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Peterson v. Murex Petroleum Corp.

United States District Court, D. North Dakota

April 25, 2019

Adam Peterson, Plaintiff,
v.
Murex Petroleum Corporation, Mickey Peck, company man, Stokes and Spiehler, Stokes and Spiehler Onshore, Inc., Earl Britzenhoff, Company Man, and Phoenix Operating Company, Defendants, and Murex Petroleum Corporation, Defendant and Third-Party Plaintiff,
v.
WISCO, Inc., Third-Party Defendant.

          ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT RE MUREX'S THIRD-PARTY COMPLAINT AGAINST WISCO, INC.

          CHARLES S. MILLER, JR., MAGISTRATE JUDGE UNITED STATES DISTRICT COURT.

         I. BACKGROUND

         In this action, plaintiff Adam Peterson (“Peterson”) is suing to recover damages for an injury he sustained on April 15, 2012, while working as a derrick hand for third-party defendant WISCO, Inc. At the time of the accident, WISCO, Inc. was doing rehabilitative work on an oil well operated by defendant and third-plaintiff Murex Petroleum Corporation (“Murex”). Specifically, the work on the day of the accident was rod removal. Plaintiff was injured when his arm became entangled in the rods while he was in a basket up in the derrick.

         In addition to contracting with WISCO, Inc. to perform the rehabilitative work, Murex engaged the services of two companies who each provided a person to represent Murex at the wellsite with respect to the work being performed by WISCO, Inc. In oilfield parlance, the onsite representative for Murex is referred to as the “company man.” One of the firms that Murex engaged to provide it with a company man was defendant Phoenix Operating Company (“Phoenix”). The individual retained by Phoenix for this purpose was defendant Earl Britzenhoff (“Britzenhoff”). The other firm engaged by Murex was defendant Stokes and Spiehler (“Stokes”). The individual that Stokes retained to be Murex's company man was defendant Micky Peck (“Peck”).

         Plaintiff has alleged in the complaint that one or more of the defendants are at fault for his injuries (either directly as result of their own conduct or vicariously) on account of his not having a safe place to work and being directed to follow unsafe working practices. Among other things, plaintiff contends Murex's company man directed that work on the job should continue despite it being too windy for safe operation and instructed that he perform his work in an unsafe manner.

         Plaintiff has not sued his employer WISCO, Inc. presumably because of the immunity provided by North Dakota workers' compensation law. While plaintiff has not sued WISCO, Inc., Murex has, contending in its third-party complaint that WISCO Inc. is required to provide Murex with a defense and indemnity from the claims being made by Peterson.

         Murex contends that its right to a defense and indemnity by WISCO, Inc. arises out of a master services agreement entered into between Murex and Williston Industrial Supply Company (herein“Williston Industrial Supply” or “WISCO”) dated February 8, 2010 (“Murex-WISCO MSA”) and, more specifically, Section 7, which reads as follows:

         7. INSURANCE AND INDEMNITY:

7.1 Contractor shall at all times while operations are conducted hereunder carry insurance of types and in minimum amounts as shown on the attached Exhibit “A, ” “Minimum Insurance Requirements” with insurers satisfactory to Murex, unless an officer of Murex Petroleum Corporation has consented to Contractor's being a self-insurer as to any one or more the risks as to which coverage is required in such Certificate of Insurance. Within ten (10) days after signing this agreement or before performing any work and/or Services hereunder, whichever is sooner, Contractor will furnish evidence to Murex of the required coverage on a Certificate of Insurance.
7.2 Contractor agrees to protect, defend, and indemnify and save Murex harmless from and against liability, loss, damage or expense by reason of any suits, claims, demands, judgments and causes of action caused by Contractor, its employees, agents or any subcontractor, arising out of or in consequence of the performance of this agreement or any Service Agreement entered into pursuant to the terms hereof, except that in no instance shall Contractor be held responsible for reservoir loss or damage, nor for any liability, claim, demand, or cause of action attributable solely to the negligence of Murex. This provision requires Contractor to protect, defend and indemnify and save Murex harmless for concurrent negligence, including that part, if any, of such concurrent negligence attributable to Murex.
This indemnity agreement by Contractor shall be insured by Contractor with insurers and in amounts satisfactory to Murex, except as to those risks as to which an officer of Murex has consented to Contractor's being a self-insurer.

(Doc. No. 26-1, pp. 1-2).

         Relevant to what follows, the owner of WISCO, James R. Scheele, decided in 2011 to sell the company to Omni Energy Services (“Omni”). The sale was in the form of a purchase of assets, rather than a stock sale. To purchase the assets Omni or one of its subsidiaries caused a new corporation to be formed-defendant WISCO, Inc. The Asset Purchase Agreement (“WPA”) dated April 14, 2011, was between Williston Industrial Supply and Scheele as the sellers and WISCO, Inc., as the purchaser. (Doc. No. 26-10).

         Nominally included in the asset purchase was all of WISCO's existing contracts along with an assumption of liabilities. (Id., pp. 4-5, 17-18, 22, 43). One of the schedules to the WPA listed the customers with whom WISCO had existing master service agreements. Murex was one of the listed customers. (Id., p.124). Also, in another schedule, Murex was listed as being WISCO's largest customer in the years 2009 and 2010. (Id., p. 134).

         Prior to the asset sale, Williston Industrial Supply often referred to itself as WISCO. In fact, it did so in the Murex-WISCO MSA, which provided in relevant part:

This is an agreement made this 8th day of February 2010 between MUREX PETROLEUM CORPORATION hereinafter called “Murex” and WISCO, herein after called “Contractor, ” . . . .

(Doc. No. 26-1, p. 1).

         WISCO, Inc. was aware that Williston Industrial Supply was using WISCO as another name for the company at the time of the asset purchase. In fact, WISCO, Inc. actually purchased Williston Industrial Supply's right to use the name or mark “WISCO” as well as the right to use the full name of “Williston Industrial Supply Corporation.” (Doc. No. 26-10, p. 5).

         Following the asset purchase and continuing through the date of the accident in this case, there are numerous instances in which WISCO, Inc. used the name WISCO or Williston Industrial Supply Corporation to refer to it operations, including documents sent to or exchanged with Murex. (Doc. Nos. 26-15, 26-47, 26-48, 26-49). As set forth above, this was WISCO, Inc.'s right. However, for the reasons discussed later, this might very well have consequences with respect to WISCO, Inc.'s contention that it was not bound by the Murex-WISCO MSA at the time of the accident giving rise to Peterson's claims in this case.

         Before the court now are cross-motions for summary judgment with respect to Murex's third-party claims against WISCO, Inc. This is not the first case to address whether Murex is entitled to a defense and indemnity pursuant to the Murex-WISCO MSA after the sale of assets to WISCO, Inc. There is currently pending in state court a personal injury case brought by another WISCO employee, Robert Todd Simmons, for injuries he sustained on October 26, 2011, while working at a Murex wellsite (“Simmons state action”). In that case, the state court ruled on summary judgment (1) that WISCO, Inc. was bound by the terms of the Murex-WISCO MSA as of the date of the accident in that case, which postdated the sale of the assets, and (2) that Murex is entitled to an immediate defense by WISCO, Inc. with respect to plaintiff's claims against Murex. (Doc. Nos. 26-26, 26-28, 26-29). The decision of the state district court, however, is not yet final. According to the state court docket, trial is scheduled to commence on January 6, 2020.

         II. LEGAL STANDARD

         This court is well familiar with the law governing motions for summary judgment as reflected in Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) and Fed.R.Civ.P. 56.

         III. ...


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