Pogo Res. v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 31 January 2022
• Docket Number: Civil Action 3:19-CV-2682-BH
• Parties: POGO RESOURCES, LLC, Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, A MEMBER COMPANY OF THE TRAVELERS GROUP OF INSURERS, Defendant.
• Court: U.S. District Court — Northern District of Texas

POGO RESOURCES, LLC, Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, A MEMBER COMPANY OF THE TRAVELERS GROUP OF INSURERS, Defendant.

Civil Action No. 3:19-CV-2682-BH

United States District Court, N.D. Texas, Dallas Division

January 31, 2022

Consent Case^[1]

MEMORANDUM OPINION AND ORDER

IRMA CARRILLO RAMIREZ, UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendant St. Paul Fire and Marine Insurance Company's Motion for Partial Summary Judgment, filed July 14, 2021 (doc. 72), and Plaintiff's Affirmative Motion for Partial Summary Judgment on its Declaratory Judgment and Breach of Contract Claims, filed July 14 2021 (doc. 75). Based upon the relevant filings and applicable law, both motions are DENIED in part and GRANTED in part.

I. BACKGROUND

This is an insurance coverage dispute between Pogo Resources, LLC (Plaintiff), a Texas oil and gas company, and St. Paul Fire and Marine Insurance Company (Defendant). (See doc 63.)^[2]

A. Insurance Policies

Defendant issued Plaintiff commercial general liability (CGL) and umbrella excess protection (Umbrella) insurance policies for its oil and gas operations, effective from March 1, 2017 to March 1, 2018 (collectively Pogo Policy). (docs. 74-3; 74-4; 77-1 at 87-150; 77-2.) Paladin Energy Corporation (Paladin) was a Dallas-based oil and gas company that owned and operated oil and gas assets in Texas and New Mexico. (docs. 63 at 2; 65 at 2.) Defendant separately issued Paladin CGL and Umbrella insurance policies for its oil and gas operations, effective July 1, 2016 to July 1, 2017 (collectively Paladin Policy). (docs. 74-1; 74-2; 77 at 8-149; 77-1 at 1-85.) The Pogo and Paladin policies generally provide the named insured coverage for, among other things, bodily injury and property damage and pollution clean-up costs. (docs. 74-1 at 85-88; 74-2 at 35-38; 74-3 at 115-18; 74-4 at 48-51; 77 at 91-94; 77-1 at 34-37; 77-2 at 24-27, 105-08). The main forms of the Pogo Policy are identical to the main forms of the Paladin Policy.^[3] (docs. 74-1 at 84-121; 74-3 at 115-48; 74-4 at 1-3; 77-2 at 24-60; 77 at 90-127.) Both provide, in relevant part:

What This Agreement Covers

Bodily injury and property damage liability. We'll pay amounts any protected person is legally required to pay as damages for covered bodily injury or property damage that:

● happens while this agreement is in effect; and

● is caused by an event.

***

Property damage means:

● physical damage to tangible property of others including all resulting loss of use of that property; or

● loss of use of tangible property of others that isn't physically damaged.

***

Event means an accident, including:

● continuous or repeated exposure to substantially the same general harmful conditions; and

● a sudden and accidental pollution incident.

***

Pollution clean-up costs. We'll pay amounts you voluntarily incur, or you or any other protected person is legally required to pay, for covered pollution clean-up costs that are incurred for a sudden and accidental pollution incident which:

● begins on a specific date and at a specific time while this agreement is in effect;

● results from your work or your completed work in the performance of your oil or gas operations, other than any work that is or was performed at, on, in, or from a waste site; and

● doesn't result from any intentional and willful violation of any governmental law, regulation, or rule by you or anyone acting on your behalf.

***

Pollution work means:

● the testing for, or monitoring, cleaning up, removing, containing, treating, detoxifying, or neutralizing of, any pollutant; or

● the responding to, or assessing, in any way the effects of any pollutant.

Pollutant means any solid, liquid, gaseous, or thermal irritant or contaminant, including:

● smoke, vapors, soot, fumes;

● acids, alkalis, chemicals; and

● waste.

Waste includes materials to be recycled, reconditioned, or reclaimed.

But we won't consider waste to include:

● any substance produced from any well that results from your oil or gas operations, but only while such substance is located at, on, or in any premises, site, or location where such operations are being performed;

● any substance injected into any well to produce oil or gas in your oil or gas operations, but only while such substance is located at, on, or in any premises, site, or location where such operations are being performed; or

● glycol or any other machinery or equipment operating fluid that was used in your oil or gas operations, but only while such substance is handled or stored at, on, or in any premises, site, or location where such operations are being performed.

For the purposes of this paragraph, your oil or gas operations doesn't include:

● the part of oil or gas lease or well operations that includes the ownership of any plugged and abandoned well; or

● any operations described as Your oil or gas operations in the Broadened Defined Meanings Table in the Coverage Summary.

Your oil or gas operations means any of the following operations, including supporting operations for any of those operations, that are or were performed by or for you:

● Gasoline recovery from casing head or natural gas.

● Oil or gas lease or well operations.

● Cleaning, drilling, re-drilling, servicing, shooting, or swabbing of, or other operations performed on, oil or gas wells.

● Installation or recovery of casing in oil or gas wells.

● Installation, service, or repair of equipment, machinery, tanks, electrical or water lines, flowlines, or gathering lines, or site preparation or construction, at, on, in, or next to any oil or gas lease or well site for oil or gas lease or well operations at, on, or in such site.

● Described oil or gas pipeline operations.

● Geophysical exploration for oil or gas.

● any operations described as Your oil or gas operations in the Broadened Defined Meanings Table in the Coverage Summary.

Your oil or gas operations also means any other operations that are or were performed by or for you at, on, or in any oil or gas lease or well site for oil or gas lease or well operations there.

But we won't consider your oil or gas operations to include:

● the transporting, handling, storage, disposal, or processing of any pollutant; or

● pollution work;

unless such operations are or were performed at, on, in, or next to any premises, site, or location which:

● you rent or lease from others, own, or operate; or

● the lease or well operator operates.

***

Oil or gas lease or well operations means the ownership or operation of:

● any oil or gas lease or well; or

● any other well that's part of operations for any oil or gas lease or well.

***

Pollution means any actual, alleged, or threatened discharge, dispersal, escape, migration, release, or seepage of any pollutant.

***

Waste pollutant means any pollutant that is or was at any time transported, handled, stored, treated, disposed of, or processed as waste by or for:

● any protected person; or

● any person or organization for whom any protected person may be legally responsible.

***

Sudden and accidental pollution incident means the discharge, escape, or release of a pollutant that:

● is sudden and accidental;

● is first known within 30 days of its beginning by you or any of your employees, your operating agent or any of its employees, your pumper-gauger or any of its employees, or any other applicable person or organization;

● any protected person, your operating agent, or your pumper-gauger attempts to end as soon as possible after it first becomes known by you or any of your employees, or your pumper-gauger or any of its employees; and

● is reported to us under this agreement within 90 days after it first becomes known to you or any of your employees, your operating agent or any of its employees, your pumper-gauger or any of its employees, or any other applicable person or organization.

***

Exclusions - What This Agreement Won't Cover

***

Pollution clean-up costs that result from your products. We won't cover pollution clean-up costs that result from your products.

Pollution injury or damage. We won't cover injury or damage or medical expenses that result from pollution.

But we won't apply this exclusion to bodily injury, property damage, or medical expenses that result from:

● building heating, air conditioning, or water heating equipment fumes, smoke, soot, or vapors;

● contractor or service work materials fumes, gases, or vapors;

● hostile fire heat, fumes, or smoke; or

● mobile equipment operating fluids.

Nor will we apply this exclusion to:

● bodily injury or property damage that results from your products or your completed work, other than waste products or completed work; or

● premises damage that results from fire.

Also, we won't apply this exclusion to bodily injury, property damage, or medical expenses that result from a sudden and accidental pollution incident which:

● begins on a specific date and at a specific time while this agreement is in effect;

● takes place at, on, in, or from a protected person's premises or protected person's worksite, other than any such premises or work site that's a waste site, or takes place in the course of described transportation operations being performed by or for you;

● doesn't involve any pollutant that's a waste pollutant at the time of its discharge, escape, or release;

● doesn't result from pollution work by or for any protected person or others unless such work qualifies as your oil or gas operations; and

● doesn't result from any intentional and willful violation of any governmental law, regulation, or rule by you or anyone acting on your behalf.

***

We'll consider all such bodily injury and property damage that results from a sudden and accidental pollution incident to happen at the

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