Chaffe McCall Secures $4+ Million Arbitration Award for Client in Oil & Gas Indemnity Dispute

Posted on Tuesday, January 20th, 2026 | Posted in Site Blog

Background

Chaffe McCall recently secured a decisive arbitration victory on behalf of a client, a leading insurance provider in the United States and the insurer for Halcon Resources, recovering more than $4 million in defense and settlement costs arising from a catastrophic burn injury case.

The underlying matter stemmed from a fire at a saltwater disposal facility operated by RBJ & Associates, where an RBJ employee was severely burned. The plaintiff filed suit in Harris County, Texas against multiple defendants, including Halcon, alleging that water delivered from Halcon’s oil and gas operations in the Permian Basin contained flammable materials that contributed to the fire.

Halcon demanded defense and indemnity from RBJ pursuant to the parties’ Master Service Contract (MSC). RBJ refused. Travelers provided Halcon’s defense, ultimately settling the case for $2.5 million and incurring approximately $1.5 million in defense costs.

Chaffe McCall was engaged to pursue recovery from Pilot Water Solutions, RBJ’s successor in interest. The MSC required arbitration, and the dispute proceeded before the Hon. Terry Jennings, retired Justice of the Texas Court of Appeals, as sole AAA arbitrator.

Key Takeaways

  • Full Recovery Awarded: The arbitrator awarded all amounts sought, resulting in a recovery exceeding $4 million.
  • Master Service Contract Enforced: The arbitrator rejected arguments that an unsigned Salt Water Disposal Agreement superseded or negated the MSC.
  • Broad Interpretation of Indemnity: Claims “arising directly or indirectly” from prior work were held sufficient to trigger indemnity obligations.
  • TOAIA Defense Rejected: The arbitrator confirmed that the Texas Oilfield Anti-Indemnity Act limits enforceability only to the amount of agreed insurance, rather than voiding indemnity provisions altogether.
  • Strategic Arbitration Success: The ruling highlights the effectiveness of arbitration for resolving complex contractual indemnity disputes in the energy sector.

Chaffe McCall’s Role

Harold K Watson, of Chaffe McCall’s Houston office, led the arbitration on behalf of Travelers. He successfully defeated multiple contractual and statutory defenses and obtained a complete victory for the client. As Harold noted, “The sole AAA arbitrator awarded everything we asked for.”

Chaffe McCall continues to represent insurers and energy companies nationwide in high-stakes indemnity, coverage, and arbitration matters.

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