HOUSTON – Both parties in a lawsuit regarding a damaged section of the Silver Dollar Pipeline are seeking a motion for summary judgment.
Tex-Tube Co. v. The Phoenix Insurance Co. was filed in the Houston Division of the Southern District of Texas.
In 2015, Tex-Tube supplied steel line pipe to JP Energy Permian for construction of a pipeline. According to Tex-Tube Co.’s motion for partial summary judgment filed Oct. 6, “After being permanently welded into a 29-mile pipeline, one of the pipe segments supplied by Tex-Tube apparently failed during a hydrotest. In order to replace the section of pipe, JP Permian had to dig up the section of pipeline, cut out (and thereby destroy) the welds to remove the Tex-Tube pipe section, and then install a new pipe section with new welds.”
After being sued by JP Permian, Tex-Tube asked its insurance company, Phoenix, to provide a defense. JP Permian had filed suit against Tex-Tube “...for costs incurred to find the leaking pipe section, costs for removing the welds and leaking pipe section, costs replacing the welds and defective pipe section, and loss of use of the pipeline for the several weeks it took to accomplish those tasks,” according to Tex-Tube's motion for partial summary judgment.
Phoenix Insurance declined to defend Tex-Tube. Phoenix filed a motion for summary judgment on Oct. 6. It denies Tex-Tube is owed coverage, stating “Phoenix seeks a determination that it does not owe Tex-Tube a defense obligation because the claims against Tex-Tube alleged by JP do not trigger coverage under the Phoenix policy. Specifically, the policy’s insuring agreement is not invoked because Tex-Tube is not being sued in the underlying lawsuit for 'property damage' caused by an 'occurrence.' In addition, even if Tex-Tube could meet its burden to show that the Policy’s Insuring Agreement is triggered, the Phoenix Policy contains exclusions that operate to bar coverage.”
The primary argument put forth by Phoenix is the impaired property exclusion, which says the defects in the Tex-Tube pipe existed before the pipe was made part of the Silver Dollar Pipeline, and that bars coverage. The Silver Dollar Pipeline would qualify as “impaired property” because the only way it was made operational was by the repair and replacement of the faulty joint section of Tex-Tube’s pipe, it alleged.
"It is undisputed from the allegations in the original petition that the pipe supplied by Tex-Tube was defective, and that its removal and replacement formed the basis for JP’s claims for damages,” according to Phoenix's motion.
Tex-Tube concludes its motion for partial summary judgment by saying “Because JP Permian sued Tex-Tube for physical injury and loss of use damages, Tex-Tube is entitled to a defense from Phoenix under the applicable policy.”
Robert Allen of the Allen Law Group in Dallas represents Phoenix Insurance Co. Graig J. Alvarex and Lance R. Bremer of Alvarex, Stauffer Bremer PLLC in Houston represent Tex-Tube.