Liberty Mutual on hook for Gulf oil spill attorney fees

From left, William Lemmer general counsel, Cameron International Corp., Vincent Foley, partner, Holland and Knight, and Tom Galligan, president and professor, Colby-Sawyer College, wait to testify on / AP

Liberty Mutual Insurance Co. is liable to pay attorney's fees to Houston-based Cameron International Corp. in litigation stemming from 2010's Deepwater Horizon oil spill, says a federal appeals court, in reversing a lower court ruling.

The U.S. Court of Appeals for the 5th Circuit in New Orleans also affirmed a grant of summary judgment by the U.S. District Court in New Orleans on Cameron's breach of contract claim in the case.

It also asked the Texas Supreme Court to consider whether Boston-based Liberty Mutual violated the Texas insurance code by wrongfully denying Cameron's claim, according to Thursday's ruling in In Re: Deepwater Horizon, Cameron International Corp. v. Liberty Insurance Underwriters Inc.

In 2014, the U.S. Chemical Safety Board held that a faulty blowout preventer made by Cameron was a factor in the Deepwater Horizon oil spill, which killed 11 men and released more than 4 million barrels of oil into the Gulf of Mexico.

According to the unanimous three-judge appeals court ruling, only Liberty Mutual among Cameron's insurers objected to a $250 million settlement Cameron reached with BP P.L.C. in connection with the incident, and refused to offer its policy limits of $50 million. Cameron filed litigation in the matter in January 2012.

“Cameron did not waive, impliedly or otherwise, its claim for attorney's fees incurred in this litigation,” said the panel, in overturning the lower court's ruling on the issue and remanding the issue to the lower court for a determination of the total.

In affirming the lower court's breach of contract ruling, the panel said there was coverage under Cameron's policy. “In our view, Cameron's interpretation is reasonable, and Liberty's is not,” said the ruling. The policy's “plain language” support's Cameron's reading.

Cameron's law firm, New York-based Willkie Farr & Gallagher, L.L.P. said in a statement Cameron is now entitled to $58 million plus attorney's fees.

Liberty Mutual said in a statement it cannot provide a comment because the matter is still in litigation.