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[W] Chesapeake Operating8/23/2001
This appeal addresses a contractual choice of law provision in a conflicts of law setting. Chesapeake Operating, Inc. appeals the trial court's summary judgment applying Texas law to an indemnity provision in favor of Nabors Drilling USA, Inc. While the contract provided for the application of Texas law, this oil field rig was located, and the accident occurred, in Louisiana, whose law disfavors oil field indemnity provisions. We reverse and remand.
Chesapeake is the operator of an oil and gas well and Nabors was hired by Chesapeake to drill the well. This case arises from a lawsuit by Danny Alms, an employee of a subcontractor of Chesapeake, for personal injuries received at a well site in Vernon Parish, Louisiana. Nabors was named as a defendant in this suit and subsequently filed a cross-action against Chesapeake seeking indemnity and defense under the Daywork Drilling Contract between Nabors and Chesapeake. This contract contained a choice of law provision that provided for application of Texas law. The contract also contained an indemnity provision.
Nabors filed a motion for summary judgment claiming Texas law applied and that the indemnity provisions were enforceable under Texas law. The trial court granted Nabors' motion and found that Chesapeake was required (1) to reimburse Nabors for reasonable attorney's fees; and (2) to defend and indemnify Nabors in this cause. The trial court later severed this portion of the case from the underlying personal injury suit. This appeal ensued.
In its sole issue, Chesapeake claims the trial court erred in granting summary judgment because Texas law, which the court applied, does not govern this dispute. Chesapeake claims that Louisiana law applies and, under Louisiana law, the indemnity provision in the parties' contract is void and unenforceable.
In DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990), the supreme court explained the effect to be given contractual choice of law provisions. The court observed that Texas recognizes the "party autonomy" rule, which affords judicial respect for the parties' contractual choice of law. See id. at 677. Regarding party autonomy, the Legislature has enacted the following provision:
hen a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. TEX. BUS. & COM. CODE ANN. § 1.105(a) (Vernon Supp. 2000).
Section 6 of the Restatement mandates that, subject to constitutional restrictions, a court will follow a statutory directive of its own state on choice of law. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 6 (1971). The supreme court observed that the party autonomy rule is best formulated in section 187 of the Restatement. See DeSantis, 793 S.W.2d at 677. Section 187 provides:
Law of the State Chosen by the Parties
(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chos
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