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Getty Museum Sues Texaco Over Legal Protection Pact

May 5, 1986

SANTA MONICA, Calif. (AP) _ The J. Paul Getty Museum is suing Texaco Inc., alleging the oil company reneged on agreements to indemnify the museum against lawsuits stemming from Texaco’s purchase of Getty Oil Co.

Those agreements were a key part of the deal that enabled Texaco in 1984 to grab the Los Angeles-based Getty Oil from Pennzoil Co., which had negotiated separately to acquire Getty.

″The museum filed this lawsuit reluctantly and only to protect and enforce its contractual agreements with Texaco,″ museum attorney Marshall B. Grossman said Monday.

Texaco spokesman John B. O’Mahoney said the museum and Texaco are jointly reviewing the indemnification agreements.

″Pending the review, further steps in the (museum’s) suit are being held in abeyance,″ O’Mahoney said.

The suit by the Malibu museum, filed here Friday in Los Angeles County Superior Court, alleges that Texaco’s repudiation of the key agreement signals a ″desperate effort″ to shift the burden of the $11.1 billion court judgment against Texaco.

Pennzoil won the judgment against Texaco after persuaded a Texas jury that Texaco had wrongly interfered with Pennzoil’s binding agreement to take over Getty. Texaco has appealed the huge award.

During the trial in Texas, Pennzoil’s lawyers showed that attorneys for the Getty Museum, which owned 11.8 percent of Getty Oil, insisted on the legal protection before agreeing to sell the museum’s shares to Texaco. Pennzoil’s lawyers argued this was evidence that Getty officials knew it was breaking a formal agreement with Pennzoil that would make the museum vulnerable to legal action.

The jurors awarded $3 billion in punitive damages plus actual damages surpassing $7 billion.

J. Hugh Liedtke, chairman of Pennzoil, declined to offer any comment on the suit. He was in Denver to speak to the annual meeting of the Society of American Business and Economic Writers.

Since the Pennzoil judgment, several shareholder lawsuits have been filed against Texaco, also naming the Getty Museum and its president, Harold M. Williams.

The museum’s suit says Texaco had reaffirmed its indemnity agreements and had paid the museum’s relevant legal costs until recently. But the museum suit indicates that changed last Wednesday, after Texaco filed a brief in a Delaware court.

According to the museum suit, Texaco informed the Delaware court: ″It is Texaco’s position that the indemnification provisions of the agreements with the museum and (Getty) Trust do not cover liability arising out of the purported ‘agreement’ upon which the judgment in the Pennzoil case rests.″

The museum’s suit said Texaco acted ″with the intent of injuring the museum as part of a desperate effort to shift liability for the Pennzoil judgment from Texaco to others, and to fend off claims by Texaco shareholders.″

The suit asks the court for a declaratory judgment upholding the indemnity agreement and for unspecified damages from Texaco.

O’Mahoney said the statement released from Texaco’s executive offices in White Plains, N.Y., was prepared jointly by the museum and Texaco. The statement reads in part: ″The museum and Texaco are reviewing the indemnities given the museum to determine what, if any, differences exist between them with respect to such indemnities. But this review does not reflect in the belief of both the museum and the company that Texaco acted lawfully and properly in making the aquisition.″

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