Court Opinion

ID: 3214498
Source: CourtListenerOpinion
Date Created: 2016-06-18 00:15:23.877964+00
Date Added: 2024-06-11T14:04:02.576461
License: Public Domain

COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                            NO. 02-15-00297-CV

TETRA TECH, INC.                                              APPELLANT

                                        V.

NSAA INVESTMENTS GROUP,                                         APPELLEE
LLC

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         FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
                   TRIAL COURT NO. 096-275702-14

                                     ----------

                       MEMORANDUM OPINION1

                                     ----------

                                  I. Introduction

     In a single issue, Appellant Tetra Tech, Inc. appeals the trial court’s

summary judgment for Appellee NSAA Investments Group, LLC in their dispute

     1
      See Tex. R. App. P. 47.4.
over the interpretation of indemnity and hold-harmless language in a commercial

contract. We affirm.

                    II. Factual and Procedural Background

      NSAA entered a construction loan agreement with One World Bank. To

facilitate the project’s financing, NSAA, Tetra Tech, One World, and the general

contractor entered into a “Funds Control & Inspection Services Agreement w/

Performance Guarantee” (FCA) for the project. The FCA appointed Tetra Tech as

One World’s agent, making it responsible for disbursement of construction loan

funds to NSAA and its contractors. The FCA also contained an indemnity clause,

which we reproduce in full in the analysis of the issue.

      NSAA sued One World and then sought to subpoena Tetra Tech’s records

and to depose Angela Halverson, a Tetra Tech employee and the FCA’s

disbursement agent. Invoking the indemnity agreement, Tetra Tech sought to

recuperate its attorney’s fees, expenses, and costs incurred in responding to the

subpoena, including the expenses associated with locating and producing

approximately 300 pages of documents.            Additionally, Tetra Tech sought

reimbursement for attorney’s fees, expenses, and costs related to preparing for

and presenting Halverson for deposition. One World paid its one-half of the

amount demanded by Tetra Tech, but NSAA refused, claiming that the indemnity

agreement did not require NSAA to reimburse for attorney’s fees, expenses, and

costs incurred in responding to subpoenas or deposition notices.

                                         2
      When NSAA declined to reimburse Tetra Tech, Tetra Tech sued NSAA for

breach of contract.    On cross-motions for summary judgment, the trial court

granted summary judgment to NSAA and denied Tetra Tech’s motion. 2 This

appeal followed.

                                  III. Discussion

      In its single issue, Tetra Tech argues that the indemnity provision in the

commercial contract between Tetra Tech and NSAA requires NSAA to indemnify

Tetra Tech for attorney’s fees, expenses, and costs incurred by Tetra Tech in

responding to subpoenas from NSAA seeking documents and a notice for an out-

of-state deposition related to NSAA’s lawsuit against One World.

A. Standard of Review

      In a summary judgment case such as this, the issue on appeal is whether

the movant met the summary judgment burden by establishing that no genuine

issue of material fact exists and that the movant is entitled to judgment as a matter

of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v.

Fielding, 289 S.W.3d 844, 848 (Tex. 2009).          The summary judgment will be

affirmed only if the record establishes that the movant has conclusively proved all

essential elements of the movant’s cause of action or defense as a matter of law.

City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). We

      2
      Tetra Tech attached the wrong contract to its motion for summary judgment,
but NSAA attached the correct one to its response and cross-motion for summary
judgment.

                                         3
review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d
860, 862 (Tex. 2010).

      Questions of law are appropriate matters for summary judgment. Rhone-

Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999). Summary judgment is

proper in cases such as this where the parties do not dispute the relevant facts.

Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000); see G & H Towing Co. v.

Magee, 347 S.W.3d 293, 296–97 (Tex. 2011) (“The purpose of a summary

judgment is to ‘provide a method of summarily terminating a case when it clearly

appears that only a question of law is involved and that there is no genuine issue

of [material] fact.’”) (quoting Gaines v. Hamman, 358 S.W.2d 557, 563 (Tex.

1962)).

      When both parties move for summary judgment and the trial court grants

one motion and denies the other, the reviewing court should review both parties’

summary judgment evidence and determine all questions presented.             Mann

Frankfort, 289 S.W.3d at 848. The reviewing court should render the judgment

that the trial court should have rendered. See Myrad Props., Inc. v. LaSalle Bank

Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex. 2009); Mann Frankfort, 289 S.W.3d at 848.

      This case turns on a purely legal issue—the interpretation of a provision in

the parties’ contract—a provision that Tetra Tech asserts is unambiguous.3

      3
       NSAA did not file an appellee’s brief or otherwise provide argument on
appeal, but in NSAA’s summary judgment response and cross-motion for summary
judgment, it also took the position that the provision is unambiguous.

                                        4
B. Indemnity Clause

      Indemnity provisions are construed under the normal rules of contract

construction, with the primary goal of determining the intent of the parties. Assoc.

Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 (Tex. 1998). In that

endeavor, the objective, not subjective, intent of the parties controls, and the

instrument alone is generally deemed to express that intent.        Sun Oil Co. v.

Madeley, 626 S.W.2d 726, 731 (Tex. 1981).       Because indemnity provisions are

construed under the normal rules of contract construction, if courts can give an

indemnity provision a definite or certain legal meaning, it is unambiguous and can

be construed as a matter of law. See Classic C Homes, Inc. v. Homeowners Mgmt.

Enters., Inc., No. 02-14-00243-CV, 2015 WL 5461517, at *3 (Tex. App.—Fort

Worth Sept. 17, 2015, no pet.) (mem. op.) (“An indemnity agreement is

unambiguous if it can be given a definite or certain legal meaning, and we will

construe an unambiguous indemnity agreement as a matter of law.”); see also

Assoc. Indem. Corp., 964 S.W.2d at 284.

      Further, “We construe contracts ‘from a utilitarian standpoint bearing in mind

the particular business activity sought to be served’ and ‘will avoid when possible

and proper a construction which is unreasonable, inequitable, and oppressive.’”

Frost Nat’l Bank v. L & F Distrib., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting

Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).

      The indemnity clause at issue provides as follows:

                                         5
      21. Indemnity: To the fullest extent permitted by law, lender, owner
      and contractor shall fully defend, indemnify and hold harmless Tetra
      Tech, Inc. and its officers, employees, agents, representatives,
      successors and assigns, from and against any and all claims,
      damages, losses, liabilities, suits, causes of action of whatever
      nature or character, whether known or unknown, at law or in equity,
      whether arising by statute or common law, and all legal fees in
      defending same, which may hereafter be asserted by any person or
      entity, penalties, expenses, and costs arising out of, related to, or
      in consequence of, directly or indirectly, (i) bodily injuries, including
      but not limited to death, at any time resulting there from and sustained
      by any person or persons, (ii) damage to property, including but not
      limited to loss of use thereof, and/or (iii) any other damage, injury or
      loss, arising out of, related to, or in consequence of, the performance
      of any work by Tetra Tech, Inc., whether or not the injury or damage
      is caused or alleged to be caused, in whole or in part, by any
      wrongdoing, strict liability, breach of contract or warranty, or
      negligence of Tetra Tech, Inc. or its officers, employees, agents,
      representatives, successors and assigns. [Emphasis added.]4

      Tetra Tech contends that this clause provides indemnity for attorney’s fees,

expenses, and costs associated with responding to the subpoena for its records

and preparing for and attending the deposition of its employee, both related to the

NSAA-One World lawsuit.        With regard to Tetra Tech’s attorney’s fees, we

disagree.

      1. Attorney’s Fees

      The indemnity clause provides indemnity for “any and all claims, damages,

losses, liabilities, suits, causes of action of whatever nature or character,

whether known or unknown, at law or in equity, whether arising by statute or

      4
       The original version, which is written entirely in capitalized letters, has been
modified here for ease in reading.

                                          6
common law, and all legal fees in defending same, which may hereafter be

asserted by any person or entity.” Assuming the term “all legal fees in defending

same” relates to “claims, damages, losses, liabilities, suits, [and] causes of action

of whatever nature or character,” and not just “causes of action,” as NSAA argued

before the trial court, Tetra Tech’s attorney’s fees would fall within the indemnity

agreement only if NSAA’s subpoena and deposition notice could fairly be

characterized as a claim, damage, loss, liability, suit, or cause of action. And

further assuming that the subpoena and deposition notice could be fairly

characterized as a claim, damage, loss, liability, suit, or cause of action, the

attorney’s fees would be subject to indemnification only to the extent that they were

incurred in “defending” against such claim, damage, loss, liability, suit, or cause of

action.

      Citing Black’s Law Dictionary, Tetra Tech argues that the subpoena and

deposition notice constitute a “claim” because they are a “demand for . . . a legal

remedy to which one asserts a right.” Even if we were to accept this partially-

quoted definition as the legal definition of “claim” in this context, the subpoenas

and deposition in this case do not meet that definition. In the broad context,

subpoenas and depositions are not legal remedies.          Rather, they are simply

discovery tools used to support an assertion of the right to a legal remedy. See

Tex. R. Civ. P. 176.1 (setting out subpoena form), 176.2 (stating that a subpoena

must command the person to whom it is directed to either attend and give

testimony at a deposition, hearing, or trial and/or produce and permit inspection

                                          7
and copying of designated documents or tangible things in the person’s

possession, custody, or control), 176.3(b) (stating that a subpoena may not be

used for discovery to an extent, in a manner, or at a time other than as provided

by the rules governing discovery), 192.1(f) (oral or written depositions are

permissible forms of discovery), 199.2 (setting out the procedure for noticing an

oral deposition), 199.3 (stating that a party “may compel the witness to attend the

oral deposition by serving the witness with a subpoena under Rule 176”); see also

Paul D. Carrington, Moths to the Light: The Dubious Attractions of American Law,

46 U. Kan. L. Rev. 673, 682–83 (1998) (explaining that “[t]he need to prepare for

trial led to the empowerment of lawyers to conduct investigations using diverse

tools, some of which had origins in early practices of the English Court of

Chancery,” such as what are now subpoenas compelling testimony and production

of documents and testimony in the form of depositions). That is, if someone “has

a legal claim, he may use discovery to aid him in pressing that claim.” Chris

Martiniak, The Lawyer’s Preparations § 7.01[B][4], How to Take and Defend

Depositions (Aspen Publishers, Inc. 2007) (emphasis added).

      And, as NSAA pointed out in its response and cross-motion for summary

judgment, even if one narrows the context to procedural remedies, a subpoena or

deposition notice is not an assertion of a right to a remedy. Compare Tex. R. Civ.

P. 176 and 199, with Tex. R. Civ. P. 22 (“A civil suit in the district or county court

shall be commenced by a petition filed in the office of the clerk.”) and 47 (setting

out requirements for original pleading setting forth a claim for relief). Rather, they

                                          8
constitute the procedural remedy itself, used to obtain documents and testimony,

to support a claim.5

      But if we are to accept the Black’s Law Dictionary definition that Tetra Tech

suggests,6 we will use the entire definition of the term—“A demand for money,

property, or a legal remedy to which one asserts a right; esp., the part of a

complaint in a civil action specifying what relief the plaintiff asks for. — Also termed

claim for relief (1808).” Claim, Black’s Law Dictionary (10th ed. 2014) (emphasis

added). In this definition, the term “legal remedy” is the third in a series of specific

      5
       In its response and motion NSAA argued to the trial court that as “a writ or
order commanding a specific act,” a subpoena is the remedy itself. NSAA stated,

      Parties do not demand a subpoena; counsel, in the capacity of “an
      officer of the court,” issue subpoenas “in the name of ‘The State of
      Texas’” (or other state), commanding production of documents,
      appearance at deposition, and so on. See Tex. R. Civ. P. 176. Just
      as a final judgment is fundamentally different from a petition, as an
      order is different from a motion, a subpoena is a different class of
      instrument from a claim.
      6
       The definition urged by Tetra Tech is only one of four—the third
enumerated—of general definitions that Black’s Law Dictionary provides for the
word “claim.” See Claim, Black’s Law Dictionary (10th ed. 2014). Black’s also
defines a “claim” as

      1. A statement that something yet to be proved is true . 2. The assertion of an existing right; any right to payment or
      to an equitable remedy, even if contingent or provisional  . . . 4. An interest or
      remedy recognized at law; the means by which a person can obtain a
      privilege, possession, or enjoyment of a right or thing; CAUSE OF
      ACTION (1) .

Id.
                                           9
words that describe a type of ultimate relief that a plaintiff may seek in a civil

lawsuit. Under the ejusdem generis rule of construction, its meaning is restricted

by the two preceding terms—money and property. Hilco Elec. Coop., Inc. v.

Midlothian Butane Gas Co., 111 S.W.3d 75, 81 (Tex. 2003) (stating that “when

words of a general nature are used in connection with the designation of particular

objects or classes of persons or things, the meaning of the general words will be

restricted to the particular designation” (citing Cleveland v. United States, 329 U.S.
14, 18, 67 S. Ct. 13, 15 (1946) (explaining that in applying the ejusdem generis

rule “the general words are confined to the class and may not be used to enlarge

it”))).7

           The terms “money” and “property” describe two types of final relief that are

typically sought in a civil lawsuit—a claim for money damages or a claim for

possession of or title to property. See generally Tex. R. Civ. P. 47(c)(1)–(5)

(requiring that pleading setting forth a claim for relief set out the amount of

monetary relief sought and whether non-monetary relief is requested), 783–809

(setting out rules for trespass to try title cases). Therefore, under the ejusdem

generis rule, the phrase “or a legal remedy” must be limited to other types of

        Black’s Law Dictionary’s definition of ejusdem generis includes the
           7

following example of how the doctrine works: “[I]n the phrase horses, cattle, sheep,
pigs, goats, or any other farm animals, the general language or any other farm
animals—despite its seeming breadth—would probably be held to include only
four-legged, hoofed mammals typically found on farms, and thus would exclude
chickens.” Ejusdem generis, Black’s Law Dictionary (10th ed. 2014).

                                            10
ultimate relief sought at the conclusion of a lawsuit, such as injunctive or

declaratory relief.8 See generally Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001–

.011 (West 2015) (declaratory relief), §§ 65.001–.045 (West 2008) (injunctions);

Tex. R. Civ. P. 680–693a (injunctions). Because a subpoena or a deposition is not

the type of relief to which a prevailing litigant would be entitled at the conclusion of

the lawsuit, the rules of construction preclude us from including subpoenas and

depositions within the definition urged by Tetra Tech. See Hilco Elec. Coop., 111
S.W.3d at 81.

      Furthermore, if the word “subpoena” or “deposition” is substituted for the

word “claim” in the indemnification clause, consistent with Tetra Tech’s argument

that “claim” means “subpoena” or “deposition,” the indemnity agreement would

read as follows:

      [NSAA] shall fully defend, indemnify and hold harmless Tetra Tech . . .
      from and against . . . any and all subpoenas [or depositions] . . . and
      all legal fees in defending same.

Such a reading would run afoul of the principle that contract interpretation should

be a utilitarian endeavor that does not lead to absurd results. Clark v. Cotten

Schmidt, L.L.P., 327 S.W.3d 765, 772 (Tex. App.—Fort Worth 2010, no pet.)

(stating that “[w]e construe contracts from a utilitarian standpoint bearing in mind

      8
        This interpretation is consistent with the remainder of the Black’s Law
dictionary definition upon which Tetra Tech relies, “esp. the part of a complaint in
a civil action specifying what relief the plaintiff asks for.” Claim, Black’s Law
Dictionary (10th ed. 2014).

                                          11
the particular business activity sought to be served” (quoting Frost Nat’l Bank, 165
S.W.3d at 312 (internal quotations omitted)); Pavecon, Inc. v. R-Com, Inc., 159
S.W.3d 219, 222 (Tex. App.—Fort Worth 2005, no pet.) (citing Reilly v. Rangers

Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987); Lane v. Travelers Indem. Co., 391
S.W.2d 399, 402 (Tex. 1965)).

      Examining the business activity involved in the FCA, at its core, the

agreement specifically defines the scope of Tetra Tech’s work as the physical

inspection of the construction of a movie theater, with related reporting obligations.

As the supreme court has guided us, the indemnity agreement should be read with

this particular business activity in mind. See Frost Nat’l Bank, 165 S.W.3d at 312.

Reading the indemnity agreement in the context of the entire FCA, it serves to

indemnify Tetra Tech for its legal fees spent in defending against an injured person

or entity’s claim for damages9 that arise out of Tetra Tech’s performance of work

under the agreement. As pointed out by NSAA to the trial court below, for example,

if Tetra Tech overlooked a construction defect that subsequently injured someone,

resulting in that person’s suing Tetra Tech for personal injuries or lost earnings,

the agreement would indemnify Tetra Tech for the legal fees spent in defending

against that action.    Or if Tetra Tech made a mistake in authorizing the

      9
       This would include bodily injuries under subsection (i), property damages
under subsection (ii), or any other damage, injury, or loss under subsection (iii).

                                         12
disbursement of construction loan funds, it would be indemnified for its legal fees

in defending against any suit for money damages that followed.

        The construction that Tetra Tech urges does not conform to the facts of this

case.        Witness subpoenas and deposition notices are not matters that are

generally defended against, but to the extent that in a given situation they might,10

those facts are simply not present here. Tetra Tech did not seek attorney’s fees

for filing defensive pleadings to avoid the subpoena or deposition. To the contrary,

Tetra Tech seeks fees for complying with the subpoena and participating in the

deposition.

        Although in attorney Bruce M. Flowers’s affidavit—which was attached to

Tetra Tech’s motion for summary judgment—he states that Tetra Tech “has

engaged [the law firm] in regard to the [sic] defending against [the] deposition and

documents subpoena,” his subsequent recitation of the work actually performed

demonstrates that the legal activities related to the subpoena and deposition were

acts of compliance, not defiance.11 [Emphasis added.] Because the summary

        10
       For example, the filing of a motion to quash or motion for protective order
might be construed as defending against a subpoena or deposition notice.
        11
        The services Flowers described that related to the subpoena and
deposition included: responding to the document and deposition subpoena;
reviewing pleadings, motions, and other documents filed in the NSAA-One World
lawsuit, including documents that Tetra Tech produced; corresponding with
NSAA’s and One World’s attorneys; conducting legal research and developing
strategy; and “coordinating, preparing for, attending and subsequently reviewing
the deposition of Tetra Tech employee, Angela Halverson[,] which occurred in
Seattle[,] Washington.” All of the other legal activities Flowers enumerated were
                                         13
judgment evidence does not show that Tetra Tech’s attorneys spent any time

“defending” against the subpoena or the deposition, the substitution of the words

“subpoena” or “deposition” for the word “claim” in this agreement is not consistent

with the facts of this case.

      However, the same analysis does not apply with regard to indemnification

for expenses and costs, because the provision for recovery of expenses and costs

is not limited to those incurred in defense of a claim.

      2. Expenses and Costs

      As to expenses and costs, the indemnity agreement provides that NSAA

      . . . shall fully defend, indemnify and hold harmless Tetra Tech, Inc.
      and its officers, employees, agents, representatives, successors and
      assigns, from and against any and all . . . penalties, expenses, and
      costs arising out of, related to, or in consequence of, directly or
      indirectly . . . any other damage, injury or loss, arising out of, related
      to, or in consequence of, the performance of any work by Tetra Tech,
      Inc. [Emphasis added.]

Tetra Tech argues that it is entitled to recovery of “related expenses and costs” to

“protect its legal rights, and those of its employee being deposed, in responding to

the subpoenas.”

      Assuming, without holding, that Tetra Tech is entitled to indemnification for

expenses and costs, Tetra Tech offered no evidence as to the amount of out-of-

pocket expenses or costs related to either the subpoena or the deposition. The

not in defense of any claim brought against Tetra Tech, but rather were in
furtherance of the lawsuit that Tetra Tech brought against NSAA.

                                         14
Flowers affidavit provides the only summary judgment proof of how much money

Tetra Tech spent in response to the subpoena and notice of deposition served on

it in this litigation. Despite Tetra Tech’s assertion that these expenses and costs

“are set forth in the attached affidavit of Bruce M. Flowers,” they are not. The

Flowers affidavit provides only proof of attorney’s fees incurred and makes no

mention incidental expenses or costs.        And, while it might be assumed that

expenses and costs were incurred by Tetra Tech’s attorney in travelling to

Washington to attend the deposition, the affidavit does not address these

expenses in any manner. The record is simply silent as to what those expenses

amounted to, assuming that any such expenses were actually incurred.

      For all of these reasons, the trial court properly denied Tetra Tech’s motion

for summary judgment and granted NSAA’s cross-motion for summary judgment.

We overrule Tetra Tech’s sole issue.

                                 IV. Conclusion

      Having overruled Tetra Tech’s sole issue, we affirm the trial court’s

judgment.

                                                   /s/ Bonnie Sudderth
                                                   BONNIE SUDDERTH
                                                   JUSTICE

PANEL: GARDNER, GABRIEL, and SUDDERTH, JJ.

DELIVERED: June 16, 2016

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