Deacero, S.A.P.I. De C v. v. BNSF Railway Company ( 2024 )

Reversed and Remanded and Opinion filed May 30, 2024
In The
Fourteenth Court of Appeals
NO. 14-23-00359-CV
DEACERO, S.A.P.I. DE C.V., Appellant
V.
BNSF RAILWAY COMPANY, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Cause No. 2020-05593B
OPINION
In this contractual indemnity case, we must decide whether an otherwise
conspicuous indemnity provision complies with the fair notice requirements set forth
in Dresser Industries, Inc. v. Page Petroleum when it is located in a portion of the
contract incorporated by reference that was only accessible by a general website.
853 S.W.2d 505, 508 (Tex. 1993). Donald Seeberger, an employee of BNSF Railway
Company (BNSF), sued BNSF and Deacero, S.A.P.I. de C.V. (Deacero) for injuries
he sustained when he was struck by a door protruding from a nearby railcar. 1 BNSF
brought a cross-claim action against Deacero and its insurer seeking indemnity based
on Deacero’s failure to load and secure the railcar properly. Deacero and BNSF filed
cross-motions for summary judgment on BNSF’s indemnity claim. The trial court
granted BNSF’s motion for summary judgment, denied Deacero’s motion, and
entered judgment that BNSF was entitled to indemnity from Deacero for damages
arising out of Seeberger’s claims for BNSF’s negligence. In two issues, Deacero
contends that the trial court erred in granting BNSF’s motion for summary judgment
and in denying its motion for partial summary judgment. Because we conclude that
the indemnity clause is not conspicuous enough to provide fair notice, we reverse
the trial court’s order granting BNSF’s motion for summary judgment and remand
the case to the trial court for further proceedings.
Background
Deacero is a Mexican corporation headquartered in Monterrey, Mexico.
Deacero manufactures specialized coil wire and other metal products used in
construction, fencing, metal structures, and other commercial metal components.
BNSF operates a railway network and regularly contracts with Deacero to transport
products to the United States through an agreement called the “Price Authority.” The
Price Authority provides the rates, routes, and other terms and conditions applicable
to customer shipments along certain BNSF routes. The relevant Price Authority,
BNSFQ 113507, governed the shipping arrangement from October 1, 2019 to
November 30, 2019. The first two pages of the Price Authority contain nine
“GENERAL RULES,” while the remaining pages identify the freight, base rates,
and routes. Under the general rules section, there is a subheading entitled “RL SUB
1
Seeberger is not a party in this appeal and is mentioned only for context.
2
BNSF 6100 RULES BOOK.” This provision, located on the right side of the page
in the third bullet point from the bottom, states:
Transportation under this agreement is subject to BNSF Rules Book
6100-Series in effect as of the date of shipment. A copy of this Rules
Book may be obtained via the internet at: www.BNSF.com.
The Price Authority also references BNSF Rules Book 6100-Series (6100
Rules Book) on page two under a provision entitled “FUEL+/- FALKCRLD $2.50
MILE.” This provision, located on the right side of the page in the first bullet point,
provides:
Price is subject to a Fuel Surcharge. A Mileage Based Fuel Surcharge
will be applied to the rates or charges in this price authority for the
shipment, as provided for in Item 3376-Series, Section B ($2.50 Strike
Price), of BNSF Rules Book 6100-Series. This amount will be added to
the freight bill.
The aforementioned provisions are the only reference to the 6100 Rules Book
in the Price Authority. And, the term “indemnity”—or any provision regarding an
indemnity clause—is wholly absent from the text of the Price Authority. The 6100
Rules Book, which could allegedly be located at BNSF’s general website, contains
a table of contents consisting of seven sections. Among the seven sections are over
100 rules and regulations that govern various aspects of the transportation and
shipping agreement, including “GENERAL RULES AND REGULATIONS,”
“RULES AND REGULATIONS GOVERNING FROZEN AND NON-FROZEN
COMMODITIES REQUIRING MECHANICAL PROTECTIVE SERVICE,” and
“RULES GOVERNING SWITCHING.” The indemnity provision, which is located
on page 17 of the 6100 Rules Book under section 2 entitled “Specific Rules and
Regulations – Without Charges,” states:
Item 2265 – Liability and Indemnity
RAILROAD PARTIES SHALL NOT BE LIABLE, AND
3
CUSTOMER SHALL RELEASE, INDEMNIFY AND HOLD
HARMLESS RAILROAD PARTIES, FOR ALL LOSS, DAMAGE,
OR INJURY (COLLECTIVELY, INCLUDING WITHOUT
LIMITATION ATTORNEY’S FEES AND OTHER COSTS OF
LITIGATION, LIABILITY TO THIRD PARTIES, FINES,
PENALTIES, ENVIRONMENTAL RESPONSE, INVESTIGATION,
AND REMEDIATION COSTS, AND NATURAL RESOURCE
DAMAGES) ARISING FROM (A) ANY DEFECTS IN OR FAILURE
OF PRIVATE EQUIPMENT; (B) IMPROPER LOADING OR
UNLOADING PRACTICES, INCLUDING WITHOUT
LIMITATION EXCESS WEIGHT OR FAILURE TO PROPERLY
CLOSE, SECURE AND TENDER LOADED OR EMPTY
EQUIPMENT; (C) FAILURE BY THE CUSTOMER (OR ITS
AGENTS OR CONTRACTORS OR RECEIVERS) TO COMPLY
WITH THE REPRESENTATIONS, WARRANTIES AND
COVENANTS MADE IN THE PRICE AUTHORITY OR WITH THE
RULES APPLICABLE TO CUSTOMER WITH RESPECT TO THE
MOVEMENT OF COMMODITIES PURSUANT TO THE PRICE
AUTHORITY; (D) THE PRESENCE OF ANY TRACE CHEMICALS
OR CONTAMINANTS IN THE COMMODITY WHICH ARE NOT
DESCRIBED IN THE COMMODITY’S PROPER U.S. DOT
SHIPPING DESCRIPTION, AS PROVIDED IN APPLICABLE U.S.
DOT REGULATIONS; OR (E) ANY LOSS, DAMAGE OR INJURY
TO THE EXTENT CAUSED BY CUSTOMER (OR ITS AGENTS OR
CONTRACTORS OR RECEIVERS). THE LIABILITY ASSUMED
BY CUSTOMER SHALL NOT BE AFFECTED BY THE FACT, IF
IT IS A FACT, THAT THE LOSS, DAMAGE OR INJURY WAS
OCCASIONED BY OR CONTRIBUTED TO BY THE
NEGLIGENCE OF THE RAILROAD PARTIES, EXCEPT TO THE
EXTENT THAT SUCH CLAIMS ARE PROXIMATELY CAUSED
BY THE INTENTIONAL MISCONDUCT OR GROSS
NEGLIGENCE OF THE RAILROAD PARTIES. “Railroad parties” as
used herein shall refer to BNSF and BNSF affiliated companies,
partners, successors, assigns, legal representatives, officers, directors,
shareholders, employees, agents and handling carriers.
The 6100 Rules Book also incorporates BNSF Contract Rules Book 90010-
Series (90010 Rules Book), another set of rules that contain general terms and
provisions for contracts. The provision referencing the 90010 Rules Book is under
4
section 1 entitled “General Rules and Regulations, Item 1160 – BNSF Published
Signatureless Contracts.” The 90010 Rules Book indemnity provision is remarkably
similar to the provision located in the 6100 Rules Book, except that the entirety of
the provision is in bold font. But this provision is located under Item 204 entitled
“Equipment.” The 90010 Rules Book also contains another indemnity provision in
Item 310, entitled “Indemnification by Customer.” This provision provides:
Item 310 – Indemnification by Customer
In addition to any other provisions regarding indemnification or
liability contained in the Contract or elsewhere in this Rules Book,
Railroad shall not be liable to Customer, and Customer shall indemnify
and hold harmless Railroad, for all costs, damage, injury or other loss
(including without limitation attorneys’ fees and other costs of
litigation and/or settlement and all fines, penalties, damages or other
payments made by the Railroad to others) for which Customer is liable
pursuant to the terms of the Contract or this Rules Book or which occur
due to failure by Customer to comply with the representations,
warranties and covenants made in the Contract or this Rules Book or
with the Applicable Rules to which Customer is subject with respect to
the movement of commodities contemplated by the Contract.
Unlike the other two indemnity provisions, the “Indemnification by Customer”
provision is not capitalized or otherwise distinguishable from the surrounding text.
As mentioned, Seeberger is an employee of BNSF. In November 2019, he was
working in a Houston-area switching yard when he was struck and injured by a door
protruding from a nearby railcar. The railcar with the protruding door was filled with
steel manufactured by Deacero. In January 2020, Seeberger sued BNSF for
negligence under the Federal Employers’ Liability Act (FELA). Seeberger later
amended his petition to include claims against Deacero for negligence in loading
and failing to secure the railcar. BNSF then filed its cross-claim against Deacero,
alleging that the contract between the parties obligated Deacero to indemnify BNSF.
5
In May 2022, Deacero filed its traditional motion for partial summary
judgment, arguing that the indemnity provision BNSF relied upon did not satisfy the
fair notice requirements, and thus, was unenforceable. In July 2022, BNSF cross-
motioned for summary judgment, contending, among other things, that Deacero is
obligated to indemnify and defend BNSF pursuant to the express terms of the
contract. After a hearing, the trial court granted BNSF’s motion, entered judgment
that BNSF was entitled to indemnity from Deacero for damages arising from
Seeberger’s claims based on BNSF’s negligence, and denied Deacero’s motion.
Deacero timely filed its notice of appeal.
Standard of Review
In an appeal from a trial court’s rulings on cross-motions for summary
judgment, we determine all questions presented and render the judgment that the
trial court should have rendered. Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 529
(Tex. 2002); City of Garland v. Dall. Morning News, 22 S.W.3d 351, 356 (Tex.
2000) (“When the trial court grants one motion and denies the other, the reviewing
court should determine all questions presented.”). “On cross-motions for summary
judgment, each party bears the burden of establishing that it is entitled to judgment
as a matter of law.” City of Richardson v. Oncor Elec. Delivery Co., 539 S.W.3d
252, 259 (Tex. 2018). We review the summary judgment rulings de novo. Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To do so, we take all
evidence favorable to the nonmovant as true, indulging every reasonable inference
and resolving any doubts in its favor. Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211, 215 (Tex. 2003). To prevail on a traditional motion for summary
judgment, a movant must prove entitlement to judgment as a matter of law on the
issues pled and set out in the motion for summary judgment. Tex. R. Civ. P. 166a(c);
Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 607 (Tex. 2013). A summary
6
judgment granted on the basis of an affirmative defense will be affirmed only if the
record establishes that the movant conclusively proved all elements of its affirmative
defense as a matter of law. See City of Hous. v. Clear Creek Basin Auth., 589 S.W.2d
671, 678 (Tex. 1979).
Governing Law
We construe indemnity agreements under normal rules of contract
construction. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000).
Our primary goal is to ascertain and give effect to the parties’ intent as expressed in
the contract. Seagull Energy E & P, Inc. v. Eland Energy, 207 S.W.3d 342, 345 (Tex.
2006). However, because indemnifying a party for its own negligence is an
extraordinary shifting of risk, the supreme court has imposed fair notice
requirements to these types of agreements. See Dresser Indus., Inc., 853 S.W.2d at
508. Risk-shifting provisions such as indemnity clauses must satisfy two fair notice
requirements: (1) the express negligence test and (2) conspicuousness. Storage &
Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004); Littlefield v. Schaefer,
955 S.W.2d 272, 274 (Tex. 1997).
Under the express negligence test, a party contracting for indemnity from the
consequences of its own negligence must express that intent in specific terms within
the four corners of the contract. Fisk Elec. Co. v. Constructors & Assocs., Inc., 888
S.W.2d 813, 814 (Tex. 1994). The express negligence test was established by the
supreme court “to cut through the ambiguity” of indemnity provisions, thereby
reducing the need for satellite litigation regarding interpretation of indemnity
clauses. Id. (quoting Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex.
1987)). The express negligence requirement is not an affirmative defense but a rule
of contract interpretation and, accordingly, is determinable as a matter of law. Id.Like express negligence, conspicuousness is a question of law. See Dresser
7
Indus., Inc., 853 S.W.2d at 509. For a provision to be conspicuous, “something must
appear on the face of the [contract] to attract the attention of a reasonable person
when he looks at it.” Reyes, 134 S.W.3d at 192 (quoting Dresser, 853 S.W.2d at
508). In evaluating conspicuousness in the fair notice context, the supreme court has
adopted the definition from the Uniform Commercial Code (UCC), which provides:
“Conspicuous,” with reference to a term, means so written, displayed,
or presented that a reasonable person against which it is to operate
ought to have noticed it. Whether a term is “conspicuous” or not is a
decision for the court. Conspicuous terms include the following:
(A) a heading in capitals equal to or greater in size than the
surrounding text, or in contrasting type, font, or color to the surrounding
text of the same or lesser size; and
(B) language in the body of a record or display in larger type
than the surrounding text, or in contrasting type, font, or color to the
surrounding text of the same size, or set off from surrounding text of
the same size by symbols or other marks that call attention to the
language.
Tex. Bus. Com. Code § 1.201(10).2 A contract provision which fails to satisfy either
of the fair notice requirements when they are imposed is unenforceable as a matter
of law. See Dresser Indus., Inc., 853 S.W.2d at 509–10; see also U.S. Rentals, Inc.
v. Mundy Serv. Corp., 901 S.W.2d 789, 792 (Tex. App.—Houston [14th Dist.] 1995,
writ denied).
2
At the time of Dresser, UCC section 1.201(10) defined “conspicuous” as:
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 it. 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 in larger or other contrasting type or color. But in a telegram
any stated term is “conspicuous.” Whether a term or clause is “conspicuous” or not
is for decision by the court.
Act of May 25, 1967, 60th Leg., R.S., ch. 785, § 1, sec. 1.201(10), 1967 Tex. Gen Laws
2343, 2349 (UCC, Tex. Bus. & Com. Code § 1.201(10), since amended).
8
However, whether language is conspicuous becomes immaterial if the
indemnitee can establish that the indemnitor had actual knowledge of the indemnity
clause. Cate v. Dover Corp., 790 S.W.2d 559, 561–62 (Tex. 1990); Dresser Indus.,
Inc., 853 S.W.2d at 508 n.2. Actual knowledge is treated as an affirmative defense
to a claim of lack of fair notice. Reyes, 134 S.W.3d 194; U.S. Rentals, Inc., 901
S.W.2d at 793. As the party seeking indemnification, the burden of establishing
actual knowledge is on BNSF. Mo. Pac. R.R. Co. v. Lely Dev. Corp., 86 S.W.3d 787,
791 (Tex. App.—Austin 2002, pet. dism’d). Actual knowledge can result from prior
dealings of the parties or if the indemnitee specifically brings the inconspicuous
waiver to the indemnitor’s attention. Cate, 790 S.W.2d at 561. Whether a party had
actual notice or knowledge is generally a question of fact. Goodyear Tire and Rubber
Co. v. Jefferson Constr. Co., 565 S.W.2d 916, 919 (Tex. 1978). The determination
can be made as a matter of law “only when there is no room for reasonable minds to
differ.” Id. at 919–20.
Discussion
As mentioned, Deacero raises two issues on appeal, alleging that the trial court
erred in (1) granting summary judgment for BNSF on its contractual indemnity claim
and (2) denying Deacero’s competing motion for summary judgment. We begin our
analysis by addressing whether the indemnity provisions comply with all the
requirements of fair notice and are enforceable as a matter of law. In this case, there
is no dispute between the parties that the indemnity provision meets the express
negligence doctrine requirement. Accordingly, our review is limited to whether the
indemnity provisions satisfy the conspicuousness requirement.
I. Conspicuousness
In its motion for summary judgment, BNSF states that the 6100 Rules Book
is clearly incorporated by reference on the first page of the Price Authority. BNSF
9
also emphasizes that the 6100 Rules Book is the only document the Price Authority
directly references. BNSF argues that documents incorporated into a contract by
reference become part of the contract. Put another way, BNSF seems to suggest that
the “face” of the contract includes the Price Authority and the 6100 Rules Book.
We, however, disagree with this contention.
In considering conspicuousness in the fair notice context, Texas courts have
generally found it relevant that an indemnity provision is either found or at least
mentioned on the first page of the contract and is set apart in some way from other
text. See Dresser Indus., Inc., 853 S.W.2d at 508–09 (explaining that the fair notice
requirements of conspicuousness and the express negligence doctrine apply to
releases as well as to indemnity agreements and concluding that the releases were
not conspicuous because the provisions were located on the back of a work order in
a series of numbered paragraphs without headings or contrasting type); Enserch
Corp. v. Parker, 794 S.W.2d 2, 8 (Tex. 1990) (providing that the indemnity language
was sufficiently conspicuous to afford fair notice of its existence when the entire
contract appeared on one page and the language was on the front side of the contract,
not hidden under a separate heading or surrounded by completely unrelated terms);
Goodyear Tire and Rubber Co., 565 S.W.2d at 920 (providing that there was some
evidence that the indemnity provision was conspicuous because the front of each
page of the purchase order contained a statement in large red type referencing the
terms and conditions on the back, and the indemnity provisions were contained on
the reverse side of the purchase order)3; U.S. Rentals, Inc. 901 S.W.2d at 792
(concluding that the indemnity provision on the back of the rental contract did not
satisfy the conspicuous requirement because the indemnity provision was the
seventh of fifteen unrelated provisions and the headings and text of all fifteen
3
Prior to Dresser, conspicuousness was treated as a question of fact. 853 S.W.2d at 509.
10
provisions were printed in the same respective sizes and types); GE Oil & Gas
Pressure Control, L.P. v. Carrizo Oil & Gas, Inc., No. 01-21-00285-CV, 2023 WL
3513141, at *24 (Tex. App.—Houston [1st Dist.] May 18, 2023, no pet. h.) (mem.
op.) (concluding that the indemnity provision was conspicuous because the field
service order included a statement on the top of the front of the page that specifically
referred to the terms and conditions printed on the back of the document, and a
second statement appeared above the signature line and referred to the terms and
conditions, including the indemnity provisions printed on the reverse side); Am.
Home Shield Corp. v. Lahorgue, 201 S.W.3d 181, 185 (Tex. App.—Dallas 2006,
pet. denied) (concluding that indemnity provision was not conspicuous because it
appeared “on the back of the contract in a series of numbered, uniformly printed and
spaced paragraphs without headings or contrasting type”); Ranger Ins. Co. v. Am.
Int’l Specialty Lines Ins. Co., 78 S.W.3d 659, 665 (Tex. App.—Houston [1st Dist.]
2002, no pet.) (providing that the indemnity language was conspicuous because it
was on the front of a footage drilling contract, not among unrelated terms, and the
paragraph heading was set off in a slightly larger font and in bold, capital letters); K
& S Oil Well Serv. Inc. v. Cabot Corp., 491 S.W.2d 733, 737–38 (Tex. App.—
Corpus Christi 1973, writ ref’d n.r.e.) (explaining that the indemnity provision was
not conspicuous enough to import fair notice because it was hidden on the reverse
side of the sales order under a heading entitled “Terms and Conditions” and was
surrounded by completely unrelated terms).
At least one Texas court has considered the conspicuousness requirement for
an indemnity provision incorporated by reference into the parties’ contract. See
ALCOA v. Hydrochem Indus. Servs., Inc., No. 13-02-00531-CV, 2005 WL 608232,
at *9 (Tex. App.—Corpus Christi–Edinburg Mar. 17, 2005, pet. denied) (mem. op.).
In ALCOA, six additional contract documents were incorporated by reference. Id. Of
11
the six additional documents, five were labeled to indicate their contents, i.e.,
“AFFIDAVIT, RELEASE AND WAIVER OF LIENS FORM R-379-5,” “SAFETY
POLICY PROCEDURE #151,” “RMCO. FORM R-379-8 POLICY ON
SUBSTANCE ABUSE,” “RMC SPEC. WS-LQ-192 R/11 ‘CONTRACTORS’
GENERAL WORK CONDITIONS,” and “RATE SHEETS.” The sixth document
containing the indemnity clause was generically labeled “SUPPL. TERMS &
CONDITIONS FORM R-380-1.” The court concluded that the indemnity provision
was not sufficiently conspicuous to satisfy the fair notice requirement, finding that
“something indicating the intent to transfer liability must appear on the face of the
contract sufficient to attract the attention of a reasonable person.” Id.Additionally, at least one Texas court has considered the conspicuousness
requirement of an indemnity provision incorporated by a website. See Matador
Prod. Co. v. Weatherford Artificial Lift Sys., Inc., 450 S.W.3d 580, 590–94 (Tex.
App.—Texarkana 2014, pet. denied). In Matador Prod. Co., the price estimate page
of the contract included a paragraph written in tiny print directing the customer to
its website containing the terms and conditions. Id. at 593. The court concluded that
the price estimate page failed to indicate that substantial liability-limiting provisions
were contained within the terms and conditions because the paragraph referencing
the terms and conditions was written in regular font at the bottom of the last page of
the six-page document and did not refer to any liability-limiting provisions. Id. at
594.
Reviewing the relevant Price Authority, we conclude that the generic title
referring to the 6100 Rules Book does not attract the attention of a reasonable person
to afford fair notice of the presence of a risk-shifting indemnity clause contained
therein. See Dresser Indus., Inc., 853 S.W.2d at 508; Matador Prod. Co., 450
S.W.3d at 594. As discussed, the general rules are located primarily on the first page
12
of the Price Authority. While the term “GENERAL RULES” is set off in a slightly
larger type in all bold capital letters, reference to the 6100 Rules Book appears in the
sixth of nine bullet points among unrelated terms and is printed in the same size and
type as the surrounding text. See U.S. Rentals, Inc. 901 S.W.2d at 792 (concluding
that the indemnity provision did not satisfy the conspicuous requirement because it
was the seventh of fifteen unrelated provisions and the headings and text of all fifteen
provisions were printed in the same sizes and types). The purpose of the
conspicuousness requirement is to protect the buyer from surprise and an unknowing
waiver of its rights. Littlefield v. Schaefer, 955 S.W.2d 272, 275 (Tex. 1997). And,
nothing on the face of the Price Authority notifies the customer of the risk-shifting
indemnity provisions located on BNSF’s general website where the 6100 Rules
Book is purportedly located and in the 90010 Rules Book, which is incorporated by
the 6100 Rules Book (assuming the customer is able to locate the 6100 Rules Book).
See Matador Prod. Co., 450 S.W.3d at 594.
Additionally, we are not persuaded by BNSF’s argument that the indemnity
language contained in the 6100 Rules Book—and not the print which refers the
customer there—is conspicuous. BNSF’s position is a classic example of “the tail
wagging the dog.” It is immaterial if the indemnity provision located in the 6100
Rules Book is conspicuous if nothing on the face of the contract attracts the attention
of a reasonable person to afford fair notice of the presence of the risk-shifting
indemnity clause at the website. See ALCOA, 2005 WL 608232, at *9 (“Whether the
heading ‘LIABILITY’ is conspicuous enough to attract the attention of a reasonable
person looking at Form R-380-1 is inconsequential if nothing on the face of the
purchase order indicates that a reasonable person should look at Form R-380-1.”);
see also Tex. Bus. Com. Code § 1.201(10) (defining conspicuous as written,
displayed, or presented such that a reasonable person against which it is to operate
13
ought to have noticed it). Further, the Price Authority, which is 21 pages, is “not so
short that every term in the contract[] must be considered conspicuous.” See Dresser
Indus., Inc., 853 S.W.2d at 511.
Even if we assume the face of the contract includes the Price Authority and
the 6100 Rules Book, the paragraph referencing the risk-shifting indemnity
provision is nonetheless inconspicuous. The Price Authority is 21 pages, and the
6100 Rules Book is over 80 pages. The paragraph referencing the 6100 Rules Book
is not displayed in a larger type, contrasting color, or in an otherwise distinguishable
manner from the surrounding text. See Tex. Bus. Com. Code § 1.201(10). A
reasonable person should not be expected to investigate the text of the Price
Authority to locate the paragraph directing them to a general website; navigate the
website to find the 6100 Rules Book; and then review the text of the table of contents,
which is printed in the same respective size and type, to discover “Item 2265 –
Liability and Indemnity”—the indemnity provision. See U.S. Rentals, Inc. 901
S.W.2d at 791 (“The conspicuousness requirement mandates that the indemnity
agreement be noticeable to a reasonable person.”) (citing Dresser Indus., Inc., 853
S.W.2d at 508). Likewise, a reasonable person should not have to analyze the text
of the 6100 Rules Book to locate the provision referencing the 90010 Rules Book,
which is listed under section 1 entitled “General Rules and Regulations, Item 1160
– BNSF Published Signatureless Contracts.” Moreover, neither the Price Authority
nor the 6100 Rules Book advise the customer of where the 90010 Rules Book is
located. “The intent of the fair notice requirements is defeated if parties are allowed
to remove risk-shifting clauses to secondary documents that are only
inconspicuously referenced on the face of the contract.” ALCOA, 2005 WL 608232,
at *9.
Accordingly, we concluded that the indemnity provisions contained in the
14
Rules Books are unenforceable as a matter of law. See Dresser Indus., Inc., 853
S.W.2d at 509–10; see also U.S. Rentals, Inc., 901 S.W.2d at 792.
II. Actual Knowledge
In its summary judgment motion, Deacero asserts that the Rules Books fail to
satisfy the conspicuousness requirement, even if the Rules Books were attached to
the Price Authority. BNSF counters that the conspicuousness of the indemnity
clauses is immaterial, and the clauses are nonetheless enforceable because Deacero
had actual knowledge of the clauses. As discussed, in the absence of compliance
with the conspicuousness requirement, actual knowledge is required. See Reyes, 134
S.W.3d at 192. In order to succeed on its motion for summary judgment on the basis
of actual knowledge, BNSF had to conclusively show that Deacero had actual
knowledge of an indemnity provision as a matter of law. See Tex. R. Civ. P. 166a(c);
City of Richardson, 539 S.W.3d at 259. But, to be entitled to the denial of Deacero’s
motion for summary judgment, BNSF, as the non-movant, only had to demonstrate
that there was a genuine issue of material fact regarding Deacero’s actual knowledge
of the indemnity clauses. See Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018).
BNSF maintains that Deacero had actual knowledge of the indemnity
provisions. BNSF presented evidence that Deacero’s representative conceded that
the Rules Books were incorporated into the Price Authority and that the Price
Authority was subject to the Rules Books. To support its contention, BNSF
emphasized Deacero’s attempts to comply with certain provisions of the
incorporated documents. BNSF also presented evidence on its course of dealings
with Deacero. The evidence established that Deacero and BNSF had entered into
similar agreements on at least 40 occasions over several years, and each prior
agreement contained contractual indemnity provisions identical to those in the Price
Authority.
15
While it is undisputed that the parties have entered into similar agreements
over several years, the summary judgment evidence fails to conclusively establish
that Deacero had actual knowledge of the risk-shifting indemnity provision located
on BNSF’s general website during its course of dealings with BNSF. See City of
Richardson, 539 S.W.3d at 259; see also Mo. Pac. R.R. Co., 86 S.W.3d at 791(providing that the burden of establishing actual knowledge is on the party seeking
indemnification). Further, BNSF did not present any summary judgment evidence
that it specifically brought the inconspicuous waiver to Deacero’s attention. Cate,
790 S.W.2d at 561. But, the summary judgment evidence certainly does raise a fact
question regarding Deacero’s actual knowledge of the indemnity provisions. See
Goodyear, 565 S.W.2d at 919.
Accordingly, we sustain Deacero’s first issue contending that the trial court
erred in granting BNSF’s motion for summary judgment, but overrule Deacero’s
second issue, alleging that the trial court erred in denying its motion for partial
summary judgment.
Conclusion
We reverse the trial court’s order granting BNSF’s motion for summary
judgment and remand the case to the trial court for further proceedings.
/s/ Frances Bourliot
Justice
Panel consists of Justices Bourliot, Zimmerer, and Poissant.
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