In Evanston Insurance Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660 (Tex. 2008) (op. on reh'g), the Texas Supreme Court addressed "whether a commercial umbrella policy that was purchased to secure the insured's indemnity obligation in a service contract with a third party also provided direct liability coverage for the third party."
ATOFINA contracted with Triple S Industrial Corporation to perform maintenance and construction work at ATOFINA's Port Arthur refinery. Id.
The contract contained an indemnity provision and a requirement that Triple S carry certain minimum levels of liability insurance coverage. Id.
Triple S agreed to indemnify ATOFINA for all personal injuries and property losses sustained during the performance of the contract "except to the extent that any such loss is attributable to the concurrent or sole negligence, misconduct, or strict liability of ATOFINA." Id.
Triple S also agreed to carry at least $500,000 of primary comprehensive general liability (CGL) insurance, "including coverage for contractual liability insuring the indemnity agreement," and an excess (or "umbrella") liability policy "following form for the CGL policy" of at least $500,000. Id. at 662-63.
Triple S purchased a commercial umbrella policy from Evanston Insurance Company. Id. at 663.
Jones, a Triple S employee working at the ATOFINA facility, drowned after he fell through the corroded roof of a storage tank filled with fuel. Id.
Jones's survivors sued Triple S and ATOFINA for wrongful death. Id.
ATOFINA demanded coverage from Evanston as an additional insured under the umbrella policy, but Evanston denied the claim, and ATOFINA brought Evanston into the case as a third-party defendant for a declaration of coverage. Id.
The supreme court noted that, under the terms of the service contract, ATOFINA was not entitled to be indemnified by Triple S if the Jones loss was occasioned in any way by ATOFINA's negligence. Id. However, ATOFINA did not seek indemnity from Triple S; instead, it claimed that it was entitled to indemnification from Evanston by virtue of its status as an additional insured on the umbrella policy Evanston issued to Triple S. Id. at 663-64.
"Instead of looking, as the court of appeals did, to the indemnity agreement in the service contract to determine the scope of any coverage, we base our decision on the terms of the umbrella insurance policy itself." Id. at 664.
The policy provided that ATOFINA was an additional insured:
"A person or organization for whom Triple S has agreed to provide insurance as is afforded by this policy; only with respect to operations performed by Triple S or on Triple S's behalf, or facilities owned by or used by Triple S." Id.
Rejecting Evanston's argument that ATOFINA was not an additional insured because the language did not cover an additional insured for its own negligence, the court held that the injury "respected" operations performed by Triple S because Triple S employed the worker who was performing the operation at the time and place of injury, and that any negligence of ATOFINA did not change the result. Id. at 667.
Therefore, there was coverage under that provision. Id.