The outcome of a multimillion-dollar suit was in the hands of a jury of 12 good and honorable citizens. The question: Was a certain party an agent, consultant, contractor, or none of the above? One side wanted the jury to be instructed on the legal definitions of those terms. The other wanted the words to be interpreted in their “ordinary and popular sense”. The legalists prevailed.
In Tite Water Energy LLC v. Wild Willy’s Welding LLC, a Texas case governed by Oklahoma law, Tite Water was Devon’s contractor under a Master Service and Supply Agreement. Bigbey was injured and sued. Under the MSSA, Tite Water was required to defend and indemnify members of the “Company Group”. As in many, probably most, MSA’s, that included (among others) Devon’s “agents, contractors and consultants”.
Tite Water and Bedrock were Devon’s contractors. Willy’s was a Bedrock subcontractor in the capacity of an independent contractor. Their agreement stated that Willy’s was not considered Bedrock’s employee, agent, servant, or representative.
In the Bigbey suit Willy’s cross-claimed against Tite Water for breach of contract and a judgment that Tite Water owed Willy’s defense and indemnity under the MSSA. As Devon’s agent, consultant, or contractor, said Willy’s, it was a member of the Company Group entitled to defense and indemnification.
Tite Water stipulated that Bigbey was a member of the Contractor Group. Willy’s conceded it was not Devon’s contractor.
The testimony of Willy’s owner Davidson was confusing but he testified that Willy’s was not a consultant after his attorney defined the term for him.
The jury instructions
Was Willy’s Devon’s agent, consultant, or contractor and therefore a member of the Company Group under the MSSA?
The jury was instructed to use these definitions based on dictionaries and Oklahoma case law:
- An agent is “one who is authorized to act for or in place of another, a representative”.
- A consultant is “someone who advises people on a particular subject”.
- A contractor “is one who covenants to do anything for another; one who contracts to perform work on a rather large scale at a certain price or rate; one who undertakes to do work for a company or corporation on a large scale at a certain fixed price.”
Tite Water argued that the jury should, “on their own” and “using their common sense”, interpret the terms “in their ordinary or popular sense.” Otherwise, complained Tite Water, the instructions would steer the jury to an award for Willy’s. Tite Water argued that Willy’s was not a consultant because Davidson repeatedly denied being a consultant.
The jury concluded that Willy’s was Devon’s agent and consultant. Tite Water owed Willy’s defense and indemnity under the MSSA and breached the agreement by failing to do so.
The court of appeals affirmed the jury verdict and judgment. The definitions were not incorrect or misleading. The court rejected Tite Water’s argument that Davidson was not Devon’s consultant because Davidson repeatedly denied being a consultant and he was not Devon’s agent because Willy’s was hired as Bedrock’s, not Devon’s, consultant and independent contractor.
The court said that Tite Water should have developed those arguments at the trial but didn’t. It appears from afar that Tite Water feared that it would forever be pushing the evidentiary rock up the hill if the jury used the court’s definitions. It was counting on Davidson’s denials based on his understanding of the terms.