Hunton Insurance Attorney, Sergio F. Oehninger, Explains the Significance of Anadarko's Texas Supreme Court Insurance Win

The Texas Supreme Court has reversed and found that insurers of An a darko Petroleum Corp. Do not use their own policy to avoid coverage for more than $ 100 million or Anadarko's defense costs vote from the 2010 Deepwater Horizon disaster. Law360 interviewed Hunton's Sergio F. Oehninger about the substantial impact the decision will have for policyholders in Texas and elsewhere. Exercises explained how the decision-making fundamental errors at the lower court in the construction of insurance policies and how it describes the proper way to construct words by the insurer that operate to limit or preclude coverage. In the Anadarko the London market policy contained a "joint venture" commission that capped joint venture liabilities at $ 37.5 million. The insures applied to the cap after paying that amount to Anadarko. The Texas Supreme Court rejected the insurers' argument and the decision of the court below, finding that the joint venture commission applies only to "liabilities" ̵

1; that is, amounts Anadarko becomes legally obligated to pay to a third party. Defense costs, in contrast, are not paid to a third party and, thus, are not liabilities within the context of the joint venture commission. The Court also drew on other policy provisions to support the distinction, including provisions that specifically refer to “liabilities” and “defense expenses.” “The Texas Supreme Court's reversal of the appellate panel's ruling serves as a clear pronouncement of both insurance policy construction. rules and proper appellate review in Texas, "Oehninger said." In this regard, the Supreme Court's opinion serves to "right the ship" and bring Texas case law back in line with precedent. "

Sergio's comments and the entire Law360 article discussing the Anadarko decision can be found here. Our blog post discussing the Anadarko decision in greater detail and its implications for policyholders can be found here.