Court Opinion

ID: 9369369
Source: CourtListenerOpinion
Date Created: 2023-02-08 17:00:34.224448+00
Date Added: 2024-06-11T17:16:14.630765
License: Public Domain

Appellate Case: 22-8013     Document: 010110810042      Date Filed: 02/08/2023    Page: 1
                                                                                 FILED
                                                                     United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                        Tenth Circuit

                              FOR THE TENTH CIRCUIT                          February 8, 2023
                          _________________________________
                                                                         Christopher M. Wolpert
                                                                             Clerk of Court
  LINE FINDERS, LLC,
  a Wyoming limited liability company,

        Plaintiff - Appellant,

  v.                                                         No. 22-8013
                                                    (D.C. No. 2:21-CV-00237-ABJ)
  DEVON ENERGY PRODUCTION                                      (D. Wyo.)
  COMPANY, L.P., an Oklahoma limited
  partnership,

        Defendant - Appellee.
                       _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before HARTZ, TYMKOVICH, and MATHESON, Circuit Judges.
                  _________________________________

       Plaintiff Line Finders, LLC entered into a contract with Defendant Devon

 Energy Production Company, L.P. to perform services on oil wells. After two Line

 Finders employees were injured in an accident while working on one of Devon

 Energy’s oil wells, Line Finders filed a declaratory-judgment action against Devon

 Energy seeking to invalidate certain portions of the contract as void and

       *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument. This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral
 estoppel. It may be cited, however, for its persuasive value consistent with
 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Appellate Case: 22-8013    Document: 010110810042         Date Filed: 02/08/2023        Page: 2

 unenforceable under Wyoming law. The district court dismissed the claim under the

 doctrine of res judicata, concluding that the matter had been fully litigated to a final

 judgment in federal district court in Oklahoma, and Line Finders therefore could not

 pursue the same claim in another court. Line Finders appeals the district court’s

 conclusion that res judicata applies. Exercising jurisdiction under 28 U.S.C. § 1291,

 we affirm.

                                     I. Background

       The following recitation of facts comes from the allegations in Line Finders’

 complaint, which we accept as true for purposes of reviewing a dismissal under Fed.

 R. Civ. P. 12(b)(6). See Safe Streets All. v. Hickenlooper, 859 F.3d 865, 878 (10th

 Cir. 2017). Line Finders provides services to companies, such as Devon Energy, in

 the oil-and-gas industry in Wyoming. Devon Energy and Line Finders entered into a

 Master Service and Supply Agreement (MSSA) in which Line Finders agreed:

       to defend, indemnify, hold harmless, and release [Devon Energy] from
       and against all claims, losses, damages, demands, causes of action,
       suits, judgments, and liabilities of every kind (including all expenses of
       litigation, court costs, and reasonable attorneys’ fees), brought or
       asserted against [Devon Energy] by any party . . . , directly or indirectly
       arising out of or related to this Agreement . . . and resulting from any
       claim of loss, damage, injury, illness, or death . . . regardless . . . of who
       may be at fault or otherwise responsible under any other contract, or any
       other statute, rule, or theory of law . . . , and even though the subject
       loss, damage, injury, illness, or death may have been caused in whole or
       in part by . . . the sole, concurrent, active, or passive negligence of
       [Devon Energy] or a third party.

 Aplt. App. at 23. The MSSA further stated these obligations apply to “[p]ersonal

 injury to, bodily injury to, emotional or psychological injury to, property or wage

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 loss, benefits loss, illness, or death of [Line Finders’] employees . . . .” Id. The

 MSSA also contained a forum-selection clause identifying Oklahoma as the exclusive

 venue for the resolution of any dispute arising from the contract.

       In October 2018, Line Finders employees Marcus Murschel and Michael

 Elsasser were injured while providing services under the MSSA. Mr. Murschel later

 sent a letter through counsel to Devon Energy demanding compensation for his

 injuries. Devon Energy denied Mr. Murschel’s demand and invoked the provision of

 the MSSA requiring Line Finders to defend and indemnify Devon Energy. Line

 Finders refused to do so.

       Devon Energy then filed a declaratory-judgment action against Line Finders in

 the United States District Court for the Western District of Oklahoma, claiming that

 Line Finders breached the MSSA by failing to defend and indemnify it from the

 claims asserted by Mr. Murschel.

       Eventually Line Finders and Devon Energy engaged in settlement discussions,

 culminating in an agreement that was memorialized in a written settlement

 agreement. The agreement stated that if Mr. Murschel or Mr. Elsasser made claims

 against Devon Energy, the parties would jointly submit a claim to Arch Insurance

 Company to defend and indemnify Devon Energy, and that if Arch did not agree to

 do so, then Line Finders would do so under the MSSA. Before Line Finders signed

 the settlement agreement, however, Mr. Elsasser submitted a demand to Devon

 Energy. Claiming that Mr. Elsasser’s demand changed the circumstances, Line

 Finders declined to sign the settlement agreement.

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          Devon Energy moved to enforce the settlement agreement, and the district

 court granted the motion. The court then entered a judgment, the substance of which

 the parties had agreed to as part of the settlement agreement. The judgment noted

 Line Finders’ indemnity and defense obligations under the MSSA and concluded that

 in accordance with those provisions, Line Finders was obligated to defend Devon

 Energy against the claims in Mr. Murschel’s demand letter. Line Finders appealed,

 arguing among other things that the district court erred in enforcing the settlement

 agreement. We affirmed in an unpublished opinion. See Devon Energy Prod. Co. v.

 Line Finders, LLC, Nos. 21-6119 & 21-6162, 2022 WL 4232404 (10th Cir. Sept. 14,

 2022).

          While its appeal from the Western District of Oklahoma was still pending in

 this court, Line Finders filed a declaratory-judgment action in Wyoming state court,

 claiming the defense and indemnity provisions of the MSSA violated Wyoming

 public policy. Devon Energy removed the case to the United States District Court for

 the District of Wyoming, then moved to dismiss on several grounds, including res

 judicata. The district court granted the motion to dismiss on the ground of res

 judicata, concluding that the matter of Line Finders’ defense and indemnity

 obligations had been fully litigated to a final judgment in Oklahoma federal district

 court, and Line Finders was therefore precluded from pursuing the same claim in

 another court.

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                                       II. Discussion

        Line Finders argues the district court erred in dismissing its complaint based

 on res judicata. “A district court’s conclusions as to res judicata are conclusions of

 law and reviewable de novo.” Clark v. Haas Grp., Inc., 953 F.2d 1235, 1237

 (10th Cir. 1992) (italics omitted). The parties do not disagree on the fundamentals of

 res judicata. “Under res judicata, or claim preclusion, a final judgment on the merits

 of an action precludes the parties or their privies from relitigating issues that were or

 could have been raised in the prior action.” Wilkes v. Wyo. Dep’t of Emp. Div. of

 Lab. Standards, 314 F.3d 501, 503-04 (10th Cir. 2002). Three elements must exist

 for the doctrine of res judicata to apply: “(1) a final judgment on the merits in an

 earlier action; (2) identity of parties or privies in the two suits; and (3) identity of the

 cause of action in both suits.” Id. at 504 (brackets & internal quotation marks

 omitted). Even if all the elements are satisfied, the doctrine does not apply if the

 party opposing its application “did not have a full and fair opportunity to litigate the

 claim in the prior action.” Johnson v. Spencer, 950 F.3d 680, 693 (10th Cir. 2020)

 (internal quotation marks omitted).

        Line Finders argues that (1) it did not have a full and fair opportunity to

 litigate the issues, and (2) there was no identity of claims because the Oklahoma case

 did not address the issue of indemnification or the demand by Mr. Elsasser. We

 reject both arguments.

        The first argument is based on the observation that the Oklahoma district

 court’s judgment makes no mention of Mr. Elsasser and only addresses Line Finders’

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 duty to defend, not its duty to indemnify. But this argument artificially confines the

 preclusion analysis to the judgment, ignoring the settlement agreement on which it is

 based. “Under federal law, settlements have claim-preclusive effect between parties

 to the settlement.” Denver Homeless Out Loud v. Denver, 32 F.4th 1259, 1271 (10th

 Cir. 2022) (brackets and internal quotation marks omitted); see also Hoxworth v.

 Blinder, 74 F.3d 205, 208 (10th Cir. 1996) (“Generally, court-approved settlements

 receive the same res judicata effect as litigated judgments.”). A settlement

 agreement “can supplant traditional preclusion principles if it is clear that the parties

 intended preclusion as part of their agreement.” Denver Homeless, 32 F.4th at 1271

 (internal quotation marks omitted).

       The settlement agreement states in pertinent part:

              In the event Marcus Murschel or Michael El[s]asser takes any
       action to advance his claim against Devon, the Parties will jointly
       submit a claim to Arch Insurance Company to defend, indemnify, and
       hold harmless Devon against such claim. If Arch Insurance Company
       does not promptly and unequivocally assume the defense and agree to
       indemnify Devon within an agreed period of time, then [Line Finders]
       promptly will defend and indemnify Devon with defense counsel of
       Devon’s choosing in accordance with the MSSA and the Judgment.
       [Line Finders] will not seek to negate or avoid its defense or indemnity
       obligations to Devon under the MSSA and the terms and conditions of
       this Agreement by asserting defenses including but not limited to public
       policy, the workers’ compensation laws of Wyoming and rules of the
       Wyoming Workers’ Compensation Division, and Wyoming Statutes
       Annotated section 30-1-131 et seq.

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 Compromise & Settlement Agreement, No. 5:20-cv-00636-F, ECF No. 41-1, at 2.1

 This language plainly prevents either party from relitigating any disputes regarding

 Line Finders’ defense and indemnity obligations arising from demands made by

 either Mr. Murschel or Mr. Elsasser. We therefore reject Line Finders’ argument that

 it did not have a full and fair opportunity to litigate the issues. Line Finders cannot

 knowingly enter into a settlement ending litigation over its obligations under the

 MSSA only to later claim it did not have an opportunity to litigate the scope of those

 obligations.

       Our conclusion is buttressed by our recent decision in Denver Homeless, 32

 F.4th 1259. There, Denver officials had authorized sweeps of homeless

 encampments, which gave rise to a class action that was resolved in a settlement

 agreement. See id. at 1264. The agreement provided that anyone in Denver whose

 belongings may in the future be taken without due process as the result of such

 sweeps forever released the City from any liability related to the class action or to the

 City’s custom of sweeping homeless encampments. See id. It further provided that

 the plaintiffs in the class action “shall not, under any circumstances, seek to present

 further claims on behalf of themselves or others” against the defendants. Id.

 (emphasis and internal quotation marks omitted). The district court then entered a

 final judgment dismissing the class action as settled. See id.

       1
          Although this document was not included in the appendix, we take judicial
 notice of it because it is a publicly filed document in our court “concerning matters
 that bear directly upon the disposition of the case at hand,” United States v. Ahidley,
 486 F.3d 1184, 1192 n.5 (10th Cir. 2007).

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        Later, Denver Homeless Out Loud and several individual plaintiffs filed a new

 lawsuit against Denver to enforce the settlement and to assert new civil-rights claims

 based on sweeps conducted after the settlement agreement was executed. See id. at

 1267. We held that the “plain text of the . . . settlement agreement makes clear the

 parties intended it to have preclusive effect.” Id. at 1271. Accordingly, the

 plaintiffs’ new constitutional claims were barred by res judicata. See id. at 1277.

        As in Denver Homeless, the Wyoming district court did not limit its analysis to

 the judgment entered in the Oklahoma lawsuit. Instead, it examined the underlying

 settlement agreement and concluded that the parties clearly intended it to have

 preclusive effect concerning Line Finders’ defense and indemnity obligations arising

 from claims by Mr. Murschel and Mr. Elsasser. The district court committed no error

 in doing so.

        Line Finders’ second argument is a variation of the first. It argues there is no

 identity of claims because Mr. Elsasser’s demand was not part of Devon Energy’s

 Oklahoma lawsuit and was not mentioned in the judgment. But “contractual

 provisions can supplant traditional preclusion principles if it is clear that the parties

 intended preclusion as part of their agreement.” Denver Homeless, 32 F.4th at 1271

 (internal quotation marks omitted). And as we noted in rejecting Line Finders’ prior

 appeal, the settlement agreement “expressly recognized the possibility that Mr.

 Elsasser could make a demand, and the agreement set forth the parties’ obligations if

 he did.” Devon Energy Prod. Co., 2022 WL 4232404, at *3. The settlement

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 agreement clearly intended to bar Line Finders from litigating its defense and

 indemnity obligations arising from future demands by Mr. Elsasser.2

                                    III. Conclusion

       We affirm the judgment of the district court.

                                            Entered for the Court

                                            Harris L Hartz
                                            Circuit Judge

       2
         Devon Energy identified two other grounds for affirming: the “first to file”
 rule and the mandatory forum-selection clause in the MSSA. We need not address
 those arguments in light of the foregoing analysis.

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