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 policies.
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 to ExxonMobil.
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.