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Exxon, Lexington dispute over liability after fatal fire must be arbitrated

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A coverage dispute between Lexington Insurance Co. and Exxon Mobil Corp. as an additional insured on a contractor’s liability policy should go to binding arbitration, a Texas appeals court ruled Thursday, overturning a lower court decision.

The claim arose after a fire at Exxon’s refinery in Beaumont, Texas, that injured at least 10, two of whom subsequently died. Three of the workers injured were employees of Brock Services, which was providing scaffolding, painting and insulation services at the refinery, court records show in Lexington Insurance Co. v. Exxon Mobil Corp. before the Court of Appeals of Texas, 9th District, in Beaumont.
 
Under the work agreement, Brock Services was required to name Exxon as an additional insured on all liability policies that the agreement required while Brock worked for Exxon. Lexington, a unit of American International Group Inc., provided an umbrella liability policy to Brock, the ruling said.

After the fire, Exxon sued Lexington after it failed to respond to its demand that the insurer recognize that the umbrella policy covered the energy company.

Lexington filed a motion to compel Exxon to arbitrate the coverage dispute under the arbitration clause in the policy. The trial court ruled last September that the policy was “clear and unambiguous,” that no interpretation was required and denied Lexington’s arbitration motion.

On appeal, Lexington disputed the coverage arguing, among other things, that the agreement between Brock Services and Exxon did not require the contractor to obtain an umbrella policy naming Exxon as an additional insured.

“We express no opinion about whether the trial court properly construed Lexington’s umbrella policy in resolving the parties’ dispute,” the appeals court ruling states. However, “once Lexington and Exxon disagreed about whether the policy covered the casualty, and Lexington established that the umbrella policy contained a valid arbitration agreement that required disputes over coverage to be arbitrated, the trial court was required to submit the matter to arbitration regardless of the merits of the respective parties’ arguments.”