BP, Transocean Wrangle Over Insurance

     NEW ORLEANS (CN) – BP wants to make sure it remains eligible for the $750 million in liability insurance Transocean held for the Deepwater Horizon in two policies, its attorneys told a federal judge during an oil spill status conference Friday.




     Since the last status conference, two insurance complaints regarding the policies were transferred to New Orleans from the Southern District of Texas, to be heard by U.S. District Judge Carl Barbier’s.
     The cases are Certain Underwriters at Lloyds of London et al. v. BP plc et al. and Ranger Insurance Limited v. BP plc.
     At issue is the scope of BP’s additional insured status under the policies.
     The insurers seek a declaration that to the extent they provide the “additional insured” coverage to BP, that coverage is limited to the scope of the “indemnity” that Transocean agreed to provide to BP in the drilling contract that applies to the Macondo well.
     BP filed a counterclaim in the Ranger suit, seeking a declaration that the insurers provide coverage for claims arising out of the Deepwater Horizon matter without any such limitation.
     BP also filed a cross-claim in the Ranger case against certain Marine Package Insurers concerning marine losses.
     In turn, Transocean Marine Package Insurers filed a counterclaim for loss of the Deepwater Horizon hull, in the amount of $560 million.
     Because the issues in the insurance cases are unrelated to issues in the four “pleading bundles” created so far in the multidistrict litigation, Judge Barbier said it may be appropriate to create an “insurance pleading bundle.”
     Jim Roy, of the plaintiffs’ steering committee, told Barbier that the steering committee is “keenly interested” in anything dealing with insurance.
     “We certainly want to be a part of that, to at least monitor it, if nothing else,” Roy said.
     Steven Roberts, an attorney for Transocean, said Transocean is likely to move to stay the insurance complaints in favor of arbitration.
     “We believe this is a contractual matter, and should be eligible for arbitration,” Roberts told the court.     
     So far, 298 cases have been transferred to the New Orleans Federal Court. Together with the cases originally filed in New Orleans, 397 cases, of which 357 are active, have been filed since the Deepwater Horizon explosion in April 2010, killing 11 and setting off the worst oil spill in U.S. history.
     Judge Barbier cautioned again that “the number of cases is a little misleading in terms of magnitude and scope” of the Deepwater Horizon disaster.
     While only about 400 cases have been filed, there are thousands of plaintiffs.
     At least 15 oil spill-related suits are pending in state courts, including three cases in Alabama, seven in Texas, two in Louisiana, one in Florida, one in California, and one in Georgia.
     On Feb. 1, BP filed a motion seeking to create a state-level multidistrict litigation in Texas to consolidate the Deepwater Horizon lawsuits pending in Texas state courts.
     In addition, there are at least eight shareholder derivative lawsuits related to the oil spill pending in at least four state courts, including Louisiana, Delaware, Texas and Alaska.
     Extensive written discovery and document production in the consolidated litigation is under way. As of Friday’s hearing, 12 depositions had been taken; a thirteenth was being conducted simultaneously with the hearing.
     Don Haycraft, an attorney for BP, told the court that BP so far has produced more than 2 million documents. Haycraft said that Transocean has produced 286,552 documents.
     The deadline to file claims in the pending Transocean limitation trial is April 20.
     The limitation trial is set to begin Feb. 27, 2012.
     Urging focus and organization from the parties and their attorneys, Judge Barbier said: “We’re just one year away from this trial, which sounds like a long time, but those of you who are in the business know this isn’t a long time at all.”
     The next status conference is set for Friday, March 25 at 9:30 a.m.

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