We begin with a philosophical question: Should a person be rewarded for bad behavior? Despite twerkee Miley Cyrus (and her daddy), the Kardashians and, at least for a while Richard Nixon, the answer should be, no. Texas law agrees.
The express negligence doctrine in indemnification agreements “… mandates that the party use express language within the four corners of the contract specifically stating that the party will be indemnified for liability arising from the party’s own negligence.”
So said Hamblin v. Lamont, a companion case to Lamont vs. Vaquillas Lopeno Energy, et al, For background and a discussion of the facts, go to my recent post discussing Lamont v. Vaquillas.
When Lamont separated from Ricochet Energy and Hamblin, the parties signed a separation agreement containing a broad and comprehensive indemnification provision in which Ricochet and Hamblin agreed to indemnify Lamont against
“… any and all liabilities, obligations or claims arising from any act, occurrence, omission or otherwise which occurs after the Effective Date of this Agreement which in any way pertains to Ricochet Energy, Inc. and/or its operations, actions and in actions. It is the intention of the Parties that Ricochet Energy, Inc. to provide as broad of an indemnity as possible and all ambiguity as to whether Hamblin and Ricochet Energy, Inc. owe the duty of indemnification shall be resolved in favor of providing the indemnity/indemnification.”
In a second paragraph, Hamblin and Ricochet agreed to assume all of Ricochet’s obligations and agreed to indemnify Lamont against past liabilities, using languge virtually identical to the first.
Lamont was found by a jury to have committed intentional torts and the jury awarded Vaquillas several million dollars in damages.
The court denied Lamont’s request for indemnification on the basis of the express negligence test, asking whether the parties intended to protect Lamont from his own actions.
The decision reversed a trial court summary judgment in favor of Lamont. The problem with the language was that Ethyl Corp., Dresser Industries, Flour Corp. and other express negligence cases from the Supreme Court talk in terms of negligence. The court viewed the case in light of the public policy against excuplating a party from the consequences of its own negligence.
According to the court, the concerns associated with such extraordinary risk-shifting in negligence cases cases should apply “with equal or greater force” to intentional torts.
Because the contract did not specifically state an intent to indemnify Lamont for liability arising from his own intentional torts, Hamblin and Ricochet had no obligation to indemnify Lamont for liability arising out of the Vaquillas lawsuit.
The dissent focused on the absence of Texas Supreme Court cases applying the express negligence test to intentional torts, and would have ordered indemnification.
I would expect Lamont to take this one to the Texas Supreme Court. Whether the court accepts it is another question. The result looks pretty fair to me.