Millennium Petrochem v. Brown & Root Holding, et a , 390 F.3d 336 ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
September 10, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
______________________ Clerk
No. 03-20264
_______________________
MILLENNIUM PETROCHEMICALS, INC.,
Plaintiff-Counter Defendant-
Appellant,
versus
BROWN & ROOT HOLDINGS, INC.,
Individually and as successor to Brown and Root USA,
Inc.; et al.,
Defendants,
BROWN & ROOT, INC., a Delaware Corporation,
Defendant-Appellee,
and
KELLOGG-BROWN & ROOT, INC.,
doing business as Brown & Root, formerly known as
Brown & Root USA, Inc., formerly known as Brown & Root, Inc.
Defendant-Counter Claimant-
Appellee.
_________________________________________
Appeal from the United States District Court
for the Southern District of Texas
________________________________________
Before DAVIS, WIENER and STEWART Circuit Judges.
CARL E. STEWART, Circuit Judge:
Millennium Petrochemicals, Inc. (“Millennium”) appeals the district court’s denial of its
motion for partial summary judgment, which sought a declaration that the indemnity provisions in a
maintenance contract (the “Contract”) with Brown & Root, Inc. and Kellogg-Brown & Root, Inc.
(collectively “Brown & Root”), were valid and enforceable, and that Brown & Root owed
Millennium an indemnity obligation for asbestos-related claims filed against Millennium by individual
plaintiffs. Millennium also appeals the district court’s grant of summary judgment in favor of Brown
& Root holding that the indemnity provisions in the Contract unambiguously precluded an indemnity
obligation on the part of Brown & Root for the underlying asbestos claims. Because we find the
disputed indemnity provisions unambiguously provides Millennium indemnity for asbestos-related
claims, we reverse the district court.
FACTUAL AND PROCEDURAL BACKGROUND
Millennium and Brown & Root entered into the Contract in 1961 under which Brown & Root
would perform maintenance services at one of Millennium’s plants.1 In 1973, the parties amended
the 1961 indemnity provision in order to clarify the respective obligations of the parties regarding any
third-party suits against Millennium.2 The parties again amended the indemnity provision in 1994.3
1
The Contract included an indemnity provision which provided:
ARTICLE 17. LIABILITY
[Brown & Root] shall indemnify and save harmless [Millennium] from all claims,
suits or actions and damages and costs of every name and description to which
[Millennium] may be subjected to by reason of injury to the person or property of
another resulting from negligence or carelessness on the part of [Brown & Root],
[its] employees, agents or subcontractors in the movement of equipment or
supplies, or by or on account of any negligent act or omission of [Brown & Root’s]
employees, agents or subcontractors, if any.
2
The 1973 amended provision was retitled and provided:
ARTICLE 17. INDEMNITY AND LIABILITY
[Brown & Root] shall indemnify and save harmless [Millennium] from all claims,
2
Under the terms of the Contract, either party could terminate it with 30 days written notice. By letter
dated April 5, 1995, Millennium terminated the contract.
Beginning in 1998, Brown & Root employees filed suits in Texas state courts claiming injuries
from exposure to asbestos in Millennium workplaces and naming Millennium as premises defendant.
Citing the indemnity provisions of the Contract, Millennium notified Brown & Root of the claims and
requested indemnity, which Brown & Root refused to provide. Millennium then filed a
declaratory judgment action in which it moved for partial summary judgment declaring that the
suits or actions and damages and costs of every name and description to which
[Millennium] may be subjected to by reason of injury to the person of any
employee of [Brown & Root’s] performance of work hereunder or resulting from
the presence on or about [Millennium’s] premises of the agents, servants or
employees of [Brown & Root], even though such injury be caused in part by
the negligence of [Millennium], its agents, servants or employees. [Brown &
Root] shall further indemnify and hold harmless [Millennium] from and against
all claims, damages, losses and expenses including attorneys’ fees arising out of
or resulting from [Brown & Root’s] performance of work undertaken hereunder,
provided that any such claim, damage, loss or expense (a) is attributable to bodily
injury, sickness, disease or death, or to injury to or destruction of tangible property
(other than the Existing Facilities of [Millennium] or the Work itself), and (b) is
caused in whole or in part by any negligent act or omission of [Brown & Root],
any subcontractor, or anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be liable, regardless of whether or not it
is caused in part by [Millennium] (emphasis added).
3
The 1994 amended provision provided:
ARTICLE 17. INDEMNITY AND LIABILITY
[Brown & Root] agrees to defend, indemnify and save harmless [Millennium], its
officers, directors, agents and employees, against any and all claims, suits,
damages, fines, penalties, orders, judgments, liabilities, loss and expense,
including reasonable attorney’s fees and other legal expenses, by reason of liability
imposed or claimed to be imposed upon [Millennium] arising out of or resulting
from (a) bodily injuries, sickness or disease, including death, at any time resulting
therefrom, sustained by any person whosoever including employees of
[Millennium], [Brown & Root], and their affiliates, subcontractors, and vendors,
and third parties, or (b) damage to property (excluding the Work and located at the
plant), sustained by any person or persons to the extent arising out of or in
consequence of...[Brown & Root’s], or ...[Brown & Root’s] agent’s, employees’,
subcontractors’, vendors’ or affiliates’ (i) negligent acts or omissions in the
performance of or (ii) breach of this Agreement.
3
indemnity provisions were valid and enforceable and that Brown & Root owed Millennium an
indemnity obligation for the plaintiff’s claims. The district court, however, held that there was no
valid and enforceable indemnity obligation, and that Brown & Root had no duty to indemnify
Millennium. The district court held that Millennium’s 1995 termination of the Contract terminated
the indemnity obligations as a matter of law, even for those Brown & Root employees who had been
performing services at Millennium facilities under the Contract before it was terminated in 1995.
Alternatively, the district court held that even if the 1995 termination of the Contract did not
terminate Brown & Root’s indemnity obligation, the 1994 amendment to the Contract effectively
eliminated such obligation. The district court then granted Brown & Root’s motion for summary
judgment, dismissing Millennium’s indemnity claims.
STANDARD OF REVIEW
This Court reviews the district court’s grant of summary judgment de novo, applying the
same standard on appeal that is applied by the district court. Lycon Inc. v. Juenke, 250 F.3d 285, 287
(5th Cir.), cert denied, 534 U.S. 892 (2001). “Under Federal Rule of Civil Procedure 56 (c),
summary judgment is appropriate when there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law.” Id. (quoting Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986)). The movant need not negate the opposing party’s claims nor produce
evidence showing an absence of a genuine factual issue, but may rely on the absence of evidence to
support essential elements of opposing party’s claims. International Assoc. of Machinists &
Aerospace Workers, Lodge No. 2504 v. Intercontinental Mfg. Co., 812 F.2d 219, 222 (5th Cir.
1987). Contract interpretation, including the question of whether a contract is ambiguous, is a
question of law subject to de novo review. Instone Travel Tech Marine & Offshore v. International
4
Shipping Partners, Inc., 334 F.3d 423, 428 (5th Cir. 2003). A contract is ambiguous when its
meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Reliant
Energy Services, Inc. v. Enron Canada Corp., 349 F.3d 816, 821-22 (5th Cir. 2003); Heritage
Resources, Inc. v. Nationsbank, 939 S.W.2d 118, 121 (Tex. 1996). If any ambiguity exists in a
contract, “a fact issue remains regarding the parties’ intent” thus precluding a grant of summary
judgment. Instone Travel, 334 F.3d at 431.
DISCUSSION
I. Millennium’s motion for summary judgment
Millennium requested the district court to hold, through a partial summary judgment order,
that the indemnity pro visions were valid and enforceable and that Brown & Root owed it an
indemnity obligation for the underlying plaintiffs’ asbestos-related claims. Because, as we explain
below, the Contract language unambiguously indicates an intent by the parties to provide Millennium
with the indemnification it seeks, we find that the district court erred in denying Millennium’s
summary judgment request for a declaratory judgment that Brown & Root owed an indemnity
obligation.
II. Brown & Root’s motion for summary judgment
A. 1995 termination of the Contract
The district court held that because the Contract was terminated pursuant to Millennium’s
April 5, 1995 letter, and the letter did not reserve any rights, any obligations Brown & Root owed
to Millennium were extinguished. We disagree with this conclusion.
TEX. CIV. PRAC. & REM. CODE ANN. § 2.106(c) provides that upon “termination all
obligations which are still executory on both sides are discharged but any right based on prior breach
5
or performance survives.” As we have previously stated, “we are aware of no Texas authority that
provides that the termination of agreements automatically applies retroactively to extinguish vested
rights.” Sid Richardson Carbon & Gasoline Co. v. Interenergy Resources, Ltd., 99 F.3d 746, 754 (5th
Cir. 1996). Other circuits have also held that rights that have vested or accrued under a contract
prior to the termination of the contract, are not automatically extinguished upon termination. See e.g.,
Premier Corp. v. Economic Research Analysts, Inc., 578 F.2d 551, 553-54 (4th Cir. 1978) (ruling
that the expiration of a brokerage contract did not discharge a broker’s indemnity obligation for
illegal sales it made prior to expiration, when the indemnity action was brought subsequent to
expiration); Standard Oil Co. of Calif. v. Perkins, 347 F.2d 379, 383-84 (9th Cir. 1965) (ruling that
prior vested contractual rights may be extinguished only if parties intended to do so under subsequent
contract). The parties have not cited, nor has our research revealed, any cases from other circuits
which hold otherwise.
This appeal therefore raises two key questions. First, whether Millennium owed any
obligations to Brown & Root under the Contract and successive amendments from 1961 through May
5, 1995, which would lead to a conclusion that the contract was truly executory on both sides, thus
terminating any obligations that Brown & Root owed Millennium for this period. Second, whether
Millennium intended to extinguish any vested indemnity rights under the Contract due to the 1995
termination. We answer both in the negative.
Millennium hired Brown & Root to perform maintenance services at Millennium’s facility.
Millennium owed Brown & Root an obligation under the Contract to pay for the work Brown &
Root performed, and to use Brown & Root’s services until such time as the Contract was terminated.
Brown & Root, for its part, owed an obligation to Millennium to perform the maintenance services.
6
Brown & Root also owed, however, an indemnity obligation to Millennium for any claims it incurred
due to injuries sustained by the Brown & Root’s employees during the period of the Contract. This
indemnity obligation was consideration offered by Brown & Root for becoming Millennium’s
maintenance provider. On May 5, 1995, Millennium owed no further obligations to Brown & Root
because it had paid Brown & Root for any work it had done, and had used Brown & Root as its
maintenance provider until the Contract was terminated. On Brown & Root’s side, it had performed
all the maintenance work t hat it was required to do under the Contract and its successive
amendments. There is no assertion by Brown & Root that there existed any unfulfilled obligations
under the Contract on Millennium’s part. Thus, the only remaining obligation on either side was
Brown & Root’s indemnity obligation.
Brown & Root, and the district court, also cite Griffin Indus., Inc. v. Foodmaker, Inc., 22
S.W.3d 33, 36 (Tex. App. - Houston, [14th Dist.] 2000), to support the argument that under Texas
law an indemnitor’s contractual indemnity obligation absolutely terminates upon termination of a
contract by its terms. However, their reliance on that case is misplaced. In Griffin Indus., unlike
here, the indemnitee’s employee was injured (and suit was filed) after the expiration of the contract
that contained the indemnity provision. Id. at 35-36. Both this court and the Texas Supreme Court
have held that an asbestos-related injury occurs at the moment of exposure to the asbestos. See e.g.,
Guaranty Nat’l Ins. Co. v. Azrock Indus., Inc., 211 F.3d 239, 249 (5th Cir. 2000) (For purposes of
determining insurance coverage, injury occurred at time of asbestos exposure, rather than at time
exposure-related disease manifested itself); Pustejovsky v. Rapid-American Corp., 35 S.W.3d 643,
647 (Tex. 2000) (“[The plaintiff’s] injury is ... the inhalation of fibers and the invasion of his body by
those fibers, thus causing him physical damage.”) (quoting Gideon v. Johns-Manville Sales Corp., 761
7
F.2d 1129, 1137 (5th Cir. 1985). In this case, it is undisputed that at least some of the claimants may
have been exposed to the asbestos between 1973 and 1993, and hence prior to the termination of the
Contract. While the Griffin Indus. court pointed out that the indemnity action in that case was not
filed until after the contract had expired, nothing in that opinion indicates that had the injury occurred
prior to the expiration of the contract, the indemnitor’s obligation to indemnify the indemnitee would
have been terminated. 22 S.W.3d at 36. We further note that no where in the May 5, 1995
termination letter does Millennium indicate an intent to extinguish or surrender any rights that may
have vested in its favor under the Contract.
Because at least some of the alleged underlying asbestos injuries at issue here may have
occurred prior to the termination of the Contract, and the Contract was not “executory” on both
sides, thereby precluding extinguishment of Brown & Root’s indemnity obligations under Section
2.106 (c), we hold that the district court erred in ruling that the 1995 termination of the Contract
extinguished all of Brown & Root’s indemnity obligations.
B. The 1994 amendment
Intent of the parties
The district court also held that as a matter of law the 1994 Amendment was adopted with
the mutual consent and understanding of both Millennium and Brown & Root, and that it was
adopted for the express purpose of superceding all previous amendments to the Agreement’s
indemnity provisions, reasoning that “it is well established that a modified contract prevails over an
old contract to the extent of any inconsistencies.” We disagree.
As Millennium correctly points out, the explicit language of the May 20, 1994 amendment
clearly stated that it was to be retroactively “effective beginning January 1, 1994.” Furthermore,
8
there is no language in the 1994 amendment stating that it supercedes all previous versions of the
Contract. Certainly, it would appear that by deleting the language of the 1973 version of the Contract
that provided Millennium indemnity protection for its own negligence the parties intended to remove
such protection in the future. However, it is by no means certain, considering the expressly stated
effective date of the 1994 Amendment, that Millennium also intended the amendment to apply
retroactively to any pre-1994 periods as well.
Under Texas law contract terms are to be given their plain, ordinary, and generally accepted
meaning unless the instrument shows that the parties used them in a technical or different sense. See
Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). Further, when
ascertaining the intent of parties from written expressions, a court should read all parts of a contract
together, ensuring that each provision of such co ntract are given effect and none are rendered
meaningless. Instone Travel, 334 F.3d at 428 (applying Texas law). Here, the plain contract terms
of the May 20, 1994 amendment provide that it was to be retroactively effective beginning January
1, 1994. Under the interpretation advanced by Brown & Root -- that the May 20, 1994, amendment
effectively superceded and extinguished application of all the previous indemnity clauses -- the
retroactivity language is rendered superfluous and meaningless. Only if the language of the May 20,
1994 amendment is read out of the contract can Brown & Root claim that it was Millenium’s intent
to have it apply retroactively prior to January 1, 1994. But, disregarding such language would violate
the jurisprudence of this Court and the Texas Supreme Court.
While Brown & Root points to cases standing for the principle that an amendment to a
9
contract supercedes the earlier version of the agreement to the extent of any inconsistencies,4 it has
not cited any case supporting its more specific proposition that an amendment or subsequent contract
will automatically retroactively effect any rights or obligations that may have vested or accrued under
a prior version of the agreement. Nor could it do so. Texas courts have made clear that rights or
obligations that may have vested or accrued under previous versions of a contract can only be
modified or extinguished through the inclusion of express language that manifests such intent. See
Lake LBJ Mun. Utility Dist. v. Coulson, 839 S.W.2d 889, 887 (Tex. App.-Austin 2001, no pet.)
(finding that an amendment to a service contract which stated new territory to be serviced, but which
did not mention territory covered under the previous contract, did not show that parties intended to
extinguish service provider’s obligation to continue to service territory listed in that earlier
agreement); Hall v. Professional Leasing Assocs., 550 S.W.2d 392, 393-94 (Tex. App.-Austin 1992,
no writ.) (finding that a purchase contract which provided that equipment subject to an existing lease
contract was to be purchased outright by lessee, showed the intent of both the lessee and lessor to
extinguish any prospective lease payment obligations under the lease, because by law the lessor was
only entitled to lease payments for the equipment to the extent lessor still possessed title at the time
the lessee was using the equipment) (emphasis added).
In this case, the absence of any language expressly indicating that the 1994 amendment was
to apply to pre-1994 periods, and the inclusion of language making the May 20, 1994 amendment
retroactively effective to January 1, 1994 strongly indicates that the parties intended the amendment
4
Brown & Root cites Elson Thermoplastics v. Dynamics Systems, Inc., 49 S.W.3d 891, 898 (Tex. App. -
Austin 2001, no pet.) (question as to whether subsequent contract was meant to supercede previous contract, or merely
to supplement it under the merger doctrine, is determined from the parties’ intent); Cadle Co. v. Henderson, 982
S.W.2d 543, 546 (Tex. App. - Austin 2001, no pet.) (“modified agreement takes place of the original”); Boudreax
Civic Ass’n v. Cox, 882 S.W.2d 543, 547-48 (Tex. App. - Houston [1st Dist.] 1994, no writ.) (“modification to a
contract creates a new contract that includes new modified provisions and the unchanged old provisions”).
10
to apply prospectively from January 1, 1994. We find Millennium’s argument compelling that in the
absence of a clear expression, the only reasonable interpretation of the Contract is that the parties
intended the effect ive date to delineate the periods of work to which each of the three indemnity
clauses would apply, an interpretation which would give effect to all the clauses in the contract. See
Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). Millennium is therefore
entitled to summary judgment on this issue.
Timing of the plaintiffs’ asbestos suits as it effects Millennium’s
ability to bring indemnity actions against Brown & Root.
The district court held that the date that the underlying plaintiffs were exposed to the asbestos
was irrelevant, and that an indemnity claim does not accrue, and thus become actionable, until all of
the potential liabilities or damages of the indemnitee become fixed and certain. (citing Pustejosky
v. Rapid-American, 35 S.W.3d 643, 653 (Tex. 2000) (causes of action for latent occupational
diseases, such as asbestosis, do not accrue “until a plaintiff’s symptoms manifest themselves to a
degree or for a duration that would put a reasonable person on notice the he or she suffers from some
injury and he or she knows, or in the exercise of reasonable diligence should have known, that the
injury is work related.”); Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 210 (Tex.
1999) (time indemnity claim accrues). The district court concluded that because the underlying
plaintiffs first filed claims in 1998, the earliest date on which these plaintiffs’ asbestos symptoms
manifested themselves would have been January 1, 1996, after the Contract had been terminated, and
thus are not covered by any of the indemnity provisions.
The district court’s decision appears to be based on an assumption that the indemnity
provisions at issue here are “claims based,” rather than “occurrence-based.” As noted above, this
Court has considered at what point in time third-party coverage is triggered for asbestos-related cases
11
in the closely analogous context of insurance. See Guaranty Nat’l Ins. Co. v. Azrock Indus., Inc.,
211 F.3d 239, 249 (5th Cir. 2000). In Guaranty National Insurance, cognizant of the difficulty of
assigning manifestation of asbestosis to a specific date, this court instructed that in assessing an
insurer’s coverage liability, courts must first identify when the exposure to asbestos occurred and then
determine whether the policy was in effect at that time. Id.; accord In re CVA, Pilgrim, 267 B.R. 773,
779 (Bankr. W.D. Tex. 2001) (coverage is triggered in any policy period in which the exposure to
the cause of injury occurred, even if the harmful effects of the exposure were not diagnosed until after
the policy expired); Pilgrim Enters., Inc. v. Mary land Cas. Co., 24 S.W.3d 488, 497 (Tex. App.-
Houston [1st Dist.] 2000, no pet.) (application of the accepted “exposure theory” to personal injury
third-party insurance coverage cases does not require that the occurrence of the event which
ultimately causes an injury be discovered while an insurance policy is still in effect for an insurance
company to be liable). In insurance coverage cases, a court must also determine whether the policy
was occurrence-based or claims-based in deciding what claims an insurance company is liable for after
a policy has expired. See Pilgrim Enters., Inc., 24 S.W.3d at 497. If a policy is “claims-based,” then
only those injuries or damages that come to the attention of the insured and are made known to the
insurer during the policy period will be covered. Id.
The same concerns that applied to assessing insurance coverage for asbestos cases also apply
to asbestos cases in which it must be determined what event, occurrence or claim, triggers indemnity
clause liability. In cases involving insurance coverage, while the point in time when the asbestos
exposure occurred is important as to whether a particular policy’s coverage applies, it is only when
a plaintiff actually brings suit against the policy-holder -- sometimes long after the policy has expired
-- for injuries or illness resulting from the previous asbestos exposure that the insurance company
12
actually becomes liable. See e.g., Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 821-22
(Tex. 1997). If the underlying plaintiff never becomes sick and/or does not sue the policy holder
for the exposure, the insurance company will not be required to pay on its policy. Id.
Applying these principles in this context, we find that the language of the indemnity provisions
are occurrence-based, not claims-based.5 All three provisions state that Brown & Root will
indemnify Millennium for claims which Millennium “may be subject to by reason of injury to the
person of” Brown & Root employees. (emphasis added). The trigger is injury to a person during
Brown & Root’s performance of work under the Contract. Furthermore, the language of the 1973
provision does not contain a requirement that claims must be made during the Contract period to be
covered. The pro visions do not state, as the insurance policy did in Yancey, that they are strictly
claims-based. Therefore, we find the parties intended an occurrence-based provision, and that
coverage is triggered at the time asbestos exposures occurred, not when a claim is made. T h e
district court inappropriately meshed together two separate but equally important events, and the
points in time when those event s occurred, i.e., the point in time when an underlying plaintiff is
exposed to asbestos, and the point in time when such plaintiff becomes ill and brings suit against the
indemnitee. While Millennium may not at the moment have an accrued indemnity claim for which it
can bring an action against Brown & Root, the district court’s summary judgment ruling that
5
In Yancey v. Floyd West & Co., 755 S.W.2d 914, 918 (Tex. App.-Fort Worth 1988, writ denied), the Texas
Court of Appeals held that an insurance policy was claims-based when its language stated in part:
THIS IS A ‘CLAIMS MADE’ POLICY READ CAREFULLY...COVERAGE: To
pay on behalf of the Insured all sums which the Insured shall become legally
obligated to pay as money damages because of any claim or claims first made
against the insured during the policy period, arising out of any negligent act, error
or omission, occurring subsequent to the retroactive date, in the conduct of the
Insured’s business...
13
Millennium is automatically barred from ever bringing an indemnity claim against Brown & Root
because such claims would have had to have been brought prior to termination of the Contract is
incorrect because the provisions are occurrence-based.
Express negligence, fair notice and conspicuousness tests
Finally, the district court held alternatively that because the 1994 amendment violated the “fair
notice requirement” or “express negligence rule,”6 Millennium is precluded from being indemnified
by Brown & Root for liability or damages that resulted from Millennium’s own negligence. This is
so, the district court concluded, because the 1994 amendment deleted the portion of the 1973
provision which stated that Brown & Root had an obligation to indemnify Millennium for the latter’s
own negligence. (citing U.S. Rentals, Inc. v. Mundy Service Corp., 901 S.W.2d 789, 791 (Tex.
App. - Houston [14th Dist.] 1995, writ denied) (“Because indemnifying a party for its own negligence
is an extraordinary shifting of the risk, the Supreme Court has applied a fair notice requirement to
indemnity agreements”)).
While the district court may have been correct in holding that the 1994 provisions would fail
the “fair notice requirement” or “express negligence rule” for cases where Millennium was negligent,
this violation is only applicable for underlying asbestos-related cases that arose from exposures that
6
This rule provides:
1. A party’s intent to be released from all liability caused by its own future
negligence must be expressed in unambiguous terms within the four corners of the
contract.
2. The indemnity clause must be “conspicuous” under the objective standard
defined in the Uniform Commercial Code. A term or clause is conspicuous when
it is so written that a reasonable person against whom it is to operate ought to have
noticed. A printed heading in capitals (as: Non-negotiable Bill of Lading) is
conspicuous. Language in the body of a form is “conspicuous” if it is larger or
other contrasting type or color. Griffin, 22 S.W3d at 37; TEX. BUS. & COM.
CODE ANN. § 1.201(10) (1994).
14
occurred from January 1, 1994 through May 5, 1995 because, as we found above, the 1994
amendment did not supercede the 1973 provision retroactively to pre-1994 periods. Furthermore,
we are not persuaded by Brown & Root’s argument that the wording of the 1973 amendment does
not meet the fair notice requirement. As Millennium correctly notes, “the fair notice requirements
are not applicable when it is established that the indemnitor possessed actual notice or knowledge of
the indemnity agreement.” Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex.
1993). We hold that the record supports a finding that Brown & Root had knowledge of the
indemnity clause, and that it was conspicuous. First, a review of the 1973 amendment reveals that
one of Brown & Root’s vice president’s signed it. Second, the amendment is less than two pages in
length. Third, the risk sharing part is not buried in a long provision, and is on the first page of the
amendment. Fourth, the indemnity and liability clause is the sole subject of the amendment. And
finally, there is no assertion on Brown & Root’s part that they were in anyway unaware that the 1973
amendment was obligating them to indemnify Millennium for even its own negligence. Thus, the
1973 amendment does meet the “fair notice requirement” and “express negligence rule.”
CONCLUSION
Because Millennium’s 1995 termination of the Contract did not extinguish any of its rights
to indemnity which may have vested, and because t he language of the Contract unambiguously
provides that the parties intended that injuries would be covered by the successive provisions in place
at the time the injuries occurred, we REVERSE the decision of the district court granting Brown &
Root summary judgment, REVERSE the district court’s denial of Millennium’s summary judgment
motion and RENDER judgment in favor of Millennium.
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REVERSED.
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