Federal Ins. Co. v. Northfield Ins. Co.

Bryan Wagner had previously obtained oil and gas properties in Louisiana from ExxonMobil, and Wagner agreed to indemnify and defend ExxonMobil against various claims and liabilities. Wagner and ExxonMobil were sued for damages in Louisiana by owners of land that is subject to these mineral rights, and ExxonMobil then sued Wagner in Texas state court seeking to enforce Wagner’s alleged contractual obligations to ExxonMobil. Northfield and Federal issued insurance policies to Wagner. Federal acknowledges its duty to defend Wagner in ExxonMobil’s suit, but Federal contends that Northfield also owes a duty to defend Wagner, and Federal seeks a declaration to that effect as well as recovery of 50% of Wagner’s defense costs. The district court determined that Northfield was not obligated to defend Wagner because of a pollution exclusion clause in Northfield’s policy. The court concluded that ExxonMobil has alleged potential claims against Wagner that are not clearly excluded by the Pollution Endorsement, and thus the district court should not have granted summary judgment in favor of Northfield on the basis of that exclusion. The court considered Federal's alternative claim and concluded that the district court did not err in granting summary judgment in favor of Northfield as to Federal's claim that ExxonMobil's allegations against Wagner are covered by his Northfield policy because of the “Underground Resources & Equipment Buyback” (the UREB) Endorsement. Finally, the court concluded that the exception to the Insured Contract exemption applies for purposes of the duty to defend. Accordingly, the court reversed and remanded. View "Federal Ins. Co. v. Northfield Ins. Co." on Justia Law