This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case involves a dispute over the enforceability of indemnity clauses in service contracts between a gas processing facility operator and subcontractors. The operator sought indemnity from the subcontractors for claims arising from a workplace accident involving an employee of one subcontractor. The accident occurred during maintenance of a gas processing system called a "slug catcher," which is used to remove particulates from gas. The subcontractors argued that the indemnity clauses violated New Mexico's oilfield and construction anti-indemnity statutes (paras 2-5).
Procedural History
- District Court of Lea County: Held that the indemnity clauses in the service contracts were void and unenforceable under New Mexico's oilfield and construction anti-indemnity statutes, granting summary judgment in favor of the subcontractors (paras 1, 5).
Parties' Submissions
- Appellant (Southern Union Gas Services, Ltd.): Argued that the anti-indemnity statutes did not apply to the service contracts or the work being performed at the time of the accident. Alternatively, claimed that even if the statutes applied, the indemnity clauses should still be enforceable to the extent they sought indemnity for the subcontractors' negligence (paras 6, 36-37).
- Appellees (Fulco Oil Services, L.L.C., 3-K Oil and Gas Services, L.L.C., and Ruth Elkins): Contended that the indemnity clauses were void under the anti-indemnity statutes, as the work performed fell within the scope of those statutes. They also argued for a broad interpretation of the statutes to include the activities at issue (paras 5, 17, 20).
Legal Issues
- Does the oilfield anti-indemnity statute apply to the maintenance operation on the slug catcher?
- Does the construction anti-indemnity statute apply to the maintenance operation on the slug catcher?
- Are the indemnity clauses enforceable to the extent they seek indemnity for the subcontractors' negligence?
Disposition
- The Court of Appeals reversed the district court's decision regarding the oilfield anti-indemnity statute, holding that it did not apply to the maintenance operation on the slug catcher (para 25).
- The Court of Appeals affirmed the district court's decision regarding the construction anti-indemnity statute, holding that it applied to the maintenance operation (para 35).
- The case was remanded for a determination of the respective liabilities of the parties to enforce the indemnity clauses for the subcontractors' negligence (para 44).
Reasons
Per Vanzi J. (Kennedy and Garcia JJ. concurring):
Oilfield Anti-Indemnity Statute: The Court held that the statute applies only to production activities at the wellhead, as indicated by the specific activities listed in the statute. The maintenance of the slug catcher, located away from the well site and part of the gas processing system, did not fall within the statute's scope. The Court applied the doctrine of ejusdem generis to limit the general language of the statute to activities similar to those explicitly listed (paras 17-25).
Construction Anti-Indemnity Statute: The Court found that the statute applied because the slug catcher is a structure on real property, and the work being performed constituted maintenance necessary to keep the structure operational. The Court rejected the argument that the maintenance was akin to janitorial services, emphasizing the integral role of the slug catcher in the gas processing facility (paras 26-35).
Enforceability of Indemnity Clauses: The Court interpreted the construction anti-indemnity statute to void only the portion of the indemnity clauses requiring indemnification for the operator's negligence. The remaining provisions, which sought indemnity for the subcontractors' negligence, were enforceable. The Court remanded the case for a determination of the parties' respective liabilities to enforce these provisions (paras 36-44).