Tax Indemnity Contract Enforced

cms's exploration and production operations was located off the west coast of arrangement with equatorial guinea in which cms and its co-venturers seller [cms] agrees to protect, defend, indemnify, and time-barred. withholding taxes for the month of december 2001. cms oil had only accrued and (ii) the amount of any net operating loss, net capital thus, the court agrees with cms, and the district court, that the thus, in consideration of the tax audit settlement, which cancelled all tax claims this section 7.03 unless such claim is first made before required cms to warrant the amount and availability to marathon of certain february 10, 2010 operating losses, and breach of seller's representations, warranties and covenants, was not texas law obliges courts to consider the circumstances prior to and e.g. production paid in 2007 "is indisputably `attributable to the time period prior to january by cms. on january 21, 2005, marathon notified cms that it had made the the spa's definition of "taxes", though broad, does not include net operating __________________ reduced by $11,000,000, which resulted in a revised net operating loss of instead, after all of the meetings and drafts exchanged and for indemnity claims is the date on which the indemnitee suffered damage, such under texas law, claims for indemnity are governed by the four-year for this payment and again denied marathon's request for indemnification as to because the taxes at issue resulted from income that marathon generated in provisions. cms's prepared financial documents showed that cms had a large therefore, a condition precedent to suing cms on that claim. thus, marathon cms contends that we should affirm summary judgment in its favor 4 notwithstanding anything to the contrary in this within a taxable period prior to closing. regular flow of income and apply methods of accounting, app.�dallas 2003, pet. denied). a contract is not ambiguous when the contract 9 of the spa, and the custom and usage evidence as to the interpretation of marathon argues that this "unusual claim presentment clause" creates a texas law governs this dispute under the choice-of-law provision of upon receipt of the final settlement amounts [including the withholding tax on january 15, 2002, but did not file suit to recover the payment argues that these statements lend support to its broad interpretation of the tax taxes, tax items, and tax attributes. case: 09-20034 document: 00511024756 page: 19 date filed: 02/10/2010 district judge of the eastern district of louisiana, sitting by designation.1 january 1, 2002, . . . . required cms to expressly warrant the amount of the net operating loss and to accepted meaning of "taxes attributable to [a] time period," unless the spa all taxes resulting from the transaction contemplated deduction is reduced or disallowed by the relevant corp., 234 f.3d at 902. "a genuine issue of material fact exists `if the evidence $2,750,000 tax settlement. after marathon filed a motion for partial summary agreement, no claim for taxes shall be permitted under section 7.03 provides that "seller [cms] hereby agrees to ... indemnify practitioners and to the sophisticated parties here. further, the tax laws of the united states f i l e d 2 case: 09-20034 document: 00511024756 page: 11 date filed: 02/10/2010 __________________ marathon is not entitled to indemnity for its payment of $2,750,000 in taxes attributes." in fact, during negotiations prior to execution of the spa, marathon 15 extent such taxes exceed the amount reserved for within the meaning of the parties unambiguous agreement. while the tax audit defendant - appellee prior negotiations is foreclosed by fundamental maxims of contract barred because it was filed more than five years after the payment of the again, we disagree. marathon paid $184,394.10 in withholding taxes for which it was not reimbursed court determined that the claim was time-barred because marathon paid the proposed tax and indemnity provision be changed to expressly require cms to condition precedent: under 7.03, marathon insists, its presentment of a claim for b. case: 09-20034 document: 00511024756 page: 1 date filed: 02/10/2010 cms was reviewing the claim. on october 3, 2006 cms denied marathon's tax credit available for carryback or carryforward that do not audits for 1997-2001, marathon insists, the payment was attributable to the indemnifying marathon for net operating loss reduction was included in the final on october 31, 2001 cms and marathon e.g. holding limited case: 09-20034 document: 00511024756 page: 16 date filed: 02/10/2010 indeed, the supreme court of texas has firmly stated "a specific accrual rule to marathon's right to sue, that fact would not necessarily change the date of indemnity provision: because the $2.75 million was paid in settlement of the tax right to sue did not depend on cms; rather it was marathon's own conduct that delayed suit. until august 15, 2007. marathon maintains that the district court applied the to pay . . . (c) any liability arising from a breach by isolating the defined terms, section 7.03(a) obligates cms to on marathon's $2.75 million claim because the spa and the circumstances claim is time-barred. if it accrued in 2006, it is not. district court erred in determining that its claim to recover its payment of applicable extensions) for the taxable period to which a party's right to sue does not depend on the actions of another party, even a condition the spa, on its face, distinguishes between these terms seriously undermines registration, minimum, alternative or add-on minimum, 12 not included in the final spa. withholding tax payment, and requested indemnity for $184,394.10. on receipt provided, "will result in additional taxes paid to the state of usd $2,750,000." the doctrine provides that:11 losses. instead, net operating losses are "tax items" or "tax attributes." that7 8 9 commencement of an action for a stated period of time, or (2) require some third 2002; cms oil was renamed marathon e.g. production. inc., 44 f.3d 308, 312 (5 cir. 1995); crawford v. formosa plastics corp., 234th "taxes . . . attributable to" a time period is supported by the structure and pursuant to its tax audit settlement with equatorial guinea. marathon insists that the spa's indemnity provision dictates a "tax attributes." as previously discussed, experienced tax would preclude summary judgment in cms's favor. case: 09-20034 document: 00511024756 page: 10 date filed: 02/10/2010 hand, no indemnity obligation was triggered where, as here, a reduction in a tax in the record, which shows that the parties used the terms in section 7.03(a) in a technical the spa's terms, and the circumstances surrounding their (ultimately, marathon's breach of contract contention would be more persuasive cms submitted operative usage evidence that informs the meaning marathon e.g. holding limited and marathon e.g. production (collectively,2 agreement, and its subsequent utilization is not a tax event the settlement agreement states, in part:6 case: 09-20034 document: 00511024756 page: 4 date filed: 02/10/2010 contract shows them to be used in a technical or different sense. heritage furthermore, even if marathon's demand for indemnification were a condition what they intended the contract language to mean. id. at 518 (citation omitted). payment of "[t]axes attributable to the time period prior to january 1, 2002" ii. standard of review limitations purposes is dispositive here. the latest possible accrual date for marathon) are subsidiaries of marathon oil company. for cms's breach of the tax indemnity provision of the spa as to $184,394.10 in result of marathon's settlement of equatorial guinea's tax audit claims that finally, marathon also proposed a provision that would have tax settlement claim. later, the district court granted cms's motion for its assets for equatorial guinea income tax purposes, attributable to the tax year in which the tax income was earned; because the we review a district court's grant of summary judgment de novo, tax audit issues for the years 1997-2001. the settlement agreement provided receipts, license, payroll, employment, excise, severance, the district court's grant of summary judgment in favor of appellee, cms case: 09-20034 document: 00511024756 page: 6 date filed: 02/10/2010 to section 4.14 stated: language of the spa suggests that the parties intended to create a condition smith int'l, inc., 490 f.3d at 388-89. marathon paid the withholding taxes more precedent that delays the date of accrual fails.12 iv. conclusion (m) schedule ________ sets forth as of the date hereof (i) spanned the period 1997-2001. incurred its debt when it paid the withholding tax in january 2002. marathon turboff v. gertner, aron & ledet invs., 840 s.w.2d 603, 612 (tex. app.--corpus of the spa confirms that the parties used to the term "attributable to" as a technical term. tax payment accrued in october 2006, when cms denied marathon's request for comprised that infrastructure; the income generated through sales of oil, gas, and condensate id. hold harmless buyer . . . from and against, and agrees intent, as well as the defined terms of the spa. and we are impressed that the lengthy negotiations, marathon and equatorial guinea resolved all outstanding providing marathon with a "full tax indemnity" for any taxes relating to cms's period of precedent to marathon's filing suit for indemnity. section 7.03 simply provides undisputed negotiations regarding marathon's changes to the spa were rejected. the very least, its expert's testimony creates a fact issue as to the meaning of section 7.03(a) or other items" required to be included in a tax return. 1, 2002.'" his conclusion, however, is belied by the terms of the spa, as informed by the indemnity" or that marathon's proposed edits were redundant, offer us no guide on august 15, 2007. furthermore, although the parties agreed to include a representation as to tax provision. furthermore, marathon's withholding tax indemnity claim was time- if it applied to a provision dealing with matters other than indemnification.) notwithstanding anything to the contrary in this would have obligated cms to indemnify marathon for any breaches of cms's seller of its representations, warranties and covenants consider "oral statements by the parties of what they intended [the contract] to circumstances include prior negotiations. see id. at 518-19 (considering written christi 1992, writ dism'd). in may 2007. on june 15, 2007, cms denied marathon's request for indemnity observation is consistent with the spa's defined terms; the record confirms that district court favored cms's proffered interpretation of "attributable to" based by payment of a claim. smith int'l, inc., 490 f.3d at 388-89. marathon shows that the phrase was used in a technical or different sense. appeal from the united states district court 19 indemnify it for any reduction of the loss and breach of the warranty. critically texas' clear rule regarding the accrual date of indemnity claims for this requested indemnity for cms's representations of "tax items" was likewise fiscal claims and tax assessments from 1997 to 2001 shall be the claim relates or if no such statute of limitations case: 09-20034 document: 00511024756 page: 15 date filed: 02/10/2010 representations of "tax items" in section 4.14(a) of the spa. the proposed 17 marathon advances a variation on its prior argument in support of marathon's tax settlement required a reduction in net operating loss for the this proposed provision also was not included in the final spa. indemnify against liabilities and those that indemnify against damages. id. by tax attributes are things such as a net operating loss or foreign cms on marathon's tax settlement indemnity claim. we affirm the district alba companies for the period prior to january 1, 2002 1, 2002. marathon advocates a more expansive interpretation of the tax marathon's claims with prejudice was then entered. marathon now timely the record confirms that the annual accounting period doctrine is well-known to tax 2005, thereby making them fall outside the scope of the spa's indemnity meanwhile, shortly after the sale in january 2002, marathon to january 1, 2002." the issue, then, is whether marathon's payment in terms in the spa in interpreting the indemnity provision. $2.75 million tax settlement payment to equatorial guinea is "attributable to" marathon e.g. holding limited and "tax attributes", and "tax items" are materially distinct terms. this10 cms was not obligated to indemnify marathon for $2,750,000 in the expiration of the statute of limitations (including contract construction. gulf ins. co. v. burns motors, inc., 22 s.w.3d 417, 422 wrong accrual date; marathon argues that its claim to recover the withholding section 7.03(a), are disputed and do not support summary judgment in favor of taxes paid to the government as a result of its settlement of tax audit claims observe that language in a contract is not construed to create a condition case: 09-20034 document: 00511024756 page: 14 date filed: 02/10/2010 plaintiffs - appellants is such that a reasonable jury could return a verdict for the non-moving party.'" 7.03 indemnification by seller. seller hereby agrees to precedent if another reading of that language is possible. powers v. powers, 714 government pursuant to equatorial guinea tax law. during that period, cms oil had when cms denied marathon's claim for indemnity. if it accrued in 2002, the case: 09-20034 document: 00511024756 page: 5 date filed: 02/10/2010 find that the district court properly considered the operative uses of the relevant attribute, not a tax item as defined in the stock purchase a settlement statement, setting forth the amount of withholding taxes accrued granting summary judgment in favor of cms, is affirmed. is "attributable" under section 7.03(a) -- is what drives the parties' dispute. the assessment, and collection capable of practical operation. taxes on the settlement statement . . . . judgment and cms replied, however, the district court withdrew its prior operating loss warranty and the requested net operating loss indemnities. provision: the record shows that marathon's proposed language would have the period in which the income to be taxed was earned, the year 2005. the plain applies to claims for indemnification." ingersoll-rand co. v. valero, 997 s.w.2d judgment) on marathon's claim for withholding taxes; the district court held that period 1997-2001, but led to additional taxes for 2005. establishes that "attributable to" should be given its plain and ordinary meaning, or that, at cms's refusal to indemnify marathon for its payments to the republic of cms. we disagree. the spa's plain language, informed by the uncontroverted cms enterprises company, judgment or debt.'" id. at 389 (quoting tubb v. bartlett, 862 s.w.2d 740, 750 limited and marathon e.g. production limited (collectively, "marathon") appeal losses and a payment of additional tax as a result. marathon, in communication at the time of the spa closing, cms had provided marathon with negotiation, support cms's proposed construction of the disputed provision. we [marathon] and agrees to pay ... any taxes... attributable to the time period prior in the united states court of appeals accrual date for its indemnity claim. therefore, its indemnity claim is time- 203, 210 (tex. 1999). this specific accrual rule, we repeat, establishes that the judgment (and denied marathon's motion for partial summary judgment) on the as by payment of a judgment.'" id. at 388-89 (quoting ingersoll-rand co. v. __________________ remarks generally that tax indemnity clauses are used to "allow a prompt closing of the sale, statute of limitations for actions on a debt. tex. civ. prac. & rem. code � case: 09-20034 document: 00511024756 page: 12 date filed: 02/10/2010 indirect interest in the relevant alba company for the case: 09-20034 document: 00511024756 page: 8 date filed: 02/10/2010 case: 09-20034 document: 00511024756 page: 18 date filed: 02/10/2010 "tax attributes," which included net operating losses. the proposed subpart (m) 7.03 provide: indemnity claims is the date on which the indemnitee suffered damage, such as of the spa. we disagree. leightman concluded that the $2,750,000 in taxes that marathon disability, real property, personal property, sales, use, transfer, the stock purchase agreement does not contain a definition of affirm the district court's grant of summary judgment in favor of cms. accrue? cms argues that it accrued in january 2002, when marathon paid the exists, prior to the date on which such claim is f.3d 899, 902 (5 cir. 2000). summary judgment is appropriate when "there isth 7.03 already provided an indemnity as to any taxes that the companies might be required to indemnify marathon for certain tax increases that might result from a reduction guinea. specifically, as of december 31, 2000, cms showed a net operating loss clerk party to take some action before the plaintiff can sue such that the resulting this section 7.03 unless such claim is first made before october 3, 2006, cms formally denied marathon's claim for indemnity for the marathon's first issue on appeal calls on us to determine whether district court ruled in cms's favor on both issues on summary judgment. i. facts and proceedings that marathon e.g. production's $29,413,997 in net operating losses would be than five years before it filed this suit. therefore, its claim for indemnity is tax indemnity provision in a stock purchase agreement (spa). in the district (tex. 2000). in construing a written contract, the court's task is to ascertain the [cms] shall be liable for any tax occurring after erred in determining that cms was not obligated to indemnify marathon for its 11 provisions will extend the statute of limitations only when they either: (1) bar enterprises company. marathon sued cms for breach of contract arising out of interpretation. it is well-settled, and we underscore again, that courts may not dorsett, 164 s.w.3d 656, 662 (tex. 2005); frost nat'l bank v. l&f distributors, case: 09-20034 document: 00511024756 page: 17 date filed: 02/10/2010 any net operating loss, net capital loss, unused investment credit or other credit...." companies and the alba companies for equatorial $184,394.10 in withholding taxes was time-barred. unpersuaded, we reject both furthermore, indemnity agreements are strictly construed in favor of the practitioners regard a net operating loss carryforward as a tax indemnity is a condition precedent to cms's duty to indemnify marathon and is, requested indemnity from cms for the payment. cms notified marathon that exists, prior to the date on which such claim is the indemnitee suffered damage, such as by payment of a claim or judgment. of $22,000,000, which cms represented to marathon had a tax asset value of $2.75 million tax settlement payment. marathon further contends that the the negotiations leading up to the sale focused on the tax indemnity companies from and against, and agrees to pay (a) any in the same draft, marathon also proposed adding a provision that contract language. city of pinehurst v. spooner addition water co., 432 s.w.2d the expiration of the statute of limitations (including energy corporation, an oil and gas exploration and production company, was the without the buyer having to perform time consuming tax audits, and reviews of the tax any "taxes attributable to [a time period]", section 7.03(a) appears to call for as to the meaning of the spa. accordingly, the alleged oral representations do limited all of its equatorial guinea assets through a stock sale.2 3 marathon e.g. production limited, contractual tax indemnity obligation. appellants, marathon e.g. holdings for taxes paid for income that was earned before january 1, 2002. on the other oral promises of "full indemnity" made by cms during prior negotiations. this (tex. 1968)(quoting restatement of contracts � 230 (1932)). the oral statements to the republic of equatorial guinea to settle certain tax audit claims; and (2) $2,750,000 settlement (though paid in 2007) is "attributable to" 2005. we agree. resources, inc. v. nationsbank, 939 s.w.2d 118, 121 (tex. 1996)(citations therewith) of the companies or the alba companies this litigation seeks to resolve a dispute concerning the scope of a reasonable inferences in that party's favor. see crawford v. formosa plastics the issue becomes, then, when did marathon's claim for indemnity spa. pursuant to the spa, marathon and cms closed the sale in january opined that the parties' knowledge of the annual accounting period doctrine at the execution 8 parent company of cms oil and gas company. until january 2, 2002, one of attribute leads to a higher tax for a period after january 1, 2002. accordingly, attributes" broadly and further would have specifically indemnified marathon provision). courts, however, may not consider parties' oral statements about settlement of the equatorial guinea government's tax audit claims constitutes discussions between the parties, the spa's final tax indemnity provision4 allegedly made by cms representatives that marathon would have "full tax in this texas diversity breach of contract suit, we must interpret a like the district court, we are unpersuaded. nothing in the sense, with an understanding of the realities of customs and principles of taxation. mr. salch loss, unused investment credit or other credit avoidance of doubt, any taxes of the companies or the marathon's proposed construction of section 7.03. but there's more. the s.w.3d at 422. which they originate.... __________________ iii. withholding taxes paid by marathon for the month of december 2001. the $184,394.10 in withholding taxes. marathon contends that the district court int'l, inc., 490 f.3d at 388. two types of indemnity provisions exist: those that contract their plain, ordinary, and generally accepted meaning unless the delay is beyond the plaintiff's control. id. neither situation is applicable in this united states court of appeals indemnity when marathon pays taxes (as defined by the spa) for the period with all of the issued and outstanding shares of its cayman island companies --3 of cms's net operating losses. in particular, marathon proposed that section first year that marathon earned income sufficient to pay taxes was 2005, the agreement, no claim for taxes shall be permitted under the basis of the companies and the alba companies in indemnified parties, the companies and the alba indeed, even if the spa required formal demand for payment, marathon's12 might be discovered in marathon's ongoing tax due diligence as to the companies. available to buyer. withholding tax. marathon urges that we find that it accrued in october 2006, valero energy. corp., 997 s.w.2d 203, 207 (tex. 1999)). under a damages backward or forward to earlier or later time periods. on the other hand, tax attributes, like had requested inclusion of a new section 4.14(m), which would have defined "tax it is the essence of any system of taxation that it should produce case: 09-20034 document: 00511024756 page: 9 date filed: 02/10/2010 surrounding its execution reveal that the contracting parties, informed by well- considered closed and final and not subject to future audit. no genuine issue as to any material fact" and "the moving party is entitled to cms oil's net operating loss had increased to $29,413,997. the government5 statements to manufacture a disputed issue of material fact as to the parties' salch explained:10 language of the spa, informed by the parties' prior negotiations and the usage marathon's suggested proposals, which would have included indemnity for net fifth circuit for the month of december 2001, which were due to be paid to equatorial guinea pay if such taxes were attributable to the time period prior to january 1, 2002. several times for 1997-2001, marathon agreed to and paid to equatorial guinea $2,750,0006 estimated or other tax of any kind whatsoever, including any 16 the final spa does not include a definition for "tax attributes." however,9 evidence, clearly establishes that cms was required to indemnify marathon only parties' dispute regarding the proper definition of "claim" in section 7.03, we parties intended for cms to indemnify marathon for any changes to net case: 09-20034 document: 00511024756 page: 13 date filed: 02/10/2010 interest, penalty or addition thereto, whether disputed or not. explained tax definitions and practices applicable in international transactions, indemnitee has suffered damage or injury by being compelled to pay the the parties were aware of the operative usages of the terms "taxes" and "tax this lawsuit followed. the district court originally denied cms's related to the years 1997-2001, the taxes were owed on income generated in marathon contends that the facts and circumstances surrounding the execution in the spa, which clearly used these terms in their technical sense. leightman simply not present a fact issue as to the construction of the disputed provision that in january 2002. on january 15, 2002, marathon paid $245,825.39 in contract. city of pinehurst v. spooner addition water co., 432 s.w.2d 515, 518 stock of three cayman island companies that held title to oil and gas reserves in section 4.14 and article vii. indemnify marathon for the withholding taxes paid. therefore, marathon marathon's claim for indemnity was time-barred. final judgment dismissing according to the spa, "tax" or taxes":7 before higginbotham and stewart, circuit judges, and feldman,1 of "attributable to." this -- the time period to which the $2.75 million in taxes time period prior to january 1, 2002 (including, for the negotiations between the parties in order to determine the meaning of a contract 2007). texas law instructs that we must look to the contract's indemnity uncontroverted usage evidence. in focusing on the business purpose behind tax indemnity ltd., 165 s.w.3d 310, 311-12 (tex. 2005). in so doing, we give the terms of a settled tax practices, did not intend to require the indemnification claimed. usage evidence further informs the parties' intent regarding its use the second issue we take up is whether marathon's separate claim doctrine, but asserts that it has no application here. marathon's argument finds no support needed, and that such language was redundant, because cms's prior version of paragraph court. intervals. only by such a system is it practicable to produce a cms was not in breach of the contract, the argument goes, until it refused to was not large enough to overcome those substantial operating losses. withholding tax payment. for indemnification for payment of withholding taxes is time-barred. the district to decide this question, we must look at the plain, ordinary, and generally produced oil, gas, and condensate offshore for export and sale. respect to which liability to pay the tax arises. this interpretation of the phrase that are set forth on schedule 4.14) but only to the motion for partial summary judgment on marathon's indemnity claim for the the spa defines "tax items" as "items of income, gain, loss, deduction, credit,8 case: 09-20034 document: 00511024756 page: 2 date filed: 02/10/2010 provides: principles of taxation. indeed, leightman fails to refute, or even address the testimony of the spa. indemnity agreements are construed under the traditional rules of the parties' contractual indemnity provision obligated cms to indemnify a. while common, do not always "serve to extend the statute of limitations." 71 $61,431.29 in withholding tax liability for december 2001. as a result, indemnity. finding that the district court applied the correct accrual date, we absent from the final draft of the spa, however, are marathon's requested net district judge of the disputed provision: cms's expert, stephen salch, a tax attorney, applying these principles, we turn to the spa's indemnity provision. "attributable to" the tax year in which the taxed income was earned; taxes are not carried parties' prior negotiations in drafting the spa provide the relevant context for accrual. as explained in moreno v. city of el paso, notice of claim provisions, case: 09-20034 document: 00511024756 page: 7 date filed: 02/10/2010 provision to determine the correct accrual date of an indemnity claim. smith otherwise barred by law. way of contrast, under a liability indemnity provision, "the indemnitee's right to of a judgment, whether or not the indemnitee has yet suffered actual damages, december 31, 2001 to the extent a net operating loss items (which include net operating losses), the final spa did not include 5 (tex. app.--el paso 1993, writ denied)). at the latest, then, the date of accrual (but only in an amount proportional to seller's direct or 2005, cms maintains, those taxes are attributable to the period after january 14 case: 09-20034 document: 00511024756 page: 3 date filed: 02/10/2010 it is understood, however, that seller [cms] shall pay africa, in the republic of equatorial guinea; cms had a contractual see moreno v. city of el paso, 71 s.w.3d 898, 902-03 (tex. app. 2002) (explaining that when indemnity provision. we disagree. marathon's attempt to invoke oral its withholding tax indemnity claim: because its claim is for breach of contract, spa, cms representatives orally stated that marathon's proposed language as to net and had ownership interest in a liquefied petroleum gas plant located in equatorial guinea of: (1) $2,750,000 to in settlement of tax audits; and (2) within the meaning of the spa. if so, cms is obligated to indemnify marathon. from 1997 through 2001, cms oil filed corporate income tax returns with the5 stock, capital gain, petroleum profits, value added, franchise, equatorial guinea. on january 3, 2002 cms sold to marathon e.g. holding sue does not accrue . . . until liability becomes `fixed and certain, as by rendition of the tax indemnity provision of the spa as to $2.75 million that marathon paid burnet v. sanford & brooks co., 282 u.s. 359 (1931). pursuant to this doctrine, taxes are only indemnity provision, "the indemnitee's right to sue does not accrue `until the representatives orally stated that they were providing marathon with a "`full tax court, marathon sought to recover from cms on two claims: (1) for cms's breach mean" in determining the meaning of an otherwise unambiguous integrated marathon for $2.75 million in taxes paid to equatorial guinea in 2007 as a appeals. while marathon's claim is for breach of contract, it relates to a subsection (c) of section 7.03 stated: withholding tax. for the foregoing reasons, the judgment of the district court, memorandum and order and granted cms's motion for partial summary case. therefore, marathon's argument that section 7.03 creates a condition marathon's requested indemnity for a breach of that specific representation. cms enterprises company, a wholly-owned subsidiary of cms specific indemnity provision, for which a specific accrual rule applies. operating losses, may be attributable to time periods other than the period in which they are we first observe that, by obligating cms to indemnify marathon for 7 that marathon must wait for cms's response to its demand for indemnity, before filing suit. indicated that it sought a reduction in marathon e.g. production's net operating because the taxes are not attributable to the period before january 1, 2002 no. 09-20034 usage evidence, supports the decision of the district court. 13 judgment as a matter of law." fed.r.civ.p. 56(c). the court considers the using the same standard as the district court. duffy v. leading edge prods., guinea tax purposes. these tax attributes will be 515, 518 (tex. 1968) (citing restatement of contracts � 230 (1932)). such contends, its cause of action for breach of contract accrued only in october 2006. conflicting evidence, says marathon, creates a disputed issue of fact, making received notice that the government of equatorial guinea was auditing cms revenue ascertainable, and payable to the government, at regular operating losses, was not incorporated into the final spa -- by pointing to alleged (collectively referred to as the "tax attributes") of the during negotiations, marathon proposed that "tax attributes" be defined as "the amount of have an income tax effect in the annual accounting period for s.w.2d 384, 388 (tex. app.--corpus christi 1986, no writ)(citation omitted); see 16.04(a)(3); smith int'l, inc. v. egle group, llc, 490 f.3d 380, 386 (5th cir. the claim relates or if no such statute of limitations 10 and equatorial guinea embody the annual accounting period principle. in building the infrastructure for its operations and the depreciation of the assets that this provision, however, was not included in the final spa. which could lead to tax exposure." he fails, however, to apply his general observations to the omitted); pratt-shaw v. pilgrim's pride corp., 122 s.w.3d 825, 829 (tex. charles r. fulbruge iii marathon suggests that its proffered expert, mr. e. daniel leightman, during negotiations, according to marathon, cms representatives orally stated that it was being applied to affect a taxpayer's overall tax liability. marathon does not challenge the v. for a reduction in the amount of net operating losses. no such provision distinction between taxes and tax items or tax attributes; these distinctions are manifest profits, withholding, social security (or similar), unemployment, reduced or disallowed for bases incurred prior to premium, windfall profits, environmental, customs duties, capital of accrual for liability indemnity agreements."). governmental authority or a depreciation deduction is time period prior to january 1, 2002 and, thus, indemnity is mandated. under this stock purchase agreement and that seller co. v. swift energy co., 206 f.3d 487, 492 (5th cir. 2000) (citation omitted); for the fifth circuit 3 net operating loss on its books and on its tax returns filed with equatorial claim for indemnity for the withholding tax payment. marathon filed this suit did not file suit against cms until august 2007, more than five years after the ... the cause of action did not accrue until cms denied its claim for indemnity. agreement. it is also not a tax as defined in the stock purchase executed an spa in which marathon bought all of the issued and outstanding 18 summary judgment (and denied marathon's cross-motion for summary posits, its cause of action for breach of contract did not accrue until cms denied the district court correctly granted summary judgment in favor of the companies that held title to the oil in gas reserves in equatorial guinea -- were sold. for the southern district of texas ownership, and this "full tax indemnity" would obviate marathon's concerns with items that period to which such taxes relate) attributable to the cause of action for indemnity claims accrues, at the latest, on the date on which indemnitor, and the indemnity must be clearly expressed. mid-continent cas. that a claim shall not be permitted unless it is timely made. putting aside the contemporaneous with the making of a contract when construing disputed resolving the parties' dispute regarding the meaning of the tax indemnity applicable extensions) for the taxable period to which summary judgment in cms's favor inappropriate. marathon insists that the 1 turboff v. gertner, aron & ledet invs., 840 s.w.2d 603, 612 (tex. app.--corpus returns and supporting documents, of the seller as well as aspects of the seller's business like that presented here. in the tax field, salch explained, the terms "taxes", indemnify marathon for certain post-sale "taxes" paid by marathon. notably, feldman, district judge: $184,394.10 in withholding taxes. arguments and affirm. according to marathon, during meetings leading up to the execution of the4 intentions of the parties as expressed in the contract. valence operating co. v. clauses in acquisitions and divestitures generally, leightman wholly fails to address the taxes (net of any realized tax benefits associated marathon seeks to soften the blow of this evidence -- that marathon's claim for indemnity. oil's tax returns for the years 1997-2001. as of december 31, 2001, the size of $5,500,000. during the negotiations, marathon requested that the draft spa's evidence in the light most favorable to the nonmoving party and draws all otherwise barred by law. precedent will not toll the statute of limitations). nothing in section 7.03 of the spa suggests indemnity' for any taxes relating to cms' period of ownership." marathon in this case, marathon paid the withholding tax for which it now protect, defend, indemnify and hold harmless the buyer tax indemnity provision in question here, the scope of which is informed by established incurred substantial net operating loses, due in part to extensive investment costs incurred $18,413.997. "this tax loss position reduction," the settlement agreement different result. section 7.03 of the spa provides: on the "annual accounting period" doctrine, finding that taxes are only11 seeks indemnification on january 15, 2002. on january 21, 2005, marathon operating losses: at "several times during the negotiations", we are told, cms 6 as by payment of a claim. id. at 388-89 ("the very terms suggest an earlier date $2,750,000] and execution of this agreement, all audit poc and is worded such that its terms can be given a definite meaning. gulf ins. co., 22 cms's expert, the validity of the annual accounting principle, or the spa's distinction between of the letter, cms notified marathon that cms was reviewing the request. on shall mean any federal, state, local or foreign income, gross barred. s.w.3d 898, 902 (tex. app.--el paso 2002, no pet.). in fact, notice of claim with cms, handled the negotiations with equatorial guinea. in may 2007, after christi 1992, writ dism'd)("[c]onditions precedent are not favored in the law").