby had caused 

a leak. Thus, the indemnity clause is broad enough to cover the pipeline 

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owner’s claims against Kellogg for Kellogg’s fault (failure to take 

corrective action). The resulting issue is the enforceability of that 

promise. The parties agree that enforceability is governed by Texas law, 

which restricts indemnity clauses through the “fair notice rule.” 

2. Kellogg’s Arguments 

Kellogg makes two challenges to the applicability of the fair notice 

rule: 

● The fair notice rule does not apply because Kellogg is seeking 

 indemnity for Eby’s conduct, not Kellogg’s. 

● The jury attributed fault to Eby, not Kellogg. 

We reject both arguments. 

 Kellogg characterizes the pipeline owner’s claims as stemming from 

the damage to the pipeline and points out that the jury attributed that 

damage to Eby. Because all of the claims can be traced to Eby’s conduct, 

Kellogg argues that it is seeking indemnity for Eby’s actions, not 

Kellogg’s. As discussed above, the pipeline owner sued Kellogg for its 

inaction after Eby had caused the leak. Thus, our indemnity issues are 

unaffected by the jury’s finding that Eby had caused the leak. 

3. Absence of a Reference to Kellogg’s Fault 

Though the indemnity clause applies, it does so implicitly rather than 

explicitly because there is no mention of coverage for claims involving the 

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indemnitee’s fault. Thus, we must ask: Does the fair notice rule apply 

when the indemnity clause covers the indemnitee’s fault implicitly, but not 

explicitly? We conclude the fair notice rule applies in these 

circumstances. 

The indemnity clause covers all claims arising directly or indirectly 

from Eby’s acts. This language is broad enough to cover claims involving 

Kellogg’s failure to take action once Eby damaged the pipeline. Because 

the indemnity clause covers claims against Kellogg for its own fault, the 

fair notice rule applies under Texas law. The rule applies even though the 

indemnity clause doesn’t explicitly mention claims involving Kellogg’s 

fault. 

 In applying the fair notice rule in these circumstances, we are guided 

by two of the Texas Supreme Court’s decisions applying a related rule (the 

“express negligence rule”): Ethyl Corp. v. Daniel Construction Co., 725 

S.W.2d 705 (Tex. 1987), and Fisk Electric Co. v. Constructors & 

Associates, Inc., 888 S.W.2d 813 (Tex. 1994). 

In Ethyl, the court held that the express negligence rule applied when 

the claims involved the indemnitee’s fault. Ethyl Corp., 725 S.W.2d at 

708. The promise in Ethyl broadly covered damages incurred because of 

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the indemnitor’s conduct. Id. at 707.1 But the claims involved the 

indemnitee’s fault. Id. Under the express negligence rule, a party seeking 

indemnity from the consequences of its own negligence must specifically 

express that intent in the four corners of the contract. Id. This restriction 

applied even though the contractual indemnification clause had not 

referred to coverage for the indemnitee’s fault. Id. Thus, the Texas 

Supreme Court concluded that the express negligence rule applies when an 

indemnity clause implicitly covers claims involving the indemnitee’s fault. 

Id. 

The indemnity language in Fisk was similar. There the clause stated 

that Fisk “‘shall indemnify . . . [Constructors] . . . from and against all 

claims, damages, losses, and expenses, including but not limited to 

attorney’s fees . . .’ arising out of or resulting from the performance of 

Fisk’s work.” Fisk Elec. Co. v. Constructors & Assocs., Inc., 888 S.W.2d 

813, 814 (Tex. 1994). Though the indemnity clause did not mention the 

 

1

 The Ethyl agreement stated: 

Contractor shall indemnify and hold Owner harmless against 

any loss or damage to persons or property as a result of 

operations growing out of the performance of this contract and 

caused by the negligence or carelessness of Contractor, 

Contractor’s employees, Subcontractors, and agents or 

licensees. 

Ethyl Corp., 725 S.W.2d at 707. 

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indemnitee’s (Constructors’) fault, the Texas Supreme Court applied the 

express negligence rule because the claims involved the indemnitee’s fault. 

Id. at 815.

 Our case resembles Ethyl and Fisk.

2

 Eby’s promise of indemnity 

does not mention Kellogg’s fault. Instead, the clause promises to 

indemnify Kellogg for money spent defending claims caused by Eby’s 

conduct. This language is broad enough to reach the pipeline owner’s 

claims that 

● resulted indirectly from Eby’s conduct 

● even though the coverage is for claims involving Kellogg’s own 

 actions. 

 Under Ethyl and Fisk, the fair notice rule can cover promises of 

indemnity bearing no mention of claims involving the indemnitee’s fault. 

 

2

 Kellogg relies on English v. BGP International, Inc., 174 S.W.3d 366 

(Tex. App. 2005). Kellogg’s Opening Br. at 22. There the court held that 

the fair notice rule did not apply, distinguishing Fisk. English, 174 

S.W.3d at 375. The court explained that in Fisk, the express negligence 

rule applied because the only claim against the indemnitee was based on its 

negligence. Id. In English, however, the only claims against the 

indemnitee were based on the indemnitor’s negligence, not the 

indemnitee’s. Id. 

As discussed in the text, the distinction in Fisk applies equally here. 

Like the indemnity clause in Fisk, our clause serves to indemnify the 

indemnitee (Kellogg) for any claims resulting from the indemnitor’s 

(Eby’s) acts. But, like the claimant in Fisk, our indemnitee (Kellogg) is 

being sued only for its own misconduct, not the indemnitor’s (Eby’s). 

Thus, Kellogg’s reliance on English is misplaced. 

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Thus, we must apply the fair notice rule even though the indemnity clause 

does not refer to claims involving the indemnitee’s (Kellogg’s) fault. 

B. The Requirements of the Fair Notice Rule 

 We apply the fair notice rule to decide if the indemnity clause can be 

enforced. Under this rule, promises to indemnify a party for its own fault 

must be expressly stated and conspicuous. See Dresser Indus., Inc. v. Page 

Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993). 

C. Applicability of the Fair Notice Rule to the Pipeline 

 Owner’s Claims 

 Kellogg has sought indemnity for its fees and expenses to defend five 

claims: 

● fraud, 

● nuisance, 

● restitution, 

● violation of a federal environmental statute, and 

● violation of a state environmental statute. 

The fair notice rule covers application of the indemnity clause for each 

claim. 

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1. Fraud 

 The parties debate the application of the fair notice rule to 

intentional torts, like fraud. We conclude that the fair notice rule applies 

to contractual indemnification for fraud. 

 The Texas Court of Appeals has held that the fair notice rule restricts 

clauses indemnifying a party for its intentional torts. Hamblin v. Lamont, 

433 S.W.3d 51, 57 (Tex. App. 2013). Though this holding does not bind 

us, it does provide guidance. RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 

857-58 (5th Cir. 2010). The Texas court’s reasoning makes sense: If 

Texas public policy restricts indemnity clauses covering a party’s 

negligence, there would be even greater reason to restrict indemnity for a 

party’s intentional wrongdoing. 

 Kellogg denies the applicability of the fair notice rule to claims 

involving intentional torts, relying on DDD Energy, Inc. v. Veritas DGC 

Land, Inc., 60 S.W.3d 880 (Tex. App. 2001), and English v. BGP 

International, Inc., 174 S.W.3d 366 (Tex. App. 2005). Kellogg’s Opening 

Br. at 33 n.9; Kellogg’s Reply Br. at 9. In these cases, however, the fair 

notice rule didn’t apply because the contracts indemnified the indemnitees 

for the indemnitors’ intentional torts, not the indemnitees’. DDD Energy, 

Inc., 60 S.W.3d at 882; English, 174 S.W.3d at 369. As discussed above, 

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our indemnity clause covered claims involving the indemnitee’s 

(Kellogg’s) torts. Thus, DDD Energy and Veritas do not affect our issue. 

 In these circumstances, we take our guidance from the Texas Court of 

Appeals and conclude that the fair notice rule applies to the claim against 

Kellogg for fraud. 

2. Nuisance 

 Kellogg was sued not only for fraud, but also for nuisance. That 

claim required proof of 

● negligent or intentional invasion of interests or 

● abnormal conduct out of place in the surroundings. 

City of Tyler v. Likes, 962 S.W.2d 489, 503 (Tex. 1997). Regardless of the 

claimant’s method of proof, the fair notice rule would apply. 

 Under Texas law, the fair notice rule applies equally to claims 

involving negligence,3

 intentional conduct,4 and abnormal activity (strict 

liability).5

 Therefore, the rule would apply to all variants of a nuisance 

 

3 See Leonard v. Aluminum Co. of Am., 767 F.2d 134, 137 (5th Cir. 

1985) (applying Texas law). 

4 See part II(C)(1), above. 

5 See Hanson Aggregates W., Inc. v. Ford, 338 S.W.3d 39, 46 (Tex. 

App. 2011) (describing nuisance, based on activity out of place in the 

surroundings, as “essentially a form of strict-liability nuisance”); see also 

Hous. Lighting & Power Co. v. Atchison, Topeka, & Santa Fe Ry. Co., 890 

S.W.2d 455, 459 (Tex. 1994) (“[W]e hold that parties to an indemnity 

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claim. In these circumstances, we conclude that the fair notice rule applies 

to the pipeline owner’s claim against Kellogg for nuisance. 

3. Federal and State Environmental Statutes 

 The owner of the methanol pipeline also sued Kellogg for violation 

of 

● the Comprehensive Environmental Response, Compensation and 

 Liability Act of 1980, 94 Stat. 2767, as amended, 42 U.S.C. §§ 

 9601 et seq. (“C.E.R.C.L.A.”) and 

● the Texas Solid Waste Disposal Act, Tex. Health & Safety 

 Code Ann. §§ 361.001-.992 (“S.W.D.A.”). 

These claims also fall under Texas’s fair notice rule. 

 C.E.R.C.L.A. and the S.W.D.A. apply to owners, operators, and 

arrangers. 42 U.S.C. § 9607(a)(1), (a)(3); Tex. Health & Safety Code 

§ 361.271(a)(1), (a)(3). For owners and operators, the statutes create strict 

liability. See Celanese Corp. v. Martin K. Eby Const. Co., 620 F.3d 529, 

532 (5th Cir. 2010). But the pipeline owner didn’t suggest that Kellogg 

was an owner or operator of the pipeline; the pipeline owner characterized 

Kellogg as an “arranger.” Kellogg could qualify as an “arranger” only if it 

had taken “intentional steps to dispose of a hazardous substance.” 

Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 611 

(2009). 

 

agreement must expressly state their intent to cover strict liability claims 

in specific terms.”). 

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 Based on this definition of “arranger,” the parties disagree over the 

characterization of these claims: Kellogg says they involve intentional 

torts; Eby says they involve strict liability. But we have already concluded 

that Texas’s fair notice rule applies to both types of claims. Thus, we need 

not decide whether the pipeline owner’s claim involves strict liability or an 

intentional tort. Either way, the fair notice rule would apply. 

4. Restitution 

 The owner of the methanol pipeline also sued Kellogg for restitution. 

Restitution is a remedy rather than a theory of liability. See McCullough v. 

Scarborough, Medlin & Assocs., Inc., 435 S.W.3d 871, 891 (Tex. App. 

2014) (“[U]njust enrichment is not an independent claim; rather it is a 

theory of recovery.”). But, in its reply brief, Kellogg characterizes the 

restitution claim as a quasi-contract theory, suggesting that it should be 

treated like a conventional contract claim. Kellogg’s Reply Br. at 10. 

According to Kellogg, this characterization would prevent application of 

the fair notice rule. Id. We reject this argument. 

 Restitution does not provide an independent theory of liability; thus, 

Texas courts have not had any reason to confront applicability of the fair 

notice rule to restitution claims. Restitution would simply describe the 

remedy being proposed (disgorgement of the benefits retained by Kellogg) 

for tortious conduct. 

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 As discussed above, the fair notice rule applies to claims involving 

the indemnitee’s negligence, intentional torts, strict liability, nuisance, and 

violation of C.E.R.C.L.A. and the S.W.D.A. Because the fair notice rule 

applies to these theories of liability, the rule applies equally to the 

remedies (like restitution). 

D. Failure to Satisfy the Fair Notice Rule’s Requirement of 

 Conspicuousness 

 In these circumstances, we must apply the fair notice rule to 

Kellogg’s indemnity claim. Applying the rule, we conclude the indemnity 

clause is unenforceable because it is not conspicuous.6

 1. The Fair Notice Rule’s Requirement of Conspicuousness 

 As discussed above, indemnity clauses are enforceable only if they 

expressly and conspicuously state that they cover claims based on the 

indemnitee’s fault. See part II(B), above. Because we conclude that Eby’s 

promise was not conspicuous, it is unenforceable. 

 In its reply brief, Kellogg argues that the indemnity clause satisfied 

the requirement of conspicuousness. Kellogg’s Reply Br. at 14. We 

disagree. 

 

6

 The district court held that the indemnity clause did not satisfy the 

express negligence requirement, but did not address the conspicuousness 

requirement. Nonetheless, we can affirm on this ground if it is supported 

by the record. Citizen Center v. Gessler, 770 F.3d 900, 909 (10th Cir. 

2014). 

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 As noted above, the fair notice rule requires an indemnity clause to 

be conspicuous. See part II(B), above. A clause is considered 

“conspicuous” when it would attract the attention of a reasonable person. 

Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 511 (Tex. 

1993). Texas cases provide examples of provisions that would attract 

attention, such as different size type, all capital letters in a heading, and 

different colors. See Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, 

192 (Tex. 2004) (type-size and colors); Dresser Indus., Inc. v. Page 

Petroleum, Inc., 853 S.W.2d 505, 511 (Tex. 1993) (all capital letters in a 

heading). 

 The indemnity language appears on page 86 of a 197-page document. 

Appellant’s App. at 263. The clause, along with the rest of the document, 

is single-spaced, small type, and in black-and-white. There is nothing, 

amidst the 197 pages, to capture the attention of a reasonable person. 

 Kellogg argues that the indemnity clause is mentioned in another 

document, which is only 4 pages long. That is true. In the 4-page 

document, labeled “Exhibit C,” the indemnity clause is mentioned, stating 

that Eby’s predecessor “agree[d] to be bound by all of the terms, 

provisions, conditions, indemnification, and liabilities imposed upon 

Contractor under the terms and provisions of said Contract Documents to 

the same extent as though the same were copied verbatim herein at length.” 

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Id. at 264. But, the 4-page document does not state the terms. To learn 

the terms of the indemnity obligation, a reader must go to “said Contract 

Documents” and read 86 pages (almost halfway into the document). The 

table of contents and headings do not help because the indemnity clause is 

buried in a section that doesn’t seem related to indemnity (called 

“Protection of Existing Structures and Facilities”). Id. at 502. 

 In short, the indemnity clause bears none of the indicia that might 

typically attract a reader’s attention: The clause is on page 86 of a 197-

page document, single-spaced along with the rest of the document, in 

black-and-white, without a heading that calls attention to indemnity. The 

clause is not conspicuous. 

2. Actual Notice 

In a reply brief, Kellogg argues for the first time that Eby had actual 

notice of the indemnity provision. Kellogg’s Reply Br. at 11-13. We 

reject this argument because it was waived and unsupported when Kellogg 

responded to Eby’s summary judgment motion. 

 The argument is too late because an appellant must present its 

grounds for reversal in the opening brief. Fed. R. App. P. 28(a)(8)(A). In 

the opening brief, Kellogg made no mention of “actual notice.” This issue 

was first raised in Kellogg’s reply brief. Thus, Kellogg waived the issue. 

See, e.g., M.D. Mark, Inc. v. Kerr-McGee Corp., 565 F.3d 753, 768 n.7 

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(10th Cir. 2009) (“[T]he general rule in this circuit is that a party waives 

issues and arguments raised for the first time in a reply brief.”). 

 Kellogg’s argument is not only waived, but also unsupported. 

Kellogg raised the argument in district court, but failed to present any 

evidence that Eby’s predecessor had known that it was promising 

indemnity for claims involving the indemnitee’s own fault. 

 Instead, Kellogg argued that Eby’s predecessor must have known 

about the indemnity terms because it signed a 4-page contract referring to 

the indemnity clause.7

 But as noted above, the 4-page contract did not 

contain any terms and referred only to the indemnification terms in the 197 

single-spaced pages. The 4-page contract does not support a reasonable 

inference of actual notice regarding the indemnity terms buried in the 

middle of 197 pages. See Am. Home Shield Corp. v. Lahorgue, 201 S.W.3d 

181, 186-87 (Tex. App. 2006) (holding that actual notice requires proof 

beyond the fact that a party read the contract before signing it). 

 Kellogg’s argument of actual notice is waived and unsupported. 

Thus, actual notice cannot serve as the basis for reversal. 

 

7

 In a surreply brief filed in district court, Kellogg added evidence that 

Eby had admitted knowledge of the indemnity agreement. Appellant’s 

App. at 1289. But, the District of Kansas does not permit the raising of 

new arguments in a surreply brief. See First Specialty Ins. Corp. v. NAIS, 

Inc., 459 F. Supp. 2d 1094, 1099 (D. Kan. 2006). Eby had no opportunity 

to address the new arguments in either of the briefs that it filed in district 

court. 

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E. Effect of the Fair Notice Rule 

 The fair notice rule involves a tool of contract interpretation. See 

Fisk Elec. Co. v. Constructors & Assocs., Inc., 888 S.W.2d 813, 814 (Tex. 

1994) (“The express negligence requirement is not an affirmative defense 

but a rule of contract interpretation.”). Because the indemnity clause is 

unenforceable, we read the clause as if it didn’t cover the pipeline owner’s 

claims against Kellogg. See Reyes v. Storage Processors, Inc., 86 S.W.3d 

344, 351 (Tex. App. 2002) (“[A]n employee who has executed a liability 

waiver that is defective for failing to meet the fair notice requirements is 

in the same position as if he had never signed the release, unless he had 

actual knowledge of the release’s provisions.”), aff’d, 134 S.W.3d 190 

(Tex. 2004). As a result, Eby has no contractual obligation to reimburse 

Kellogg for its attorneys’ fees or costs. In these circumstances, the award 

of summary judgment to Eby was proper. 

III. Travelers and Eby: Assumption of Contractual Liability 

 Kellogg sued not only Eby, but also Eby’s insurer: Travelers. 

Travelers did not name Kellogg as an insured. But Travelers apparently 

acknowledges that it agreed to insure parties whose liabilities were 

assumed by Eby in a “covered contract.” Kellogg contends that 

● even if Eby’s promise of indemnity was unenforceable, it had 

 been made, and 

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● because the promise had been made, Travelers (as Eby’s 

 insurer) indirectly insured Kellogg for the money spent 

 defending the pipeline owner’s claims. 

We disagree with Kellogg.8

Under Texas law, we must interpret the indemnity clause in a way 

that does not cover damages caused by Kellogg’s fault. See part II(E), 

above. As discussed above, this interpretation means that the indemnity 

clause does not cover the pipeline owner’s claims against Kellogg. And 

without an underlying indemnity clause covering Kellogg’s expenses, Eby 

did not assume Kellogg’s liability. Therefore, Eby’s insurer (Travelers) 

never agreed to provide insurance to cover Kellogg’s claims. In the 

absence of insurance coverage, the district court properly granted summary 

judgment to Travelers on the claim involving Eby’s assumption of 

contractual liability.9

 

8

 Because Travelers is not liable on other grounds, we need not decide 

whether there is a covered contract. 

9

 Kellogg relies on Gilbane Building Co. v. Admiral Insurance Co., 

664 F.3d 589 (5th Cir. 2011). But there the court was addressing coverage 

of the indemnitee as an “additional insured.” Gilbane Bldg. Co., 664 F.3d 

at 593-96. “A contract provision that extends direct insured status as an 

additional insured is deemed to be separate and independent from the 

indemnity agreement.” Travelers Lloyds Ins. Co. v. Pac. Emp’rs Ins. Co., 

602 F.3d 677, 682 (5th Cir. 2010). Our issue is different: the effect of an 

unenforceable indemnity clause. Kellogg has not raised the argument 

involved in Gilbane Building Co.: the indemnitee’s coverage as an 

“additional insured.” 

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IV. Conclusion 

 Applying the fair notice rule to the indemnification clause, we 

conclude that Eby’s indemnity promise was unenforceable. It was as if the 

indemnity promise had never been made. 

 Without an enforceable indemnity promise, Eby and Travelers are 

entitled to summary judgment: Eby cannot incur liability for an 

unenforceable promise, and Travelers did not insure Kellogg. As a result, 

we affirm the summary judgment rulings. 

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