Summary
The Fifth Circuit affirmed summary judgment for Liberty Mutual in a declaratory judgment action concerning whether a commercial insurance policy required a defense and indemnity for pollution-related property damage. Applying Texas law, the court held that the Underground Resources and Equipment Coverage endorsement and the Total Pollution Exclusion were not irreconcilable, because the supplemental endorsement still covered non-pollution property damage.
Topics
Practice areas
Questions Presented
- Whether the Total Pollution Exclusion and Underground Resources and Equipment Coverage endorsement were irreconcilable under Texas law.
- Whether the Total Pollution Exclusion barred coverage for the pollution-caused property damage alleged in the Louisiana lawsuit.
- Whether Liberty Mutual owed Linn a duty to defend or indemnify in the underlying Louisiana lawsuit.
Holdings
- Under Texas law, policy provisions are irreconcilable only when they contradict to the point that one completely negates or renders superfluous the additional coverage provided by the other. The Total Pollution Exclusion did not render the Underground Resources and Equipment Coverage endorsement wholly meaningless because the endorsement continued to cover non-pollution property damage.
- The Total Pollution Exclusion unambiguously excluded coverage for property damage caused by pollution, contamination, or seepage, and the Underground Resources and Equipment Coverage endorsement did not override that exclusion.
- Liberty Mutual had no duty to defend or indemnify Linn for the pollution-related claims alleged in the Louisiana lawsuit.
Key quotations
“Under Texas law, which the parties agree applies in this diversity action, two provisions of an insurance policy are irreconcilable only when they contradict to the point that one would completely “negate or render superfluous the additional coverage” provided by the other.” (426)
“Reading the instant TPE to exclude the pollution-caused property damage alleged in the Louisiana lawsuit does not render the UREC wholly meaningless.” (426)
“Indeed, the TPE is exactly what it purports to be: a total pollution exclusion.” (426)
Factual background
A Louisiana lawsuit alleged that Linn's pipeline leaked saltwater, brine, and other contaminants, polluting the complainants' property. Liberty Mutual had issued Linn a commercial insurance policy containing an Underground Resources and Equipment Coverage endorsement and a Total Pollution Exclusion endorsement. Linn contended that the supplemental endorsement restored coverage for the alleged property damage, while Liberty Mutual argued that the pollution exclusion barred coverage.
Procedural history
Liberty Mutual brought a declaratory judgment action regarding coverage under a commercial insurance policy. The district court granted summary judgment to Liberty Mutual, concluding that the policy's Total Pollution Exclusion barred coverage for the alleged pollution-related property damage and that the Underground Resources and Equipment Coverage endorsement did not supersede the exclusion. The Fifth Circuit affirmed.