Opinion ID: 2630467
Heading Depth: 2
Heading Rank: 2

Heading: Is Thunder Basin obligated to indemnify Jacobs Ranch?

Text: [¶ 22] Jacobs Ranch currently owns the surface estate of Section 18. Thunder Basin has access to the surface of about half of the Section 18 property pursuant to a 1999 Surface Use and Lease Agreement with Jacobs Ranch. This Agreement includes the following provision: [Thunder Basin] agrees that it will conduct all operations hereunder in full compliance with all applicable state and federal laws, rules and regulations, including but not limited to, those pertaining to zoning, environmental protection and land reclamation. [Thunder Basin] covenants and agrees to indemnify, save harmless and defend [Jacobs Ranch] from and against all suits, actions, claims and demands in any manner arising from, incident to or growing out of [Thunder Basin's] operations hereunder and the use and occupancy of the Leased Premises. Pursuant to this provision, Jacobs Ranch asserts an express indemnity claim against Thunder Basin. [¶ 23] On summary judgment, the district court ruled against Jacobs Ranch, providing this explanation: The clause requires Thunder Basin to indemnify Jacobs Ranch against all suits, actions, claims and demands in any manner arising from, incident to or growing out of Lessee's operations hereunder and the use and occupancy of the Leased Premises.  (Emphasis added.) The claims against Jacobs Ranch for the payment of purchase money relative to the 1997 conveyance has no more than a tangential relationship to the coal mined on the property. The court finds that the payment of purchase money owed the plaintiffs (now Jacobs Ranch) by Jacobs Ranch was not arising from, incident to or growing out of Thunder Basin's operations, use or occupancy of the property. Indeed, the amount to be paid would depend upon the amount of coal mined, but the mining activities did not create the obligation, they merely produced the gauge for the payment amount. [¶ 24] We interpret an indemnity provision as we do any other contract, affording the language its plain meaning. If the provision is unambiguous, we look only to the four corners of the document to determine the intent of the parties. Amoco, 2 P.3d at 540. Where there is an express indemnity provision, its parameters are derived from the specific language of [the] contract. Diamond Surface, Inc. v. Cleveland, 963 P.2d 996, 1002 (Wyo.1998). In addition, Thunder Basin has pointed us to this language from 42 C.J.S. § 15: A contract of indemnity should be construed so as to cover all losses, damages, or liabilities to which it reasonably appears to have been the intention of the parties that it should apply, but not to extend to losses, damages, or liabilities which are neither expressly within its terms nor of such character that it can reasonably be inferred that they were intended to be within the contract. (Footnotes omitted.) Applying these standards, we agree with the district court that the claims in this case are not of such character as to be included within this indemnity provision. The Stuart Family, the original plaintiff in this case, brought suit against Jacobs Ranch, asserting that Jacobs Ranch had assumed Consol's obligation to pay the surface royalties relating to the Section 18 property. The claims arose from Jacobs Ranch's own contractual obligations. They are not arising from, incident to, or growing out of Thunder Basin's operations on or use of the land. [¶ 25] Other language in this indemnity provision supports the conclusion that it is limited in scope. The Stuart Family did not bring claims against Jacobs Ranch because Thunder Basin breached its promise to conduct all operations hereunder in full compliance with all applicable state and federal laws, rules and regulations. It did not bring claims pertaining to zoning, environmental protection and land reclamation, and while the indemnity provision is expressly not limited to those topics, the presence of such a list does suggest the character of claims to which the indemnity provision was intended to apply. The claims brought are of a different character. We conclude from the language of this indemnity provision that it does not require Thunder Basin to indemnify Jacobs Ranch for claims relating to surface royalty payments.
[¶ 26] As noted above, the 1999 Surface Use and Lease Agreement applies only to about half of the surface of the Section 18 property. Thunder Basin's access to the remainder is governed by a 1993 Consent to Mine Agreement. That document contains no express indemnity provision, but Jacobs Ranch asserts that it clearly implies an obligation for Thunder Basin to pay for any costs and damages that arise from its coal mining activities on the land. However, Jacobs Ranch's claim for implied indemnity suffers the same flaw as its claim for express indemnity: these claims do not arise from Thunder Basin's coal mining activities on the land, but rather, from Jacobs Ranch's own contractual obligations. The district court correctly ruled against Jacobs Ranch on this theory of implied indemnity as well.
[¶ 27] Jacobs Ranch's third theory is equitable indemnification. We have previously said that [i]mplied theories of indemnity are not viable in the face of an express indemnity agreement. Wyoming Johnson, Inc. v. Stag Industries, Inc., 662 P.2d 96, 101 (Wyo.1983). As we explained, when parties have entered into a written contract which includes an express indemnification provision, the express provision controls. It is inappropriate to enlarge or add rights of indemnification to the express provision by implication. Id. at 102. The claim in Wyoming Johnson was implied indemnity rather than equitable indemnity, but the same principle should apply under the circumstances of this case. Jacobs Ranch and Thunder Basin have an express indemnity agreement, which does not apply to claims for surface royalty payments. It would be inappropriate to enlarge or add to Jacobs Ranch's rights of indemnification using an equitable indemnity theory. We therefore affirm the district court's summary judgment decision denying Jacobs Ranch's indemnity claim under the three theories of express, implied, and equitable indemnity. [¶ 28] Affirmed.