Court Opinion

ID: 4708126
Source: CourtListenerOpinion
Date Created: 2021-07-31 00:00:33.937465+00
Date Added: 2024-06-11T08:06:48.646238
License: Public Domain

Case: 20-20304     Document: 00515960066         Page: 1    Date Filed: 07/30/2021

           United States Court of Appeals
                for the Fifth Circuit                            United States Court of Appeals
                                                                          Fifth Circuit

                                                                        FILED
                                                                    July 30, 2021
                                  No. 20-20304
                                                                   Lyle W. Cayce
                                                                        Clerk
   Sanchez Oil & Gas Corporation,

                                                           Plaintiff—Appellant,

                                      versus

   Crescent Drilling & Production, Inc.,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:18-CV-2840

   Before Jones, Clement, and Graves, Circuit Judges.
   Edith H. Jones, Circuit Judge:
         Sanchez Oil & Gas Corporation (“Sanchez”) was sued by a
   subcontractor (claiming to be an “employee”) of a contractor for alleged
   violations of the Fair Labor Standards Act. Such claims are becoming
   ubiquitous in the oil patch. After unsuccessfully requesting indemnification
   from Crescent Drilling & Production, Inc. (“Crescent”), which hired the
   subcontractor, Sanchez filed a third-party complaint alleging breach of
   contract for Crescent’s failure to indemnify Sanchez and failure to comply
   with the FLSA. The district court denied Sanchez’s motion for summary
   judgment and granted Crescent’s. We find material fact issues as to whether
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   Langen was an “independent contractor” or otherwise exempt from the
   FLSA, and as to whether Crescent unreasonably withheld consent to the
   settlement. Accordingly, we REVERSE and REMAND.
                                       I. Background
           Though it arises out of a suit under federal labor law, the present
   dispute is over the scope and meaning of a contract between two
   sophisticated entities.        Sanchez, a private company engaged in the
   management of oil and natural gas properties, engaged Crescent to provide
   wellsite consulting services relating to some of its operations. Accordingly,
   the parties executed a Master Services Agreement (“MSA”) effective
   August 26, 2016. The MSA was intended to “control[] and govern[]” all
   services performed by Crescent for Sanchez. Having agreed, among other
   things, to provide skilled labor, Crescent entered contracts with various
   individuals for their consulting services, and dispatched them to the Sanchez
   wellsites. Sanchez paid Crescent for services rendered and, in turn, Crescent
   paid these subcontractors a percentage of that fee. 1
           The MSA allocated risks and expenses between the parties.
   Specifically, pursuant to Section 3.1, Crescent “at its own cost” was obliged
   to “provide all labor [and] services . . . necessary to perform the Work.” 2
   Sections 4.1.1 and 4.1.6 required Crescent, at its sole cost, risk, and expense,
   to “[e]xamine and become familiar with the Site and all conditions and

           1
             For example, Sanchez may pay Crescent $500 for a day’s worth of labor by one
   of its contractors. Crescent then pays that contractor $450 for the same day’s labor,
   retaining 10% for itself.
           2
             Under MSA Section 2, the “Work” is “everything to be provided or performed
   by [Crescent] from time to time under a particular Work Order.” A “Work Order” is
   defined as “the direction from [Sanchez] to [Crescent] . . . to provide [Sanchez] with goods
   or services at a specific time, place, and cost.”

                                                2
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   circumstances concerning such Work” and pay “for all labor and materials
   furnished . . . for the Work.” Crescent also “warrant[ed] that the Work will
   be completed in strict compliance with . . . applicable law.” MSA Section
   6.1. Additionally, in Section 14.2, Crescent “represent[ed] and warrant[ed]
   that it will comply with and will cause the Contractor Group to comply with
   all Federal, State and local laws” including the Fair Labor Standards Act of
   1938 (“FLSA”), 3 and agreed to “protect, defend, indemnify, and hold
   harmless [Sanchez] from any and all claims resulting from [Crescent’s]
   breach of this article.” 4 MSA Section 13.1 dictated that Crescent “shall at
   all times be an independent contractor with respect to the Work, and no
   member of the Contractor Group will be deemed to be the employee, agent,
   servant, representative or invitee of [Sanchez].”
           The MSA included detailed indemnity procedures in Sections 11.1–
   10, which supplemented the indemnification duty related to the FLSA. To
   obtain indemnification, Section 11.10 required the prospective indemnitee to
   notify the other party about the underlying claim, relating specific details
   about the claim and the provision(s) of the MSA implicated. In the event
   indemnification stemmed from a third-party claim, notice was to be delivered
   “as soon as practicable” and include copies of all papers served according to
   that claim. Id. Section 11.10.1 offered the indemnitor the right to assume the
   defense of the underlying claim, but failure to do so would require the
   indemnitor to pay “such claims (including, reasonable costs of defense
   incurred and any costs paid in connection with settlement or final judgment

           3
               Codified at 29 U.S.C. §§ 201–19.
           4
             The MSA’s Section 2 defines “claims” as “any and all claims, losses, damages,
   demands, causes of action, judgments, lawsuits, proceedings, fines, penalties, awards,
   costs, obligations, and liabilities of every kind and character . . . and all costs, expenses, and
   fees related to investigation, settlement, defense, and litigation, including court costs,
   attorney fees, and expert fees, arising out of, or related to, this Agreement.”

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   with respect to such claims) that the Indemnified Party pays or becomes
   liable for.” Notwithstanding the foregoing provision, the parties agreed, in
   Section 11.10.3, not to settle or compromise any claims “without prior
   written consent of the Indemnifying Party, which consent shall not be
   unreasonably withheld or delayed.”               But, if consent was unreasonably
   withheld or delayed—“including as a result of the Indemnifying Party’s
   belief that it has no indemnification obligations”—the claim could be settled
   and the indemnified party could initiate litigation to determine whether
   consent was, in fact, unreasonably withheld. Id.
           Against this backdrop, Kevin Langen became a subcontractor through
   Crescent and provided services to Sanchez from September 2016 through
   October 2017. 5 Langen performed a variety of roles, ranging from Production
   Foreman to Flowback Supervisor. Crescent initially billed for Langen’s time
   at a rate of $728 per day and incrementally increased to $900. 6                       On
   October 31, 2017, Langen was released “for poor job performance.” 7
           On August 16, 2018, Langen sued Sanchez in federal court “to
   recover unpaid overtime wages and other damages owed under the [FLSA]”
   for himself and other workers like him.                Langen alleged that he was
   improperly classified as an independent contractor and that Sanchez was
   actually his employer for purposes of the FLSA. Before filing, Langen
   contacted Sanchez regarding the potential suit. Sanchez in turn notified

           5
            Langen initially began providing services for Sanchez in 2015 through another
   company. After Sanchez and Crescent executed the MSA and Crescent became the prime
   contractor, Langen contracted with Crescent and continued his work with Sanchez.
           6
              The parties do not dispute that Sanchez dictated the rate at which it would pay
   Crescent for Langen’s work. Crescent, however, maintained some flexibility in the portion
   of that rate passed on to Langen. At one point, Crescent reduced its fee from 12% to 11% in
   an effort to keep the consultants happy.
           7
               During his term with Crescent, Langen earned well over $200,000.

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   Crescent, “making a claim for indemnification under the relevant MSAs for
   defense costs and any amounts paid in connection with settlement . . . or a
   judgment in his favor.” Sanchez notified Crescent again on August 29,
   shortly after Langen’s suit was filed, and “demand[ed] prompt and specific
   payment from Crescent in accordance with its indemnification obligations to
   Sanchez.”
          Crescent refused to indemnify. Sanchez next filed a third-party
   complaint against Crescent on September 14 in which it sought indemnity
   and asserted that Crescent violated the MSA. Specifically, Sanchez alleged
   in Count I that “Crescent [] agreed to indemnify Sanchez against any and all
   claims resulting from its failure to comply with the FLSA . . . [and] [t]his
   indemnification obligation extends to the claim asserted by Langen against
   Sanchez.” Count II claimed that “Langen’s allegations implicate Crescent,
   which allegedly breached the MSA by failing to comply with the FLSA with
   respect to payments to Langen and other consultants.”
          After some initial skirmishing, Crescent answered and disavowed any
   duty to defend or indemnify, a position it has maintained throughout this
   litigation. In the meantime, however, Langen and Sanchez entered into a
   confidential settlement agreement, which the district court approved, and
   Langen’s suit was dismissed with prejudice. The settlement acknowledged
   a “bona fide and contested dispute,” and neither party conceded liability.
   Crescent requested access to the terms of the settlement agreement, despite
   continuing to deny any duty to indemnify, but was refused on the ground that
   the terms were confidential. Nonetheless, progressing through discovery,
   the litigation between Sanchez and Crescent continued. 8

          8
             Sanchez sought indemnification not only for the Langen settlement but also for
   substantial attorneys’ fees it incurred defending the suit.

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           Both sides moved for summary judgment. Sanchez sought summary
   judgment, first, because Crescent agreed to pay for all labor at its sole risk
   and expense yet violated numerous terms of the parties’ contract after
   Sanchez incurred a “labor” cost related to defending and settling the FLSA
   dispute. 9 Second, Sanchez claimed indemnity because Crescent “warranted
   that it would comply with all applicable laws, specifically including the FLSA,
   and agreed to indemnify [Sanchez] for claims arising from its failure to do
   so.” Conversely, Crescent argued that summary judgment should be granted
   in its favor because Crescent never violated the FLSA (though Sanchez may
   have done so, according to Crescent); thus, the indemnity provision was
   never triggered. Moreover, even if Langen was Crescent’s “employee,” he
   fell within the FLSA’s highly compensated employee exemption, which
   meant that Crescent was not required to pay him overtime wages. Crescent’s
   coup de grâce was the allegation that Sanchez failed to comply with the
   settlement procedures, obviating Crescent’s duty to indemnify.
           The district court denied Sanchez’s motion and granted summary
   judgment for Crescent. First, the court held that Sanchez’s claims for breach
   under MSA sections 3.1, 4.1.6, 6.1, and 13.1 did not satisfy the Federal Rule
   of Civil Procedure 8 standard because the Third-Party Complaint failed to
   state specific allegations under those provisions of the MSA and instead
   limited the breach of contract claim to the FLSA-related provision. The
   pleadings thus failed to provide adequate notice to Crescent that the breach
   of contract claim reached those other provisions. The court continued,
   however, that even if those provisions had been properly pleaded, they would
   still fail under the principle that specific contractual provisions control over
   general ones. All four provisions describe Crescent’s duties in general terms

           9
           Sanchez further alleges that Crescent breached § 13.1 by taking the position that
   Langen was Sanchez’s employee.

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   while MSA § 14.2 directly addresses the FLSA, the key to this dispute. But
   with respect to § 14.2, the court held, Sanchez failed to present evidence that
   Crescent’s compensation of Langen violated the FLSA. Accordingly, the
   court granted Crescent’s motion with respect to the breach of Section 14.2.
          Rejecting the indemnity claim, the court also held that Sanchez
   “failed to give Crescent notice of the proposed settlement with Langen and
   failed to grant Crescent an opportunity to consent or object to that
   settlement.” Subsequently, the court awarded Crescent, as prevailing party
   under the MSA, “$391,544.50 in reasonable attorneys’ fees and $15,176.05
   in recoverable costs.” Sanchez timely appealed.
                             II. Standards of Review
          This court reviews a grant of summary judgment de novo. Renwick v.
   PNK Charles, LLC, 901 F.3d 605, 611 (5th Cir. 2018). Summary judgment is
   only appropriate if the pleadings and record demonstrate no genuine issue of
   material fact, construing all justifiable inferences in favor of the nonmovant.
   TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002) (citing
   Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50, 106 S. Ct. 2505, 2511
   (1986)). A fact is “material” if it “might affect the outcome of the suit under
   governing law.” Anderson, 477 U.S. at 248, 106 S. Ct. at 2510. An issue is
   “genuine” if the evidence could allow a reasonable jury to return a verdict
   for the nonmovant. TIG Ins., 276 F.3d at 759. If the moving party makes this
   initial showing, “the nonmovant must come forward with ‘specific facts’
   showing a genuine factual issue for trial.” Id. (citations omitted).
          “The interpretation of a contract—including whether the contract is
   ambiguous—is a question of law” and this court reviews it de novo. McLane
   Foodservice, Inc. v. Table Rock Rest., L.L.C., 736 F.3d 375, 377 (5th Cir. 2013).
   If the contract is ambiguous, “the district court’s findings of fact as to the
   intent of the parties are reviewed for clear error.” Id.

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                                        III. Discussion
           Sanchez contends on appeal that the district court erred in (1) limiting
   the breach of contract claim exclusively to MSA § 14.2; (2) finding no
   material fact question regarding Crescent’s alleged breach of § 14.2; and
   (3) concluding that no indemnification was owed because Sanchez failed to
   provide notice of the settlement. We address each argument in turn.
   A. Scope of the Breach of Contract Claim
           The district court held that Sanchez failed to adequately plead breach
   of the MSA’s sections 3.1, 4.1, 6.1 and 13.1, and that the parties’ dispute must
   be channeled through the FLSA-specific § 14.2. Sanchez contends it should
   be allowed to litigate breaches of the broader provisions. We hold that
   Sanchez’s pleadings adequately encompass all relevant contract provisions
   in this case. But as the district court also noted, basic rules of contract
   interpretation prevent the other sections from affording Sanchez relief.
           Federal procedure requires “a short and plain statement of the claim
   showing that the pleader is entitled to relief; and . . . a demand for the relief
   sought.” FED. R. CIV. P. 8(a)(2)–(3). “The purpose of this requirement is
   ‘to give the defendant fair notice of what the . . . claim is and the grounds
   upon which it rests.’” Wooten v. McDonald Transit Assocs., Inc., 788 F.3d
   490, 498 (5th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
   555, 127 S. Ct. 1955, 1964 (2007) (internal quotations omitted)). While
   litigants should, when possible, identify specific contractual provisions
   alleged to have been breached, Rule 8 does not require that level of
   granularity. 10 “So long as a pleading alleges facts upon which relief can be

           10
              See, e.g., Innova Hosp. San Antonio, Ltd. P’ship v. Blue Cross & Blue Shield of Ga.,
   Inc., 892 F.3d 719, 731–32 (5th Cir. 2018) (rejecting the district court’s conclusion that “to

                                                 8
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   granted, it states a claim even if it ‘fails to categorize correctly the legal theory
   giving rise to the claim.’” Homoki v. Conversion Servs., Inc., 717 F.3d 388,
   402 (5th Cir. 2013) (quoting Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594,
   604 (5th Cir. 1981)).
           Sanchez pled sufficient facts to satisfy Rule 8 with respect to claimed
   breaches of several material MSA contract provisions. The Third-Party
   Complaint states that “[t]he MSA . . . would control and govern all services
   performed by Crescent,” and “Sanchez retained Crescent to perform work
   in exchange for Sanchez’s promise to pay for those services.” The pleading
   further states that Crescent was obliged “to act as an independent contractor
   to Sanchez” and assured Sanchez “that none of its subcontractors or
   employees ‘will be deemed to be the employee, agent, servant,
   representative, or invitee of [Sanchez].’” It states that Langen performed
   services for Sanchez on behalf of Crescent and Sanchez paid Crescent for
   Langen’s services. Finally, Count II incorporates all previous allegations and
   declares that Crescent “allegedly breached the MSA by failing to comply
   with the FLSA with respect to payments to Langen and other consultants.”
   The Third-Party complaint provided sufficient notice that Crescent’s alleged
   failure to comply with the FLSA may have breached one or more provisions
   of the MSA, and Crescent was not prejudiced by the fact that the complaint
   specifically referenced Section 14.2 but only generally alleged other MSA
   provisions. 11

   properly plead a breach of contract claim, a plaintiff must identify a specific provision of
   the contract that was allegedly breached”).
           11
             That the pleading was sufficient in this contract dispute, governed by an
   agreement neither exceedingly long nor rife with addenda, exhibits, and multiple parts,
   does not mean that Rule 8 would necessarily be satisfied by general allegations involving
   more complex contracts.

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           That Crescent was not prejudiced is reinforced by the facility with
   which the district court interpreted the parties’ contract. This MSA is
   governed by Texas law. “In construing a contract under Texas law, courts
   must examine and consider the entire writing and give effect to all provisions
   such that none are rendered meaningless.” 12 Gonzalez v. Denning, 394 F.3d
   388, 392 (5th Cir. 2004) (internal quotations and citations omitted). “[N]o
   one phrase, sentence, or section [of a contract] should be isolated from its
   setting and considered apart from the other provisions [and] a specific
   contract provision controls over a general one.” Pathfinder Oil & Gas, Inc. v.
   Great W. Drilling, Ltd., 574 S.W.3d 882, 889 (Tex. 2019) (internal quotations
   omitted).
           Under Texas law, the more general provisions Sanchez now seeks to
   rely on are foreclosed by the rule that the specific Section 14.2 controls over
   other provisions’ more general application.                    Section 6.1, for instance,
   warrants that Crescent’s work “will be completed in strict compliance with
   the requirements or specifics in this Agreement . . . and applicable law.” The
   detailed requirements of Section 14.2, however, govern Crescent’s duty to
   comply with the FLSA and to indemnify Sanchez for failing to do so. Section
   14.2 therefore supersedes § 6.1 with respect to the FLSA. 13
           Sections 3.1 and 4.1.6 require Crescent to “furnish all labor” at its own
   cost and pay “for all labor and materials furnished by the Contractor Group

           12
              See, e.g., Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994) (“When
   construing a contract, the court’s primary concern is to give effect to the written expression
   of the parties’ intent. This court is bound to read all parts of a contract together to ascertain
   the agreement of the parties. The contract must be considered as a whole. Moreover, each
   part of the contract should be given effect.” (internal citations omitted)).
           13
             Even assuming Sanchez could proceed under § 6.1, the only law alleged to have
   been violated is the FLSA, rendering § 6.1 and § 14.2 coextensive. Finding a breach of one
   would necessitate finding a breach of the other.

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   for the Work and the charges of all subcontractors” “at its sole cost, risk and
   expense.” In this regard, Sanchez asserts that “[i]n defending and settling
   Langen’s FLSA overtime claims . . . [it] incurred expenses and costs of
   labor.” But Section 14.2 precludes such a broad reading. “Claims” are
   defined by MSA Section 2 to include “all costs, expenses, and fees related to
   investigation, settlement, defense and litigation . . . arising out of, or related
   to, [the MSA].” Effectively, Sanchez attempts to recast as a “labor cost”
   what the MSA more relevantly defines as a “claim.” In regard to its duty to
   assure FLSA compliance, Crescent is required to “protect, defend,
   indemnify, and hold harmless [Sanchez] from any and all claims resulting
   from [Crescent’s] breach of [§ 14.2].” These two more general provisions,
   when examined, do not create additional claims beyond that authorized by
   Section 14.2.
           Section 13.1 yields to similar textual analysis. Addressing the legal
   relationship between the contracting parties, it states that Crescent “shall at
   all times be an independent contractor” and “no member of the Contractor
   Group will be deemed to be an employee, agent, servant, representative or
   invitee of [Sanchez].” Crescent’s “Contractor Group” includes, among
   others, its “subcontractors of every tier.” This section plainly has broad
   application beyond FLSA compliance. 14 For present purposes, however, the
   provision replicates Crescent’s assurance that it will maintain the
   “independent contractor” status of its “subcontractors,” one of whom was

           14
              Further, contrary to Crescent’s argument, the syntax of § 13.1 does not render
   the provision merely “aspirational.” The first clause of § 13.1 expressly uses the duty
   creating language of “shall,” which places an obligation on Crescent to ensure its own
   independent contractor status. And the second clause also contains duty creating
   language—“will be deemed.” See BRYAN A. GARNER, GARNER’S DICTIONARY OF LEGAL
   USAGE 954 (3d ed. 2011) (noting that “‘will’ may express both parties’ obligations”).

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   Langen, and such status means that Langen should have been exempt from
   the FLSA.
          From the standpoint of breach, however, Sections 13.1 and 14.2
   address different grounds to protect Sanchez. For Sanchez’s defense and
   settlement of Langen’s FLSA suit, Section 14.2 prescribes the precise
   remedy: costs of defense and indemnification based on proof that Langen’s
   claims “result[ed] from [Crescent’s] breach of this article.” This specific
   provision supersedes the more general Section 13.1. A claim by Sanchez
   under Section 13.1 would reach a different scenario. Suppose Crescent had
   misclassified Langen’s status and, following a lawsuit, been required to pay,
   e.g., double damages for overtime pursuant to the FLSA. And then suppose
   Crescent had attempted to bill Sanchez for the entire debacle. In that case,
   Sanchez could sue (or counter-sue) Crescent for breach of Section 13.1.
          The district court, in sum, construed Sanchez’s pleading too
   narrowly, but its alternative exposition of the implicitly pled contractual
   provisions was correct. Sanchez is limited to the indemnification remedy for
   breach of Section 14.2.
   B. Sanchez’s Claims for Breach of Contract & Indemnification
          The court held that, based on the language of Section 14.2, Sanchez is
   entitled to indemnification only if it first “establish[es] that Langen’s
   services were provided in violation of the FLSA.” But according to the court,
   there had been no showing “that either party violated the FLSA with respect
   to Langen,” and “Sanchez . . . presented no evidence that Crescent failed to
   comply with the FLSA in violation of Section 14.2 of the MSA.” The court
   went on to reject Sanchez’s claim for the additional reason that it failed to
   comply with the MSA’s procedural terms of indemnity. Sanchez challenges
   both grounds for summary judgment.

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           1. Crescent’s Alleged Breach of § 14.2
           Crescent agrees that the MSA requires it to comply with the FLSA
   and to cause the Contractor Group to comply. Crescent claims that it
   satisfied this obligation when it “properly” characterized Langen as an
   independent contractor of Crescent and did not pay him overtime wages.
   Section 14.2, as the district court explained, provides Sanchez with
   indemnification from Crescent only “from any and all claims resulting from
   [Crescent’s] breach of [its FLSA compliance duty].” Crescent would be
   immunized from this provision if Langen’s compensation did not violate the
   FLSA.
           More boldly, Crescent contends, if there was any failed compliance
   with the FLSA, it was Sanchez’s doing. Sanchez responds, reasonably, that
   pursuant to the contract, Langen must either be an independent contractor
   with respect to both Crescent and Sanchez, or of neither company; Sanchez
   alone cannot have violated the FLSA.
           “When a contract’s meaning is disputed, [the] primary objective is to
   ascertain and give effect to the parties’ intent as expressed in the
   instrument.” URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018).
   The instrument is construed as a whole “‘according to its plain, ordinary,
   and generally accepted meaning unless the instrument directs otherwise.’”
   Pathfinder Oil & Gas, 574 S.W.3d at 888 (quoting URI, 543 S.W.3d at 764
   (internal quotations omitted)).
           In clarion terms, the MSA places the duty of paying Langen upon
   Crescent. The parties’ agreement structures their relationship as follows:
   Sanchez places a “Work Order” and Crescent completes the work and
   invoices Sanchez at the agreed rates; Crescent pays for all labor and expenses
   necessary to handle that work. MSA Sections 3.1, 4, 5. The MSA plainly
   requires that the wages paid for the “Work” must comport with the FLSA,

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   and Crescent is responsible to ensure this happens. 15                   Accordingly, to
   determine whether Langen’s claim “result[ed] from [Crescent’s] breach” of
   Section 14.2, the inquiry is only whether Langen was entitled to overtime
   wages paid by Crescent. 16 If he was not, then there was no breach.
           Believing that Sanchez had produced no relevant evidence that
   Crescent violated the FLSA, the district court denied summary judgment to
   Sanchez. This was error. Sanchez offered evidence that Crescent took no
   actions to comply with the FLSA besides classifying Langen internally as an
   independent contractor. According to Sanchez, Langen was an “employee”
   of Crescent for FLSA purposes based on the “economic reality” test, and
   Crescent failed to make the legally required overtime payments. Sanchez’s
   fact-intensive response to Crescent’s motion for summary judgment

           15
                Crescent argues that shifting Sanchez’s liability for the FLSA to Crescent
   violates the “fair notice (or express negligence) doctrine.” This court has held that actual
   knowledge of the indemnity provisions nullifies the fair notice doctrine. See Cleere Drilling
   Co. v. Dominion Expl. & Prod., Inc., 351 F.3d 642, 647 (5th Cir. 2003) (discussing Dresser
   Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 n.2 (Tex. 1993) (“The fair notice
   requirements are not applicable when the indemnitee establishes that the indemnitor
   possessed actual notice or knowledge of the indemnity agreement.”)). Here, the MSA
   required Crescent to furnish and pay all labor, comply with the FLSA, and indemnify
   Sanchez for any breach of its covenant to comply. Crescent doesn’t claim lack of actual
   knowledge of these provisions. Further, the indemnity clause in § 14.2 is bolded and offset
   in all capital typeface. Together, these undercut any argument that FLSA indemnity is void
   under the fair notice doctrine.
           16
              Crescent argued at summary judgment that even if Langen was an employee, he
   still was not entitled to overtime wages because he fell within the FLSA’s highly
   compensated employee exemption. 29 C.F.R. § 541.601(a); see also Faludi v. U.S. Shale
   Sols., L.L.C., 936 F.3d 215, 219 (5th Cir. 2019). Thus, Crescent never breached the MSA.
   The district court did not rule on that issue, which is currently pending before this court en
   banc. See Hewitt v. Helix Energy Sols. Grp., Inc., 983 F.3d 789 (5th Cir. 2020), reh’g en banc
   granted, opinion vacated, No. 19-20023, 2021 WL 869058 (5th Cir. Mar. 9, 2021).

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                                          No. 20-20304

   thoroughly addresses each factor of that test 17 and identifies material fact
   disputes.       Crescent vigorously defends an independent contractor
   relationship with Langen under the same test. The parties’ clash illustrates
   an obviously fact-intensive inquiry, which the district court failed to explore.
   See Hobbs v. Petroplex Pipe & Constr., Inc., 946 F.3d 824, 829 (5th Cir. 2020)
   (reviewing a bench trial determination of employee status and explaining that
   a “district court’s findings as to the [economic realities test] factors are
   ‘based on inferences from fact and thus are questions of fact’” (citation
   omitted)). Because Crescent’s obligation to indemnify Sanchez turns in part
   on Langen’s FLSA status, material questions of fact remain as to whether
   Langen’s suit “resulted from” Crescent’s “breach” of its FLSA obligations,
   as provided in Section 14.2.
           2. Crescent’s Indemnity Obligation
           Having failed to examine the fact disputes underlying the FLSA issue,
   the district court granted summary judgment for Crescent on the basis that
   Sanchez did not comply with the MSA’s indemnification procedures.
   Section 11.10.3, the court held, includes a condition precedent to indemnity,
   such that Sanchez could only unilaterally settle Langen’s claim if Crescent
   “unreasonably withheld or delayed its consent.” Since Sanchez never gave
   Crescent access and an opportunity to consider the Langen settlement’s
   terms, the court reasoned, “Crescent did not ‘withhold[] or delay[] its
   consent’” unreasonably.

           17
              “Those ‘five non-exhaustive factors’ include: ‘(1) the degree of control
   exercised by the alleged employer; (2) the extent of the relative investments of the worker
   and the alleged employer; (3) the degree to which the worker’s opportunity for profit or
   loss is determined by the alleged employer; (4) the skill and initiative required in
   performing the job; and (5) the permanency of the relationship.’” Parrish v. Premier
   Directional Drilling, L.P., 917 F.3d 369, 379 (5th Cir. 2019) (quoting Hopkins v. Cornerstone
   Am., 545 F.3d 338, 343 (5th Cir. 2008)).

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                                    No. 20-20304

          Sanchez challenges this ruling on three grounds:          (1) the court
   improperly construed § 11.10.3 as a condition precedent instead of a “mere
   covenant”; (2) Crescent suffered no prejudice and therefore cannot avoid its
   indemnity obligations due to lack of notice; and (3) Sanchez provided
   Crescent with sufficient notice and opportunity to participate in the
   settlement. We need only consider the first ground.
          Generally, “[c]onditions are not favored in the law; thus, when
   another reasonable reading that would avoid a forfeiture is available, [the
   court] must construe contract language as a covenant rather than a
   condition.” PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 636 (Tex. 2008).
   “But if . . . a legitimate condition precedent exists, it must be either met or
   excused before the obligation that hinges on the condition may be enforced.”
   Conn Credit I, L.P. v. TF LoanCo III, L.L.C., 903 F.3d 493, 502 (5th Cir.
   2018) (citing Texas cases). To determine whether a condition precedent
   exists, the entire contract must be interpreted to ascertain the intent of the
   parties. Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945,
   948 (Tex. 1990). “In order to make performance specifically conditional, a
   term such as ‘if’, ‘provided that’, ‘on condition that’, or some similar phrase
   of conditional language must normally be included.” Id. If that conditional
   language is lacking, the terms will “be construed as a covenant in order to
   prevent a forfeiture.” Id.
          Section 11.10.3 of the MSA states that:
          Each Indemnified Party agrees that it will not settle or
          otherwise compromise any claims to be indemnified under this
          Agreement without prior written consent of the Indemnifying
          Party, which consent shall not be unreasonably withheld or
          delayed. If the Indemnifying Party unreasonably withholds or
          delays its consent (including as a result of the Indemnifying
          Party’s belief that it has no indemnification obligations under
          this Agreement), then the Indemnified Party may settle or

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                                    No. 20-20304

          otherwise compromise the applicable claims in its sole
          discretion, and the Indemnified Party shall be entitled to
          initiate litigation against the Indemnifying Party to determine
          whether the Indemnifying Party unreasonably withheld
          consent . . . .
          We agree with Sanchez that, by its terms, no conditional language in
   this provision frames a precondition for Sanchez’s recovery. This paragraph
   principally obliges the indemnifying party, Crescent, not unreasonably to
   withhold or delay its grant of prior written consent. The “if” clause speaks
   to what Sanchez, the indemnified party, may do if the indemnifying party
   unreasonably withholds consent. Sanchez may then settle unilaterally and
   file suit for a definitive decision on the indemnifying party’s
   unreasonableness. This is the opposite of setting up a condition precedent
   against Sanchez. It is a structure for permitting reasonably settled claims to
   be indemnified only after a lawsuit. Moreover, the prospective indemnitor
   may be guilty of unreasonably having withheld or delayed consent even if it
   believes “that it has no indemnification obligations under this Agreement.”
          Nowhere does the MSA state that indemnity is owed only “if” or
   “provided that” or “on condition that” the party claiming indemnification
   adheres to the listed protocols; nowhere does it foreclose Sanchez’s right to
   indemnity solely or expressly because of Sanchez’s failure to inform Crescent
   of the settlement terms. The absence of such language is “probative of the
   parties[’] intention that a promise be made, rather than a condition
   imposed.” Criswell, 792 S.W.2d at 948. “When no conditional language is
   used and another reasonable interpretation of the contract is possible, ‘the
   terms will be construed as a covenant in order to prevent a forfeiture.’” Solar
   Applications Eng’g, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 109 (Tex.
   2010) (quoting Criswell, 792 S.W.2d at 948). The district court erred in
   construing Section 11.10.3 as a condition precedent. Instead, that provision
   must be read as a covenant. “Breach of a covenant may give rise to a cause

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                                              No. 20-20304

   of action for damages, but does not affect the enforceability of the remaining
   provisions of the contract unless the breach is a material or total breach.” Id.
   at 108.
             In this case, it is undisputed that Sanchez notified Crescent of
   Langen’s claim before Langen filed suit; it notified Crescent immediately
   after Langen filed suit; and it declined to inform Crescent of the settlement
   terms only after Crescent had demanded to be informed while also steadfastly
   denying any liability under the MSA. 18 Contrary to the district court’s
   implication that Crescent was “deprived” of fair notice of the settlement
   (thus abrogating its duty to indemnify), it seems quite plausible that Crescent
   “unreasonably withheld or delayed” assent based solely on a belief that it had
   no liability, which is not a basis under the MSA for rejecting indemnity.
   There is a material fact issue concerning Crescent’s liability under
   Section 11.10.3 governing its procedural duty to indemnify. This issue
   requires further exploration in light of remand on the question whether
   Crescent breached its FLSA duty to Sanchez under § 14.2.
                                           IV. Conclusion
             Our reading of the parties’ MSA holds that, for Sanchez to obtain
   indemnification for the Langen settlement and its defense costs for that
   lawsuit, Sanchez has to prove that Langen’s suit “resulted from” Crescent’s
   “breach” of its duty to pay Langen in accord with the FLSA. It is also
   necessary to decide whether Crescent unreasonably withheld consent to the
   Sanchez-Langen settlement. Material fact issues exist as to both of these
   aspects of the relevant FLSA indemnity provisions.

             18
                  Exactly why the settlement was held confidential is not explained in this record.

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                                No. 20-20304

         Based upon these conclusions, and for the reasons further stated
   above, the judgment is REVERSED and the case REMANDED for
   further proceedings.

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