Court Opinion

ID: 9777670
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:19:04.288585+00
Date Added: 2024-06-11T07:32:58.478152
License: Public Domain

COHEN, Justice,
concurring.
I agree with the majority opinion. I write only to point out the irony that a statute meant to protect oil field contractors may not be doing so, as in the case of Greene’s, or it may be protecting them in circumstances far different from what the legislature intended.
In Greene’s Pressure Testing & Rentals v. Flournoy Drilling Co., 113 F.3d 47 (5th Cir. 1997), the party seeking and denied indemnity was the contractor, Greene’s. The present parties tell us that section 127.005 was enacted to prevent oil and gas operators, who were dominant over drilling contractors, from imposing oppressive indemnity obligations on contractors, like Greene’s and like Grey Wolf. Tex. Civ. Prac. & Rem.Code Ann. § 127.005(b) (Vernon 1997).1 This was accomplished by requiring “agreement” that equal amounts of insurance support their mutual indemnity obligations. Id. Although the operator in Greene’s did not “agree” in the contract to provide insurance equal to the $6 million that Greene’s provided, the operator (Flournoy) actually provided much more than that — $10 million. Instead of aiding Greene’s, a contractor whom the statute was intended to assist, that fact helped to deprive Greene’s of any indemnity at all. Greene’s, 113 F.3d at 52 n. 6. Of course, because that indemnity was void, Greene’s was also relieved of any potential indemnity to Flour-noy. Thus, the parties in Greene’s purchased $16 million of insurance to support their void indemnities. Only their insurance companies benefitted from that. That could not have been the legislature’s intention in enacting § 127.005(b) or the parties’ intention in making their contract or buying their insurance.
Similarly, in this case, Weber purchased insurance equal to Grey Wolfs, $16 million, even though it never “agreed” in the contract to do so. Thus; the two operators, Flournoy and Weber, both did what the statute was intended to accomplish. Both operators bought insurance equal to or greater than their contractors to indemnify their contractors from suits by the operators’ employees. It is difficult to justify voiding these indemnities when operators have furnished the insurance required or, as in Greene’s, they have furnished even more. These operators accomplished the purpose of the statute. Their contractors received indemnities equal to or greater than those they gave their operators.
I must concede, however, that the holding in Greene’s seems true to the words of the statute. Perhaps the legislature feared that if operators were not required — by their contract — to buy equal amounts of insurance, they would not do so, and that would either leave contractors without the intended protection2 or would generate disputes over what insurance was “available” to a particular operator at a particular time for a particular risk.3 Although the results in Greene’s and in this case seem contrary to the statute’s intent, I do not feel free to rewrite either the statute or this contract when I can see at least the possibility of some larger goal the industry and the legislature may have been pursuing. Fortunately, the International Association of Drilling Contractors has rewritten its form contract to avoid disputes like this by providing simply that the “operator will ... maintain ... insurance coverage of the same kind and in the same amount as is required of the contractor_” Greene’s, 113 F.3d at 51 n. 4.

. They have furnished legislative history supporting this view.

. Requiring equal insurance coverage from operators could also have influenced downward the total amount of indemnity an operator would seek from a contractor. The more indemnity the contractor provided, the more insurance the operator would have to purchase to support his reciprocal indemnity required by section 127.005.

.It probably never occurred to legislators that, as in Greene's, an operator would purchase $10 million of insurance to support its indemnity obligation to its contractor, when the statute required it to buy only $6 million to equal the amount the contractor had purchased.