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Texas high court rules against Lloyd’s in Deepwater Horizon case

Texas high court rules against Lloyd’s in Deepwater Horizon case

The Texas Supreme Court on Friday ruled that Anadarko Petroleum Corp. can pursue Lloyd’s of London underwriters to recover some $100 million in legal defense costs the oil company said it incurred as a result of the Deepwater Horizon disaster.

The Texas Supreme Court ruling in Anadarko Petroleum Corp. and Anadarko E&P Company, L.P., Petitioners, vs. Houston Casualty Company, Et Al., Respondents overturns a 2016 state appeals court ruling that favored insurers.

In Friday’s decision, Texas Supreme Court Justice Jeffrey S. Boyd said that the so-called “joint venture provision” in the insurance policy does not limit the liability of Lloyd’s underwriters for Houston, Texas-based Anadarko’s insured defense expenses.

Justice Boyd remanded the case to a trial court for further proceedings.

The case involves a coverage dispute over legal fees and related costs Anadarko incurred defending against liability and enforcement claims arising from the 2010 Gulf of Mexico oil spill.

Anadarko owned 25% of the Macondo well that was drilled by Deepwater Horizon, which blew out in 2010 and resulted in a massive oil spill.

Anadarko argued that the insurance policy covered all of its defense expenses, up to the policy’s $150 million excess coverage limit. However, Lloyd’s underwriters contended that a policy provision caps the excess coverage, including coverage for defense costs, at 25% of that limit.

A separate dispute between Anadarko and Lloyd’s concerning the amount of defense expenses is yet to be resolved by a trial court.

“We hold only that the joint venture provision does not limit the underwriters’ liability for Anadarko’s insured defense expenses and reach no conclusions as to the actual amount of those expenses, if any,” the Supreme Court said in Friday’s ruling.

Representatives for Lloyd’s and Anadarko did not immediately respond to calls requesting comment.