Ranger Insurance v. Transocean Offshore Deepwater Drilling, Inc., 728 F.3d 491

Transocean owned the Deepwater Horizon; the rig exploded and sank in April 2010 during drilling for BP, producing massive pollution claims. Transocean’s drilling contract with BP required Transocean to maintain insurance and to name BP as an additional insured on Transocean’s policies (Exhibit C).
Transocean carried a primary liability policy (Ranger, $50M+) and multiple layers of excess coverage (London market syndicates, $700M+). The policies define "Insured" to include parties required by an "Insured Contract" to be provided the insurance afforded by the policy.
The drilling contract separately contains indemnity provisions allocating pollution liability: Article 24.1 assigns responsibility for pollution originating on or above the surface to Transocean; Article 24.2 assigns other pollution liability to BP.
Insurers filed declaratory-judgment actions seeking a ruling they have no obligation to BP for pollution claims from BP’s well; BP moved for judgment on the pleadings asserting it is an additional insured and that policy language alone should determine coverage scope.
The district court denied BP’s motion, interpreting the contract to require naming BP as additional insured only for liabilities Transocean assumed under the contract, and held that pollution at issue was not covered. The Fifth Circuit certified two questions to the Texas Supreme Court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ATOFINA controls so that the umbrella policy terms alone determine the scope of an additional-insured's coverage when the contract’s additional-insured and indemnity clauses are "separate and independent"	BP: ATOFINA requires looking to the policy terms; BP, as additional insured, seeks direct coverage under the policy independent of contract indemnities.	Insurers/Transocean: ATOFINA differs; the drilling contract limits the additional-insured obligation to liabilities Transocean assumed, so indemnity provisions inform coverage scope.	Certified question to Texas Supreme Court — unresolved by Fifth Circuit; court asked Texas to decide.
Whether contra proferentem applies to interpret the additional-insured insurance provision in the drilling contract given the parties' sophistication	BP: Ambiguities must be resolved for the insured (BP), so contra proferentem favors broader coverage.	Insurers/Transocean: Parties are sophisticated; doctrine may not apply to restrict drafting party when contracts are negotiated by capable entities.	Certified question to Texas Supreme Court — unresolved by Fifth Circuit; court asked Texas to decide.

Evanston Ins. Co. v. ATOFINA Petrochems., Inc., 256 S.W.3d 660 (Tex. 2008) (holding additional-insured status can provide direct coverage under the policy and policy terms — not the indemnity agreement — govern scope when provisions are separate and independent)
Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., 811 S.W.2d 552 (Tex. 1991) (ambiguities in coverage construed in favor of the insured)
Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663 (Tex. 1987) (policy language construed liberally for insureds when ambiguous)
Balandrán v. Safeco Ins. Co. of America, 972 S.W.2d 738 (Tex. 1998) (discussing insurer–insured bargaining-power imbalance as a basis for construing ambiguous policy terms for insureds)
Aubris Res. LP v. St. Paul Fire & Marine Ins. Co., 566 F.3d 483 (5th Cir. 2009) (Fifth Circuit precedent addressing interaction of policy language and contract indemnities)
Certain Underwriters at Lloyds, London v. Law, 570 F.3d 574 (5th Cir. 2009) (if ambiguity exists, contractual language is construed in favor of the insured)
McIntosh v. Scottsdale Ins. Co., 992 F.2d 251 (10th Cir. 1993) (noting that clear language is required to limit additional-insured coverage to vicarious liability only)