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Penn Virginia Oil & Gas GP, LLC v. Garza

Court of Appeals of Texas, First District

July 6, 2017

PENN VIRGINIA OIL & GAS GP, LLC AND PENN VIRGINIA OIL & GAS LP, Appellants
v.
ALFREDO DE LA GARZA, INDIVIDUALLY AND AS NEXT FRIEND FOR I. D. L. G. AND K. D. L. G., MINORS, AND JOHN PAUL ADAME, INDIVIDUALLY AND AS NEXT FRIEND FOR C. A. A., J. P. A., JR., AND J. N. A., MINORS, Appellees

         On Appeal from the 215th District Court Harris County, Texas Trial Court Case No. 2014-42519

          Panel consists of Chief Justice Radack and Justices Brown and Lloyd.

          MEMORANDUM OPINION

          Harvey Brown Justice.

         In this accelerated interlocutory appeal, [1] Penn Virginia Oil & Gas GP, LLC ("Penn GP") and Penn Virginia Oil & Gas LP ("Penn LP") (collectively, "Penn Virginia") appeal from the trial court's order denying their motion to compel arbitration of personal injury claims asserted by Alfredo De La Garza.[2]

         De La Garza was injured while working for his employer, Nabors Completion & Production Services Company ("Nabors Completion") on a wellsite operated by Penn Virginia. De La Garza sued Penn Virginia in state district court, and Penn Virginia moved to arbitrate under the Nabors Dispute Resolution Program, an arbitration agreement that requires arbitration of disputes between Nabors employees and "Electing Entities."

         Penn Virginia argued that De La Garza's claims were arbitrable because Penn Virginia had become an Electing Entity by entering into drilling contracts with Nabors Drilling USA, LP ("Nabors Drilling") in 2008 and 2010. De La Garza responded that Penn Virginia had only become an Electing Entity for disputes related to work performed under those specific contracts and that he was injured while working at a wellsite governed by a different contract, one that superseded the prior contracts and did not contain an Electing Entity provision. The trial court agreed with De La Garza and denied the motion. We affirm.

         Background

         The Nabors Dispute Resolution Program

         Nabors Industries, Inc. ("Nabors") is a drilling contractor. Nabors has a Dispute Resolution Program that requires arbitration of "all Disputes" between the "Company" and the Company's "present and former" employees. Under the program, a "Dispute" is defined to include "all legal and equitable claims, " including claims for "any personal injury allegedly incurred in or about a Company workplace or in the course and scope of an Employee's employment." The "Company" is defined to include Nabors, Nabors's subsidiaries, and any "Electing Entity." An "Electing Entity, " in turn, is defined as "any legal entity that has agreed to be bound by the Program . . . ."

         The 2008 and 2010 contracts between Penn Virginia and Nabors Drilling

         Penn Virginia Corporation is an oil and gas company. Over the years, Penn Virginia Corporation and its subsidiaries have contracted with various Nabors subsidiaries to drill and service onshore wells throughout the United States. Penn Virginia Corporation and its subsidiaries have become Electing Entities under at least two contracts with Nabors.

         The first contract was executed in 2008 between Penn LP and Nabors Drilling. It governs drilling operations for a wellsite in Jefferson County, Texas.[3] The 2008 contract was filled out on a form contract.[4] It contains a duration clause, which provides that the contract will "remain in full force and effect until drilling operations are completed on the well . . . ."[5] And it contains a merger clause, which provides that the contract "constitutes the full understanding of the parties" and will "exclusively control and govern all work performed" thereunder.

         The 2008 contract also includes several exhibits, one of which lists 17 "special provisions" that are expressly "made a part" of the contract. Included among the "special provisions" is an Electing Entity provision. The Electing Entity provision states, in relevant part:

Operator [Penn LP], its parent, subsidiary and affiliated corporations, as well as the employees, officers and directors of each (collectively, "Operator") is cognizant of the Nabors Dispute Resolution Program and wishes to become an Electing Entity, as defined in that Program. Accordingly, Operator and Nabors Industries, Inc. ("Nabors") hereby agree that Operator is an Electing Entity as to all disputes between Operator and the present and former Employees and Applicants of Nabors pursuant to the Nabors Dispute Resolution Program as it currently exists and as may be amended from time to time. . . . Operator may withdraw this election to participate in the Program at any time by giving notice of such withdrawal to Nabors, such revocation to be effective with respect to any claims not yet instituted as of the date of revocation. Operator understands that it is bound by the terms of the Program with respect to all Disputes with Nabors employees, regardless of whether such Dispute is initiated by the employee or by Operator.

         The 2008 contract is signed by representatives of Penn LP and Nabors Drilling; the exhibit listing the 17 "special provisions" is not.

         The second contract was executed in 2010 by Nabors Drilling and a different Penn entity, Penn Virginia MC Energy, LLC ("Penn MC"). It governs drilling operations for a wellsite in Logan County, Oklahoma.[6] The 2010 contract was filled out on the same form as the 2008 contract. It has the same title, the same duration[7] and merger clauses, and the same Electing Entity provision. Like the 2008 contract, the 2010 contract's Electing Entity provision is listed on an attached exhibit that is expressly "made a part" of the contract. And like the 2008 contract, the 2010 contract is signed by representatives of both contracting parties, while the exhibit listing the "special provisions" is not.

         The 2013 contract between Penn Virginia and Nabors Completion

         No Penn Virginia entity is an Electing Entity under the most recent contract with Nabors, a contract executed in March 2013 with Nabors Completion. The 2013 contract is not limited to a specific wellsite. Instead, it governs all operations conducted by Penn LP in Texas.[8] The 2013 contract states that it "shall become effective" the day of its execution and that it "shall supersede all prior service contracts between the parties . . . with respect to new ...


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