*3 LYNN, District Judge: In this insurance coverage dispute, Plaintiff-Appellant Jefferson Block 24 Oil (Jefferson Gas, Block) & appeals L.L.C. grant from the district of summary court’s judgment Defendants-Appel- favor of lees, Limited, Aspen Insurance UK Ace Limited, European Group and Certain Un- Lloyd’s, derwriters at London (collectively Underwriters). reasons, For following *4 we REVERSE and REMAND. I At all times relevant appeal, to this Jef- ferson Block part-owner, was the and sole operator, of seven offshore oil gas and leases, an platform, wells, associated and pipelines located in the Gulf of Mexico. The leases were divided between two dif- ferent lease blocks in High located leases, Island area. Two of the M-103384 M-103385, and were located in High block, others, Island 7 lease and the five M-103386, M-103387, M-103388, M- 103389, M-103390, and were located in the High Island 24 lease block. Jefferson operated also a 16-inch right-of-way oil that connected an pro- offshore facility duction located on one of the leases (argued), High block, Robert E. Holden R. in the Donald Island 24 lease M- Abaunza, Stephen Wiegand, W. Liskow & with a shore. reach- Lewis, P.L.C., Orleans, LA, New for Plain- destination, ing its the pipeline crossed tiff-Appellant. blocks, other including High lease Island where operated Jefferson Block certain Johnson, Harry Alston III (argued), leases, and several others where held no Dunbar, L.L.P., Phelps LA, Rouge, Baton interests. Cooper, Rebecca Yvonne Richard N. Di- Dunbar, L.L.P., charry, Phelps New Or- 5, 2007, On November there was a sud-
leans, LA, Defendants-Appellees. for den in pressure decrease in the 16-inch
pipeline while Jefferson Block filling the pipeline with oil. An investigation re- developed vealed that a leak had in the line, resulting in spill of oil into the Block, BENAVIDES, Gulf of Mexico. acting Before GARZA and *, Judges, Circuit and LYNN under the direction of District a “Unified Com- Judge. consisting mand” of the United States * Judge sitting by designation. District Northern District of Tex- as judgment, governmental summary filed cross-motions other Guard and
Coast court, concluding after district cleanup spill, conducted agencies, did not the costs Policy the OPA cover approximately during which it incurred $3 Jefferson Block sustained a result of in oil “removal” costs. pollution million pipeline, granted leak the 16-inch Un- leak and the At the time of motion, derwriters’ denied Jefferson Block owned a resulting cleanup, Jefferson motion, judgment Block’s and entered Policy for Off- “London OPA Insurance fol- appeal favor Underwriters. This (the Policy) under- Facilities” OPA shore lowed. Underwriters’ written Underwriters. Policy exposure under potential II limited, however, only certain liabilities review the court’s district incurred the re- that Jefferson Block “as novo, judgment grant summary ap de Applicant party Designated sponsible plying the same standards as the district area(s) facility(ies) the offshore set out Saunders, court. DePree 10 of An addi- in Item the Declarations.” (5th Cir.2009). “The court’s district proviso provides tional insurance contract is covers certain liabili- *5 policy question of law that we also review de arising “discharge ties from substan- Ford, novo.” Admiral Ins. Co. v. 607 F.3d discharge tial threat of as to which a facili- (internal (5th Cir.2010) 420, 422 quotation (or facilities) in Item ty set out 10 omitted). Summary marks and citation designated the Declarations has been judgment appropriate plead is when “the source.” ings, discovery and materi the disclosure 10 of the Declarations of Item consists file, any als on affidavits show single “Item only a sentence: 10: Sched- genuine any there is issue as materi no to Area(s) ule of and Facilities Offshore al fact that the movant to is entitled (See Thereon: attached form MMS- judgment as a matter law.” Fed. R. 1021).” itself, form dis- genuine P. “A mate 56(c)(2). issue of Civ. below, cussed further detail is titled rial fact if exists the evidence is such that Facilities,” “2 “Covered Offshore and lists jury could return for reasonable a verdict Locations Covered Offshore Facilities.” the Paz non-moving party.” v. Brush En Specifically, the form lists Lease Numbers Materials, Inc., 383, gineered 555 F.3d 391 to in the High M-103384 M-103385 Island (5th (internal Cir.2009) quotation marks block 7 lease on one line and Lease Num- omitted). assessing and citations “When through bers in the M-103386 M-103390 any fact dispute whether a material High Island 24 lease block a second exists, all we consider of the evidence spe- line. The MMS-1021 form does not from making record but refrain credi cifically pipeline. reference bility determinations or the evi weighing Jefferson Block submitted claim under dence.” Delta & Pine v. Na Land Co. for indemnification of the Co., tionwide Ins. F.3d Agribusiness 530 in responding (5th Cir.2008). removal it incurred 395, costs reviewing 398-99 “In record, leak. Underwriters denied the entire we consider all evidence claim, Block and Jefferson filed suit light non-moving in a most favorable against Underwriters in the Eastern Dis- all party and draw reasonable inferences Specifically, trict of Louisiana. non-moving party.” in favor Frakes alleged 426, wrongful- Corp., that Underwriters 579 429- Crete Carrier F.3d (5th Cir.2009) (internal indemnify quotation it for oil ly pollution refused 30 marks omitted). parties removal costs. The thereafter and citation
589
ted)).
III
If the court concludes that
poli
cy
ambiguous, however,
pro
should
presents
This case
an insurance
ceed to the
step.
second
coverage dispute governed by New York
law.1 “It is well established under New
Once the court has concluded
York
a policyholder
law that
bears the
policy
ambiguous,
the burden
showing
burden of
that the insurance con
shifts to the insurer to prove
pro
that its
tract covers the
Morgan Stanley
loss.”
posed interpretation of
is the
Co.,
Grp.,
England
Inc. v. New
Ins.
225
Morgan
Inc.,
correct one.
Stanley Grp.,
(2d Cir.2000).
F.3d
A court inter
A Exxon oil to the Valdez response analysis, of our begin Alaska, Sound, and in Prince William spill language course, express with law so federal intended to streamline Found., 189 Andy Warhol Policy. OPA cleanup of and efficient provide quick toas lan considering that 215. Before at F.3d spills, victims of such compensate spills, oil detail, though, “[a]l- we note guage spills within the costs internalize and of an unambiguous terms and though clear industry.” Rice Harken petroleum plain their given be policy must insurance (5th Exploration of an language ordinary meaning, and Cir.2001). previously has this court As construed with be policy must insurance liability noted, imposes strict “[t]he [Act] risk, subject matter to the reference discharge for the responsible on Speed Car policy.” Show of the purpose provides: Id. It oil.” Co., 192 Fid. & Guar. Shop, v. U.S. Inc. or party for vessel responsible [E]ach (1993) 596 N.Y.S.2d A.D.2d discharged, or which oil is from omitted). case, we be (citations In this threat of the substantial poses which pur matter and the subject lieve oil, upon naviga- into or discharge impor Policy both shed of the OPA pose or the adjoining shorelines ble waters express meaning light tant for the is liable economic zone exclusive and, aid our in order to policy, terms of n damages specified costs and removal consider policy, we (b) from such inci- that result subsection them first. dent. 2702(a). relevant to this As 33 U.S.C. par- case, requires responsible also the Act subject First, clear quite it is evidence ties to establish maintain was Jefferson matter of to as referred responsibility, financial the Oil under potential Block’s liabilities § 2716. OSFR.2 U.S.C. § 2701 et Act of 33 U.S.C. Pollution fa- to offshore Act). respect (the Importantly, rec- the district court seq., As *7 cilities, only requires Act evidence with Policy “replete ognized, the OPA was offshore for those responsibility financial In- Act].” it to tie[d] [the language spill have a oil facilities that worst-case OPA deed, Insuring Agreement to the 1,000 than bar- of more discharge potential for Policy expressly provides indemnifica- 2716(c)(1)(A). § oil. 33 U.S.C. arising rels of of liabilities types various tion for off- as covered are known Act,” the OPA Such facilities Part V of under “the and (COFs), regulations and “Definitions,” shore facilities per- states Policy, entitled by Department promulgated ‘the Act’ the words part: tinent “Where Management Service Interior’s Minerals shall Policy they in this Insurance are used ” (MMS)3 for requirements “establish[ ] Act of 1990.... Oil Pollution mean the 2010, Secretary (OSFR) Inte- 3. On June Responsibility Spill Financial 2. "Oil changed which Order No. rior issued capability and means which means Management Ser- the name of the Minerals facili- responsible party for a covered offshore Manage- Energy damages vice to Bureau Ocean for removal costs and ty meet will ment, Or- See Regulation, and Enforcement. Act] Oil [the it is liable Pollution which under (June WL discharges der No. oil-spill and respect to both 2010). change occurred while this discharge of oil.” Because threats of the substantial of con- pending, the interest (2010). case § 253.3 C.F.R. demonstrating OSFR for covered offshore vide evidence of insurance. 33 U.S.C. (COFs) facilities under 2716(e); (2010). [the Act].” 30 § § 30 C.F.R. 253.20 regulations C.F.R. 253.1 de- Both Jefferson Block and Underwriters fine such facilities thus: agree that one of purposes of the OPA (COF)
Covered offshore means a Policy satisfy was to require- the MMS’s facility: ments for demonstrating OSFR. (1) any That includes structure and all components (including its complet- wells ed at the structure and the associated purpose subject With its and matter in
pipelines), equipment, pipeline, or device mind, we now address the express lan- (other than a vessel or other than a guage of the under which Jef- deepwater port or un- licensed ferson Block seeks of the 16-inch (33 Deepwater der the Port Act of 1974 pipeline. Part l of Policy, enti- seq.)) U.S.C. 1501 et used for exploring “Insuring tled Agreement,” provides in for, for, drilling producing or oil or for pertinent part: transporting oil from such facilities. Part 1. INSURING AGREEMENT This includes a well drilled from a mo- In premium consideration of the stated (MODU) drilling bile offshore unit and subject terms, herein and to all of the the associated riser and well control conditions and limitations contained equipment from the moment a drill shaft herein, agree Underwriters in- or other device first touches the seabed demnify the Assured for such amounts for, purposes exploring drilling in excess of the Deductible set out in for, oil, producing or but it does not (the Item 3 of the Declarations “Deduct- MODU; include the and ible”) shall, as the Assured as the re- (2) That is located: sponsible party Designated Applicant of (i) coastline; Seaward of the or area(s) the offshore facility(ies) and set (ii) any portion bay of a that is: Declarations, out in Item 10 of the have (A) sea, directly Connected to the either pay, become liable to pay, by shall through one or bays; more other reason of or with respect to: (B) Depicted in part whole or in Liability FIRST: under Section 1002 of map USGS listed in the Appendix to this Pollution for discharge [Oil Act] part, any map published or on by the 1001(23) oil as defined in Section USGS that ais successor to and covers Act, or the substantial threat of a dis- all or part of the same area as a listed charge of oil upon into or the navigable map. any portion Where of a bay is waters or adjoining shorelines or the *8 included on a map, listed this rule ap- exclusive economic zone of the United plies bay; to the entire and States of America for specified [certain (3) That oil-spill has a worst case dis- removal costs or damages]. charge potential 1,000 of more than bbls oil, of or a if lesser volume the Director 1 Part also provisos, includes several one in writing determines that oil-spill the of which requires “that the discharge or discharge justifies risk requirement the discharge” substantial threat of that gives to demonstrate OSFR. to liability discharge rise “is a or substan- 30 C.F.R. discharge 253.3 One method of tial threat of as to which a facili- (or facilities) demonstrating OSFR for a to pro- ty COF is set out Item 10 of the sistency designation. we will continue to use the MMS 592 3 designated as the has
Declarations been 1014(a) the pursuant source to Section court, the interpreting The district Act____” Item 10 of the part, For its below, proceedings the Policy during single sentence. Declarations consists following the conclusions with re- reached of Offshore It “Item 10: Schedule reads: First, to the spect policy’s language. the (See Area(s) at- and Facilities Thereon: pol- district court concluded that “the OPA MMS-1021).” form tached clearly icy unambiguously and cover[ed] a form created form is MMS-1021 The on the listed on the COFs located leases MMS, Depart- the branch the note, court to MMS-1021.” The went on responsible for en- ment of the Interior however, “it clear [was] that whether Act. forcing requirements the OSFR ‘located’ on [was] the applicant4 uses the MMS- designated A Accordingly, the these leases.” district the the identify to to MMS form Policy court the OPA concluded facilities applicant’s “covered offshore ambiguous respect to whether the by my application be covered for certifica- located on the leases pipeline was identi- important charac- tion of One [OSFR].” fied on the MMS-1021 form. the the form is that teristic of MMS-1021 appeal Jefferson Block contends on the of an form asks for locations the district court erred in its applicant’s covered offshore facilities—not plain the OPA and that the lan- specific the facilities themselves. list of Policy unambiguously guage Facil- The form is titled “Covered Offshore includes the 16-inch within the desig- includes in which a ities” and a table scope coverage. of its Jefferson Block’s cov- applicant nated lists the locations of First, argument proceeds stages. in three using following ered offshore facilities the *9 “AREA” express only form includes no to the MMS-1021 uses word reference once, pipeline. High and that one it identifies time § designated applicant "person 4. The is the of-use and easement.” 30 C.F.R. 253.3 responsible designate to demonstrate lease, permit, right- for a COF OSFR on a or ted)). just MMS-1021 Item contemplates Island as the “Area.” does not Therefore, identify any area, not “facilities.” designation of an offshore but also plain meaning Insuring of the the designation of facilities located within Agreement and 10 of the Declara- Item that offshore That the OPA Policy area. coverage applies tions is that to the includes a proviso coverage that limits High any Area and Island Offshore “fa- “a discharge or substantial threat of dis- cilities” thereon. (or charge facility facilities) as to which a dispute Since there is no 16-inch set out in Item 10 of Declarations has “facility” entirely was a located been designated as the source” but- area,5 High Island offshore Jef- within tresses this conclusion. Policy ferson Block contends the OPA Second, argument Jefferson Block’s also unambiguous coverage and extends fails to account for the fact that Item pipeline. by naming MMS-1021 as the “Schedule of reject argument, We Jefferson Block’s Area(s) Thereon,” Offshore and Facilities proposed interpretation its because incorporates into insurance contract Policy the express OPA conflicts with lan- form, just the entire MMS-1021 not guage Item 10 and Block’s parts of the form that reference High form, as the purposes as well Island area. The MMS-1021 form is enti- tled “COVERED OFFSHORE FACILI- begin analysis plain our with the TIES,” proceeds and to list the locations of language of Item 10. Jefferson Block’s covered offshore facilities “to be covered that, argument presumes first for an in- by application [Jefferson for certi- Block’s] facility, of a sured obtain Item fication of spill oil financial responsibility.” only requires designate that the insured The form identify does not the locations of facility offshore area on which these covered offshore facilities through 10, however, located. Item references a only, reference to an area name but also Area(s) of “Offshore schedule Facili- through specific reference to block num- proposed ties Thereon.” Jefferson Block’s By bers and focusing only lease numbers. interpretation simply designating an —that High the form’s reference to the Island area is to extend offshore sufficient cover- area, ignores Jefferson Block these more age to all facilities in area —renders specific identifiers. Jefferson Block’s ar- meaningless Item 10’s reference to “Facili- gument ignores also the clear purpose of Ruttenberg Davidge ties Thereon.” Cf. the MMS-1021 form—the identification of Sys. Corp.,
Data 215 A.D.2d “covered offshore facilities” for which a (1995) (“It recog- N.Y.S.2d is a designated applicant seeks to demonstrate nized rule of construction that a court OSFR. not adopt should which short, provide Item 10 exists operate provision will to leave a of a con- (inter- schedule of ... offshore areas and the facili- tract without force effect.” quotation nal marks and citations omit- ties in areas that those offshore “facility,” following pur- 5. does define used for one or more of the for, for, but the poses: definitions section ex- exploring drilling producing, pressly provides phrases "terms and all storing, handling, transferring, processing, or shall, stated, used herein otherwise unless transporting oil. This term includes mo- meaning given have the to them in the [Oil stock, vehicle, rolling tor used for Pollution The Act defines Act].” purposes.” one or more of these 33 U.S.C. structure, structures, “any group equip- 2701(9). ment, (other vessel) or device than a which is *10 that the an- The district court observed accomplishes Item 10 Policy covers. form. referencing the MMS-1021 but clear: by question anything swer to this is task noted, And, already the MMS-1021 pipeline on began The 16-inch Jefferson identify “covered offshore exists form High 24 lease M-103387 Block’s Island designated applicant which facilities” 24A, platform it was where connected we When to demonstrate OSFR. seeks get 6 miles To but it ran to the shore. together, the them we believe read shore, termination on the point to that Item is import of 10 and MMS-1021 75, 90, 89, pipeline High crossed Island Policy pro- Block’s OPA clear—Jefferson 76, 67, where Jefferson facili- coverage for covered offshore vides mapA had no leasehold interests. the on ties at the locations identified suggests nearly area of the 3/4’s form. MMS-1021 leases pipeline was located outside in “[E]very in an clause or word on MMS- that Jefferson Block listed is to have some contract deemed pipeline surance other 1021. crossed these not meaning, policy’s and a terms should pursuant an easement that properties to be or to have superfluous be assumed granted by had been the Texas General State, idly inserted.” Schumann been Thus, it is not so clear Land Office. 987, 990 Misc.2d 610 N.Y.S.2d fairly that the 16-inch can be pipeline (Ct.Cl.1994) (internal marks and quotation facility as a “located” on the described omitted). Additionally, must citations we Likewise, it listed on leases MMS-1021. subject regard the risk and give due “to clear is not pipeline is not so policy.” De purpose matter and of the on some “located” those leases because v. Allstate 81 A.D.2d Forte Ins. portion pipeline undisput- of the 16-inch (1981) (internal cita 442 N.Y.S.2d edly spans Jefferson Block’s leases. omitted). of the interpretation tion explain The district court went on to Policy that was the adopt, OPA we which Policy “ambiguous the OPA is because court, comports adopted one district reasonably suscepti- ‘located’ meaning of plain Policy the OPA language with the more than one Ac- interpretation.” ble to of the promotes purpose cordingly, the court to consider resolved Block’s does nei Jefferson evidence in to determine extrinsic order Accordingly, reject ther. we Jefferson whether the the 16-inch intended plain language Block’s claim facility desig- to be a pipeline within Policy includes the unambiguously OPA nated locations on the MMS-1021 form. its pipeline scope within the Although particular we note that coverage. term that the district court determined ap- ambiguous was —“located”—does agree in the pear Policy, OPA we rejection Block’s Our of Jefferson point. Specifi- court’s more district basic language argument not end our plain does cally, was a covered pipeline whether Rather, simply however. re- inquiry, (or more offshore “located” interpreta the issue. frames Under “thereon”) properly one of the lease blocks adopt, the rele tion we on the form cannot identified MMS-1021 is, correctly as the court vant issue district to the through determined reference be whether Block’s 16- recognized, Poli- Policy alone. facili OPA Because inch covered offshore inter- cy capable is thus of two different ty “located” on of the lease blocks one on the form. pretations identified which —one *11 by located on the leases listed on the MMS- Underwriters serves to resolve the 1021 form and one which it is not—we ambiguity with respect coverage to agree the district court that policy the pipeline. ambiguous is as a matter of law. See Since the ambigu is Found.,
Andy
at
Warhol
respect
ous with
to
coverage
the 16-inch
(“Where
reasonably
its terms are
suscepti-
pipeline, Underwriters bear the burden of
interpretation,
ble to more than one
proving the
interpreta
correctness of their
policy
regarded
must be
ambiguous.”).
as
tion of
policy
desig
the location
—that
court,
Accordingly, as did the district
we
nations in the MMS-1021 form do not
proceed
step
two of New York’s inter-
(“If
pipeline.
include the
See id. at 276
pretation framework and consider extrinsic
court concludes that an
policy
insurance
is
attempt
evidence in an
resolve
ambi-
ambiguous, then the burden shifts to the
(“When
guities in the policy. Id.
a court
prove
insurer to
its
is
decides, after examination of the contrac-
correct.”). Moreover,
“[i]f
extrinsic
tual
language,
policy
an insurance
is
yield
evidence does not
a conclusive an
ambiguous,
policy
it looks
outside
intent,
swer
parties’
as to the
it
appro
is
evidence, if any,
extrinsic
to ascertain the
priate for a court to resort to other rules
parties.”).
intent of the
construction,
including the contra-insur
B
rule,
er
which
states that
ambiguity in
insurance
should be resolved in
noted,
already
As we have
when
favor of the insured.” McCostis v.
a court determines that an
Home
poli
insurance
Ind.,
(2d
Ins.
cy
ambiguous,
may
“the
Co.
accept
court
F.3d
Cir.1994).
any available extrinsic evidence to ascer
meaning
by
tain the
intended
address
first the extrinsic evidence
during the formation of the contract.”
that addresses whether the
pipe-
16-inch
Morgan Stanley Grp.,
that is po- a discharge it was facilities with worst-case on form because locations listed 1,001 a need of less than barrels that are there existed tential not a COF for which under 30 253.3.6 See not COFs C.F.R. demonstrate OSFR. to appear, No. 2008-N05. It would NTL out, however, points Jefferson Block As then, facility a that can be a “covered the dis- report on which both expert facility” listed on MMS-1021 offshore rely esti- trict court Underwriters Thus, necessarily a being without COF. discharge for all of a worst-case mates pipeline that the 16-inch was not evidence High Is- Block’s in the facilities Jefferson provides insight respect a no to COF with block, including pipeline, land lease facili- pipeline whether the was a non-COF only 666 barrels. If we follow Under- of include ty sought that Jefferson Block to conclusion, argument logical to its writers’ form, especially on its MMS-1021 since 24 lease High on the Island no that none of facilities on the appears qualify would as a COF such block High Island were COFs. lease block demonstrate Block needed to Jefferson Thus, expert point to also evi- the extent Underwriters to extrinsic OSFR. that, rely support on estab- report argument that Underwriters dence to their pipeline was not a COF for whether the 16-inch was a COF lishes not, separately needed to demon- or it needed to listed on which Jefferson Block be OSFR, report coverage also establishes MMS-1021 order for under strate High Policy to Specifically, there were no COFs on the attach. Yet, 24 lease note No. Island block. Jefferson Underwriters that NTL 2008- lease, RUE, High identified its in the N05 states: “Each or permit, leaseholds 24 lease on the MMS-1021 is considered a unique, separate Island block as potential require form and indicated a worst-case COF. On OSFR forms that these shown, 5,000 discharge Accordingly, of to be one must be listed barrels. COFs each individual, inference that can draw from on its own line.” More- single one over, expert report this that Jefferson Block No. 99- argue, is Underwriters NTL voluntarily sought provides separate on its MMS- N01 an exception to include to this actually requirement pipe- facilities that COFs. listing were for “lease term Indeed, notes, “wholly Notices pipelines Jefferson Block that are con- lines”— (NTL) published single to Lessees the MMS tained within the boundaries of a (not lease, leases, expressly provide designated appli- that a unitized contiguous any 6. Underwriters make much of the fact that Block did not intend include facilities prescribes specific the relevant NTL a method problem that were not COFs. with this designated applicant a indicate OSFR course, that, argument, according coverage for facilities with a worst case oil- on, rely expert report that none Underwriters 1,001 spill potential Specifi- under barrels. High on 24 lease of the facilities Island cally, provides NTL No. 2008-N05 if discharge potential block had a worst-case designated applicant wishes to demonstrate 1,000 greater implication than barrels. The coverage OSFR that are not for facilities argument of Underwriters' is thus that Jeffer- COFs, facility(s) “the listed must show COF son Block did not intend cover these oil-spill discharge worst case volume specific because it facilities did not use '<1,001' appropriate barrels in the column on designated by at method the NTL issue. Form MMS- Form and/or then, argument, reject must because Jef- argue 1022.” that the fact that Underwriters Block must have to cover ferson intended any facility Block did not list something High when it Island included 1,001'' "< discharge worst-case volume of block on its lease MMS-1021. its MMS-1021 form indicates that Jefferson discussed, determines cornering) leases of the same owner or MMS (lease implication map of these no- on a operator.” based lease-basis tices, attached). argue, non- Underwriters properties This includes all (also right- pipelines term known as wells, lease pipelines and facilities contained there is no dis- of-way pipelines), of which However, within an individual lease. *13 one, must be pipeline the 16-inch was pute (i.e. pipelines pipe- ROW the 16[-inch] on Form-1021. listed MMS separately base) goes line that to the shore are differently considered is a sepa- noted, however, As the district court —there Also, rate worksheet included for same. regulations publica- or “none of the MMS there is the Form 1021 MMS attached require that the 16-inch expressly tions your be listed on MMS-1021.” More- for reference. pipeline over, we note that the NTLs that Under- The district court concluded that this e- sug- rely guidance on also include writers suggested mail that Block Jefferson gesting separate designation that a required pipeline to list the 16-inch as a pipeline necessary. 16-inch was not NTL separate line on the MMS-1021 if it want- 99-N01, that example, provides No. for ed insurance coverage pipeline, for the be- single operator a lease with a contains “[i]f pipeline right-of-way cause the was a facility more than one that can be classi- e-mail, pipeline. Based on this the court COF, only the require fied as a we COF “[c]learly, determined that Jefferson worst case oil largest potential with the experts Block’s own in the area of MMS on the lease to listed in spill discharge be regulatory requirements understood that Moreover, NTL application.” the OSFR lump Jefferson Block would not be able to provides “[pipelines that No. 2008-N05 the 16-inch in pipeline with the other fa- covered OSFR must be recorded cilities that were contained within the in the area and where the block leases listed on the MMS-1021.” in begins.” pipeline began The 16-inch are not that import convinced block, High Island 24 lease where Jef- this e-mail is as the district court suggests. other facilities. operated ferson also notes, ap- As Jefferson Block the e-mail Thus, if requires even NTL No. 2008-N05 pears to communicate worst-case that Jefferson Block treat the as a (or spill potential right-of-way for non- facility, it that separate appears term) pipelines lease is calculated under only required Block was to list one of the applied different formula than that to lease in facilities the lease block the form. pipelines. term A attached to worksheet Accordingly, we do not believe that e-mail, titled “Calculation Worksheet that rely NTLs Underwriters on conclu- Scenario,” Discharge for sup- Worst Case sively resolve the that confronts the issue ports interpretation of the e-mail. court—whether the locations Jeffer- That worksheet addresses worst-case dis- son Block identified on the MMS-1021 charge right-of-way pipe- calculations for pipeline. form included the very like the 16-inch At the pipeline. lines piece The final of extrinsic evidence that least, we cannot conclude that the e-mail request Underwriters the Court consider conclusively in ambiguity resolves the regula- is an e-mail from Jefferson Block’s respect with of the consultant, That tory Roberta McClure. pipeline. pertinent part: e-mail reads short, any we do not believe are the worksheets that Attached OSFR the extrinsic evidence the record conclu- you determining will assist how coverage you sively pipe- much will need. As we resolves whether the 16-inch appeal, Underwriters reassert coverage un- On entitled line was argument and contend Thus, district court’s Policy. der not benefit from an Jefferson Block should of law question remains a the contra-insurer rule be- application of Rose & Kier- Primavera v. court. See policy language was disputed cause “the Inc., N.Y.S.2d nan, A.D.2d furnished, drafted, completed by circum- 223, 224 Under such Specifically, Underwriters policyholder.” stances, ... to resort to appropriate “it is d’etre is to contend that the rule’s raison construction, including the other rules for an ambi- prevent party responsible rule, which states contra-insurer typically will be the insurer guity, which be policy should ambiguity in an insurance benefitting from policy, the drafter of the insured.” McCos- resolved favor *14 it In this ambiguity from the created. tis, now consider F.3d at 113. We case, ambigui- note that the Underwriters the contra-insur- apply we should whether scheduling in the ty at issue exists rule in this case. er form, and that facilities on the MMS-1021 C that form. Ac- completed Jefferson Block Underwriters, the extent cording “[t]o to below concluded The district court by completed the form as appli rule was not that the contra-insurer Jefferson as to whether agents ambiguous or its was the apply It refused to cable in this case.7 covered, the traditional pipeline the was First, court the rule for two reasons. drafter against construction the insurer as at least that Block is reasoned Jefferson apply.” does not ambiguity for the because partly blame form without completed the MMS-1021 persuaded by are not Underwriters’ Second, the listing pipeline. the 16-inch that the district arguments, and we believe Roberta McClure e-mail court cited the the it refused to construe court erred when evidence that “Jefferson Jefferson as Policy in favor of ambiguity in the OPA regulatory specifi consultant Block’s own sure, Block. To be some New Jefferson very omis cally identified to its client apply have York courts declined to the 16-inch respect sion with part in on the contra-insurer rule based respect to ambiguity that with led to crafting terms insured’s involvement in we have al particular facility.” See, As e.g., Cum- disputed of the noted, ready mins, we do not believe A.D.3d Inc. v. Atl. Mut. Ins. conclusive, (2008) see e-mail is and we (declining McClure 867 N.Y.S.2d why prevent appli it would 'the against no reason defendant insurer to construe term rule in this concept origi- cation of the contra-insurer and terms where “the basic Thus, turn to the first reason ... so- plaintiff, plaintiff [was] case. we nated with Jef in craft- provided' phisticated that the district court and ... instrumental —'that partly responsible agreement, ing parts ferson Block is at least various company, an had respect ... while not insurance ambiguity for the an bargaining power and acted like equal pipeline. against ap- policy Under- would be construed Specifically, 7. the district court refused to coverage.” See also ply expectations” writers and in favor of the “reasonable doctrine. York, expectations” 1-5 New In New the "reasonable Appleman Jeffrey Thomas, on Insur- E. (identi- (2010) materially 5.05 differ from the doctrine does not Library ance Law Edition rule, fying "us[es] a state that point the district court New York as contra-insurer expectations terminology when doc- of reasonable implicitly made when it described the doctrine”). proferentem any ambiguity applying the contra applying trine as "such number, by listing or it in maintaining right-of-way a self- company by insurance retention”); appendix v. Bir- attached to the form. As the Metpath Inc. insured Pa., acknowledged, district court while the 86 A.D.2d Fire Ins. Co. mingham (resolv- (1982) may precise for a more form have allowed 449 N.Y.S.2d policy designation, regulations “none of the MMS in an insurance ing ambiguity publications expressly require or the insured because against broker be listed MMS-1021.” by the insured’s insurance drafted Further, just easily Underwriters could provisions request- were and the contested an actual have included representatives). the insured’s ed facilities, rather than incorpo- schedule However, inapposite are be- such cases form that rating regulatory deals completing Block’s cause Jefferson to fill locations. Jefferson Block’s choice not amount to its MMS-1021 form does provided, out the form as it is MMS-1021 poli- drafting dictating terms of by listing only the lease block on which the Here, undisputed it is cy. pipeline begins, change does not the fact form; out the how- Block filled which, that it was Underwriters after re- ever, it was Underwriters drafted ceiving completed form from Jefferson Policy, incorporating the form as the Block, provision made it a of the OPA *15 Area(s) of Offshore and Facili- “Schedule Policy, without speci- alteration or further Specifically, Thereon.” the record ties fication.8 To the extent Jefferson Block Block sent its demonstrates Jefferson may have had indirect and modest role form to Underwrit- completed MMS-1021 by in creating ambiguity filling the out the quote a rate but that it was get ers to form, MMS-1021 that causal link is one drafted the OPA Poli- Underwriters which wholly of Underwriters’ own creation. form, the which lists locations of cy to use Thus, suggesting the cases an exception to themselves, facilities rather than facilities applicable contra-insurer where insureds Thus, of facilities. the as the schedule actively policy negotiate draft terms are ambiguity respect coverage to is the inapplicable to this case. language policy pre- direct result of the by insofar as that lan- pared Underwriters short, In believe that we the dis incorporates the MMS-1021 form guage trict court erred when it to apply refused policy. into the in the contra-insurer rule this case. As we discussed, responsibility ambigu for the am- have Underwriters’ biguity by possibility respect not diminished ous with to the issue of pipeline. Block could have recorded for Jefferson Block’s 16-inch Jefferson by ambiguity policy’s on the MMS-1021 form its This arises because the Nevertheless, dissent, according language, merely completing regu- to the Jef- but was a 8. Underwriters, power latory ample Block "had to affect the form. It was and Under- ferson so, alone, ambiguity policy at issue here.” Even if this is writers that selected lan- Thus, explain guage incorporating not how in this case that form. even if the dissent does law, “power ambiguity” equates represent current New York to affect the to those cases do, negotiation they they the active of contract terms that and we do not conclude that are justifies inapposite New York courts have held because Jefferson Block "had ‘no some departure the contra-insurer rule. As voice in the selection of lan- [the contractual] from " notes, guage.' Applications Corp. Int'l the dissent those courts have focused Sci. State, 1257, 1259, 60 A.D.3d 876 N.Y.S.2d on whether had "no voice the selec- above, (2009) explained (quoting 182 67 Wall St. Co. v. Frank- tion” of contract terms. As Bank, competed lin Nat’l 37 N.Y.2d 371 N.Y.S.2d when Jefferson Block the MMS- form, (1975)). simply selecting policy 333 N.E.2d 187 was not weight facilities to an the Underwriters. The substantial of insured refers schedule however, that lists the loca- authority, MMS-1021 form of recent York New pipeline— facilities. tions of Whether suggests proferentem should that contra desig- begins at one locations which apply not case. I therefore dissent. this not on the form but crosses others nated party a requires responsible The OPA to a one so “thereon” designated —is maintain, in “establish and accordance with form of on the cannot be the locations by the regulations promulgated Secretary, plain reference through determined responsibility evidence financial suffi- policy. As we noted language of amount cient to meet the maximum above, the evidence in the record extrinsic liability responsible party which conclusively ambigui- resolve this does not subjected....” could be 33 U.S.C. ty. Block offers a reason- Since Jefferson regulations § 2716. implementing The re- able —that submit, responsible quire party to right-of-way pipeline originating one (“MMS”), Management Minerals Service designated on an MMS- lease blocks cases, including, certain in some forms in that designation— is included form designated form MMS-1021. C.F.R. draft completely ambigu- did 253.40(a)(3). purpose of the MMS- Policy, of the OPA the con- provisions ous apply identify rule should the am- 1021 form a filer’s tra-insurer is to covered (“COFs”). resolved in biguity should be favor of the Id. offshore facilities insured, Block. Jefferson ease, however, put has been facility” was a “covered offshore another, purpose: perhaps problematic de- designated on Jefferson Block’s MMS- fining the Block’s scope cover- and thus included form within under As age its insurance coverage afforded scope the OPA majority explains, relying on the MMS- *16 Policy. policy 1021 form scope define regard itself with ambiguity
lends to some reasons, For the aforementioned the dis- in to whether this case is grant summary trict judgment court’s by covered and the case is REVERSED REMAND- ambiguity must resolve that under ED proceedings for further with consistent the laws of the of New York. State “[T]o opinion. law, determine state federal courts look to highest final court of decisions of the GARZA, M. Judge, EMILIO Circuit Pipe Corp. state.” Line Transcon. Gas v. dissenting: (5th Co., 985, Transp. Ins. F.2d 988 953 Gas, 24 & Jefferson Block Oil L.L.C. Cir.1992). a final “In the absence of deci- (“Jefferson Block”) contends that an Oil by highest sion court on state’s (“OPA”) Pollution Act in- policy insurance hand, at duty issue it is the federal of a against spill sures it the costs recent determine, judgment, court to in its best particular right-of-way from a oil highest how court of the state would (“Un- pipeline. policy’s The underwriters presented resolve the if issue derwriters”) contend that the does policy Specialty same case.” Am. Int’l Lines granted summary not. The district court Co., 254, v. Ins. Co. Canal Indem. 352 F.3d Underwriters, judgment to the concluding (5th Cir.2003) (citing 260 Transcon. Gas spills did not reach from Line, 988). Pipe “[A]n F.2d at inter- 953 majority reverses, the pipeline. rely- mediate court decision ing appellate state proferentem, on the rule of contra se,” ambiguity may in the serve as “a policy against controlling per construe but
601
in
A
goal
the federal court
its
review the case law reveals numer
to assist
guide
highest
opinions suggesting
the state’s
ous
that contra
determining
prof
how
apply
Richards v.
erentem will not
where the party
decide the issue.”
court would
seeking the
Prop.
Corp.,
Ins.
benefit
doctrine was so
La. Citizens
(5th Cir.2010).
241,
phisticated
negotiated
legal
instru
244
See, e.g.,
ment at issue.
Applications
Sci.
majority concludes that New York
State,
1257, 1259,
Corp.
Int’l
60 A.D.3d
requires us to resolve this case
law
(3d
2009) (de
182,
Dep’t
876 N.Y.S.2d
184
pursuant
to the
Jefferson Block’s favor
clining
against
to construe contract
proferentem.
traditional
rule of contra
drafter
parties
sophisti
because both
“are
proferentem provides that “in cases
Contra
cated
and there is evidence that
ambiguity,
a contract must be
of doubt
they engaged
negotiations
they
party
strongly against
construed most
worked out some of the details of the
favorably
prepared
party
who
it and
contract”);
Towers
Coliseum
Assocs. v.
who had no voice
the selection of its
Nassau,
562,
Cnty.
565,
2 A.D.3d
769
language.” 67 Wall St. Co. v. Franklin
(2d
2003) (“The
Dep’t
N.Y.S.2d
Bank,
245, 249,
37 N.Y.2d
Nat’l
proferentem
contra
doctrine
inapplica
N.Y.S.2d
ably
apply
not
does
the terms of the contract
to influence
ties);
Holding Corp. v. Atl. Ocea
Oceana
and,
1029(A),
identify
necessary,
if
Inc.,
should be able to
Co.,
2004 N.Y.
4 Misc.3d
na
2246177,
drafting.
at the time of
51122(11),
remedy ambiguities
at *5
WL
Slip Op.
2004)
a thumb on the
party
a
does not need
(Civ.Ct.,
Cnty.,
(stating that
Such
Kings
“
...
scales in its favor.
doctrine’
is
proferentem
‘contra
participat
parties
when both
inapplicable
Block, a com-
It is clear that Jefferson
terms”); accord In
negotiating
ed
expen-
in an
enterprise engaged
mercial
Coverage
11th Liab. Ins.
September
re
sive,
in-
large-scale,
highly
technical
Cases,
118 n.
F.Supp.2d
party.
a
It was
dustry,
sophisticated
(S.D.N.Y.2006) (stating
construing
position to know
party
also the
in the best
‘generally
the insurer “is
policy against
operated.
of the facilities it
the details
sophisti
if
are
inappropriate
both
reason, then,
no
to think that
There is
(quoting DaPuzzo v. Globalvest
cated.’”
sophistication
Block lacked
(S.D.N.Y.2
Co.,
714, 719
Mgt.
F.Supp.2d
ambiguity
at issue
necessary to see
003))).1
turn, then,
here. We should
to whether
however,
a voice in the creation
disregards these
Jefferson Block had
majority,
ambiguous
policy.
terms of the
It is
proferen-
that contra
cases and concludes
stresses,
that,
majority
true
as the
apply
Jefferson Block
tem must
because
rely
chose to
on the
policy
the terms of drafter of
dictat[e]”
did not
“draft[ ]
form. But Jefferson Block
But neither New MMS-1021
the insurance
and, moreover,
out
filled it
purposes
nor the
of contra
filled
form
York case law
ambiguity
justify defining
incorrectly.
the rule’s ex- out
here arises
proferentem
entirely out
Jefferson Block’s answers
narrowly.
proferentem
Contra
ceptions so
form,
incorporate
that “had ‘no to the
not the decision to
designed
protect party
concedes,
majority
the form itself. As the
contractual]
in the selection of [the
voice
”
including a non-
procedure
60 A.D.3d a
exists for
language.’
Applications,
Sci.
facility on an MMS-1021. Jefferson
(quoting
at
1. Our sister circuit once observed that that it is "[i]t profer in New York whether contra priate" apply proferentem unsettled contra to con applies policyholder sophisti is a entem if sophisticated parties. tracts between Int’l entity negotiated contract cated terms.” Corp. v. Commercial Union Ins. Multifoods Co., Stanley Eng. Morgan Grp. Inc. v. New Ins. Co., (2d Cir.2002) (citing 309 F.3d 88 n. (2d Cir.2000). It is not 573). any Fire 949 F.2d at U.S. Ins. entirely the Second Circuit still clear event, duty question our is not to answer this question years views this as undecided. Two it, Circuit would answer but as as the Second Morgan it declared the law unclear in after highest would. New York's court Stanley, the court seemed to revise that esti then, with, ambig- are left is an What we using contract that we must construe
uous interpre- ordinary tools of contractual By my reading, the Underwriters’
tation. closely fit
interpretation seems to most at and the extrinsic evi-
language issue upon by relied the district court.
dence is, terms, its own a list purpose
of locations of COFs. The identify
MMS-1021 is to COFs. most reading is that it is
natural to reach COFs non-
intended and/or properly facilities that are identified
COF in the manner
on the form directed respectful- facilities. therefore
non-COF I
ly DISSENT. JONES,
In re Curtis Movant.
No. 09-1858. Appeals, Court of
United States
Sixth Circuit.
March 2010. notes the Insuring Jefferson Block (1) Region; identifiers: the State OCS Agreement coverage for of “the provides (2) (3) Number; Aliquot Lease area(s) facilityfies) offshore set out (4) Name; (5) Portion; the Block Area Item 10 of the Declarations.” Jefferson (6) (7) Number; Number; Permit Block then out that Item 10 of the points (8) Number; Right of Use/Easement Declarations directs the reader (9) Number; Pipeline Segment MMS-1021 form order to determine the Spill Discharge Oil Potential WorsNCase Area(s) and Facilities “Offshore Thereon” (in barrels). discussed, already As Jeffer- Agreement Insuring covers. Fi- son form Lease Block’s MMS-1021 lists nally, Block Jefferson contends that in the Numbers M-103384 M-103385 unambiguously MMS-1021 form identifies High block on one line and Island lease High area Island as “Offshore through Numbers M- Lease M-103386 under the Area” which extends in the High Island block on argues: assigns High second line. form alia, identifies, inter Island 7 block leases a dis- worst-case “AREA ... “HI.” 1,000 NAME:” It charge calculation of barrels and the “HI” undisputed “High High Island leases a stands block worst-case 5,000 no discharge ambiguity Island.” There is here— calculation barrels.