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Marathon Petroleum Company LP v. Cherry Moving Company, Inc.

Court of Appeals of Texas, Fourteenth District

May 1, 2018

MARATHON PETROLEUM COMPANY LP, Appellant
v.
CHERRY MOVING COMPANY, INC., Appellee

          On Appeal from the 405th District Court Galveston County, Texas Trial Court Cause No. 15-CV-1324

          Panel consists of Chief Justice Frost and Justices Jamison and Busby.

          OPINION

          KEM THOMPSON FROST, CHIEF JUSTICE

         After the trial court dismissed an oil company's indemnity claims for want of prosecution, the company sought an equitable bill of review asserting that the trial court clerk sent the notice for the dismissal hearing under Texas Rule of Civil Procedure 165a to the wrong address. The trial court granted the defendant's summary-judgment motion on the grounds that there is no evidence of official mistake unmixed with any fault or negligence on the oil company's part. Concluding that the summary-judgment evidence raises a genuine fact issue on this point, we reverse and remand.

         I. Factual and Procedural Background

         Appellant/plaintiff Marathon Petroleum Company, LP, successor in interest to Marathon Petroleum Company, LLC and Marathon Ashland Petroleum, LLC filed a petition for equitable bill of review in the trial court, naming appellee/defendant Cherry Moving Company, Inc. d/b/a Cherry Demolition as the sole defendant. Marathon sought relief from a January 2015 order dismissing Marathon's claims against Cherry for want of prosecution signed by the trial court in Marathon Ashland Petroleum, LLC v. Frontier Pacific Insurance Company, No. 98-CV-0687-A (the "Underlying Case"). Marathon asserts that it did not receive notice of the trial court's intent to dismiss the Underlying Case for want of prosecution until September 2015, after the deadlines for filing a motion to retain, motion to reinstate, motion for new trial, and after the trial court lost plenary power to grant relief from the dismissal order.

         A. The Underlying Case

         According to Marathon, the underlying claims arose from an industrial accident that occurred at Marathon's Texas City refinery in 1998. Several contract workers sustained injuries in an explosion or flash fire in a vacuum tower that was being demolished, and one worker died from his injuries.[1] Marathon arranged for the demolition work under a service contract with Cherry. Marathon contends that the governing contract document contains indemnity language requiring Cherry to indemnify Marathon from liabilities and injuries or deaths arising in the course of the work.

         An injured Cherry worker filed suit against Marathon. The estate and family of a deceased worker intervened in the suit. Marathon demanded indemnity from Cherry. Cherry and its insurers did not respond favorably. Based on the indemnity and insurance obligations under the contract documents, Marathon later asserted claims against Cherry, Frontier Pacific Insurance Company and other parties, seeking to enforce Marathon's rights to coverage and indemnity. In 2000, the trial court severed Marathon's claims into cause number 98-CV-0687-A, the Underlying Case. The parties engaged in intensive negotiations in an attempt to resolve the personal-injury and wrongful-death claims. During the final stages of the negotiation, Royal Insurance, Cherry's excess-insurance carrier, agreed to participate in resolving the claims subject to full participation by Frontier, Cherry's primary carrier. At that juncture, Frontier made it known that Frontier could not contribute funds needed to settle the claims. In response, Marathon agreed to advance $1 million to cover the refusal or inability of Frontier and Cherry to contribute funds as required by contract, without waiving Marathon's rights. After Marathon made available the initial $1 million in settlement funds, Royal negotiated the settlement of the personal-injury and wrongful-death claims for a confidential amount that Marathon claims amounted to several times Marathon's contribution.

         Thereafter, Marathon renewed its efforts to recover on its insurance and indemnity claims in the Underlying Case. State authorities placed Frontier in receivership and supervised liquidation. Courts in New York and California issued stay orders that prevented any further legal action against Frontier. Attorneys for Frontier requested an abatement in the Underlying Case. The trial court granted an initial abatement in October 2001.

         Frontier's insolvency brought about a long period of inaction on Marathon's claims, pending resolution of the financial status of Frontier, the primary insurer on the personal-injury and wrongful-death claims. Marathon sought to recover more than $500, 000 in litigation costs as well as its $1 million settlement contribution. Frontier's liquidation was placed under the supervision of the California Insurance Commissioner. Marathon perfected a claim in that proceeding, and the claim was allowed.

         The trial court retained the Underlying Case on its docket for more than a decade, all while the parties and the trial court awaited final resolution of the Frontier liquidation. In 2012, Marathon received a partial distribution from the Frontier liquidation. In May 2015, the California court supervising the liquidation approved a final distribution to Marathon. On September 2, 2015, after Marathon received this final distribution, counsel for Marathon reported to the trial court by letter that the Frontier liquidation proceeding should close by December 2015, at which point Marathon wanted to proceed with its claims against the remaining parties. That same day, counsel for Royal Insurance emailed counsel for Marathon, informing Marathon that on January 22, 2015, the trial court had signed an order dismissing Marathon's claims in the Underlying Case for want of prosecution ("Dismissal Order"). Marathon asserts that it received notice of the Dismissal Order for the first time on September 2, 2015.

         B. Marathon's Petition for Equitable Bill of Review

         In December 2015, Marathon filed its petition in this case seeking an equitable bill of review. Marathon contends that an equitable bill of review is its only remedy to the Dismissal Order. Marathon alleges that it has a meritorious indemnity claim against Cherry. According to Marathon, the indemnity provision is enforceable and Marathon is entitled to full indemnity against Cherry, regardless of any alleged negligence by Marathon. Though Marathon asserted claims against other parties in the Underlying Case, Marathon now seeks to pursue only its claims against Cherry.

         Even after receiving the distributions from the Frontier liquidation, Marathon alleges that it still has more than $200, 000 in actual damages on its indemnity claim that remains due and owing, as well as prejudgment interest in excess of $200, 000 and the reasonable attorney's fees incurred by Marathon in pursuing its indemnity claim against Cherry.

         Marathon's counsel of record testified in an affidavit made part of the live petition that he has confirmed that before September 2, 2015, his law firm received no actual, written, or oral notice that dismissal of Marathon's claims was planned or entered. Marathon did not seek reinstatement, file a motion for new trial, move for relief under Texas Rule of Civil Procedure 306a, file a notice of appeal, or file a notice of restricted appeal. If Marathon did not receive any notice of the trial court's intention to dismiss for want of prosecution or of the Dismissal Order until September 2, 2015, then Marathon could not have timely sought any of these remedies.

         Marathon contends that its counsel of record's failure to receive the notice of intent to dismiss for want of prosecution (the "DWOP Notice") and the notice under Texas Rule of Civil Procedure 306a that the Dismissal Order was signed ("Rule 306a Notice") was due to an official mistake by the Galveston County District Clerk's Office (the "District Clerk") in failing to send the notices to Marathon's counsel of record at his current address as shown in the register of attorneys practicing in the District Courts of Galveston County, which the Galveston County District Clerk maintains (hereinafter the "Galveston County Attorney Register"). Marathon alleges that this official mistake was unmixed with any fault or negligence on Marathon's part.

         C. Cherry's Summary-Judgment Motion

         Cherry moved for summary judgment on the following grounds:

(1) There is no evidence of fraud, accident, or a wrongful act by Cherry or of official mistake;
(2) There is no evidence that the trial court's 2015 dismissal of the Underlying Case was unmixed with any fault or negligence on Marathon's part;
(3) The summary-judgment evidence proves as a matter of law that there was no official mistake nor was there any fraud, accident, or wrongful act by Cherry; and
(4) The summary-judgment evidence proves as a matter of law that the trial court's 2015 dismissal of the Underlying Case was mixed with fault or negligence on Marathon's part.

         Cherry did not assert in its summary-judgment motion a ground challenging the "meritorious defense" element for an equitable bill of review.

         Cherry attached evidence to its motion showing that nearly a decade before issuing the Dismissal Order, in March 2005, the trial court dismissed the Underlying Case for want of prosecution and that the District Clerk sent the notice of intent to dismiss for want of prosecution and the notice that the case had been dismissed by final judgment to an address for Marathon's counsel that was no longer current. In 2005, Marathon found out about the dismissal order in time to file a motion to reinstate, which the trial court granted.

         Cherry also attached evidence to its motion showing that in December 2014, the trial court signed the DWOP Notice and that the District Clerk sent the DWOP Notice to Marathon's counsel of record at an office on the West Loop South in Houston (the "West Loop Address"). On January 22, 2015, the trial court signed an order dismissing the Underlying Case for want of prosecution. Other evidence indicates that the District Clerk sent the Rule 306a Notice to Marathon's counsel of record at the West Loop Address.

         In its motion, Cherry asserted that the DWOP Notice and the Rule 306a Notice were sent to Marathon's counsel of record at the West Loop Address, which Cherry asserts was counsel's last known address. Cherry asserted that the United States Post Office did not return either notice to the District Clerk. Cherry asserted that if, as Marathon alleges, its counsel of record changed his address in 2010, then Marathon and its counsel had a duty under the Texas Rules of Civil Procedure to file a written notice in the Underlying Case notifying the trial court, the District Clerk, and other counsel of the change of address and requesting that the District Clerk send future notices to the new address. Cherry asserted that Marathon and its counsel failed to do so, and therefore the District Clerk properly sent the DWOP Notice and the Rule 306a Notice to the West Loop Address.

         D. Marathon's Summary-Judgment Response

         Marathon responded in opposition to Cherry's summary-judgment motion. Marathon also contended that an adequate time for discovery had not yet passed, so Marathon objected to the trial court ruling on Cherry's no-evidence grounds. In the response, Marathon pointed to its attached evidence and asserted that the evidence raised fact issues regarding Marathon's assertion of official error unmixed with any fault or negligence on Marathon's part.

         Updating of Address in Galveston County ...


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