AMENDED ORDER
Before the Court is Plaintiffs Motion for Summary Judgment (Dkt. No. 34), Defendants’ Motion for Summary Judgment, (Dkt. No. 25), Plaintiffs Response to Defendants’ Motion for Summary Judgment (Dkt. No. 33), Defendants’ Response to Plaintiffs’ Motion for Summary Judgment (Dkt. No. 37), and Plaintiffs’ Reply to Defendants’ Response to Plaintiffs Motion for Summary Judgment (Dkt. No. 42).
I. BACKGROUND
The dispute now before this Court arises out of an incident involving a flash fire that took place on August 19, 2010 at thé Her-rén 5-8 # 4 in Martin County, Texas. (Dkt. No. 21 at ¶ 16). The well was owned and operated by Endeavor Energy Resources, L.P. (“Endeavor”). (Id.). At the time the fire occurred, one of Endeavor’s affiliates, Exxcel Well Service, Inc. (“Exx-cel”), was performing a work over of the operations of the well. (Id. at ¶ 18). To assist in that effort, Exxcel contracted with an organization called Basic Energy Services L.P. (“Basic”) to provide services and generally assist Exxcel in its work over of the Herren.#4 well. (Id.). The contract called for Basic to do things like provide a tank truck loaded with brine water or provide a pump truck to pump the brine water into the well. (Id.). Exx-cel and Basic spelled out the various terms and conditions of their new relationship in a master services agreement (“MSA”). (Id.). In the MSA, both parties agreed to defend and indemnify each other and their subsidiaries for all “claims, demands, and causes of action,” asserted by or on behalf of their respective employees for bodily injury or death (except in cases involving claims of gross negligence or willful misconduct). (Id.). To support this agreement, but as a separate and independent obligation, the MSA requires Basic to: (1) obtain primary liability insurance coverage in the amount of $1 million; (2) obtain excess insurance coverage in the amount of $4 million; (3) have its primary and excess insurance policies endorsed to name Endeavor and Exxcel as additional insureds; (4) have the policies endorsed to waive subrogation against Endeavor and Exxcel; and (5) have the policies endorsed to be primary and non-contributory with any other liability insurance available to Endeavor and Exxcel for any occurrence, ac
On August 19, 2010, a fire broke out and two Basic employees—Abel Garcia and Fernando Zamora—were killed. (Id. at 4-5). Their families subsequently filed suit against Basic, Exxcel, and Endeavor
At the time the accident occurred, Basic had three layers of liability insurance coverage in effect: (1) a primary Commercial General Liability Policy issued by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”), which provided a $1 million per occurrence limit of liability (“the Basic Primary Policy”); (2) a first layer excess liability insurance policy subscribed to by Aspen and other subscribing underwriters, which provided a $10 million limit of liability (“the First Layer Excess Policy”); and (3) a second layer excess liability insurance policy subscribed to by defendant, Dornoch, and other subscribing underwriters, which provided a $40 million limit of liability (“the Second Layer Excess Policy”), which was excess of the First Layer Excess Policy. (Id.). Endeavor also had three layers of liability insurance coverage in effect at the time of the accident: (1) a primary Commercial General Liability Policy issued by National Union, which provided a $1 million per occurrence limit of liability (“the Endeavor Primary Policy”); (2) a Commercial Excess Liability insurance policy issued by Plaintiff, Ironshore, which provided a $10 million limit of liability (“the Ironshore Excess Policy”); and (3) a second layer excess liability insurance policy issued by Axis Surplus Insurance Company, which provided a $10 million limit of liability excess of the Ironshore Excess Policy. (Id.).
Basic’s First and Second Layer Excess policies both contain identical definitions of “■Insured” and “Insured Contract.” The policies define “Insured” as “any person or entity to whom the ‘Insured’ is obliged by a written ‘Insured Contract’ entered into before any relevant ‘occurrence’ and/or ‘claim’ to provide insurance such as afford by this policy but only with respect to ... liability arising out of operations conducted by the named ‘Insured’..(Dkt. No. 25 at 13). Both policies define “Insured Contract” as “any written contract or agreement entered into by the ‘insured’ and pertaining to business under which the ‘insured’ assumes the tort liability of another party ...” (Id. at 13-14).
On October 28, 2010, after the lawsuits were filed, Endeavor/Exxcel informed Basic’s primary insurance provider, National Union, of the Endeavor/Exxcel lawsuits. (Dkt. No. 34-1 at 6-7). National Union acknowledged that it was contractually obligated to provide coverage to Endeav- or/Exxcel and the insurance company appointed counsel to defend Endeavor/Exx-cel against the underlying lawsuits. (Id.).
The dispute that gave rise to this case began in April of 2011. (Id. at 7). After settlement negotiations yielded offers well in excess of the limit of the National Union Primary Policy and the First Layer Excess Policy, Endeavor/Exxcel, along with Plaintiff Ironshore, made a demand on Basic’s excess insurers for coverage up to the full limits of liability provided by the First And Second Layer Excess policies. (Id.). In other words, Endeavor/Exxcel and Plaintiff argued that they were entitled to up to $51 million of coverage from Basic’s
While Defendants acknowledged a limited contractual obligation to provide some coverage to Endeavor/Exxcel, they had a dramatically different understanding than did Plaintiff as to the scope of their contractual obligation to Endeavor/Exxcel. Pointing to the underlying MSA (which both parties concede is the “insurance contract” in this case), Defendants took the position that Endeavor/Exxcel were entitled to a total of $5 million in coverage—$1 million from the primary policy and $4 million from the First Excess Policy. (Dkt. No. 25).
Plaintiff Ironshore is one of Endeav- or/Exxcel’s insurance providers that found itself on the hook for any damages not covered by Basic’s insurers pursuant to Basic’s indemnity obligations under the MSA. Hoping to avoid a hefty bill, Plaintiff filed a Complaint for Declaratory Judgment pursuant to 28 U.S.C. §§ 2201 et seq. and Rule 57 of the Federal Rules of Civil Procedure seeking a judicial determination of the total amount of “OTHER INSURANCE” available to Endeavor/ Exxcel under the First Layer Excess Policy and under the Second Layer Excess Policy issued to Basic. (Dkt. No. 21). Since that original filing, both sides have filed motions for summary judgment (Dkt. Nos. 25 and 34).
II. STANDARD OF REVIEW
The court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25,
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party’s case, the party opposing the motion must come forward with competent summary-judgment evidence of the existence of a genuine fact issue. Matsushita,
III. ANALYSIS
Plaintiff makes two arguments in support of its desired outcome in this case. First, it argues that precedent precludes the Court from looking at the underlying contract and as a result, the only conclusion the Court can draw from the language of the insurance policy is that Defendants intended to provide all of the coverage available to Basic under the First and Second Layer Policies. As a secondary argument, Plaintiff argues that even if the Court considers the MSA, Defendants’ intent is nevertheless ambiguous and therefore, the Court must construe the policy in favor of the insured. For reasons set out below, the Court rejects both of Plaintiffs arguments.
A. ATOFINA and Aubris Do Not Preclude the Court from Examining the MSA
Plaintiff both misunderstands and misapplies the cases upon which it relies. Examination of the MSA and the insurance policies makes clear that Basic intended its insurers to provide Endeavor/Exxcel up to $5 million of liability coverage and no more.
In Texas, insurance contracts are subject to the same rules of construction that are applied to other contracts. Am. Nat’l Gen. Ins. Co. v. Ryan,
As is clear from the above discussion, where a policy contract expressly refers to another instrument, the Court should and must refer to the other instrument as part of the contract itself if the Court determines that the parties intended the documents to be read together. Three Fifth Circuit cases further illustrate how courts have handled interpretational issues like one involved in this case. The first such case is LeBlanc v. Global Marine Drilling Co.,
Along the same lines, in Certain Underwriters at Lloyd’s London v. Oryx Energy Co., an insurance policy provided that “any ... corporation ... and/or entity for whom or with the Assured may be operating is hereby named as additional assured when required.”
The final case directly relevant to the matter before this Court is Becker v. Tidewater, Inc.,
Taken together, LeBlanc, Certain Underwriters, and Becker show that, at least as of 2009 (when the Circuit handed down Becker), the Fifth Circuit had not created, recognized, or employed any sort of common law prohibition against looking to the language of an underlying contract in order to determine how much coverage the parties intended to provide. Plaintiff nevertheless argues that the Texas Supreme Court dramatically altered the rules of the game in 2008, when it handed down its decision in Evanston Insurance Co. v. ATOFINA Petrochemicals, Inc.,
Most of the fundamental flaws in Plaintiffs arguments derive from a flawed understanding of the Texas Supreme Court’s holding in ATOFINA. In ATOFINA, a property owner sought coverage under a contractor’s excess policy for liability associated with the death of one of the contractor’s employees. ATOFINA,
Before explaining what the Court actually did in ATOFINA it is worth pausing to highlight the differences between the contract that was before the Texas Supreme Court in ATOFINA and the one before the Court in this case. First, it is noteworthy that the contract before the Texas Supreme Court in ATOFINA did not reference any underlying contract. Here, however, both parties concede that the umbrella policy specifically refers to an “insurance contract.” Additionally, both parties in this case agree that the “insurance contract” that the umbrella policy refers to is the MSA. Both parties further concede that the Court must examine the MSA in order to answer the question of whether Endeavor/Exxcel is entitled to any coverage. While Plaintiffs contend that this Court should look at the MSA to decide whether Endeavor/Exxcel is a covered entity, Plaintiff conveniently argues that ATOFINA categorically prohibits the Court from considering the language of the MSA in order to evaluate how much coverage the parties intended to provide one another. What Plaintiffs argument gainsays, however, are the important differences between the contract at issue in ATOFINA and the one before the Court in this case. The reason the ATOFINA Court refused to look beyond the four corners of the umbrella policy had nothing to do with any rule against referring to other documents. Instead, the ATOFINA court limited the scope of its inquiry to the policy itself because the policy in that case did not refer to any outside documents. In light of this fact, it is hardly surprising or remarkable that the ATOFINA court limited its inquiry to “the terms of the umbrella insurance policy itself.” Id. at 664. This case, however, involves a contract that does expressly refer to an outside document: an “insurance contract.” Accordingly, the facts that lead the ATO-FINA court to limit the scope of its analysis to the four corners of the insurance policy itself do not apply to this case.
Once one understands why ATOFINA does not prohibit this Court from examining the umbrella policy and the insurance contract it incorporates in tandem, Plaintiffs reliance on Aubris becomes less persuasive because ■ Plaintiffs understanding of Aubris is predicated on what the Court has shown to be a faulty reading of ATO-FINA. The Aubris court addressed whether an insurer had a duty to defend an additional insured (property owner) in a tort claim, or whether that duty was abrogated by an indemnity exclusion in a services agreement between the owner and its contractor, the primary insured. The court held that the owner was entitled to a defense of the underlying tort claim.
The insurance policy before the Court is this case looks nothing like the one that was at issue in Aubris. The pivotal difference between the Aubris insurance provision and the one presently before the Court is that the Aubris insurance provision was separate from and additional to the general indemnity agreement, and therefore, the Aubris indemnity provision had no bearing on the scope-of-coverage question. Id. The MSA in this case does not contain a separate and additional indemnity provision. Instead, Basic’s insurance obligations are clearly identified and expressly spelled out in the underlying MSA, making the document not only relevant to, but indeed, a part of the contract itself.
B. Defendants Intended to Provide up to $5 million of Liability Coverage to Endeavor/Exxcel
Since neither ATOFINA nor Aubris force the Court to limit its analysis to the insurance policy exclusive of the underlying MSA, the Court now turns its focus to the task of construing the policy and the MSA it incorporates in order to determine how much coverage Endeav- or/Exxcel are entitled to. Texas law mandates that courts construe insurance policies according to ordinary contract principles, and interpretation of insurance policies is a question of law. New York Life Ins. Co. v. Travelers Ins. Co.,
This case involves an MSA which contains an indemnity provision that expressly requires each party to obtain $5 million in total insurance coverage for the other party. The question in this case is how much insurance Defendants and Basic intended to provide Endeavor/Exxcel. The language of the contract is such that the Court can only answer the question one of two ways. Either Defendants intended to provide Endeavor/Exxcel with a total of $5 million of coverage, or Defendants intended to provide Endeavor/Exxcel all of the insurance coverage that they owed Basic under the Primary, First, and Second Excess policies. Defendants argue that the reference back to the “Insurance Contract” included in the insurance policies coupled with the fact that the “Insurance Contract” (MSA) clearly requires Basic to obtain a total of $5 million in coverage benefitting Endeavor/Exxcel conclusively reveals that Defendants only intended to provide enough coverage (i.e. $5 million) to bring Basic into compliance with its requirements as set out in the MSA.
Plaintiff offers a different interpretation. According to Plaintiff, “even though the parties could have limited the dollar amount of their contractual liability under the mutual indemnity obligations, no limit of liability was established by the MSA.” (Dkt. No. 34-1 at 11). That is, Plaintiff contends that the MSA merely set out the minimum amount of coverage the parties had to obtain for one another. In light of
If deemed true, or even plausible, Plaintiffs suggested understanding of the MSA and Defendants’ intent is legally significant because in Texas, additional rules of interpretation apply where an insurance policy contains an ambiguous term or clause. See Gomez v. Hartford Co. of the Midwest,
The doctrine of contra proferentem is inapplicable to this case since the Court finds that the contract is not subject to more than one reasonable interpretation. While Plaintiff asserts that the MSA only set out the minimum amount of insurance the parties had to provide one another, the Court’s job is to enforce the intent of the parties as manifest at the time of the agreement. Beaston,
IV. CONCLUSION
For the reasons set out above, the Court GRANTS Defendants’ Motion for Summary Judgment (Dkt. No. 25) and DENIES Plaintiffs Motion for Summary Judgment (Dkt. No. 34). The Court further declares that the available limits of the insurance are $5,000,000.00 as set forth in the MSA. It is further noted that the National Union Policy has exhausted its $1,000,000 primary limit, thereby leaving only $4,000,000 to contribute to the underlying lawsuit.
Finally, the Court DISMISSES all motions and relief requested not expressly ruled upon in this motion as MOOT.
Notes
. Hereafter, Endeavor and Exxcel will be referred to as a single entity ("Endeavor/Exx-cel”).
. Since both parties acknowledge that the relevant contractual language at issue in this case is identical in both the First and Second Layer Excess policy contracts, the Court will hereafter refer to the two policies as a single umbrella policy.