Insurance issues surface in BP oil spill litigation

Steve Korris Mar. 8, 2011, 3:43am


NEW ORLEANS - Below the surface of lawsuits blaming oil company BP for the Deepwater Horizon rig explosion, tremors of insurance disputes begin to roll.

In a pair of federal suits, insurers of rig owner Transocean resist BP's claim that it qualifies for coverage under Transcoean policies.

"The issue in the suits is the scope of BP's additional insured status under the policies," BP lawyer Don Haycraft of New Orleans wrote to U.S. District Judge Carl Barbier on Feb. 22.

The insurers sued BP in Texas last year, and the Judicial Panel on Multi District Litigation transferred the suits to Barbier in February.

He presides over consolidated cases from many federal courts by appointment of the panel.

Haycraft reported to him that, "The plaintiffs, Transocean Excess Insurers and Ranger Insurance Company, are liability insurance carriers that issued policies to Transocean as the named insured with total limits of $750 million."

"The insurers seek a declaration that to the extent that they provide the 'additional insured' coverage to BP, that coverage is limited to the scope of the 'indemnity' that Transocean agreed to provide to BP in the drilling contract," Haycraft wrote.

He wrote that BP filed a counter claim in the Ranger suit, seeking a declaration that the insurers must cover claims without such limitation.

He wrote that BP filed a cross claim in the Ranger suit against Marine Package Insurers.

"In turn, Transocean Marine Package Insurers filed a counter claim for the loss of the Deepwater Horizon hull in the amount of $560 million," Haycraft wrote.

He wrote that BP and leasehold co-owner MOEX Offshore intend to seek an order instructing the insurers not to dissipate their policy limits pending court consideration of these cases.

"BP and MOEX are evaluating other insurance policies, including other excess Transocean policies, in which they may be 'additional insureds' and may seek leave to amend to add that coverage to the insurance litigation," Haycraft wrote.

In the same report, Haycraft wrote that the panel transferred 397 cases to Barbier.

He wrote that as a result of voluntary dismissals, 357 remained active.

He wrote that at least 15 Deepwater Horizon suits were pending in state courts.

He wrote that two rig workers and five response workers alleged personal injuries in state courts.

Richard Godfrey and Andrew Langan, both of Kirkland and Ellis in Chicago, worked on the report, as did Mike Brock of Covington and Burling in Washington.

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