HOUSTON – AZA has prevailed at the Supreme Court of Texas on behalf of client Apache Corp. This victory paves the way for Apache to proceed in its arbitration against Wagner Oil to recover in excess of $15 million under an indemnity provision in Apache’s agreement with Wagner Oil.
The April 9 ruling rejects arguments by Wagner Oil to discard an arbitration provision contained in a 2001 purchase and sale agreement for oil and gas wells, mineral leases and fee interests and property to operate the wells. The justices agreed that based on the plain language in the provision, the two parties are bound to arbitrate their dispute over Wagner Oil’s alleged failure to honor its indemnity obligations when third-party surface landowners brought lawsuits for alleged environmental contamination.
After the oil and gas sale transaction, Wagner Oil assigned the assets purchased from Apache to parties related to Wagner. When faced with Apache’s indemnity claims stemming from the third-party environmental litigation, Wagner and its related entities claimed that the assignees were not bound by the arbitration clause in the original purchase and sale agreement.
A trial court initially agreed with Wagner Oil, but on appeal, the Texas 2nd Court of Appeals ruled in Apache’s favor in 2018, holding that the arbitration clause in the purchase and sale agreement applied to the assignees. In Oct. 2020, the Supreme Court of Texas denied Wagner’s request to hear the case, but later reversed and allowed the appeal to proceed. Friday’s opinion in Apache’s favor followed oral arguments that occurred in February 2021.
“The wording in the purchase agreement was clear, and we’re glad that the state’s highest court has agreed,” said appellate attorney and AZA partner Jane Langdell Robinson. “Today’s ruling will allow our client to quickly prosecute its case against the Wagner respondents in the arbitration, where this case belonged from the beginning.”
The case is Bryan C. Wagner et al. v. Apache Corp., case numbers 19-0243 and 19-0244, in the Supreme Court of Texas.
In addition to Ms. Robinson, Apache is represented by AZA partner Tim Shelby and AZA associates Foster C. Johnson and Nathan Campbell.
AZA, or Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, healthcare, intellectual property, and business dispute cases. AZA is recognized by Chambers USA 2020 among the best in Texas commercial law; by U.S. News – Best Lawyers’ Best Law Firms as one of the country’s best commercial litigation firms for nine years running; was named 2019 Litigation Department of the Year by Texas Lawyer; and was previously dubbed by Law360 a Texas Powerhouse law firm. National corporate counsel named AZA one of the country’s best in client service among law firms serving the Fortune 500.