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Click here for the full text of this decision FACTS:Following a natural gas explosion on its well in the Gulf of Mexico in 1997, The Houston Exploration Co. sued Halliburton Energy Services for failure to properly perform drill-stem testing operations that led to the blow out. Halliburton said the indemnity provision between it and THEC precluded recover, but the district court found Halliburton’s conduct grossly negligent and thus outside the scope of the agreement. The district court awarded THEC $7 million in damages. This court reversed and remanded with instructions for the district court to first determine if the indemnity provision was executed by an authorized agent of THEC. The contract for the drill-stem testing was executed through a work order. Big, red letters above the signature line stated that the signer was subject to terms and conditions on the back side of the agreement, including payment, release, indemnity and limited warranty. The indemnity provision at issue here was on the back. THEC’s on-site company man signed the work order, as was the usual case between these two parties. Applying Louisiana law, the district court agreed with THEC that although the company may was authorized to initiate the work order, he was not authorized to negotiate the terms of an indemnity agreement. Without implied actual authority or apparent authority to sign the indemnity agreement from THEC, Halliburton’s reliance on this manifestation of authority was unreasonable, the district court ruled in reinstating the $7 million award. HOLDING:Reversed and remanded. The issue here is one of agency by implication, the court finds. Implied agency is created when the agent is deemed to have permission from its principal to “undertake certain acts which are reasonably related to the agent’s position and which are reasonable and necessary concomitants of the agent’s express authorization.” The district court’s ruling was “plainly contrary” to Louisiana law, the court concludes. The court cites Southern States Equip. Co. v. Jack Legett Co. Inc., 379 So.2d 881 (La.App. 4th Cir. 1980), which found implied agency in one instance of signing a receipt when the person who had on 31 prior occasions signed certain receipts with full authority. Here, THEC regularly allowed company men to sign work orders. These men were also vested with “ultimate authority” for the well the order was signed on. The repeated approval of work orders manifests the scope of the company man’s authority. Furthermore, without the man’s consent to the entire terms of the work order, including consent to the indemnity provision, Halliburton would not have performed its services. “In the end, THEC management consented to Halliburton’s release and indemnity provision, despite any earlier misgivings.” OPINION:Jones, J.; Jones, Garza and Benavides, JJ.

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