Lawsuit Demonstrates Why Contract Terms Matter

Oil Giant Invokes Indemnity Clause Against Elwood Staffing

A major oilfield equipment manufacturer is suing Elwood Staffing Services alleging that Elwood refused to honor a broad indemnity agreement, one that requires the staffing firm to indemnify the client for the client's own negligence.

National Oilwell Varco, LP ("NOV") filed suit against Elwood in Harris County District Court on May 21, 2026, seeking compensatory damages, plus attorneys' fees and costs.

Background

According to the petition, attached below, NOV and Elwood entered into a Temporary Employment Services Agreement under which Elwood supplied temporary workers to NOV's facility in Williston, North Dakota. The agreement was NOV's template. The agreement's indemnity clause allegedly required Elwood to defend and indemnify NOV from all claims brought by any worker Elwood placed—including claims based on NOV's own negligence. The language was even written in conspicuous all-caps text to satisfy Texas drafting standards for such provisions:

"AGENCY ASSUMES FULL RESPONSIBILITY FOR AND AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS NOV GROUP FROM AND AGAINST ALL LOSSES RELATED TO PERSONAL INJURY, ILLNESS, DEATH OR PROPERTY DAMAGE WHICH ARISE OUT OF, IN CONNECTION WITH, INCIDENT TO OR RESULT DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT OR THE SERVICES PROVIDED UNDER THIS AGREEMENT, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO, IN WHOLE OR IN PART, BY THE SOLE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR FAULT OF NOV GROUP, THE UNSEAWORTHINESS OF ANY VESSEL OR A PRE-EXISTING CONDITION."

The contract further reinforced the scope of that obligation:

"THE OBLIGATION TO RELEASE, DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS NOV GROUP SHALL APPLY TO ANY SUCH LOSSES, WITHOUT REGARD TO THE CAUSE(S) THEREOF INCLUDING, WITHOUT LIMITATION, THE UNSEAWORTHINESS OF VESSELS, STRICT LIABILITY, ULTRA HAZARDOUS ACTIVITY, BREACH OF EXPRESS OR IMPLIED WARRANTIES, BREACH OF CONTRACT, IMPERFECTION OF MATERIAL, DEFECT OR FAILURE OF EQUIPMENT, DEFECT OR 'RUIN' OR OTHER CONDITION OF PREMISES, OR THE SOLE OR CONCURRENT NEGLIGENCE OR OTHER FAULT OF NOV GROUP."

The petition describes the underlying claims as including negligence, unsafe building design, intentional acts, and exemplary damages and asserts that "Elwood ignored NOV's demand for defense and indemnity and NOV unnecessarily incurred substantial expenses defending [the worker's] claims" and seeks attorneys' fees under both the contract's fee-shifting provision and the Texas Civil Practice & Remedies Code, which allows attorneys' fees in breach of contract cases.

An Insurance Policy Without a Premium

Whether or not NOV's allegations hold up, this contract illustrates a risk that appears in staffing agreements far more often than it should. The indemnity clause potentially amounts to a liability insurance policy for NOV, with Elwood as the insurer. But unlike an insurer, Elwood received no premium for accepting the risk. The worker’s lawsuit claims unsafe building design and intentional acts that are 100 percent attributable to NOV, not the staffing firm. Yet here is the client asking, with a straight face, for Elwood to pay for it all. Adding insult to injury, NOV wants Elwood to pay its attorneys’ fees in this lawsuit, as well as those incurred in defending the underlying lawsuit. And under Texas law, if NOV wins, they will be entitled to attorneys' fees.

There is no doubt that some staffing firms regularly sign client contract templates without reviewing them for overreaching provisions like this one. And they get away with it – until one day they don’t. That is the day when something goes wrong.

The good news is that most clients will agree to modify commercially unreasonable indemnity terms—but only if you ask them to.