La. Court: ConocoPhillips Entitled to Defense Costs as Additional Insured

Judge Wilfred Carter of the Fourteenth Judicial District Court, Parish of Calcasieu, State of Louisiana, granted the motion for partial summary judgment of ConocoPhillips Company, successor-by-merger to Conoco Inc., that it is entitled to a defense costs as an additional insured against bodily injury claims allegedly arising from a discharged-product recovery effort in In Re: EDC Contractor Insurance Litigation, Docket No. 98-1984 (October 4, 2006).

According to the law firm of Anderson Kill & Olick, P.C. the Court also granted ConocoPhillips’s companion motion to strike, holding that the Court could not consider any evidence extraneous to the insurance policies, the underlying petitions, and the contracts between ConocoPhillips and the named insured contractors in ruling on the duty to defend.

The insurance companies against which ConocoPhillips filed its motions were Continental Casualty Company, American Dynasty Surplus Lines Insurance Company, American Indemnity Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., and Commerce and Industry Insurance Company of Canada.

This litigation arises out of thousands of bodily injury claims brought against ConocoPhillips and others, for alleged exposure to discharged ethylene dichloride (EDC) at ConocoPhillips’s Docks Facility in Westlake, La. In the lawsuit, ConocoPhillips has sought insurance coverage as an additional insured under the insurance policies sold to various contractors hired by ConocoPhillips to assist it in the recovery of the discharged EDC, which ConocoPhillips discovered in late March 1994.

ConocoPhillips was represented by John N. Ellison and Nicholas M. Insua of Anderson Kill & Olick, P.C., G. Andrew Veazey of Huval, Veazey, Felder & Aertker, and Raleigh Newman.

In its motion, ConocoPhillips argued that the duty to defend is determined by comparing the allegations of the underlying petitions and the terms of the insurance policies at issue. In the case, the Court also could look at ConocoPhillips’s contracts with the companies that conducted the EDC recovery, as those contracts often were incorporated into the insurance policies and helped to define ConocoPhillips’s right to insurance coverage as an additional insured under the policies.

ConocoPhillips asserted that the defense obligation must be upheld unless the allegations of the underlying petitions are unambiguously excluded from coverage. The insurance companies contended that there were issues of fact regarding whether the underlying actions against ConocoPhillips were covered. To demonstrate those facts, the insurance companies relied on material other than the underlying petitions and the insurance policies. Consequently, ConocoPhillips asked the Court to strike all of such extraneous evidence because, while such evidence may go the duty to indemnify, it does not bear on the duty to defend.

Ruling from the bench, Judge Carter granted ConocoPhillips’s motion. Judge Carter held that the underlying claims against ConocoPhillips were not unambiguously excluded from coverage, even under the pollution exclusions contained in the policies. Judge Carter found that to prove such defenses, he would need to look at extraneous evidence, and he was constrained not to do so under established Louisiana jurisprudence. For that reason, he also granted ConocoPhillips’s motion to strike the extraneous evidence submitted by the insurance companies, finding that it had no relevance to determining the broad duty to defend. The court thus held that ConocoPhillips was entitled to a duty to defend under the contractors’ insurance policies as an additional insured.

Source: Anderson Kill & Olick, P.C.