NEW ORLEANS – ExxonMobil Corp. recently asked the U.S. Court of Appeals for
the Fifth Circuit to uphold a district court order that awarded $3.67 million
to the company in an injury claim insurance coverage lawsuit filed against Electrical
Reliability Services Inc. (ERS) and Old Republic Insurance Co.
ExxonMobil said in its appeal response brief that it filed a
breach of contract claim against ERS and Old Republic after they denied
coverage to ExxonMobil for personal injury claims filed by an ERS subcontractor
who was working at an ExxonMobil facility.
Specifically, ExxonMobil said it hired ERS to perform electrical
work at ExxonMobil’s Beaumont, Texas, chemical facility by executing a purchase
order in conjunction with a standard procurement agreement (SPA) for downstream or chemical
services goods in 2008. ExxonMobil said the agreement required ERS to purchase
certain types of insurance and to name ExxonMobil as an additional insured on
The U.S. District Court for the Southern District of Texas
originally ruled in ExxonMobil’s favor in connection with part of its lawsuit
in March 2012, ruling that ERS was contractually obligated to provide the
coverage as an additional insured on its policy with Old Republic.
“Despite the district court’s ruling, ERS and ORIC refused
to pay ExxonMobil,” ExxonMobil said in the brief. “ERS then claimed ExxonMobil
was liable for payment of the policy’s deductible.”
Following an appeal by ERS and Old Republic, and a clarifying
ruling made by the Texas Supreme Court in a separate case that was integral to
the ExxonMobil insurance coverage dispute, the circuit court vacated the
district court’s order and sent the case back to the district court. The
district court ultimately reinstated its original findings and awarded a total
of $3,670,359.57 in damages, attorneys’ fees, costs and pre-judgment interest
In support of its defense of ERS and Old Republic’s
subsequent appeal of the district court’s final order, ExxonMobil said the
district court was right to reinstate the original judgment, and that it was
clear under the terms of the insurance policy that ERS was responsible for covering
ExxonMobil as an additional insured party and paying all related deductibles.
In addition, ExxonMobil said the policy did not incorporate
any of the alleged limitations on the scope of coverage related to indemnities
and also did not call for any consideration of indemnity issues in determining
the status and scope of additional insured coverage.
“The SPA required ERS to provide ExxonMobil with primary
additional insured coverage extending to services ERS performed at ExxonMobil’s
facility and to pay related deductibles,” ExxonMobil said in the appeal brief. “It
is undisputed that the claims arose in connection with ERS’s services, as
defined by the SPA.”
According to ExxonMobil’s court filing, ERS misconstrued the
nature of the district court’s award of damages. ExxonMobil said the Old
Republic Insurance policy also obligated ERS to pay the deductible, which it
failed to do.
As a result of the breach, ExxonMobil said it suffered damages,
including the cost of paying for the defense and settlement of the personal
injury lawsuit, which should have been covered under the Old Republic Insurance
policy and the provisions of the SPA.