St. Paul Fire & Marine Insurance Company and St. Paul Surplus Lines Insurance Company v. Petroplex Energy, Inc., 474 S.W.3d 454

Background

Petroplex operated the Quinn 1-6H Well in Reeves County and claimed 100% working interest after an assignment sequence (Thomas assignment; Partial Assignment to Endeavor; Endeavor reassigned its 80% back to Petroplex). The Endeavor reassignment was written, executed, delivered, but not recorded.
A blowout occurred on September 14, 2007, when a blowout preventer failed; the event caused pollution, third-party damage, and litigation. Petroplex paid some expenses and defense costs; Endeavor and others advanced funds for blowout expenses with an accounting/true-up arrangement between the parties.
Petroplex purchased two policies covering the Well: a well-control policy (St. Paul Surplus) and a CGL policy (St. Paul Fire & Marine). Petroplex timely paid premiums and reported activity quarterly as required.
Insurers (St. Paul Surplus & St. Paul) denied coverage, arguing Petroplex was not the working-interest owner, that the Well was in a workover (not covered) when the blowout occurred, and that Petroplex had not sustained an indemnifiable loss because others actually paid expenses.
The trial court granted Petroplex's partial summary judgments (holding Petroplex owned 100% working interest, the Well was insured at blowout, and Petroplex sustained covered losses under both policies) and denied insurers' cross-motions. The court of appeals affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Who owned the working interest?	Petroplex: written Endeavor reassignment plus prior Thomas assignment gave Petroplex 100% ownership.	Insurers: challenged Petroplex's ownership (argued partners/others controlled interest).	Petroplex owned 100%; Endeavor Assignment was a valid, delivered written conveyance despite non‑recordation.
Was the Well insured at blowout under the well-control policy?	Petroplex: coverage attaches to the well at policy inception; policy covers status changes via quarterly reporting/true-up; no termination event occurred.	Insurers: policy only insured "producing" activity for Quinn Well (no rate for workover), so Well was not insured if in workover/reconditioning.	The Well remained an insured well at blowout. Policy unambiguously provided a rate and an after‑the‑fact quarterly true‑up; no termination provision applied.
Did Petroplex suffer an insured loss under the well-control policy where others advanced or paid expenses?	Petroplex: despite advances/credits, accounting/true‑up obligations and ownership meant Petroplex suffered an insurable loss.	Insurers: Petroplex incurred no out‑of‑pocket indemnifiable loss because partners/third parties paid expenses.	Court applied Gotham IV reasoning: existence of true‑up/accounting (and ownership) raises a fact issue and supports that Petroplex suffered a loss; summary judgment for Petroplex was proper.
Are defense costs and third‑party liabilities covered under the CGL policy?	Petroplex: it incurred and paid defense costs and third‑party expenses recoverable under CGL.	Insurers: liability was satisfied/paid by others, so Petroplex incurred no legal liability payable under the CGL.	Court held Petroplex sustained covered loss for defense and third‑party costs; summary judgment for Petroplex affirmed.

Key Cases Cited

Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (standard of review for summary judgment)
Gotham Ins. Co. v. Warren E & P, Inc., 455 S.W.3d 558 (Tex. 2014) (insurer cannot win summary judgment where reimbursement/accounting arrangements create fact issues about whether insured suffered a loss)
Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex. 2006) (insurance‑policy interpretation; ambiguities resolved for insured)
Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003) (contract/insurance interpretation rules)
Masgas v. Anderson, 310 S.W.3d 567 (Tex. App.—Eastland 2010) (assignment/ownership principles; payment of expenses does not change ownership)