Opinion ID: 162850
Heading Depth: 4
Heading Rank: 1

Heading: Death or bodily injury to persons

Text: (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. . . . WYO. STAT. ANN. § 30-1-131 (emphasis added). -7- to contract, we must strictly construe both statutes. See id. at 770 (citation omitted). In this case, the Master Service Agreement pertains to a “well for oil, gas or water” and it purports to indemnify Devon against damages resulting from Devon’s own negligence. Thus, it is invalid under Wyoming law if the operations performed by Neether and Hall on June 5, 2000, fall within the scope of activities described in section 30-1-132. If they do, the Master Service Agreement’s indemnity provision is void under Wyoming law despite the parties’ choice of law provision. If they do not, the parties’ express choice of law provision is valid, and Oklahoma law will determine the enforceability of the indemnity provision. Recently, in Gainsco Ins. Co. v. Amoco Prod. Co., 53 P.3d 1051 (Wyo. 2002), the Wyoming Supreme Court again considered the boundaries of section 30-1-132. As it had in the past, the court relied on ejusdem generis, the principle of statutory construction “whereby a general term following a list of specifically enumerated terms should be construed as limited to the same genus as the things enumerated.” Id. at 1078 (citing Reliance, 713 P.2d at 770). Applying this principle to the catchall phrase “or otherwise rendering services in or in connection with any well,” the court restricted the scope of section 30-1-132 to “services similar to ‘drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, [or] plugging [wells].’” Id. (internal quotation omitted). Thus, to come within the ambit of section 30-1-132, the activity must be “‘closely related to oil well drilling.’” Id. at 1077 -8- (emphasis added) (quoting Reliance, 713 P.2d at 770). “‘Services or activities having remote or indirect connection to the kinds of services enumerated’ in [section 30-1-132] are not covered.” Id. at 1075 (quoting Reliance, 713 P.2d at 770). In Gainsco, the court reviewed its prior decisions defining the scope of section 30- 1-132. The court set up as opposite points on a continuum the facts in two cases: Cities Serv. Co. v. N. Prod. Co., 705 P.2d 321 (Wyo. 1985), and Reliance. In articulating the proper test, the court stated: The question, then, is whether the work being performed under the Contract [at the time of the incident in question] [is] more akin to the service of pumping units, as in Cities Service Co., and therefore covered by the statute, or to the digging of fluid waste pits after a fire at a separation plant, as in Reliance Ins. Co., and therefore not covered by the statute. Gainsco, 53 P.3d at 1077. Applying this test, the court held that “delivering oil by truck to a tank battery is not an activity closely related to well drilling.” Id. Thus, under Gainsco, we must consider the services at issue in this case as they relate to the cases to which the Wyoming Supreme Court has directed us. In conducting our inquiry, we are mindful of the Wyoming Supreme Court’s repeated admonition that section 30-1-132 must be construed narrowly because it restricts the common law right of freedom of contract. See id. at 1078; Reliance, 713 P.2d at 770. In this case, the R&G employees were servicing a pump in Wolff CDP 12-6. The CDPs function to consolidate gas flow from numerous wells, meter the incoming gas for royalty calculation, and separate water from the gas before it enters the main pipeline. -9- While the CDP units contribute to well pressurization, which is essential to proper operation of the well, the closest gas well to Wolff CDP 12-6 was 600 feet away. Based on these considerations, the district court concluded that “the operations [Neether and Hall] performed at the CDP building [were] not sufficiently related to well drilling to fall within the application of the anti-indemnity statute.” Dist. Ct. Order at 8. We agree. R&G argues that activities performed at the CDP buildings are essential to the operation of the well and therefore fall within the scope of the statute because they are services “in or in connection with a well.” It is true that a properly functioning CDP contributes to well pressurization, which is in turn essential to proper operation of the well. But R&G stretches the relationship too far. Beyond being essential to the proper functioning of the well, the cases require that the activity be “closely related to well drilling.” Reliance, 713 P.2d at 770 (emphasis added). Thus, while we recognize that the coalbed methane wells in this case required CDPs to function, this does not bring the servicing of the CDPs within the scope of section 30-1-132. The metering, consolidating, and separating functions, performed by the CDPs at considerable distance from the wells themselves, are distinguishable from the pumps involved in Cities Service. In fact, the separation function performed by the CDPs make this case similar to the facility in Reliance and the consolidating and metering functions are similar to the transportation function at issue in Gainco. Further, the Wyoming Supreme Court construes the “in connection” language as requiring a close connection to - 10 - well drilling; activities with a “remote or indirect” connection to the well itself are outside the statute’s scope. Gainsco, 53 P.3d at 1075 (quoting Reliance, 713 P.2d at 770) (emphasis added). The CDPs are unquestionably remote. The nearest CDP is 600 feet from the well, and they may lie up to one mile away. The connection is also indirect, as up to a mile of four-inch pipelines and a “blow down” separate a well and a CDP.3 Finally, we again note the Wyoming Supreme Court’s instruction that we must strictly construe section 30-1-132. R&G also argues that dictionary definitions of terms listed in the statute, such as “treating,” “conditioning,” and “altering,” bring the functions performed by the CDP within the scope of section 30-1-132. As Devon notes, however, these terms have a specific meaning within the oil industry. Moreover, we are not writing on a blank slate; we are bound by the decisions of the Wyoming Supreme Court, which have (1) restricted the applicability of the statute to activities closely related to well drilling, and (2) provided a factual template for determining whether activities yet to be addressed are “closely related.” It is for the legislature of Wyoming, not us, to extend the scope of the 3 The Supreme Court of Wyoming has suggested, in dicta, that it does not consider sections 30-1-131 and 132 applicable to work on pipelines. Northwinds of Wyoming, Inc., v. Phillips Petroleum Co., 779 P.2d 753, 757 n.5 (Wyo. 1989). The court in that case, however, held that the indemnity provision at issue was invalid because it did “not clearly state that Phillips [was] entitled to indemnity for its own negligence where it [had] been concurrently negligent.” Id. at 756. The court’s discussion of the applicability of the anti-indemnity statute to pipelines is therefore little help in this case, despite the similarity of the services at issue. - 11 - anti-indemnity statute beyond the boundaries set by Wyoming’s highest court.