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Liberty Mutual Fire Insurance Co. v. Axis Surplus Insurance Co.

United States District Court, W.D. Texas, Austin Division

December 14, 2017

LIBERTY MUTUAL FIRE INSURANCE COMPANY, Plaintiff,
v.
AXIS SURPLUS INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, Defendants.

          ORDER

          SAM SPARKS UNITED STATES DISTRICT JUDGE.

         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Defendant Federal Insurance Company (FIC)'s Motion for Summary Judgment Against Defendant Axis Surplus Insurance Company (Axis) [#81], Axis's Response [#90] in opposition, and FIC's Reply [#96] in support; Intervenor Plaintiff First Mercury Insurance Company (First Mercury)'s Motion for Summary Judgment Against Axis [#85], Axis's Response [#91] in opposition, and First Mercury's Reply [#101] in support; Plaintiff Liberty Mutual Fire Insurance Company (Liberty)'s Motion for Summary Judgment Against Axis [#86], Axis's Response [#95] in opposition, and Liberty's Reply [#97] in support; Defendant Axis's Motion for Summary Judgment Against FIC and First Mercury [#88], FIC's Response [#92] in opposition, First Mercury's Response [#94] in opposition, and Axis's Replies [#98] and [#99] in support; as well as Defendant Axis's Motion for Summary Judgment Against Plaintiff Liberty [#89], Liberty's Response [#93] in opposition, and Axis's Reply [#100] in support.[1] Having considered the case file and the applicable law, the Court enters the following opinion and order.

         Background

         This is an insurance-coverage-dispute case related to an oilfield explosion at a wellsite located on Peeler Ranch in McMullen County, Texas. Glenn Weigang was killed and Abel Pena was seriously injured in the explosion. Jt. App. [#82] at 5. Weigang's children filed a lawsuit against numerous entities involved with the wellsite in the 79th District Court of Jim Wells County, Texas. See Weigang v. South Texas Oil Field Solutions, et al, Case No. 14-12-54-002 (Weigang Lawsuit). Pena intervened in the Weigang Lawsuit, and the parties eventually reached an agreement to settle the case. Liberty Mot. Summ. J [#81] at 3, 6. This lawsuit relates to the rights and obligations of the different insurance companies stemming from this incident.

         SEA Eagle Ford, LLC (SEA) and its parent company Sundance Energy, Inc. (Sundance) hired various contractors to perform work at the Peeler Ranch wellsite. SEA entered into a Master Services Agreement with contractor Mesa Southern Well Servicing, LP (Mesa) for Mesa to provide equipment and personnel at the wellsite. See Jt. App. [#84] at 373-77 (Mesa MSA). At the time of accident, Weigang and Pena were employed by and working for Mesa. Jt. App. [#82] at 5. Sundance separately contracted with contractor FESCO, Ltd. (FESCO) to provide equipment and personnel at the wellsite. See Jt. App. [#84] at 379-84 (FESCO MSA).

         FIC and First Mercury both insured SEA and its parent company Sundance. See Jt. App. [#82] at 103 (First Mercury's Commercial Excess Liability Policy No. TX-EX-0000030898-01); id. at 8, 55 (FIC's General Liability Policy No. 3584-24-66 and FIC's Commercial Excess and Umbrella Policy No. 7987-01-90). SEA and Sundance were defendants in the Weigang Lawsuit. Jt. App. [#82] at 5.

         SEA and Sundance's contractors were also insured at the time of the accident. Mesa was insured by Zurich American Insurance Company (Zurich) and Axis. See Jt. App. [#83] at 226 (Zurich's Policy No. GLO 9296632-00); Jt. App. [#84] at 320 (Axis's Excess Liability Policy No. EAU718216/01/2013 to Finley Resources, Inc., Mesa's parent corporation). Liberty insured contractor FESCO. See Jt. App. [#82] at 126 (Commercial General Liability Policy No. TB2-641-443736-023).

         SEA, Sundance, Mesa, and FESCO were all defendants in the Weigang Lawsuit. Liberty tendered FESCO's defense to Sundance, who in turn tendered its own defense and FESCO's defense to SEA's contractor Mesa. Compl. [#1] at 4. The insurers paid to settle the Weigang Lawsuit. As Mesa's insurers, Zurich paid its policy limit of $1 million and Axis paid $10 million of its $25 million policy limit. Jt. App. [#82] at 5-6. Mutual, FIC, First Mercury, and Liberty each paid their respective policy limits. Id.

         Liberty filed this lawsuit seeking a declaratory judgment regarding its duty to defend and indemnify in the Weigang Lawsuit. See Compl. [#1]. After this case commenced, FESCO's other insurer, Commerce and Industry Insurance Company (CIIC), intervened seeking a declaratory judgment regarding the scope and obligations of the various insurers. See CIIC Intervention Compl. [#2]. SEA and Sundance's insurer, First Mercury, also intervened claiming breach of contract against its fellow insurers. See First Mercury Intervention Compl. [#54].

         The parties have filed numerous claims and counterclaims against each other regarding the rights and obligations arising from the explosion at the Peeler Ranch wellsite. By agreement of the parties, the Court issued a bifurcated scheduling order in this case. See Order of April 27, 2017 [#68]. The first phase relates to claims against Axis, and second phase relates to claims against CIIC and FESCO. Id. at 2. The parties have filed summary judgment motions related to claims against Axis pursuant to the Court's order. These motions are fully briefed and ripe for consideration.

         Analysis

         I. Legal Standard-Summary Judgment

         Summary judgment shall be rendered when the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh the evidence" in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

         Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. Id. The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Adams v. Travelers Indent. Co. of Conn., 465 F.3d 156, 164 (5 th Cir. 2006). Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.

         "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which ...


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