Product Liability & Toxics Law News

Anadarko Insurers Face Up to $150M for Deepwater Defense Costs

Jan. 25, 2019, 9:05 PM

Anadarko Petroleum Corp. may pursue up to $150 million from its insurers to cover the legal costs of defending suits over the Deepwater Horizon oil spill, the Texas Supreme Court ruled.

The policy covers all of Anadarko’s defense expenses, up to the policy’s excess-coverage limit, and isn’t limit to one-quarter of its policy’s limit, the court said.

The expenses include attorneys’ fees and related costs tied to defending the company from both third-party suits and enforcement actions stemming from the country’s biggest spill.

The underwriters argued they owe no more than the $37.5 million they had already paid out. They cited a clause in Anadarko’s policy that they said caps coverage based on the company’s ownership interest in the joint venture that operated the Deepwater Horizon.

But the cap doesn’t apply to reimbursement for defense costs, the court said, reversing an appeals court ruling. The provision instead only applies to coverage of amounts Anadarko actually paid out to resolve third-party claims, the court said.

Anadarko says its total defense expenses will exceed $100 million. The insurers dispute that amount and the trial court hasn’t yet ruled on the issue.

The underwriters include Houston Casualty Co., Allianz Global Corporate & Specialty AG, Clearwater Insurance Co., Hudson Insurance Co., Lancashire Insurance Co. (UK) Ltd., Navigators Insurance Co., and Certain Underwriters at Lloyd’s.

Judge Jeffrey S. Boyd wrote the opinion.

Reed Smith LLP, and Vinson & Elkins LLP represent Anadarko Petroleum.

Alexander Dubose Jefferson & Townsend LLP, and Hall Maines Lugrin PC represent the underwriters.

The case is Anadarko Petroleum Corp. v. Hous. Cas. Co., Tex., No. 16-1013, 1/25/19.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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