Noble Can't Cut Conoco From Oil Cleanup Insurance Row

Noble Can't Cut Conoco From Oil Cleanup Insurance Row

Source: Law360, January 18, 2013
By: Sean McLernon

A Texas federal judge on Thursday shot down Noble Energy Inc.’s request to remove fellow defendant ConocoPhillips Co. from a suit brought by two insurance companies seeking to avoid paying settlement costs in an underlying oil contamination lawsuit, ruling that Noble cannot independently seek dismissal for ConocoPhillips.

In denying Noble’s motion for summary judgment, U.S. District Judge W. Royal Furgeson Jr. agreed with Great Northern Insurance Co. and Federal Insurance Co. that Noble had no standing to dispute the insurance companies’ claims against ConocoPhillips. Great Northern and Federal said that ConocoPhillips must be included in the suit in order for any ruling to be binding for both energy companies.

“Noble has identified no claim or defense asserted against it, or by it, on which it summary judgment may be granted. ConocoPhillips has made no claim against Noble, or vice versa,” the ruling says. “There is simply nothing to grant Noble on these facts. Noble essentially asks the court to sua sponte grant summary judgment on behalf of ConocoPhillips — an objecting nonmovant.”

The insurance companies lodged the suit in December 2011 seeking a declaratory judgment that they have no duty to pay ConocoPhillips’ demand for indemnity from Noble for its settlement costs in the underlying suit because that claim stems from a contract between the two defendants and therefore falls under a policy exclusion.

The state of Louisiana and a local parish school board sued ConocoPhillips and Elysium Energy LLC, among others, in Louisiana state court alleging that school lands had been contaminated or otherwise damaged by oil and gas exploration and production activities. Noble is the successor by merger to Elysium, which is insured by Great Northern and Federal policies.

Elysium and ConocoPhillips ended up striking separate settlement deals in that state court contamination suit, and ConocoPhillips is now seeking contractual indemnity for its settlement from Noble, as Elysium’s successor.

Noble argued that the insurance companies’ claims against ConocoPhillips must be dismissed because the energy company has no claim for coverage. Unlike Noble, ConocoPhillips is not a named insured under the Great Northern and Federal policies.

Judge Furgeson didn’t discuss the merits of that argument in Thursday’s ruling, instead simply finding Noble has no right to call for summary judgment on claims against a separate co-defendant.

Counsel for both sides were not immediately available for comment.

The insurers allege in their complaint that the excess and umbrella policy Federal issued for the period of May 1, 2004, to June 1, 2005, bars coverage for Noble thanks to a contractual liability exclusion for costs tied to bodily injury or property damage that stem from assumption of liability in a contract.

The 1994 contract also does not fall under the policy’s exception for “insured contracts,” the complaint says, because that contract was not executed by the named insured. Even if the 2000 agreement was an insured contract, its status as such could not be retroactive, according to the complaint.

The Great Northern policy, meanwhile — which covers the period of May 1, 2004, to May 1, 2005, with a retroactive date of Oct. 17, 1992 — also provides no coverage because there is no proof of a pollution incident that started between the execution date of a written insured contract and the end of the policy period, the insurers allege.

Noble is represented by Gerald F. Slattery Jr. and Emile J. Dreuil III of Slattery Marino & Roberts and James M. McCown of Nesbitt Vassar & McCown LLP.

The insurance companies are represented by Joseph A. Ziemianski, Kendall Kelly Hayden, Peter B. Magnuson and Bryan P. Vezey of Cozen O’Connor.

The case is Great Northern Insurance Co. et al. v. Noble Energy Inc. et al., case number 3:11-cv-03467, in the U.S. District Court for the Northern District of Texas.

–Additional reporting by Megan Stride. Editing by Katherine Rautenberg.

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