Case Studies

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Key Cross Examination Turns the Tide on Coverage Lawsuit

After Hurricane Katrina downed five of its platforms and destroyed or damaged the associated wells and pipelines in the Gulf of Mexico, a Houston-based independent energy company sought recoveries under several insurance policies. After receiving in excess of $192 million under its energy package policy, the company sought an additional $50 million under a removal of wreckage and debris endorsement to its excess liability policy, claiming that its decommissioning obligations under certain federal regulations, triggered by its lease with the United States, were covered.

Hall Maines Lugrin represented a consortium of London-based energy underwriters on the excess liability policy. The excess underwriters denied the claim, reasoning that the decommissioning obligations were not a legal liability, but part of the energy company’s contractual relationship with the United States. The energy company brought suit in Texas state court for breach of contract and bad faith denial, and requested $50 million in insurance coverage for well control and removal costs, plus bad faith damages. The company also sued its Houston-based insurance brokers for professional malpractice, alleging that if the policy did not cover the claims, the brokers negligently failed to procure the coverage the energy company requested.

To best position the case for trial, we directed early efforts against the bad faith claim, amassing evidence that allowed us to successfully obtain pre-trial dismissal of those claims. Proceeding to trial on the coverage issue, we strategically planned a critical cross-examination of the opposing expert based upon our deep knowledge of London market energy wording and placement practices. Several weeks into trial, that cross-examination obtained key admissions and inconsistencies that severely damaged the expert’s credibility, and led directly to a settlement of all claims before the close of evidence on confidential terms favorable to our clients.

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