Parkman v. W&T Offshore, Inc., et al features two contractors playing hot potato over liability for a company man’s alleged negligence. The takeaway: Write your Master Service Agreement to address your liability concerns, and then pay attention to what really happens on the location, regardless of what the MSA says. (And good luck monitoring that second factor!)

Brubaker was a drilling consultant and payroll employee of defendant AGR, assigned to work as a company man for W&T pursuant to a MSA. Helmrich & Payne was drilling a well for W&T offshore Louisiana. Brubaker’s job was to monitor H&P’s drilling operations on behalf of W&T.

Plaintiff Parkman was a floorhand/roughneck employed by H&P who suffered a serious accident resulting in paraplegia.

The borrowed employee under Louisiana law

Were W&T and/or AGR vicariously liable for Brubaker’s negligence? AGR contended that Brubaker was a borrowed employee of W&T and as a result no AGR employee was involved in the incident and thus AGR was not vicariously liable.

As a matter of law, whether Brubaker was a borrowed employee of W&T and or a dual employee of AGR and W&T depended on nine so-called Ruiz factors:

  1. Who had control over the employee and the work he was performing beyond mere suggestion of details or cooperation?
  2. Whose work was being performed?
  3. Was there an agreement, understanding, or meeting of the minds between the original employer and the borrowing employer?
  4. Did the employee acquiesce in the new work situation?
  5. Did the original employer terminate his relationship with the employee?
  6. Who furnished tools and place for performance?
  7. Was the new employment over a considerable length of time?
  8. Who had the right to discharge the employee?
  9. Who had the obligation to pay the employee?

No single factor is decisive but the first is the most critical.

You can’t rely only on the MSA

The parties cannot rely only on the terms of the MSA to answer the question. Regardless of contract language favoring one result or another, the reality at the worksite and the parties’ actions in carrying out a contract can impliedly modify, alter, or waive express contract provisions. The terms of the agreement alone are not dispositive and can be overcome for summary judgment purposes by other factors.

In deciding a motion for summary judgment from AGR, the court concluded that the non-contract record evidence (ie, what was really happening on the platform), in addition to the MSA language, clearly and overwhelmingly pointed to Brubaker’s status as a borrowed employee of W&T. The details of the fact-intensive opinion are less important than the principals involved and won’t be discussed here.

The dual employer doctrine

Under Louisiana’s dual employer doctrine even if Brubaker was W&T’s borrowed employee, a general/lending employer (AGR) that is in the business of lending employees to its customers is solidarily liable for the employee’s torts committed upon third persons.

Parkman’s position was that both the lending and borrowing employers were vicariously liable. The court determined that Louisiana’s dual employer rule applies, AGR would be vicariously liable for Brubaker’s torts regardless of Brubaker’s status as a borrowed employee of W&T.

The federal issue

The court also determined that there was no federal law which was inconsistent with the Louisiana rule such that Louisiana’s dual employer rule did not apply. The Louisiana rule applied.

Your musical interludes, the Christmas kind and the Advent kind.

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.

The facts
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 result

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.

Your musical interludes: One for Christmas and one for Advent.

See yesterday’s post on Iskandia Operating, LLC v. SWEPI, LP

SWEPI’s motion for summary judgment alleged that Iskandia presented no evidence of one or more elements of its trespass claim, noting that the Supreme Court of Texas has never recognized a cause of action for trespass based on deep subsurface water migration (to which some might respond, not yet).

The court observed that the parties disagreed on the elements required for a plaintiff to prevail on a trespass claim.

The court noted that in Coastal Oil & Gas Corp. v. Garza Energy Trust, the Supreme Court made several pronouncements that could affect Iskandia’s claim: a trespass against a possessory interest does not require actual injury to be actionable, and the rules for trespass on the surface of the earth are different from those that apply above or below it.

The court concluded that a trespass claim based on unauthorized interference with a lessee’s right to develop minerals was recognized in Lightning Oil v. Anadarko E&P Onshore, and Regency Field Services v. Swift Energy Operating as long as the injury is not outweighed by competing interests in the oil and gas context. The parties did not address that issue in this appeal.

Causation

The court discussed causation-in-fact as an element of Iskandia’s claim. To establish that an event is the cause-in-fact of damages the plaintiff must establish that the defendant’s act or omission was a substantial factor in bringing about the injuries and without it the harm would not have occurred.

The court determined that in order to survive summary judgment on the element of causation Iskandia had to demonstrate exposure of its wells to water originating from SWEPI at levels sufficient to cause the loss claimed by its pleading. Iskandia presented evidence of exposure to excessive amounts of saltwater by several means established by its experts.  

An expert’s failure to rule out other causes of the damage could render his opinion little more than speculation; however, alternative causes need not necessarily be ruled out entirely. The expert’s analysis of alternative causes must be sufficient for the factfinder to reasonably conclude that the defendant’s conduct was a substantial factor in causing the injury. Dr. Meehan considered and accounted for plausible alternatives before reaching his conclusions.

Damages

Meehan applied the income approach to calculate damages. Using the discounted cash flow method to determine the fair market value of Iskandia’s property he calculated the net present value of future cash flows and ultimately calculated Iskandia’s damages by comparing the fair market value of the leases in question before and after SWEPI’s alleged trespass.  His opinion on damages was $29.9 million.

The result

Iskandia’s only burden at summary judgment was to present more than a scintilla of evidence creating material fact issues. The testimony of Meehan and Bintu was more than a scintilla of evidence creating a material fact issue that SWEPI’s wastewater damaged Iskandia’s wells.

The trial court erred in granting SWEPI’s no evidence motion. Is it time for the Supreme Court to weigh in? Otherwise, its back to the trial court.

Your musical interlude.

Iskandia Operating Inc. v. SWEPI, LP d/b/a Shell Western E & P reversed summary judgment for the defendant in a subsurface trespass claim involving injection of large amounts of produced water.

The facts

Iskandia produces oil from 100 wells across 5,000 acres from a shallow zone of the Delaware Mountain Group in the Dimmitt Field in Loving County. SWEPI produces from the deeper Bone Springs and Wolfcamp formations.

Iskandia sued SWEPI for trespass, alleging that Iskandia produces and disposes less than 6,000 barrels of salt water per day, maintaining equilibrium in the DMG, while SWEPI produces more than 110,000 barrels per day, injecting exponentially more saltwater than the area would accommodate without adverse effects and injecting saltwater into Iskandia’s producing zone, “swamping” Iskandia’s oil reserves and rendering the reserves economically unrecoverable.

The analysis

In considering SWEPI’s no-evidence motion for summary judgment the trial court excluded two of Iskandia’s expert witnesses, Meehan and Bintu, granted the motion and dismissed Iskandia’s suit.

Iskandia’s experts, using reservoir simulation system FracMod, testified that high-pressure high-volume saltwater injected into the DMG migrated onto Iskandia’s leases and adversely affected the production potential of Iskandia’s wells, damaging 15 wells beyond repair and others to varying degrees.  

SWEPI argued that Meehan was not qualified, his testimony was based on unreliable foundational data and flawed methodology, and he failed to rule out possible alternative causes of damage. The court of appeals discussed each challenge in turn and reversed the trial court. (At this time, feel free to forward this post to your engineering geek colleagues so that they may delight in the magic of Petrel geo-modeling software, the “Nance paper”, facies models, the “Stone Model” and the like.)  

The court accepted Meehan as qualified by education, experience and training (see the opinion for details) and applied the Supreme Court’s six factors under Rule of Evidence 702 for determining the reliability of scientific expert testimony:

  • The extent to which the theory has been or can be tested;
  • The extent to which the technique relies upon the subjective interpretation of the expert;
  • Whether the theory has been subjected to peer review and all publication;
  • The technique’s potential rate of error;
  • Whether the theory or technique has been generally accepted as valid by the relevant scientific community; and
  • Non-judicial uses which have been made of the theory or technique.

The court recognized that reservoir simulations have been used in the industry and litigation for decades and are generally accepted as valid in the relevant scientific community.  The court accepted the data underlying the opinions as sufficiently reliable for Meehan to form an opinion.

TOMORROW, THE COURT’S CONSIDERATION OF TEXAS LAW ON SUBSURFACE TRESPASS BY INJECTED SALTWATER.

Your musical interlude, a query from the appellant.

A quiz: What do Big Oil and Galileo, and maybe you, have in common? Answer is below.

Here is news and opinions about climate change that counters climate-alarm truthiness emanating from some quarters. These facts and opinions are being said by those who know what they are talking about. Decide for yourself if you accept it.

For example, fires are not getting worse, storms are not getting worse, and the polar bears are doing fine, says economist Bjorn Lomborg. Incidentally, he believes the climate is getting warmer and offers realistic solutions.

Climate-change dissent is muffled. Or worse, the dissenters are scorned. Idealogues rule the debate.

Alex Epstein deflates several “facts” he deems to be climate myths (e.g. 2023 is not the hottest year on record) and shows how climate data is manipulated by climate catastrophists.

Speaking of one-sided scenarios, the Dallas Morning News warns that the summer of 2023 was the hottest ever. The source is the Associated Press.  See the link above; Mr. Epstein says it is a myth. What matters is that there is legitimate disagreement on the topic. The Morning News and others in the mainstream media rely on sources who act as if the purpose of news reporting is to advocate a position rather than actually report and let the reader decide. Fatuous politicians, bureaucrats lacking expertise (says Francis Fenton of The Manhattan Contrarian , feckless government policy, and children who can’t sleep at night and the parents who terrify them, are the results.

See this link for a debate about climate sensitivity, that is, the sensitivity of the earth’s climate to increases in atmospheric CO2 concentrations. You have both sides to consider.

Storms are getting worse!!! says the AP. No, they aren’t, says David Legates at the Heartland Institute.

Answer to the quiz:  Both have been condemned by the current “science” … and the Catholic Church. Lately it’s from the Vatican’s chief meteorologist, who has a cool side-hustle. 

Answered correctly? You won an hour of scorn from Greta Thunburg.

Your musical interludes: One for the mighty Ra … and one for what comes next.

The Duhig Rule is back, this time in Echols Minerals LLC, et al v. Green et al.

Framing the discussion, Duhig v. Peavy Moore Lumber Company and Trial v. Dragon

In Duhig the grantor in a general warranty deed warranted title and reserved half of the minerals. The deed did not mention that a third party owned half of the minerals. Duhig breached the warranty the moment he conveyed the property because he could not both retain half the minerals and convey half when the third party owned that half. Duhig was estopped from claiming ownership of the mineral interest he had reserved for himself.

There is a two-part test to determine if Duhig applies to a warranty deed that reserves an interest. First, did the grantor convey an interest greater than what he or she possessed such that there is an overconveyance and therefore a failure of title?

If the answer is yes, then under Dragon, Duhig does not apply if the grantor did not own the interests required to remedy the breach at the time of execution. Duhig is narrow in scope and confined to the specific facts in that case, say the courts.

The transactions

The court refers to several transactions. Here are the most important. By a 1952 General Warranty Deed, the Haynes grantors conveyed 278.5 acres in the north half of Section 1 to Madison, reserving a 33.25/278.5 NPRI. The deed stipulated that grantors did not own the minerals in the NW/4 of the NE/4 and the deed did not convey those minerals. There was no reference to a prior 1944 Mineral Deed conveying ½ of the minerals to Regan. In 1949 Haynes et al had stipulated that Roselyn owned 1/6th and the others owned 5/6ths.

In another 1952 deed, Haynes, guardian for the minor Roselyn, conveyed to Madison all of Roselyn’s RTI in the N/2 of Section 1, described as a 1/6th interest, “subject to all outstanding royalty or mineral conveyances.”

The suit

Echols claimed an interest through the Haynes grantors for half of the 33.25/278.5 NPRI retained in the 1952 Haynes et al deed. Defendants Green and Fortis counterclaimed as successors to Madison that the NPRI reservation by Haynes et al in the 1952 deed was ineffective under Duhig because the Haynes grantors failed to except the ½ mineral interest conveyed to Regan in 1944.

The trial court granted summary judgment in favor of Green/Fortis that the reservation was ineffective, applying Duhig. The court of appeals reversed and rendered. Duhig did not apply

The Haynes grantors in the 1952 general warranty deed conveyed more interest in the mineral estate than they owned, reserving a mineral interest, creating a “Duhig problem”. But there was no remedy available. The exact mineral interest to remedy the grantors’ failure of title would be 1/2. They conveyed a 5/6 interest to Madison while they only owned 1/3rd. The Haines grantors did not own the exact interest to remedy their failure of title.  

The court also denied Echols’ argument that the 1952 guardian deed and the 1952 NPRI deed should be read together as a single, unified transaction. The deeds had different grantors, conveyed different interests and had different terms.

A concurring opinion would read the two transactions together.

Your musical interlude

Fletcher v. Merritt resulted in several rulings on the proof required to prevail in a property dispute. Merritt filed a trespass to try title suit (actually a quiet title, which the court construed as TTT) against Fletcher for ownership of a 28.9 foot-wide strip separating their lots.  In concluding that the evidence was legally and factually sufficient to support adverse possession in favor of Merritt the court clarified several aspects of Texas adverse possession and TTT law.  

Dueling surveys concluded that both parties owned the strip. Defendant Fletcher sought superior title based on adverse possession. The court affirmed Merritt’s ownership.

A general denial won’t interrupt peacable possession

Fletcher’s denial of Merritt’s TTT petition without affirmatively claiming ownershjp was insufficient to disrupt the peaceable possession element of adverse possession. The defendant in a TTT suit seeking to interrupt the plaintiff’s peaceable possession must seek affirmative relief of his own to recover the property. Merritt’s evidence was sufficient to support the finding that his possession was peaceable.

A correction deed can support limitations

A correction deed was filed less than five years before suit was filed. Fletcher challenged the “duly registered deed” requirement in Civil Practice and Remedies Code §16.025(a)(3) (the five-year statute) to establish adverse possession. A correction deed is effective as of the date of the original deed, according to Property Code §5.030(a)(1). The court said there is no authority for the proposition that the mandate does not affect limitations for the purposes of adverse possession. In other words, because of its effective date per the statute, the correction deed supported five-year limitations. Plus, there was no testimony from the surveyor about the effect a change in metes and bounds would have had on the boundary. The court was left to speculate.

Use can be established by temporary improvements

Adverse possession requires continuous, use, cultivation or enjoyment of the disputed property for the statutory period. Fletcher argued that Merritt’s shed and propane tank on the property were temporary improvements and insufficient to demonstrate continuous use, etc. But there is no requirement that permanent structures be built in order to establish continuous use.

The testimony that Merritt maintained the strip since moving in was testimony that the disputed strip always belong to him.  

No attorney’s fees in a TTT action
Fletcher’s challenge to an award of attorney fees to Merritt was successful. Attorney fees are not recoverable in TTT. Merritt argued for fees under the Texas Uniform Declaratory Judgment Act, but he did not ask the trial court to determine the boundary between the two lots.  Rather, he asked the trial court to determine that he had superior right to possession of the disputed land through adverse possession. It was a suit for adverse possession, not for a declaration of the boundary line.

Your musical interlude

Securities and Exchange Commission v. The Heartland Group Ventures LLC et al. explains what a receiver under federal law has the right to do. Much like Nick Saban’s offense against a certain team, she can do just about anything she wants.

The assets

The SEC applied for appointment of a receiver for a group of Heartland companies. The entities’ assets included 403 oil and gas wells and 110 miles of gas gathering and transportation lines called the Palo Pinto Pipeline. The receiver sought an order from the court that she had no right, obligation or interest in the Palo Pinto Pipeline or, alternatively, for permission to abandon her interest in the pipeline. The Texas Railroad Commission objected, asserting that each operator of a pipeline system must obtain a permit from the Commission, to be renewed annually; Dodson Prairie, one of the receivership entities, did not possess a T-4 Permit to operate the pipeline; and the pipeline was not part of the receivership estate.

The receiver’s authority

Under federal law, a receiver in a civil action involving property has complete custody and control and right to take possession over such property. But upon taking possession, the receiver has the burden of managing and operating the property in accordance with state law.

A court imposing a federal equity receivership assumes jurisdiction over the property of the subject entity. Federal receivers must comply with state law and cannot abandon property if doing so would violate a state law reasonably calculated to protect public health or safety from immediate and identifiable harm. The party opposing abandonment, here the Railroad Commission, must prove that the property would create an imminent and identifiable harm to the public which would be aggravated by the abandonment (For example, burying five tons of pesticides in uncontrolled conditions). 

The Railroad Commission argued that whether the receiver is an operator of the pipeline was not before the court because only the Commission had jurisdiction to make that decision. Thus, the issue for the court was to determine whether abandoning the pipeline would result in imminent and identifiable harm to the public.

No imminent harm

Assuming without deciding that the receiver had a legal obligation to operate the pipeline, in absence of evidence showing that abandonment would cause an imminent and identifiable harm to the public the magistrate recommended that court permit the receiver to abandon the pipeline.

The receiver argued that she was not liable for plugging the wells because the obligation arose months or even years before her appointment. Relying on a similar situation in the bankruptcy context the magistrate concluded that the receiver has an obligation to expend funds to bring the wells into compliance with state health and safety laws and the duty is not contingent upon when the obligation arose. Regardless of when the violations occurred, the receiver undertook ongoing obligations to comply with applicable state law related to health and safety and plug the wells once she became the operator.

The receiver offered evidence to support her position. Among other actions she emptied tanks to avoid potential spills, removed vegetation to mitigate fire hazards, and insured gathering line pressure was not an immediate environmental threat.

The magistrate concluded that while abandoning unplugged wells could create future environmental hazards, that fear does not present evidence of imminent harm to the public.

The receiver was allowed to abandon the wells and the pipeline.

Your musical interlude.

So, you found all the heirs and you have an agreed judgment stipulating title. Time to pay royalties? Maybe. And you have signed division orders. Surely, you can pay now? Maybe. These were the questions facing the parties in Perdido Properties LLC v. Devon Energy Production Company et al.

Facts and events

Ross Brady dies, bequeathing a royalty interest in Ector County, 75% to wife Pauline and 12.5% each to his two sisters.

Pauline dies intestate survived by next `husband Smitherman, Sr. and her siblings Claire Bremer and William Watson.

A title opinion for Devon the operator links Pauline to the Brady interest.

Enerlex acquires 1/4th of the interest in the royalty from William. That was all he owned.

William’s conservator, Devon and Enerlex execute an agreed judgment setting aside the Enerlex deed and a release of claims. Devon prepares and the conservator signs division orders reflecting that 100% of the Brady interest is payable to Watson and his lawyer De León. Devon pays William and De Leon.

William dies and his interest goes to the Watson Group (descendants, it appears).

Perdido sues Devon and the Watson Group on behalf of Smitherman, Jr./Bremer for failure to pay royalties, claiming they own 50% of the Brady interest, and asserts alternative claims against Watson Group.

Watson Group obtains summary judgment on Perdido’s claims based on limitations. Devon obtains summary judgment that Smitherman/Bremer’s claims are precluded because Devon paid royalties under a division order, limitations, and no evidence of fraudulent inducement.

What about the judgment?

An agreed judgment is an adjudication and a contract, but only applies to the parties who are before the court. That does not include the Watson Group.

Aren’t division orders binding?

Not always. In Gavenda v. Strata Energy the producer who prepared erroneous division orders and then underpaid royalty owners retained part of the proceeds for itself was liable to the underpaid owners, overcoming the general rule that DO’s are binding until revoked.

One of the principles underlying the general rule is detrimental reliance. Generally, when there are proper division orders the underpaid royalty owner is entitled to recover royalties from the overpaids, not the operator.

In Gavenda the producer was liable to the underpaid owner for the portion of the royalties the producer retained, although it was not liable for royalties paid to other royalty owners. Here, Smitherman/Bremer did not sign DO’s. They were only signed by Watson.

The basis of the result in Gavenda was unjust enrichment. Here, Devon argued that it had paid all the royalties to Smitherman/Bremer under DO’s executed by other royalty owners. Relying on several North Dakota cases, the appellate court held that Gavenda did not preclude Smitherman/Bremer’s claim against Devon even though it would result in double payment from Devon. Devon was not unjustly enriched, but it could not have detrimentally relied on the actions of Smitherman/Bremer because they did not sign the DO’s.

Limitations and other issues

Interesting as it might be to those of us who procrastinate, space does not allow for the court’s analysis of limitations.

Mispayment of the royalties to the Watson Group did not occur as a result of a change in ownership and failure of notice under the lease’s change of ownership clause. The failure to pay was not the result of a change of ownership.   

The release agreement did not release Smitherman/Bremer’s claim royalties on past production. See the opinion for a detailed analysis of the agreement’s language and of emails on the issue of whether Devon acknowledged a debt to Smitherman/Bremer.

The result

Judgment for Devon on limitations reversed and remanded. Judgment affirmed on all other claims.

Your musical interlude.

Most states call it a third-party beneficiary contract. Leave it to Louisiana to be different. In Adams v. Chevron USA Inc., the plaintiffs claimed that oilfield pipe-cleaning activities of Chevron and others contaminated their land with NORM. The Grafers owned the land where, pursuant to a lease, the pipes and other equipment were cleaned. Plaintiffs also sought damages from the Grefers for their own alleged negligence.  Adams settled with most of the defendants by a settlement agreement in 2014 but continued to seek damages from the Grafers.

The question: Were the Grefers included in the settlement as released/indemnified parties? No. The appellate court concluded that the trial court erred by disregarding testimony presented at an evidentiary hearing of the actual intent of the parties to the settlement agreement concerning whether the Grefers were or were not to be released.  

Extrinsic evidence of the parties’ intent

Under Louisiana’s extrinsic evidence rule when words of the agreement are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. Compromise agreements are a jurisprudential exception. When a dispute arises as to the scope of a compromise agreement, extrinsic evidence can be considered to determine exactly what differences the parties intended to settle. Intent is determined by reading the compromise instrument in light of the surrounding circumstances at the time of execution of the agreement. 

There was no stipulation pour autrui.

In any state, a contracting party may stipulate a benefit for a third-party who is not named in the contract. In Louisiana it is done via a stipulation pour autrui. Such a stipulation is never presumed.

In the settlement agreement, the definition of released parties was very broad, including indemnitees and indemnitors and any other person for which the named settling defendants may be liable, whether in contract, tort or equity, in connection with or arising from the claims asserted in the litigation. The Grefers were not parties to the agreement, had no hand in drafting it, and did not contribute to the settlement payment.

The settlement agreement failed to meet the criteria for a stipulation pour autrui.

  1. There was no manifestly clear intent to benefit the Grefers. The agreement itself provided that the parties did not intend to make any person a third-party beneficiary nor create a stipulation pour autrui.
  2. There was no certainty as to the benefit bestowed upon the Grefers.
  3. Any benefit for the Grefers was a mere incident of the settlement between the settling defendants and plaintiffs.

The Grefers were not released by the 2014 settlement agreement.

Your musical interlude