X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS: Cleere Drilling Co. appeals the district court’s bench trial judgment, which rejected Cleere’s claims against Dominion Exploration & Production Inc. and held Cleere liable to Dominion for almost $2 million in damages. These damages resulted from the blowout of Kenaf Industries Unit No. 1 Well, which Cleere had contracted to drill for Dominion. Cleere contends that the district court misconstrued various provisions of the standard form International Association of Drilling Contractors footage drilling contract, July 1998 revision, as revised by the parties and entered into by Cleere as contractor and Dominion as operator. Cleere also contends that the district court erred in various findings of fact. HOLDING: Affirmed in part, reversed in part, vacated in part and remanded. The court affirms that part of the district court’s judgment that holds that the contract never converted from a footage to a daywork basis. The court affirms the part that rejects Cleere’s claims for 1. pre-blowout drilling services (because Cleere never reached “contract footage depth”); 2. daywork services (because the contract never converted to a daywork basis); and 3. the loss of its own property in the hole (because, under subparagraph 18.2, Cleere remains responsible for any loss of its in-hole equipment while performing on a footage basis). The court affirms the part of the court’s judgment that holds Cleere responsible for all necessary and reasonable costs incurred by Dominion in controlling and killing the well and for the differential between the contract cost of drilling the well and the reasonable cost of drilling the replacement well; but the court vacates the quantum of the court’s awards to Dominion for these items and remand for the district court to determine how much of Dominion’s expenditures on these necessary items was reasonable, and thus reimbursable by Cleere. Furthermore, the court reverses the part of the district court’s judgment that holds the contract’s indemnity and release provisions inapplicable for lack of “fair notice”; and the court holds that doctrine irrelevant because Dominion had actual knowledge of the indemnity and release provisions of the contract. The court reverses that part of the judgment that holds the salt water, sand and drilling mud that the blowout spread on the surface of the land did not constitute contamination of the drill site and the surrounding area within the meaning of the contract; the court holds that the presence of the materials in question did constitute contamination within the meaning of the contract. The court vacates the quantum of the district court’s awards to Dominion for costs incurred in the cleanup and restoration of the surface, and remands for the court to determine 1. whether, consistent with this opinion, any portion of Dominion’s expenditures for cleanup or restoration of the drill site and surrounding areas is not attributable to contamination and is therefore Cleere’s responsibility under the contract; and, 2. if so, how much of each such non-contamination expenditure is necessary and reasonable, and therefore reimbursable by Cleere. The court vacates the quantum of the district court’s award to Dominion in reimbursement of payments to Kenaf for landowner damages, and remand for the court to determine 1. whether, consistent with this opinion, any portion of such landowner damages to Kenaf is not attributable to contamination and is therefore Cleere’s responsibility under the contract; and 2. if so, how much of such non-contamination landowner damages is necessary and reasonable, and therefore reimbursable by Cleere. OPINION: Wiener, J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.