Anadarko Petroleum Corporation v. Alternative Environmental Solutions, Incorporated

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Questions Presented

1. Whether Texas or Louisiana law governed the Master Services Contract's defense and indemnity provisions.
2. Whether the indemnity provision was void as contrary to Texas or Louisiana public policy, including under the Louisiana Oilfield Anti-Indemnity Act.
3. Whether Anadarko was judicially estopped from enforcing the choice-of-law and indemnity provisions.
4. Whether the indemnity declaration improperly covered punitive and exemplary damages excluded by the contract.
5. Whether Anadarko's alleged failure to provide contractual notice defeated its defense and indemnity claims.
6. Whether attorney's fees incurred in the underlying litigation were recoverable under Federal Rule of Civil Procedure 54.
7. Whether the award of attorney's fees for the present declaratory action was otherwise improper because of redacted time entries, the supporting declaration, or failure to segregate fees.

Holdings

1. The contractual choice-of-law provision selecting Texas law governs because AESI failed to show that Louisiana had a more significant relationship or materially greater interest in the dispute, or that applying Texas law would contravene a fundamental Louisiana policy.
2. The indemnity provision was not void as an agreement for an illegal purpose and covered claims arising in connection with AESI's admitted violations, even if an Anadarko employee also participated in the underlying misconduct.
3. Judicial estoppel did not bar Anadarko from enforcing the choice-of-law or indemnity provisions, and Anadarko's failure to raise those provisions in the underlying state litigation did not preclude this separate action.
4. The declaration could not require AESI to indemnify Anadarko for punitive or exemplary damages because the Master Services Contract expressly excluded indemnification for those damages.
5. Anadarko's alleged failure to give prompt notice did not defeat its claims because, in a suit brought by the indemnitee against the indemnitor, requiring notice would have been futile.
6. Attorney's fees incurred in a separate underlying lawsuit because of a breach of a duty to defend are contract damages, not attorney's fees recoverable under Rule 54; the district court therefore erred in awarding those fees under Rule 54.
7. The district court could award attorney's fees incurred in the present declaratory and breach-of-contract action, and AESI's challenges based on redacted entries, the Haysley declaration, and segregation of fees did not establish reversible error.

Key quotations

Factual background

Anadarko and AESI entered a 2008 Master Services Contract requiring AESI to assume liability for and defend, release, indemnify, and hold Anadarko harmless from claims arising from AESI's violations of applicable laws. AESI's owners and subcontractors fraudulently overbilled Anadarko, and the resulting dispute led to Louisiana litigation alleging that an Anadarko employee participated in the scheme and that Anadarko was vicariously liable. The contract selected Texas law and Harris County, Texas, as the venue for litigation connected with the contract.

Procedural history

AESI was sued in Louisiana state court in litigation arising from fraudulent overbilling of Anadarko. Anadarko then brought a separate action in the Southern District of Texas seeking declaratory relief concerning AESI's duties to defend and indemnify and damages for attorney's fees incurred in the underlying litigation. The district court granted summary judgment for Anadarko and awarded $1,031,142.48 in attorney's fees. The Fifth Circuit affirmed in part, vacated in part, and remanded.

Remand instructions

The district court must modify the declaratory judgment to explicitly exclude punitive and exemplary damages from AESI's duty to indemnify and conduct further proceedings consistent with the opinion concerning the vacated award of attorney's fees for the Palowsky Lawsuit.