Andrews Myers Monthly Law Alert


November 2017

Be Careful Out There: Bad Trends in Oilfield MSA Indemnity Clauses
By Champe Fitzhugh and Andy Harris

In the oil patch, the pendulum of leverage between operators and service providers never stops swinging.  In the heyday of $90+ per barrel WTI crude pricing, the typical master services agreements that service companies signed contained indemnity and other provisions that were relatively friendly to the service providers.  The last few years have not been as kind to the service providers.  As a result, a number of operator-drafted master service agreements are now designed to minimize the operator’s obligations while making the full extent of those of the service provider uncertain and potentially expansive.

In particular, two recent trends are: (1) operators trying to remove themselves from the indemnity chain in the case of mutual indemnity obligations where one of the service provider’s employees is injured or suffers property loss as the result of the actions of another service provider; and (2) operators removing provisions that protect service providers from liability for reservoir damage, blowouts and wild well control, types of damage for which service providers cannot typically obtain affordable, if any, insurance coverage.  Issue (1) is addressed here.
For basic background, Chapter 127 of the Texas Civil Practice & Remedies Code is often referred to as the Texas Oilfield Anti-Indemnity Act (“TOAIA”).  When it was first enacted, it was difficult for service providers (“contractors” in the TOAIA) to negotiate with the operators of oil and gas well sites, so many service providers were required to fully indemnify operators for all acts and occurrences at a well site, even those caused by the sole negligence of the operators.  In response, the Texas Legislature created the TOAIA to restore some parity between the service providers and operators. However, the TOAIA has now been amended several times as the insurance market reacted to this parity... Read More

Are You Prepared for the Next Major Crisis?
By Tony Stergio and contributing author Dennis Winkler of Winkler Public Relations

It would have been difficult for anyone to avoid the dramatic images of Hurricane Harvey’s impact on human life, from the positive stories of neighbor-helping-neighbor to the negative impact on lives, homes, automobiles and even businesses. As time passes and people begin to recover, Andrews Myers wants its clients to learn from these events and plan for business disruptions caused by a variety of crises.
To this end, Andrews Myers and Winkler Public Relations are working together to review the elements of our clients’ crisis planning, response, and recovery. We have reviewed several high-profile crisis incidents that impacted business with an eye towards helping our clients avoid those crisis pitfalls.
During Hurricane Harvey, for example, a number of our clients were directly impacted, with employees displaced and offices closed for several days.  Part of any crisis management plan should deal with the potential for such office closures.  Wage and hour laws require employers to pay exempt employees their full salary for any week in which they worked for any portion of the workweek.  Thus, employers cannot dock exempt employees’ pay for days not worked due to Harvey-related office closures.  The law, however also states that employers need only pay non-exempt employees (generally, hourly employees) for time actually worked; non-exempt employees’ pay, therefore, can be affected by Harvey if the employer so chooses.  Employers can also require both exempt and non-exempt employees to use PTO in times of inclement weather or natural disasters... Read More.

Blockchain - Appearing in Public and Private Business Sectors
By Susan George and Katie Gourley

Buzz continues to surround blockchain technology and how it is poised to explode for use across various industries. The buzz exists for good reason, and blockchain technology should not be discounted as irrelevant in any sector of the business world. 
A broad overview of the steps in a blockchain transaction can be found here. Beyond how it works, an understanding of what blockchain is supposed to do is helpful toward understanding the practicality of how it can be adapted. 
“Blockchain” refers to a type of technological platform that hosts a particular universe of peer-to-peer transactions. The first and most notable of these networks is the Bitcoin network, where participants can complete sales transactions using the Bitcoin digital currency.  However, a blockchain platform could be created to host all or part of many different types of transactions.
The technology is described as “distributed ledger” technology. Transactions on a blockchain platform are recorded as successive ledger entries.  Participants of a particular blockchain network are accessing and receiving all ledger entries as they occur on the platform, in real time, and all entries are moving in the same direction (as new links on the chain). No one person is managing the ledger—the platform is designed to manage itself. This transparency, along with cryptography measures that happen before a ledger entry can attach to the chain, give blockchain networks the reputation of being immutable or extremely secure.  The accessibility and security make the technology especially appealing to automate two functions otherwise served by people: record-keeper and trusted intermediary... Read More

Forum Selection Clauses in Construction Contracts: Validity vs. Enforceability
By Lauren Scroggs

Construction contracts often contain terms designating the forum for future disputes. And, in many cases, the forum designated is one distant from the place where construction actually takes place. The Texas Legislature, like many other state legislatures, has taken steps to statutorily void these types of clauses, ensuring construction disputes are litigated at home. Specifically, Texas Business & Commerce Code § 272.001 states:

If a contract [that is principally for the construction or repair of an improvement to real property located in this state] contains a provision making the contract or any conflict arising under the contract subject to another state’s law, litigation in the courts of another state, or arbitration in another state, that provision is voidable by the party obligated by the contract to perform the construction or repair. 

Notwithstanding, litigants regularly seek to enforce forum selection clauses at odds with this statute and other similar statutes across the country.  In so doing, they rely heavily on precedent favoring enforcement of forum selection clauses absent particularly unfair or unjust circumstances. This argument, however, tends to put the cart before the horse... Read More.

Congratulations Are in Order  

Andrews Myers is pleased to announce that Ben Westcott, Co-Managing Shareholder, has been selected as a new Associate Board Member for the 2018 Houston Contractors Association Board of Directors. Ben will be officially sworn into office in December by Harris County Judge Ed Emmett.  Congratulations Ben!

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