Plantation Pipe Line Company v. Highlands Insurance Company, in Receivership
444 S.W.3d 307
Tex. App.2014Background
- Plantation Pipe Line and Highlands dispute coverage under an excess Highlands policy issued to Plantation.
- Underlying insurers (American, Cal Union, Lumbermens) settled with Plantation for less than their policy limits; no full exhaustion occurred at issue.
- Highlands denied coverage arguing the excess policy attaches only after underlying carriers are paid in full; this is tied to an “Underling Limits/Ultimate Net Loss” framework.
- Plantation had incurred substantial remediation costs (>$8 million) and sought indemnity from Highlands for the excess.
- The trial court granted Highlands summary judgment based on alleged exhaustion; Plantation appealed challenging the interpretation of the exhaustion/maintenance provisions.
- The Eleventh Court of Appeals reversed and remanded, holding the Highlands policy language unambiguously triggers coverage regardless of settlements with underlying carriers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Highlands must pay under the excess policy regardless of settlements below full underlying limits. | Plantation contends exhaustion is not satisfied by settlements alone and Highlands must pay above $8 million. | Highlands argues exhaustion requires full payment by underlying carriers per the policy language. | Yes; the Highlands policy triggers coverage despite settlements. |
Key Cases Cited
- Citigroup, Inc. v. Federal Insurance Co., 649 F.3d 367 (5th Cir. 2011) (addressed Zeig doctrine; held policy language not ambiguous in that case)
- Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198 (Tex. 2004) (general contract interpretation and coverage rules for policies)
- Glover v. Nat’l Ins. Underwriters, 545 S.W.2d 755 (Tex. 1977) (ambiguity rule in insurance policy interpretation)
- Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex. 2006) (ambiguous terms interpreted in insured’s favor when reasonable)
- Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455 (Tex. 1997) (ambiguity and construction against insurer; favor insured)
- Blaylock v. Am. Guarantee Bank Liability Ins. Co., 632 S.W.2d 719 (Tex. 1982) (construction against insurer; exceptions and limitations treated favorably to insured)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (interpretation to give effect to all policy provisions)
- Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995) (summary judgment standard and burdens in contract disputes)