Court: District Court, D. New Mexico; May 31, 2016; Federal District Court
Zurich American Insurance Company filed a Motion for Reconsideration regarding a previous ruling that its insurance contract with XTO Energy, Inc. does not violate New Mexico's Oilfield Anti-Indemnity Statute. The Court addressed four primary issues: (i) whether to reconsider the ruling on the statute's applicability, (ii) the need for clarification on Zurich's indemnification obligations, specifically that it should indemnify XTO for liabilities arising from Air Tech’s fault, (iii) the possibility of amending the ruling to permit an interlocutory appeal under 28 U.S.C. 1292(b), and (iv) whether to certify the issue to the New Mexico Supreme Court. The Court reaffirmed its original ruling, stating that it aligns with New Mexico case law. However, it clarified that Zurich must indemnify XTO for liabilities linked to Air Tech's fault. The Court denied the requests for an interlocutory appeal and for certification to the state Supreme Court. Consequently, Zurich's Motion was granted in part and denied in part. The factual background of the case includes multiple parties engaged in service and insurance contracts, and the Court referenced earlier opinions for context.
XTO Energy operates as an oil-and-gas well operator and contracts with various contractors for well operations. Air Tech Drilling, Inc., a New Mexico corporation established in 2006, is a contractor whose corporate status was revoked in 2010. ATD, LLC, another New Mexico limited liability company, was formed in 2006 and converted from a corporation in 2009. Zurich American Insurance Co. insures Air Tech. Employees Scott Manley and Jose Betancur were working at an XTO Energy Well site on November 8, 2012. The Manleys and the Betancurs filed litigation against multiple parties, including XTO Energy, in state court.
On November 8, 2006, XTO Energy entered into a Master Service Contract (MSC) with Air Tech, which required Air Tech to provide specific well-related services. The MSC defines the 'XTO Group' as XTO and its affiliates, co-owners, joint venturers, and other associated parties, excluding the Contractor and its subcontractors. The 'Contractor Group' includes Air Tech and its affiliates and subcontractors. XTO Energy's 2014 complaint for breach of contract and other claims does not assert that XTO or the defendants in the Manley and Betancur complaints are part of the 'Contractor Group.'
Master Contract ¶10 outlines the obligations of the Contractor regarding indemnification and liability. Specifically, the Contractor agrees to release, defend, indemnify, and hold the XTO Group harmless from all claims and actions (collectively termed 'Indemnifiable Claims') related to bodily injury or death of the Contractor Group members occurring in connection with the Work, regardless of the cause, including any negligence or strict liability of the XTO Group. Additionally, the Contractor must indemnify the XTO Group for claims arising from emissions, discharges, or acts of the Contractor Group associated with the Work.
The Contractor's indemnity obligations are to be supported by insurance that meets minimum requirements outlined in Article XI, which must also name the XTO Group as an additional insured and include waivers of subrogation. If any legal restrictions affect the indemnity or insurance limits, the provisions will adjust to comply with applicable law.
Furthermore, a special provision applies for work performed in New Mexico, indicating that indemnification for one’s own negligence is excluded under New Mexico law. In contrast, Texas law governs the Master Contract, excluding its conflict of law rules.
Zurich Insurance issued a commercial general liability policy (Policy number GLO 4391238-03) to Mesa Well Servicing, LP, effective from July 1, 2012, to July 1, 2013, designating Mesa Well Servicing, LP as the Named Insured. The terms "you" and "your" refer to the Named Insured and others qualifying under the policy. The Schedule of Named Insureds includes Air Tech.
Coverage A of the Policy provides that Zurich will pay for damages the insured is legally obligated to pay due to "bodily injury" or "property damage," and it includes the right and duty to defend the insured against relevant lawsuits. However, Zurich has no duty to defend against suits not covered by the policy. Coverage A excludes damages for bodily injury or property damage arising from contractual liability, except for liability the insured would have without the contract or for liabilities assumed in an "insured contract" occurring after the contract's execution.
An "insured contract" is defined as any contract pertaining to the insured's business that includes the assumption of tort liability for another party. "Tort liability" refers to liability imposed by law absent a contract. The Policy expands its definition of "insured" to include anyone required to be an additional insured under a written agreement. Coverage for additional insureds is limited to bodily injury and property damage linked to the Named Insured's operations but excludes professional services related to architecture, engineering, or surveying.
The Zurich Policy stipulates that Air Tech will be reimbursed for reasonable attorney’s fees and expenses incurred due to liabilities under an 'insured contract.' All claims in the XTO Complaint relate to obligations under the Master Contract and Zurich Policy concerning allegations against members of the XTO Group in the Manley and Betancur Complaints. An accident on November 8, 2012, at a well in Eddy County, New Mexico, involved ATD, LLC and Air Tech, whose employees, Scott Manley and Jose Betancur, were present. There is a dispute about whether XTO Energy supervised Air Tech at the site, which is contested in ongoing cases. The Master Service Contract (MSC) indicates that Air Tech/ATD was to act as an independent contractor with full control over its employees and work methods.
Following the incident, Scott and Shanna Manley filed a personal injury complaint against XTO Energy and others in 2013, with the Betancur family filing an intervention complaint in 2014 related to the same event. Both complaints name XTO Energy and various contractors as defendants, asserting claims of negligence and seeking damages for personal injuries and loss of consortium. The Manley Complaint was amended to include the same claims as those in the Betancur Complaint. Both complaints allege that XTO owned and operated the well at the time of the incident, with Randy Green identified as having overall authority at the site. Importantly, neither complaint includes allegations against Air Tech, ATD, LLC, or their employees.
On February 28, 2013, XTO Energy notified Air Tech and ATD, LLC of its defense obligations under the indemnity provision of their Master Contract. Zurich Insurance confirmed receipt of this defense tender on April 3, 2013, acknowledging its responsibilities. XTO Energy later asserted to Zurich that Air Tech and ATD, LLC were required to provide defense and indemnity per the Master Service Contract (MSC). On November 10, 2013, Zurich denied its obligation to indemnify XTO Energy but agreed to provide a defense under a reservation of rights. XTO accepted Zurich's defense, with the law firm Holland & Hart LLP approved for representation. However, Zurich sought to negotiate hourly rates with the firm but did not reimburse XTO for incurred fees and insisted on an agreement before providing defense. A subsequent failure to agree on rates led to continued disputes.
XTO Energy filed a complaint on November 10, 2014, alleging breach of contract and unfair practices against Air Tech and ATD, LLC, as well as breach of defense and reimbursement obligations by Zurich Insurance under the liability policy issued to Mesa Well Servicing. Zurich Insurance responded with a motion for summary judgment on November 11, 2015, arguing that the Master Contract was invalid under New Mexico’s Oilfield Anti-Indemnity Statute. The court denied this motion on March 11, 2016, ruling that the statute only invalidates contracts that indemnify for one's own negligence. It found that the Master Contract's savings clause protected it from this invalidation, confirming that the statute did not void the Zurich Policy but limited its indemnity obligations, preventing Zurich from indemnifying XTO Energy for its own negligence.
Zurich Insurance's Motion requests the Court to reconsider its earlier ruling (MSJ MOO) regarding the interpretation of N.M. Stat. Ann. 56-7-2(A)(3). Zurich contends that the Court's interpretation was unduly narrow, arguing that New Mexico courts have not limited the statute in the same way. They assert that the cases cited by the Court did not specifically address the statute's current text and maintain that, since no appellate court has clarified the statute's implications, the Court should enforce it as written, which would void Contractor obligations sought by XTO. Additionally, Zurich seeks clarification of the MSJ MOO, arguing that it implies broader obligations than intended, specifically regarding indemnification for vicarious liability related to Air Tech's negligence. If reconsideration is denied, Zurich requests the opportunity for an interlocutory appeal under 28 U.S.C. 1292(b) or certification of a question to the New Mexico Supreme Court regarding the statute's scope.
In response, XTO Energy argues that Zurich fails to meet the criteria necessary for reconsideration, asserting that the Court had thoroughly addressed the cited cases and provided sound reasoning for its decision. XTO emphasizes the Court's detailed consideration of public policy and the importance of accountability among parties at construction or well sites to enhance safety.
XTO Energy asserts that the MSJ MOO effectively addresses the primary issue of the case, allowing for a swift resolution or trial. XTO Energy argues against Zurich Insurance's Motion, claiming: (i) no changes in controlling law have occurred; (ii) Zurich has not introduced new evidence; and (iii) there is no clear error to warrant reconsideration. XTO maintains that Zurich is merely restating previous arguments due to disagreement with the Court's decision.
In response to Zurich's request for clarification, XTO notes that Zurich's proposed language omits crucial references to its obligations regarding defense and reimbursement costs for XTO and its affiliates, which XTO argues alters the scope of the order. XTO also opposes Zurich's requests for interlocutory appeal or certification to the New Mexico Supreme Court, asserting that the validity of indemnity provisions is no longer a controlling issue necessary for such appeals under 28 U.S.C. 1292(b) and that Zurich fails to demonstrate substantial grounds for differing opinions.
Zurich Insurance, in its reply, claims it has provided adequate grounds for reconsideration, arguing that district courts possess discretion to revisit interlocutory rulings if there has been a misunderstanding of facts or law. Zurich contends that it has not previously raised its current arguments and that no harm would come to XTO from the relief sought. Zurich acknowledges the omission of language regarding its obligation to defend and reimburse XTO Group members as inadvertent and clarifies that its request aims to prevent misinterpretation regarding indemnification obligations, particularly concerning vicarious liability issues. Zurich maintains that its requests for interlocutory appeal or certification are valid.
Zurich Insurance argues that an interlocutory appeal is warranted as it addresses a controlling issue that is significant to the litigation's outcome, potentially saving the parties from further appeals. It asserts that a question of first impression can meet the substantial grounds requirement under 28 U.S.C. § 1292(b). Regarding state-court certification, Zurich Insurance contends that XTO Energy cannot claim prejudice from a dispositive motion filed prior to meaningful discovery, and that XTO could not have reasonably relied on an earlier ruling to its detriment. Furthermore, Zurich notes that the Tenth Circuit has previously certified questions after adverse rulings, despite general admonitions against this practice.
The document outlines the legal framework for motions to reconsider interlocutory orders, distinguishing three categories based on timing relative to judgment: (i) a motion within twenty-eight days is treated under Rule 59(e) as a motion to alter or amend judgment; (ii) a motion beyond that period is considered under Rule 60(b) for relief from judgment; and (iii) any non-final order is subject to the court's inherent discretion to reopen. There is noted confusion in the legal community regarding the standard and procedure for such motions since the Federal Rules do not explicitly address them, which has led to conflation of terms and inconsistent application. Additionally, it differentiates final judgments from interlocutory orders, highlighting that 'judgment' includes decrees and orders eligible for appeal, thereby affecting the district court's jurisdiction.
For the first twenty-eight days following the entry of judgment, the district court retains jurisdiction to address motions under rules 50(b), 52(b), 59, and 60, superseding the Court of Appeals' jurisdiction. During this period, if an appeal notice is filed, the Court of Appeals will defer action until the district court resolves any post-judgment motions. After twenty-eight days, if an appeal has been filed, the Court of Appeals’ jurisdiction takes precedence, requiring the district court to seek permission from the Court of Appeals to entertain any rule 60 motions. Conversely, if no appeal is filed post-twenty-eight days, the district court may proceed with rule 60 motions independently.
Two primary concerns underlie the restriction on district court authority to reconsider judgments: the need for finality when a case is not appealed, allowing parties to conclude their disputes, and the necessity for a clear jurisdictional transfer to prevent simultaneous jurisdictional claims by both courts. The notice of appeal serves as the critical document for this jurisdictional transition, establishing the appellate court's authority and stripping the district court of control over matters involved in the appeal. The entry of final judgment limits the district court's previously broad jurisdiction in three significant ways.
Finality in legal cases is paramount when no appeal is filed, allowing parties to move on after the judgment, especially once the appeal windows close. When an appeal occurs, a clear jurisdictional handoff from the district court to the Court of Appeals is essential to avoid simultaneous jurisdictional claims, which can lead to conflicting analyses of the same judgment. The notice of appeal is the critical document that signifies this transfer of jurisdiction; it grants authority to the Court of Appeals and removes the district court’s control over the appealed issues. Filing a timely notice of appeal under Federal Rules of Appellate Procedure divests the district court of jurisdiction, rendering any subsequent actions by it null and void. While the final judgment initiates the timeline for filing an appeal, the Federal Rules and the Tenth Circuit limit the district court's jurisdiction during a transitional period following the final judgment. This structured approach allows the district court to address any correctable issues before the appeal, moving from full jurisdiction pre-judgment to limited review for 28 days post-judgment, and ultimately to a restricted Rule 60 review thereafter. The Tenth Circuit's interpretation of Rule 59(e) acknowledges traditional grounds for limited review during this transition.
The law of the case doctrine can be departed from in three specific situations: (1) when subsequent trial evidence significantly differs; (2) when a controlling authority has issued a contrary legal decision; or (3) when the prior decision was clearly erroneous and would result in manifest injustice. In the context of interlocutory orders, the Federal Rules of Civil Procedure do not explicitly address motions for reconsideration; however, Rule 54(b) indicates that a district court can revise any order that does not resolve all claims or parties at any time before a final judgment is entered. This allows district courts significant discretion to reconsider their prior rulings, without any strict limitations, as the Tenth Circuit has not restricted this discretion beyond what Rule 54(b) provides. The law of the case doctrine does not restrict a district court's ability to revisit interlocutory orders, even if the case has been reassigned to a different judge. The standard for reviewing a motion to reconsider is flexible; a court can choose to review the earlier ruling de novo, impose limitations, require the parties to meet law-of-the-case grounds, or decline to entertain the motion entirely. The recommended approach is to adjust the level of scrutiny based on how comprehensively the initial ruling addressed the specific issues raised in the reconsideration motion, considering the time and effort devoted by both the court and the parties involved.
A movant seeking reconsideration of a prior ruling faces a heightened challenge if the ruling pertains to significant issues such as criminal suppression motions, class certifications, or preliminary injunctions, compared to less impactful decisions like short discovery rulings. The Court will evaluate the thoroughness of the prior ruling specifically concerning the points raised in the reconsideration motion rather than its overall depth. A narrow, focused motion is easier to advance than a broad one that merely reiterates previous arguments. The Court will also consider the case's progress, the timely nature of the reconsideration motion, and the reliance the opposing party placed on the prior ruling. As proceedings approach finality, maintaining stability becomes crucial, and reopening cases should protect against reliance on earlier decisions. Specific scenarios, such as significant expenditures by a defendant based on a ruling, will increase the burden on plaintiffs seeking reconsideration. Additionally, the Court should be more open to granting reconsideration if the movant presents new controlling authority, new evidence with justification for its previous absence, or clear indications of error. While these factors influence the Court's review, it should avoid applying a more deferential standard than what an appellate court would use, unless the prior ruling error is deemed harmless or not properly raised by the movant.
A de novo standard of review is warranted even if the Court believes it is insulated from reversal on appeal, as maintaining a potentially unjust prior decision is problematic. The Court must balance this injustice against the reliance interests of the parties based on the earlier ruling. "Restricting its review" focuses on limiting the depth of analysis during reconsideration to conserve judicial resources and minimize the burden on the opposing party, which includes the time and expense already incurred during the original ruling.
In reconsideration motions, the Court should not automatically grant an evidentiary hearing as was done previously; instead, it emphasizes that the burden on the movant is one of production, not persuasion. The movant must persuade the Court to alter its earlier ruling solely based on the evidence and arguments presented before, without relying on the Court for additional fact-finding or research. They must effectively counter both the original ruling's supporting evidence and any new arguments from the opposition. The process is designed to be less equitable for the movant, requiring not only a solid legal argument but also significant effort to sway the Court.
Additionally, under 28 U.S.C. § 1291, appellate courts have jurisdiction over final decisions of district courts to prevent piecemeal appeals, which could disrupt judicial administration. Interlocutory rulings are subject to specific appeal provisions, such as those established in 28 U.S.C. § 1292(b).
District courts have the authority under 28 U.S.C. § 1292(b) to certify certain significant legal decisions for immediate appeal when a judge believes that the order involves a controlling question of law with considerable grounds for differing opinions, and that an immediate appeal could expedite the resolution of the litigation. The district judge must document this belief in writing, after which the applicable Court of Appeals may, at its discretion, allow an appeal if requested within ten days. However, such an application does not automatically stay district court proceedings unless explicitly ordered by the district judge or the appellate court.
A "controlling question of law" is defined as one that pertains to the interpretation of statutory or constitutional provisions, regulations, or common law, rather than factual issues. To qualify, the question must be abstract enough to be relevant to other cases and must materially affect the case's outcome, though it need not be dispositive. Broader interpretations of controlling questions can include issues that impact the existence of claims or the amount of recovery. Typically, questions related to discovery do not qualify as controlling legal questions, as they involve a judge's discretion and should only be reviewed on appeal in instances of clear abuse of discretion.
The legal principles surrounding interlocutory appeals under 28 U.S.C. § 1292(b) are clarified, emphasizing that the term "question of law" refers specifically to the interpretation of statutory, constitutional, regulatory, or common law provisions, rather than the application of facts to the law. A substantial ground for difference of opinion exists when a trial court's ruling contradicts all relevant court of appeals decisions, when there is a circuit split on the issue, when complex foreign law questions arise, or when novel and difficult issues of first impression are presented. However, merely facing an issue of first impression does not automatically constitute substantial grounds for an appeal. Moreover, the existence of conflicting opinions among judges does not negate substantial grounds for appeal.
Interlocutory review is reserved for extraordinary cases that could prevent prolonged and costly litigation. An immediate appeal may materially advance litigation if it can eliminate the need for a trial, simplify complex issues, or streamline discovery. If the litigation would proceed similarly regardless of the court's decision, the appeal does not materially advance termination. The determination of whether an appeal will materially advance the case depends on pragmatic considerations, including the procedural and substantive status of the case.
Additionally, cases suitable for certification typically involve a defense that could swiftly resolve the lawsuit. Examples are provided, including instances where interlocutory appeals were denied after the court had already ruled on the relevant issues. The document also references Rule 12-607 of the Rules of Appellate Procedure, which outlines the powers related to answering appeals.
The Supreme Court has the authority to respond to certified questions of law from various courts, including federal and state courts, if the questions are crucial in ongoing litigation and no controlling New Mexico appellate decision or state constitutional/statutory provision addresses them. This includes cases where federal courts may either predict state court outcomes or certify questions to the state appellate court. The certification is at the discretion of the federal court, which may only occur if the answers are determinative of issues in the litigation and there are no existing controlling precedents. The New Mexico Supreme Court generally accepts certifications when there is no factual dispute and the answer resolves the entire case or a significant issue. Additionally, a federal magistrate judge has indicated that a question is not pending for certification if the district court has already ruled on the issue. Under the Erie doctrine, federal courts must adhere to intermediate state court decisions unless it is evident that the state’s highest court would rule differently, especially when the intermediate court has previously addressed the same issue in a similar case.
Colorado appellate court decisions, along with federal and other state rulings, inform how the Colorado Supreme Court may interpret applicable law. The Tenth Circuit, in Wade v. EMCASCO Insurance Co., clarified that in diversity jurisdiction cases, federal courts must apply state law rather than form their own common law judgments. They are bound to follow the latest decisions from the state’s highest court and, in the absence of such decisions, must predict how the court would rule, taking cues from lower state court decisions and relevant authoritative trends.
The Tenth Circuit typically does not grant certification of state law questions when such requests arise after an unfavorable district court ruling, as seen in Massengale v. Okla. Bd. of Exam’rs in Optometry and Armijo v. Ex Cam, Inc. Requests made after a ruling are generally disapproved, particularly if the party has not sought certification earlier, as demonstrated in cases like Harvey E. Yates Co. v. Powell and Martinez v. Martinez.
In the current case, the court has denied Zurich Insurance’s request to alter its ruling that New Mexico’s Oilfield Anti-Indemnity Statute does not invalidate the Master Contract. The court indicated it would amend its order to clarify Zurich's obligations but would not permit an interlocutory appeal as the requirements under 1292(b) are not met. The court also affirmed that it would not certify the issue to the New Mexico Supreme Court, maintaining its previous rulings. The court emphasized that Zurich Insurance's motion to reconsider its extensive decision faced significant challenges, especially given the comprehensive nature of the initial ruling.
New Mexico’s Oilfield Anti-Indemnity Statute does not invalidate the Master Contract or the Zurich Policy, as ruled by the Court. Zurich Insurance's motion for reconsideration of an interlocutory order does not meet the Court's criteria, particularly in demonstrating a lack of thorough consideration of the issues it raises. The Court examined relevant New Mexico case law and compared it to Wyoming’s anti-indemnity statute, concluding that the statutes aim to promote safety by holding parties accountable for their own negligence. Zurich Insurance's motion was timely, suggesting that XTO Energy has not detrimentally relied on the prior ruling. However, the Court's main legal issues regarding the Master Service Contract's compliance with the statute and the validity of the insurance policy were sufficiently addressed despite limited discovery. Zurich Insurance failed to establish the presence of factors warranting reconsideration: no new controlling authority or evidence was presented, nor was there a clear indication of error by the Court.
The Court did not err in its decision regarding the interpretation of New Mexico’s Anti-Indemnity Statute, specifically section 56-7-2(A)(3). Zurich Insurance's request for certification and interlocutory appeal indicates a substantial difference of opinion exists about the statute's scope, which the Court acknowledges. The Court's ruling was based on established New Mexico law predicting how the state's Supreme Court would interpret relevant issues. Zurich Insurance argues that the Court should consider this matter as if it were a new case, but the Court counters that prior interpretations of the statute provide a clear context. New Mexico courts have consistently held that indemnity agreements cannot relieve an indemnitee from liability for its own negligence but can allow indemnity for the indemnitor's negligence. The Master Contract in question does not seek to absolve XTO Energy from its own negligence but aims to indemnify it against Air Tech’s negligence, aligning with New Mexico's statutory policy of ensuring both parties monitor safety and are responsible for their respective negligence. The Court's earlier findings and interpretations of similar cases support the decision, reaffirming the legality of the indemnity agreement as structured.
New Mexico's policy mandates that each party be accountable for its own negligence, necessitating a reading of § 56-7-3(A)(3) that supports indemnity provisions in contracts. The court concluded that § 56-7-2(A)(3) should only invalidate indemnity agreements that protect an indemnitee against its own direct negligence, not for negligence attributed through vicarious liability. Strict liability for contractors' actions could undermine safety incentives, as contractors need motivation to operate safely. Zurich Insurance acknowledges that contractors are incentivized to maintain safety since they remain liable for their share of fault. However, under the Workers’ Compensation Act, contractors cannot be sued for injuries to their employees, which raises concerns about proper safety incentives when contractors' employees are most at risk. The case illustrates this issue, as Air Tech, shielded from liability due to its employer status, was not named in the lawsuit. If the plaintiffs succeed in their claim, XTO Energy would bear responsibility for Air Tech’s negligence. Thus, allowing indemnity agreements that hold contractors accountable for their own negligence is essential to fulfill statutory safety objectives, aligning with the Supreme Court of New Mexico’s stance on the Construction Anti-Indemnity Statute, which promotes accountability and safety in construction by permitting indemnity for a party's own negligent actions.
In Safeway Inc. v. Rooter 2000 Plumbing and Drain SSS, the court addressed the implications of indemnity agreements in the context of New Mexico law, emphasizing that financial liability serves as a safety incentive for contractors like Air Tech. The ruling highlighted that if contractors could not be held liable, they would lack motivation to protect their employees adequately. The court reiterated the longstanding New Mexico policy of holding parties accountable for their own negligence, referencing case law that supports this principle.
Zurich Insurance's argument against the enforcement of these indemnity agreements was deemed unpersuasive, as it contradicts public policy aimed at enhancing safety. The court clarified its order regarding the Zurich Insurance Policy, stating that the policy does not violate N.M. Stat. § 56-7-2(A)(3) and requires Zurich to indemnify XTO Energy members for liabilities arising from Air Tech's negligence, as well as to cover defense costs. The clarification aimed to ensure the order accurately reflects the court’s intention and complies with state law, confirming that the indemnity provisions in both the Master Contract and Zurich Policy do not necessitate indemnification for XTO Energy’s own negligence. Zurich's obligations are delineated in the policy, which provides coverage for both the named insured (Air Tech) and additional insureds (the XTO Group) for their tort liabilities.
Liability under the Zurich Policy is defined as a legal obligation arising without any contract, specifically when the insured assumes this liability under an "insured contract." Coverage extends to Additional Insureds for “bodily injury” and “property damage” caused by the actions or omissions of the Named Insured, Air Tech, or those acting on its behalf, related to its ongoing operations. The terms “you” and “your” refer to the Named Insured and any qualifying organizations under the policy. The policy coverage for the XTO Group, as an Additional Insured, is restricted to tort liability arising from Air Tech’s conduct; it does not require Zurich Insurance to indemnify XTO for liabilities due to other contractors’ negligence. XTO Energy seeks indemnity solely for Air Tech’s potential fault, not for its own or other contractors’ negligence. The court concluded that Zurich Insurance must indemnify XTO Group members only for tort liability stemming from Air Tech's actions. The court also denied Zurich Insurance's request for an interlocutory appeal, stating that the conditions for such an appeal were not met, as there was no controlling question of law sufficiently articulated by Zurich. The court highlighted that a question of law refers to the interpretation of statutory or constitutional provisions, not merely the application of facts.
A legal question is defined as one concerning the interpretation of statutory, constitutional, regulatory, or common law provisions. Zurich Insurance seeks to appeal a fact-intensive question regarding whether New Mexico Statute 56-7-2(A)(3) invalidates contractor obligations that XTO aims to enforce. However, the court finds that Zurich Insurance's proposed question is too specific and requires factual determination, which does not qualify as a controlling question of law under 28 U.S.C. § 1292(b). The court emphasizes that legal questions must be articulated at a higher level of abstraction to be broadly relevant to other cases. Furthermore, Zurich Insurance has not demonstrated substantial ground for difference of opinion, as there is no conflicting case law; New Mexico courts have consistently interpreted the statute to permit indemnity agreements that exclude indemnification for an indemnitee's own negligence. The court’s prediction regarding how the New Mexico Supreme Court would interpret the statute does not constitute a substantial disagreement merely because Zurich Insurance disagrees with the conclusion. No relevant cases supporting Zurich Insurance's view have been presented, reinforcing that the issue does not warrant interlocutory review.
A single disagreement does not suffice to establish a substantial ground for differing opinion. Zurich Insurance has not demonstrated that an interlocutory appeal will significantly advance the case's resolution. The court has already addressed the controlling legal questions in its order on the motion for summary judgment (MSJ MOO). The issues previously affected the litigation's outcome, but there are no remaining controlling questions. The denial of Zurich Insurance's summary judgment motion is not expected to prolong litigation or necessitate extensive discovery, as the case is streamlined for quick resolution. XTO Energy indicates that the core issue revolves around entering a protective order for information sharing, focusing largely on Zurich's obligations regarding defense costs for XTO and its group members. The resolution largely depends on Zurich’s willingness to expedite the process, as it has already lost on significant issues. If Zurich wishes to contest the details, it may do so post-final judgment, which is anticipated soon. The court cites precedent indicating that a denial of summary judgment is typically not appealable and agrees with this stance in this case. Moreover, the court will not certify a question to the Supreme Court of New Mexico regarding the interpretation of NMSA 56-7-2(A)(3), as the controlling issue has already been decided, negating the need for certification.
Indemnity provisions in the Master Contract are upheld under 56-7-2(A)(3) as they do not require indemnification for an indemnitee’s own fault. The issue is no longer "pending" under 39-7-4, as the district court has ruled on the matter, aligning with Hartford Ins. Co. of the Midwest v. Cline, which states litigation ceases to be pending once a ruling is made. The court followed precedent from the Supreme Court and Tenth Circuit, predicting state supreme court rulings based on recent decisions and lower court guidance. Zurich Insurance’s late request for certification, made after an adverse ruling, contradicts Tenth Circuit principles which generally disallow certification after an unfavorable decision. The court noted that certification is not typically invoked merely due to unresolved state law issues, especially post-ruling. Zurich Insurance, aware of the lack of New Mexico appellate interpretation of 56-7-2(A)(3) when it filed for summary judgment, failed to seek certification earlier and now, after incurring substantial research and argument costs, claims insufficient authority exists for a proper answer. The court will not grant Zurich Insurance’s certification request to the New Mexico Supreme Court.
The Court declined to certify questions regarding New Mexico precedent in Martinez v. Martinez and Arnold v. Farmers, Ins. Co. of Ariz., stating that it could interpret the law without certification. Zurich American Insurance Company’s motion for reconsideration, clarification, and for interlocutory appeal or certification to the New Mexico Supreme Court was partially granted and partially denied. The Court clarified that New Mexico Statute 56-7-2 does not void the Zurich Policy's requirement for indemnification and defense costs for XTO Group members arising from Air Tech's fault. The Court will not amend its previous ruling to change the outcome, permit an interlocutory appeal, or certify an issue to the New Mexico Supreme Court. Additionally, the Court corrected a statement in its Memorandum Opinion and Order regarding the timing of a hearing, clarifying that it issued the opinion without holding a hearing on the motion. XTO Energy did not dispute Zurich's factual assertions and referred to Air Tech and ATD, LLC interchangeably, while Zurich provided evidence showing they are distinct entities. The Court deemed it disputed whether they are the same but noted this was not material to the current case. The Court will treat Air Tech and ATD, LLC as separate entities for the purposes of the Master Contract.
The document details the distinctions among various types of motions related to reconsideration as articulated by Judge Paul J. Kelly, Jr. in the case of *Servants of the Paraclete v. Does*. It identifies three primary categories: (i) motions to reconsider interlocutory orders, which lack a standardized guideline but must be decided before judgment, (ii) motions to reconsider judgments filed within twenty-eight days post-judgment, governed by the *Servants of the Paraclete* standard, and (iii) motions to reconsider judgments filed more than twenty-eight days after entry, governed by Rule 60(b). A potential fourth category exists for motions filed over a year after judgment, as certain grounds for relief under Rule 60(b) expire. To reduce confusion, the Court suggests using specific terminology: "motion to reconsider" for interlocutory orders, "motion to amend or alter the judgment" for timely judgment reconsiderations, and "motion for relief from judgment" for late filings. The Court agrees with Judge Kelly’s approach, indicating that motions labeled as "motion to reconsider" after a final judgment should still be evaluated under the relevant rules. Additionally, the Federal Rules of Civil Procedure outline that findings of fact and conclusions of law can be amended within twenty-eight days of judgment, but this time limit applies only to findings supporting case-ending judgments, not to interlocutory orders. The excerpt also references a New Mexico Supreme Court case, *United Rentals Northwest, Inc. v. Yearout Mechanical, Inc.*, which emphasizes a consistent legislative intent in protecting workers across sectors.
The Court upheld the validity of the Master Contract under New Mexico law, emphasizing that it mandates each party to be responsible for its own negligence. The contract does not require Air Tech to indemnify XTO Energy for its own fault or negligence, particularly in scenarios where XTO Energy may be found entirely at fault or where it inadequately supervised Air Tech. The Court clarified that while Air Tech must indemnify XTO Energy for its own faults, it is not liable for XTO's fault, thus aligning with New Mexico's policy of personal responsibility for negligence.
The Court noted that New Mexico law, specifically § 56-7-2, does not void agreements that allow for indemnity for one party's fault as long as it does not extend to indemnifying the indemnitee for its own direct negligence. The Court reiterated that vicarious liability does not equate to direct negligence, allowing for the possibility of indemnity when one party is liable under respondeat superior. Ultimately, the Master Contract complies with New Mexico law by not requiring indemnity for direct negligence, thus ensuring that each party remains accountable for its own actions.
