Opinion ID: 2429310
Heading Depth: 4
Heading Rank: 2

Heading: arises from:

Text: (A) personal injury or death; (B) property injury; or (C) any other loss, damage, or expense that arises from personal injury, death, or property injury. Section 127.003 would void the indemnity provisions before us unless they are excepted from its application by some other section of chapter 127. The only such exception asserted by Moran is that contained in section 127.005. Before it was amended in 1989, that section stated: (a) This chapter does not apply to an agreement that provides for indemnity with respect to claims for personal injury or death to the indemnitor's employees or agents or to the employees or agents of the indemnitor's subcontractors if the parties agree in writing that the indemnity obligation will be supported by available liability insurance coverage to be furnished by the indemnitor. (b) The indemnity obligation is limited to the extent of the coverage and dollar limits of insurance the indemnitor has agreed to furnish. (c) The amount of insurance required may not exceed 12 times the state's basic limits for personal injury, as approved by the State Board of Insurance in accordance with Article 5.15, Insurance Code. The parties agree that at all times material to this case the basic limits referred to in section 127.005(c) were $25,000. Thus, the limit which section 127.005(c) imposed on the amount of insurance that could be required was $300,000. Diamond Shamrock argues that the exception in section 127.005 is inapplicable because its agreement with Moran did not call for their indemnity obligations to be supported by available liability insurance coverage to be furnished by the indemnitor, but rather allowed those obligations to be supported either by available liability insurance ... or voluntarily self-insured, in part or whole. See infra note 1. Diamond Shamrock argues that section 127.005(a) does not permit self-insurance but requires a liability policy of insurance. Moran counters that section 127.005(a) does not prohibit self-insurance, which should be an acceptable form of coverage. In response, Diamond Shamrock contends that even if the validity of indemnity provisions is preserved by section 127.005, its liability is limited by section 127.005(c) to $300,000. [7] Moran argues that this limit does not apply when, as here, the parties have voluntarily agreed to indemnify one another without limit. Further complicating the parties' contentions, section 127.005 was amended in 1989 to read as follows: (a) Except as to agreements with respect to the purchase, gathering, storage, or transportation of oil, gas, brine water, fresh water, produced water, petroleum products, or other liquid commodities, this chapter does not apply to an agreement that provides for indemnity if the parties agree in writing that the indemnity obligation will be supported by liability insurance coverage to be furnished by the indemnitor. (b) With respect to a mutual indemnity obligation, the indemnity obligation is limited to the extent of the coverage and dollar limits of insurance or qualified self-insurance each party as indemnitor has agreed to provide in equal amounts to the other party as indemnitee. (c) With respect to a unilateral indemnity obligation, the amount of insurance required may not exceed $500,000. Section 127.001 was also amended to add the following definitions: (2) Mutual indemnity obligation means an indemnity obligation in an agreement pertaining to a well for oil, gas, or water or to a mine for a mineral in which the parties agree to indemnify each other and each other's contractors and their employees against loss, liability, or damages arising in connection with bodily injury, death, and damage to property of the respective employees, contractors or their employees, and invitees of each party arising out of or resulting from the performance of the agreement. (5) Unilateral indemnity obligation means an indemnity obligation in an agreement pertaining to a well for oil, gas, or water or to a mine for a mineral in which one of the parties as indemnitor agrees to indemnify the other party as indemnitee with respect to claims for personal injury or death to the indemnitor's employees or agents or to the employees or agents of the indemnitor's contractors but in which indemnitee does not make a reciprocal indemnity to the indemnitor. With respect to these amendments, the Legislature provided: This Act applies to an indemnity obligation without regard to whether the obligation was entered into before, on, or after the effective date of this Act [which was September 1, 1989]. Act of May 28, 1989, 71st Leg., R.S., ch. 1102, § 4, 1989 Tex.Gen.Laws 4557, 4559. Diamond Shamrock argues that the 1989 amendments to chapter 127 cannot constitutionally be applied retroactively, notwithstanding the Legislature's expressly contrary intention. [8] Alternatively, Diamond Shamrock argues that the indemnity obligations are not mutual as defined in section 127.001(2) because the parties did not agree, in the language of the definition, to indemnify each other's contractors and their employees. Even if the indemnity provisions here are mutual, Diamond Shamrock argues, its obligation is limited to the $100,000 of insurance coverage Moran was required by their contract to obtain. Moran contends that the indemnity provisions are mutual and the obligations imposed unlimited. The second difference the parties raise between Texas and Kansas law is that Texas law requires that an agreement to indemnify another for his own negligence must be express, Enserch Corp. v. Parker, 794 S.W.2d 2, 8 (Tex. 1990), Atlantic Richfield Co. v. Petroleum Personnel, Inc., 768 S.W.2d 724, 725 (Tex. 1989), Singleton v. Crown Central Petroleum Corp., 729 S.W.2d 690 (Tex. 1987), Gulf Coast Masonry, Inc. v. Owens-Illinois, Inc., 739 S.W.2d 239 (Tex. 1987), Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705 (Tex. 1987), while Kansas law requires that the agreement be clear and unequivocal, Bartlett v. Davis Corp., 219 Kan. 148, 547 P.2d 800, 807-10 (1976), Butters v. Consolidated Transfer & Warehouse Co., 212 Kan. 284, 510 P.2d 1269, 1273-74 (1973). Diamond Shamrock agreed to indemnify Moran against all bodily injury, death and property claims by its employees or the employees of its contractors without limit and without regard to the cause or causes thereof or the negligence of any party or parties. See infra note 1. This exact language has been held to indemnify a party clearly and unequivocally against its own negligence. Theriot v. Bay Drilling Corp., 783 F.2d 527, 539-41 (5th Cir. 1986) (applying federal maritime law). We agree that the language meets the clear and unequivocal standard. We also think that it meets the requirement of Texas law that the indemnity agreement be express. The agreement unmistakably obliged Diamond Shamrock and Moran to indemnify one another for the other's own negligence. Thus, while the degree of certainty to which the indemnity provisions in issue are subject differs under Texas and Kansas law, they meet the standards imposed by both jurisdictions. The only effective difference between the two states' law remaining is the existence of a statute expressing public policy in Texas; and the absence of any such statute or policy in Kansas. With this difference in mind, we now return to the principles of section 6 of the Restatement.