Sitting for the court: Justice Paul W. Green, Justice Nathan L. Hecht, Chief Justice Wallace B. Jefferson, Justice Phil Johnson, Justice David Medina, Justice Dale Wainwright, Justice Don R. Willett, Justice Scott A. Brister, Justice Harriet O'Neill
Sonat Exploration Co. v. Cudd Pressure Control Inc.
From Harrison County and the Sixth District Court of Appeals, Texarkana
For petitioner: Joel L. Thollander and Sam Baxter, Austin
For respondent: David M. Gunn, Houston
For intervenor Lumbermens Mutual Casualty Co.: Christopher Tramonte, Houston, and Arthur W. Landry, New Orleans
The Supreme Court will hear arguments on the issue of whether choice of law applies to where an oilfield contract was made or where the primary indemnity obligation was performed. The principal issues are (1) whether choice-of-law analysis for an indemnification agreement is based on the place of performing the indemnity obligation or the place of performing the primary contract obligation and (2) whether, when a litigant uses the virtual-representation doctrine to appeal a trial court decision, the resulting appellate court decision binds an originally named party that did not appeal. Sonat, which agreed to mutual indemnity with Cudd in their oilfield-service contract, sued Cudd after Cudd refused to reimburse any of the $28 million that Sonat paid to settle a personal-injury suit. Cudd employees brought the suit in Texas after a Louisiana accident. Cudd argues that Louisiana law invalidates the mutual indemnity agreement. The trial court held for Sonat, concluding Texas law applied. Before an appeal, Cudd agreed that it would not appeal the choice of Texas law but would appeal the trial court’s application of it. The intervenor in this case – Lumbermens, Cudd’s insurer – then sought to appeal the trial court’s choice-of-law ruling, employing the virtual-representation doctrine to raise the issue that Cudd agreed to abandon. The court of appeals reversed the trial court on its choice-of-law, holding that Louisiana law governed the contract.