United States District Court, S.D. Texas, Houston Division
KEVIN LANGEN, Individually and on behalf of all others similarly situated, Plaintiff,
SANCHEZ OIL & GAS CORPORATION, Defendant and Third-Party Plaintiff, and CRESCENT DRILLING & PRODUCTION, INC., Third-Party Defendant.
MEMORANDUM AND ORDER
F. ATLAS SENIOR UNITEJ2 STATES DISTRICT JUDGE
the Court is Third-Party Plaintiff Sanchez Oil & Gas
Corporation's (“SOG”) Motion to Dismiss
Crescent Drilling & Production, Inc.'s
(“Crescent”) Counterclaims (“Motion to
Dismiss” or “Motion”) [Doc. # 76].
Third-Party Defendant Crescent filed a response,
SOG replied. The Motion is now ripe for decision. Based
on the parties' briefing, relevant matters of record, and
pertinent legal authority, the Court grants SOG's Motion.
lawsuit began as a putative Fair Labor Standards Act
(“FLSA”) collective action against SOG filed by
Kevin Langen, a former consultant engaged by SOG through
Crescent. Original Complaint [Doc. # 1].
answering Langen's complaint, SOG filed a third-party
complaint against Crescent containing claims for
indemnification and breach of contract under a Master Service
Agreement (“MSA”) [Doc. # 14-1] between the SOG
and Crescent. Third-Party Complaint [Doc. # 14]. SOG alleges
that it did not contract directly with Langen for his
services, but instead contracted with Crescent for
Langen's services pursuant to the MSA. Under the MSA,
Crescent agreed to comply with the FLSA with respect to
services they provided to SOG and agreed “to protect,
defend, indemnify, and hold harmless [SOG] from any and all
claims resulting from [Crescent's] breach” of its
covenant. MSA § 13.2. SOG alleges that Crescent breached
the MSA by not complying with the FLSA with respect to
Langen's compensation and must indemnify SOG against
Langen's FLSA claim.
January 7, 2019, Langen and SOG agreed in principle to a
confidential settlement of Langen's individual claim and
notified the Court of the agreement. Joint Notice of Partial
Resolution [Doc. # 55]. On January 30, 2019, Langen and SOG
moved for Court approval of their settlement. Agreed Motion
for Approval of Settlement and Dismissal of Claims with
Prejudice [Doc. # 61]. On February 1, 2019, the Court
approved a settlement between SOG and Langen, dismissing
Langen's claim with prejudice and dismissing Langen from
the lawsuit. Order dated February 1, 2019 [Doc. # 64].
February 14, 2019, Crescent answered SOG's third-party
complaint and asserted two breach of contract counterclaims.
Crescent Drilling & Production, Inc.'s Answer to
Third-Party Complaint and Counterclaim Against Sanchez Oil
& Gas Corporation (“Crescent's Answer &
Counterclaims”) [Doc. # 71].
labels Count 1 as its “Prevailing Party Status”
claim. Crescent asserts that SOG owes Crescent attorneys'
fees under Section 18.1 of the parties' MSA. Section 18.1
of the MSA states:
In the event the Parties become involved in mediation or
litigation arising out of or related to the Agreement in
which services of an attorney or other expert are reasonably
required, the prevailing Party will be fully compensated for
the cost of its participation is such proceedings, including
court costs, expenses and the reasonable costs incurred for
attorneys' fees and experts' fees. Unless judgment
goes by default, the attorneys' fee award will not be
computed in accordance with any other court schedule, but
will be such as to fully reimburse all reasonable
attorneys' fees actually incurred by the prevailing
Party, regardless of the size of the judgment and regardless
of whether the payment of all or a portion of such fees was
contingent upon the outcome of the mediation or litigation.
MSA § 18.1. Crescent contends that SOG's
indemnification claim under the MSA is meritless because it
did not violate the FLSA. Accordingly, Crescent alleges it
will be a “prevailing Party” on an action
“arising out of” the MSA and thus entitled to
attorney's fees under Section 18.1.
labels Count 2 as “Sanchez's Breach of
Contract.” Crescent asserts that SOG breached Section
11.10.3 of the MSA by settling with Langen without
Crescent's prior written consent. Section 11.10.3 of the
Indemnified Party agrees that it will not settle or otherwise
compromise any claims to be indemnified under this Agreement
without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.
If the Indemnifying Party unreasonably withholds or delays
its consent (including as a result of the Indemnifying
Party's belief that it has no indemnification obligations
under this Agreement), then the Indemnified Party may settle
or otherwise compromise the applicable claims in its sole
discretion, and the Indemnified Party shall be entitled to
initiate litigation against the Indemnifying Party to
determine whether the Indemnifying Party unreasonably
withheld consent to the proposed compromise or settlement.
§ 11.10.3. Crescent alleges that SOG never informed it
that Langen and SOG were negotiating, and that Crescent's
first notice of settlement negotiations was the Joint Notice
of Partial Resolution filed on January 7, 2019. Crescent
further alleges that SOG refused Crescent's demands for
documents pertinent to settlement negotiations and SOG never
obtained Crescent's approval of the settlement agreement.
With respect to damages, Crescent contends that SOG's
refusal to communicate settlement terms or obtain
Crescent's approval caused Crescent to lose the ability
to determine whether the settlement agreement was reasonable,
appropriate, or justified, causing Crescent damages “in
an amount to be proven at trial.”