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Large US unit loses political dispute over fuel leakage



A policyholder has been in a dispute with a Great American Holding Inc. entity that is partly due to a policy's co-operation clause.

The complicated case of San Antonio-based Petroleum Solutions Inc. and Tulsa, Oklahoma-based Mid-Continent Casualty Co. derives from a leak in an underground fuel tank installed during a truck stop built by PSI in 1997, according to Tuesday's judgment of the 5th US Circuit Court of Appeal in New Orleans in Mid-Continent Casualty Co. v. Petroleum Solutions Inc.

The company for which the tank was installed, Columbus, Georgia-based Bill Head Enterprises Inc., which is no longer in operation, discovered that the fuel had leaked under the system in 2001

, according to judgment.

PSI filed Mid-Continent, with which it had a commercial public policy on the potential claim against it. Both Mid-Continent and PSI believed that the leak was caused by a defective flex connector made by Springfield, Massachusetts-based Titeflex Corp..

Head sued PSI in February 2006 and claimed that PSI was responsible for the faulty flex connector and leak. Mid-Continent adopted the PSI's defense rights reservation. PSI then raised a third party claim against Titeflex, which opposed PSI.

Despite Mid-Continent's call, PSI refused to accept a settlement bid in the Titeflex case, which continued with the trial, with the jury returning a verdict in Head and Titeflex favor, according to them.

Subsequently, Mid-Continent accused the US Tribunal in Houston and requested a Declaration in the case. It also warned PSI that it denied the coverage of the Titeflex judgment, because PSI had violated its policy of co-operation by not cooperating with it in the Titeflex investigation and settlement of counterclaims. It also said that an exclusive to a critically critical approval in its policy excluded coverage, according to judgment.

In a subsequent trial on the issue of whether PSI followed the co-operation clause, the jury found the PSI's service. The Court of Appeal also argued that the professional compensation agreement does not cover the entire Titeflex judgment.

In an appeal, a third panel of the 5th circuit unanimously ruled in favor of the PSI on the question whether the Tribunal's jury clause was an abuse of discretion.

The panel was even turned over by the court and claimed that "Mid-Continent is guilty of PSI coverage for the entire Titeflex judgment."

The case was referred to additional procedures.

We have tremendous respect for the (three) trials that heard this case and issued yesterday's decision but we believe they overlooked or failed to properly consider several problem solutions our customers believe should lead to another conclusion on several important holdings. "Mid-Continent attorney Christopher W. Martin, a partner with Martin, Disiere, Jefferson & Wisdom LLP in Austin, Texas, said in a statement.

" Our customer is eval Uating a movement to reconsider and if desired, we move early and ask for such relief. "

PSI's lawyer could not be reached immediately for comments.

                    


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