Goswick v. Employers' Cas. Co.
| Decision Date | 16 April 1969 |
| Docket Number | No. B--1008,B--1008 |
| Citation | 440 S.W.2d 287 |
| Parties | Leon GOSWICK d/b/a Leon Goswick and Company, Petitioner, v. EMPLOYERS' CASUALTY COMPANY, Respondent. |
| Court | Texas Supreme Court |
Nunn, Griggs & Beall, Charles R. Griggs, Sweetwater, for petitioner.
McMahon, Smart, Sprain, Wilson & Camp, Abilene, Graves, Dougherty, Gee, Hearon, Moody & Garwood, Dan Moody, Jr., Austin, for respondent.
Leon Goswick was removing a defective pump from the hole of an oil well owned by a third party when a damaging fire occurred. Employers' Casualty Company denied coverage under his liability insurance policy; so Goswick settled with the well owner and brought this suit against Employers. Goswick has lost in both the trial court and the Court of Civil Appeals, the latter court saying that the loss was excluded by the policy either as underground damage or as property under the case, custody or control of the insured. 429 S.W.2d 166. We hold that damages to the casing and hold of the oil well were not excluded from the policy coverage, and judgment is rendered for Goswick to that extent.
The facts are not disputed. Goswick was in the oil well servicing business, and on October 28, 1965, was called by Pan American Petroleum Corporation to change the underground pump on one of its wells. The pump was at the bottom of the well hole, about 6,000 feet deep, and was connected to the activating unit on the surface by rods. Ordinarily, the procedure would only require Goswick's employees to pull out the rods and pump, through the tubing (2 3/8 inches in diameter) which is at the center of the well hole, then replace the pump at the end of the rod connections and lower it back into the well. But, as sometimes happens, the pump was stuck and would not come up through the tubing. It became necessary to pull the tubing out of the hold together with the rods and pump. This opened the bore for the escape of gas, and the gas was ignited midway during the lifting operation. The most serious destruction was caused by the tubing within the well dropping back to the bottom of the hole and so damaging the interior hole and casing that Pan American was finally forced to abandon the well.
Pan American brought suit against Goswick for its damages in the amount of $34,764.41. Employers refused to defend the suit and denied all coverage. The suit with Pan American was finally settled at an expense to Goswick of $15,114.50 plus attorneys fees and expenses in the amount of $2,995.28. Goswick seeks to recover the total of these expenses from Employers. Employers' defense is based upon two exclusionary provisions in its policy issued to Goswick. Both provisions apply to the policy's 'Coverage B' which obligated the company to 'pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.'
The policy provided as follows:
'EXCLUSION OF COVERAGE FOR LIABILITY RESULTING FROM UNDERGROUND DAMAGE
It is agreed that with respect to the operations described in this endorsement, including such operations performed for the named insured by independent contractors or their subcontractors:
1. Such insurance as is afforded for Property Damage Liability * * * does not apply:
(a) to injury to or destruction of underground property;
(b) to the increased cost of reducing any underground property to physical possession above the surface of the earth, or to the expense incurred or rendered necessary to prevent or minimize loss of or damage to property resulting from acts or omissions causing underground damage.
2. The term 'underground property', as used in this endorsement, means oil, gas, water or other mineral substances, * * *, which, at the time of the act or omission causing loss of, injury to or destruction of such substance, * * *, has not been reduced to physical possession above the earth's surface; such term also includes any well, hole, formation, strata or area beneath the surface of the earth in or through, which exploration for or production of any such substance is carried on, or any casing, pipe, bit, tool, pump, or other drilling or well servicing machinery or equipment which is located in any such well or hole beneath the earth's surface at the time of the accident causing injury or destruction.'
'DESCRIPTION OF OPERATIONS
Gas Lease Operators--natural gas--all operations
Gasoline Recovery--from casinghead or natural gas
Oil Lease Operators--all operations
Oil or Gas Well Shooting
Oil or Gas Wells--cleaning or swabbing--by contractors
Oil or Gas Wells--drilling or redrilling, installation or recovery of casing.'
In order for the exclusion to apply, the accident must have occurred 'with respect to the operations described.' None of the operations listed expressly cover an independent contractor doing what Goswick was doing in this instance. But Employers contends, and the Court of Civil Appeals held, that this description applies: 'Oil Lease Operators--all operations.' Goswick was not an oil lease operator, but it is reasoned that because he changed the underground pump for the operator, Goswick was within the operations excluded. The description is thus expanded from the operations of the oil lease operator to include the operations of anyone working for the operator. This is not what the language of the policy says, and we see no reason to expand it.
If the insurance company had intended to exclude from coverage the underground damage resulting from operations performed by an independent contractor, it could have so provided. One of the described operations expressly includes contractors ('cleaning or swabbing'). If the description of the operations of the lease operators is to include all performance by contractors, there would be no need to include 'by contractors' in this description relating to cleaning or swabbing of...
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