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Oasis Oil Corporation v. Koch Refining Company8/23/2001
Appellants, Oasis Oil Corporation and Oasis Transportation and Marketing Corporation ("Oasis"), sold a product manufactured by appellee Chemical Process & Production, Inc. ("CP&P;), to Koch Refining Company ("Koch"). The product allegedly damaged Koch's refinery. Koch brought suit against Oasis, which sought indemnity from CP&P;under chapter 82 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. § § 82.001 - 82.006 (Vernon 1997). CP&P;filed both traditional and no-evidence motions for summary judgment, and the trial court granted summary judgment in favor of CP&P; The dispositive question in this appeal is whether Oasis, the seller of the product, was entitled to indemnity from CP&P; the manufacturer, against loss arising from the product liability action instituted by Koch. Because we find that the summary judgment cannot stand on any ground asserted by CP&P; we reverse and remand.
Factual and Procedural Background
In reviewing the summary judgment record, the appellate court must resolve all factual disputes and indulge all inferences in favor of the non-movant. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Accordingly, although there are numerous factual disputes in this case, the following statement of facts resolves those conflicts in favor of Oasis.
The main parties in the underlying litigation were Whytecliff, CP&P; Oasis, and Koch. Whytecliff owned a large quantity of a naphtha product, which is a hydrocarbon, and Whytecliff contracted with CP&P;to process that naphtha product for sale. Whytecliff's naphtha product was unusually high in organic chlorides, which can damage processing facilities by forming hydrochloric acid during high-temperature processing. Accordingly, Whytecliff had the levels of organic chlorides tested, and provided that testing data to CP&P; Despite the high organic chloride levels, CP&P;nevertheless agreed to accept a fee in exchange for distilling Whytecliff's naphtha product. One of the distillates from CP&P;s processing was a substance called "overheads," also referred to as crude naphtha. CP&P;s distillation process increased the concentration of the harmful organic chlorides in the crude naphtha overheads by four fold.
CP&P;then contacted Oasis and asked if Oasis was interested in buying Whytecliff's crude naphtha overheads. Oasis is an oil gatherer that sells hydrocarbons to Koch, which then further refines the petrochemicals. When CP&P;contacted Oasis about buying the crude naphtha, CP&P;provided Oasis with a certified chemical analysis that identified the product as crude naphtha with certain additional distillates and by-products. This certified chemical analysis CP&P;provided to Oasis did not reveal the presence of organic chlorides in the crude naphtha, and CP&P;did not provide Oasis with the chemical analysis of the organic chloride levels that Whytecliff had provided to CP&P; Oasis purchased the crude naphtha overheads, then sold them to Koch.
Oasis delivered the crude naphtha with high organic chloride levels into Koch's pipeline system. Subsequently, Koch claimed that the high organic chloride levels damaged Koch's plant, and Koch consequently sued Oasis. No party disputes that Koch's claims against Oasis fell within the definition of a product liability action under chapter 82 of the Texas Civil Practice and Remedies Code. See TEX. Civ. PRAC. & REM. CODE ANN. § § 82.001 - 82.006 (Vernon 1997). Ultimately, Oasis settled with Koch for $700,000 and brought a claim for indemnity against CP&P;under chapter 82. See id, at §82.002 (manufacturer's duty to indemnify).
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