A Case Trying To Prove Insurance Coverage Exists In A Commercial Policy

The following is a short discussion of a case trying to interpret Missouri law, in part. The relevance to people in Dallas, Fort Worth, Arlington, or Grand Prairie areas is that the case was heard in a Texas Court in the Southern District of Texas and that the appeal was to the United States Court of Appeals for the Fifth Circuit, which is a Court that makes decisions regarding lots of Texas cases.
The case is Westchester Surplus Lines Insurance Company v. Maverick Tube Corporation. The opinion of the Court was issued on December 10, 2009.
The dispute involved the application of Missouri state law in determining if an insurance “occurrence” and the duty of the insurance company to indemnify existed.
In this case, Maverick had purchased insurance policies from Westchester. The policies purchased provided for indemnification for “property damage” resulting from an “occurrance”. An “occurrance” was defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
In 2006, Maverick sold a specific casing, P-110, to Dominion Exploration and Production Company for use and operation in its gas wells. In September 2006, Dominion experienced catastrophic failure in four gas wells that were using the P-110 casing. A subsequent investigation showed the P-110 casing to be the cause of the problems Dominion was experiencing.
Dominion made a written demand for its losses to Maverick and eventually settled for a substantially less amount of money. Maverick then asked Westchester to indemnify per the insurance policy and Westchester refused. The lawsuit followed.
The Court got into more specific issues in this case and a discussion of Missouri law. The more relevant issues in an insurance law context were also discussed and these included an insurance companies duties to not only pay claims but their duty to defend claims asserted against their insured in some situations regardless of whether or not the insurance company may or may not have to later pay on the claim. These issues in part, were breach of contract claims, warranties, performance issues, DTPA causes of action, failure to perform cases, etc.
The case is another illustration of some of the complex situations that can arise in an insurance context. The wording of the insurance contract, the facts of the claim, and the existing insurance law, all have to be looked at together to get an understanding of what may be the final outcome in a particular case.