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CAUSE NO. 2017
TOTAL PETROCHEMICALS & IN THE DISTRICT COURT OF
REFINING USA, INC. and
ACE PROPERTY & CASUALTY
INSURANCE COMPANY
HARRIS COUNTY, TEXAS
KINDER MORGAN PETCOKE, LP and
KINDER MORGAN PETCOKE GP LLC 164th JUDICIAL DISTRICT
KINDER MORGAN’S REPLY IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT ON PLAINTIFFS’ DAMAGES
Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC
(individually and/or collectively “Kinder Morgan”) file this Reply in Support of its Motion for
Summary Judgment on Damages and would show the Court as follows
SUMMARY
Kinder Morgan disputes that Plaintiffs are entitled to any damages because: (1)
Kinder Morgan did not breach the Crane Contract in a way that caused them any damages; and (2)
any damages they incurred were consequential and waived by the Crane Contract. Alternatively,
even if there had been damages caused the breach that were not consequential; Plaintiffs could
only recover $6 million. Plaintiffs’ responses attempt to distinguish cases cited by Kinder Morgan
but they do not provide any law to controvert that the damages they claim are consequential.
Further, the cases they do cite actually support Kinder Morgan’s arguments.
ARGUMENTS AND AUTHORITIES
Plaintiffs’ claims for damages are barred by the Crane Contract as consequential
damages.
The Crane Contract’s purpose was to provide a service to operate a crane that
moves a byproduct of TOTAL’s refinery operations petcoke to a conveyer belt. Plaintiffs’
alleged damages are for amounts they paid to defend and settle claims arising out of the death of
an employee (the Counts’ claims). Although Plaintiffs appear to not even be able to agree on how
Kinder Morgan breached the Crane Contract and how any such breach affects the measure of
damages, in essence, both Plaintiffs claim that but for one of the breaches they would not have had
to pay to defend and settle the Counts’ claims. These alleged damages are classic consequential
damages claims because although they may result “naturally” from an alleged breach by Kinder
Morgan of the Crane Contract, they do not “necessarily” result from it. See Arthur Andersen &
Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). The death of Mr. Counts and the
resulting lawsuit, defense costs, and settlement certainly did not “necessarily” flow from the mere
fact that Kinder Morgan had a different insurance program than Plaintiffs now claim they wanted.
3. Even more, a case previously cited by Plaintiffs is instructive and shows that the
costs Plaintiffs paid to defend and settle their liability in the Counts’ case were consequential in
nature. In Cherokee Cty. Cogeneration Partners, L.P. v. Dynegy Mktg. & Trade, 305 S.W.3d 309,
314 (Tex. App.—Houston [14th Dist.] 2009, no pet.), the Court explained that lost profits can be
classified as either direct or consequential, depending on their nature. Id. at 314. The court
reasoned that profits lost on the contract itself — such as the amount a party would have received
as payment for the performance of the contract minus saved expenses — are direct damages.
Whereas, profits lost on other contracts or relationships resulting from the breach are classified as
indirect or consequential damages. Id. “Stated differently, if a party’s expectation of profit is
incidental to the performance of the contract, the loss of that expectancy is consequential.” Id.
TOTAL’s expectation damages resulting from the coverage available under Kinder Morgan’s
insurance policies are consequential, as the main purpose of the Crane Contract was for the
provision of services related to operating a crane to move petcoke, not to secure insurance for
TOTAL.
2
4. Plaintiffs do not cite to any cases in which a court actually considered whether costs
incurred to defend/settle a third–party lawsuit in the absence of coverage as an additional insured
on the named insured’s policy are direct damages against the named insured, as opposed to
consequential damages. Plaintiffs do cite to cases in which the plaintiffs were able to recover the
costs to defend/settle third-party lawsuits but none of those cases analyze whether those costs were
consequential versus direct damages. TOTAL and CHUBB cite no controverting authority in their
responses that conclusively show that the damages they seek are anything other than consequential
damages, and instead focus their efforts on trying to distinguish cases cited by Kinder Morgan that
show various analogous scenarios were the damages have been classified as consequential.
5. Plaintiffs’ damages, if any, were consequential, and thus waived expressly by the
Crane Contract. Thus, the Court should grant Kinder Morgan summary judgment on this issue.
II. CHUBB’s contract interpretation argument is a non sequitur.
6. In itsresponse, CHUBB makes the argument that because there is an indemnity
provision in the Crane Contract that the rules of contract interpretation would read the
consequential damages waiver out of the contract. This is certainly a novel argument because the
inclusion of both indemnity provisions and a consequential damages waiver in the same contract
is incredibly common. Under the rules of contract interpretation, Texas courts consider the entire
contract, harmonizing and giving effect to all of the contract’s provisions so that none will be
rendered meaningless. Title Res. Guar. co. v. Lighthouse Church & Ministries, No. 01-18-00015-
CV, 2019 Tex. App. LEXIS 6242, at *12 (Tex. App.—Houston [lst Dist] July 23, 2019, no pet. h.);
see Chubb’s Response. However, CHUBB’s argument would erase the consequential damages
waiver (rendering it meaningless) in favor of the indemnity provision. Both provisions can co-
exist in a contract under the corollary rule of contractual interpretation that when reading and
harmonizing all provisions such that none are rendered meaningless, the specific controls over the
3
general. See Nustar Energy, LP v. Diamond Offshore Co., 402 S.W.3d 461 (Tex App.—Houston
[14th Dist], 2013, no pet.)(the parties may choose to set out a general rule in one provision and
exceptions to that rule in other provisions. Thus, to the extent of any conflict, specific provisions
control over more general ones). Based upon this principal of contract interpretation, the general
waiver of consequential damages applies unless the more specific provisions of the indemnity
clause apply. Here, it is not even contested that the indemnity provision does not apply. Thus, the
general consequential damages waiver does apply.
III. Plaintiffs’ damages, if any, are capped at the $6,000,000 combined limits in the Crane
Contract, inclusive of its reasonable defense costs.
7. Even if Kinder Morgan breached in such a way that caused damage that were not
consequential, there is no contractual or legal basis to hold Kinder Morgan liable for amounts
beyond the minimum required combined limits in the Crane Contract of $6 million. Very simply,
if Kinder Morgan breached the Crane Contract by failing to obtain coverage for TOTAL as an
additional insured, and if that breach caused damages, the damages are measured by what Kinder
Morgan should have obtained—$6 million in combined limits. See Exhibit A to Kinder Morgan’s
Motion, Crane Contract, Exhibit X §1.1(b) and (d) at TPR00000581. Plaintiffs’ argument is that
Kinder Morgan breached by failing to obtain the required additional insurance. If correct, nothing
permits Plaintiffs to recover any amount beyond the $6 million insurance requirement of the Crane
Contract.
8. TOTAL’s response cites to Forest Oil Corp. v. Strata Energy, 929 F.2d 1039, 1044-
45 (5th Cir. 1991). Forest Oil Corp. v. Strat Energy, Inc. is not directly on point but actually is
supportive of Kinder Morgan. In that case, the Fifth Circuit resolved Strata’s entitlement to
benefits under two polices. TOTAL only discusses the first policy at issue in Forest Oil —the
American primary policy—under which there was no dispute as to coverage. Id. at 1045. The
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Fifth Circuit did find that Strata could recover up to the limits of that policy, but again there was
coverage under that policy. Id. However, TOTAL does not discuss the Southern excess policy,
which did not provide coverage to Strata and the Fifth Circuit affirmed the judgment that Strata
was not entitled to proceeds under that policy. Id. at 1046. Even more, the Fifth Circuit concluded
there was not coverage under the Southern excess policy because the insurance policy specifically
stated it provided coverage only to “any organization … to whom the Named Assured [Forest] is
obligated by virtue of a written contract or agreement to provide insurance such as is afforded by
this policy … but only to the extent of such [contractual] obligation” and the underlying contract
did not require limits beyond $100,000/$300,000. Id. at 1045. In other words, the Southern excess
policy incorporated limitations based on the underlying contract between the parties, which limited
coverage, and because the underlying contract did not require limits in excess of
$100,000/$300,000, Strata was not entitled to coverage under the Southern excess policy. See id.
9. This case supports the fact that Plaintiffs are not entitled to anything beyond the $6
million combined limits set forth in the Crane Contract.1
10. CHUBB also quotes from Ironshore Specialty Ins. Co. v. Aspen Underwriting, Ltd.,
788 F.3d 456 (5th Cir. 2015). Ironshore is another case that supports Kinder Morgan’s argument.
The court in Ironshore used the underlying contract to limit the coverage available to the additional
insured to the contractually required $5 million of minimum combined limits despite the fact that
the named insured, Basic, obtained policies with $51 million in combined limits. Id. at 458, 463.
1
The case also stands for the proposition that that it is permissible for an insurance policy—such as Kinder
Morgan’s—to expressly incorporate the underlying contract between the parties to limit coverage available under that
insurance policy. Like Strata in Forrest Oil Corp., TOTAL had no coverage under Kinder Morgan’s insurance policy
because the policy incorporate the limits on the contractual indemnity.Therefore, Plaintiffs are not entitled to benefits
under that policy, regardless of what the limits were.
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11. In Ironshore, a fire at a well owned by Endeavor killed two employees of Basic.
At the time of the fire, Basic was performing work for Endeavor under the terms of an MSA. Id.
at 457. The MSA required Basic to obtain at least $5 million of combined limits ($1 million
primary and $4 million excess) that would cover the Endeavor as an additional insured for the
claims based upon the employees deaths. Id. at 458. Basic actually obtained $51 million of
insurance ($1 million primary, $10 million excess, and a second excess policy of $40 million). Id.
The policies did not expressly limit the coverage for additional insureds like Endeavor to the
required $5 million of combined limits.
12. With the tort liability for the two fatalities, likely exceeding $5 million, Endeavor’s
excess insurer, Ironshore Specially Indemnity Company, brought a declaratory judgment against
Basic’s excess insurers. Id. at 458-59. Ironshore contended that Basic’s insurers were obligated to
provide coverage to Endeavor up to the full $51 million limits of their policies because the policies
did not expressly limit the coverage available to an additional insured like Endeavor. Id. In
response, Basic’s excess insurers (referred to collectively as “Aspen”) contended that the insurance
policies incorporated a $5 million limit because the policies referred to the MSA. Id. at 459. Based
upon language in the MSA that is remarkably similar to the language in the Crane Contract, the
Fifth Circuit agreed with Aspen and limited the available coverage to the contractually required
$5 million in combined limits. Id. at 463.
13. The excess policies in Ironshore defined “Insured” parties to include: “(c) any
person or entity to whom [Basic] is obliged by any oral or written Insured Contract … .” Id. at
461. The Fifth Circuit, made an “Erie Guess” based on Deepwater Horizon, and determined that
Endeavor was only entitled to $5 million of coverage under Basic’s insurance policies because
6
Basic was only “obliged” under the MSA to procure insurance with $5 million in combined limits.
Id. at 463.
14. The facts in our case are remarkably similar to Ironshore. Like the underlying
MSA in Ironshore, the underlying Crane Contract here set forth minimum limits of $6 million,
and with respect to additional insureds, the Kinder Morgan’s policy contained language very
similar to the Aspen policies. Specifically, the Kinder Morgan policy defined “Additional Insured”
to mean “any person or organization to whom [Kinder Morgan] is obliged by a written Contract
… .” Thus, for the same reasons held by the Fifth Circuit in Ironshore, the policy limits that would
have been available to TOTAL would be the $6 million that Kinder Morgan was “obliged” to
obtain despite the fact that Kinder Morgan actually obtained insurance policies for itself in excess
of that amount. In the event of a breach by failing to obtain insurance, the law simply does not
permit Plaintiffs to access any coverage beyond the limits required by the contract that was
allegedly breached.
15. Ironshore Specialty Ins. Co. v. Aspen Underwriting, Ltd., could not more clearly
support Kinder Morgan’s arguments that: (1) a policy is permitted to incorporate an underlying
contract that limits the coverage available to an additional insured2; and (2) despite the insurance
limits obtained by and available to the named insured, a Plaintiff seeking damages resulting from
a breach for failure to obtain coverage as an additional insured, is only entitled to the contractual
limits set forth in the provision allegedly breached—here $6 million at most.
2
“[I]nsurance policies can incorporate limitations on coverage encompassed in extrinsic documents by
reference to those documents,” and the “Insured Contract” provision in the policy was a sufficient ground in
Deepwater Horizon to incorporate the contract’s limitation on coverage Id. at 460, 463.
7
CONCLUSION
16. Kinder Morgan disputes that Plaintiffs are entitled to anything because: (1) Kinder
Morgan did not breach the Crane Contract in a way that caused them any damages; (2) any
damages they incurred were consequential and waived by the Crane Contract; and (3) even if there
had been damages caused by the breach that were not consequential, they would have been limited
to the $6 million limits set forth in the Crane Contract.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Defendants Kinder Morgan Petcoke, LP and
Kinder Morgan Petcoke GP LLC pray that their motion for summary judgment as to damages be
granted in its entirety and that Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke
GP LLC’s recover all other relief at law or in equity to which they are entitled.
Respectfully submitted,
MUNSCH HARDT KOPF & HARR, P.C.
/s/ James M. Bettis, Jr.
James M. Bettis, Jr.
jbettis@munsch.com
State Bar No. 02268650
Justin K. Ratley
State Bar No. 24093011
jratley@munsch.com
700 Milam Street, Suite 2700
Houston, Texas 77002-2806
Tel: (713) 222-1470
Fax: (713) 222-1475
8
BUTCH BOYD LAW FIRM
/s/ Butch Boyd, Jr.
Ernest “Butch” Boyd Jr.
butchboyd@butchboydlawfirm.com
State Bar No. 00783694
2905 Sackett St.
Houston, Texas 77098
Tel: (713) 589-8477
ATTORNEYS FOR DEFENDANTS,
KINDER MORGAN PETCOKE, LP AND
KINDER MORGAN PETCOKE GP, LLC
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing pleading has been
th
electronically filed and served on the following counsel of record on this the 13 day of September
2019:
Jack G. Carnegie
Kelly H. Leonard
Strasburger & Price, LLP
909 Fannin, Suite 2300
Houston, Texas 77010
Jack.carnegie@strasburger.com
Kelly.leonard@strasburger.com
Sarah R. Smith
Lewis Brisbois Bisgaard & Smith, LLP
24 East Greenway Plaza, Suite 1400
Houston, Texas 77046
Sarah.Smith@lewisbrisbois.com
/s/ James M. Bettis, Jr.
James M. Bettis, Jr.
9
4830-5791-5301v.1
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CAUSE NO. 2017 TOTAL PETROCHEMICALS & IN THE DISTRICT COURT OF REFINING USA, INC. and ACE PROPERTY & CASUALTY INSURANCE COMPANY HARRIS COUNTY, TEXAS KINDER MORGAN PETCOKE, LP and KINDER MORGAN PETCOKE GP LLC 164th JUDICIAL DISTRICT KINDER MORGAN’S REPLY IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT ON PLAINTIFFS’ DAMAGES Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC (individually and/or collectively “Kinder Morgan”) file this Reply in Support of its Motion for Summary Judgment on Damages and would show the Court as follows SUMMARY Kinder Morgan disputes that Plaintiffs are entitled to any damages because: (1) Kinder Morgan did not breach the Crane Contract in a way that caused them any damages; and (2) any damages they incurred were consequential and waived by the Crane Contract. Alternatively, even if there had been damages caused the breach that were not consequential; Plaintiffs could only recover $6 million. Plaintiffs’ responses attempt to distinguish cases cited by Kinder Morgan but they do not provide any law to controvert that the damages they claim are consequential. Further, the cases they do cite actually support Kinder Morgan’s arguments. ARGUMENTS AND AUTHORITIES Plaintiffs’ claims for damages are barred by the Crane Contract as consequential damages. The Crane Contract’s purpose was to provide a service to operate a crane that moves a byproduct of TOTAL’s refinery operations petcoke to a conveyer belt. Plaintiffs’ alleged damages are for amounts they paid to defend and settle claims arising out of the death of an employee (the Counts’ claims). Although Plaintiffs appear to not even be able to agree on how Kinder Morgan breached the Crane Contract and how any such breach affects the measure of damages, in essence, both Plaintiffs claim that but for one of the breaches they would not have had to pay to defend and settle the Counts’ claims. These alleged damages are classic consequential damages claims because although they may result “naturally” from an alleged breach by Kinder Morgan of the Crane Contract, they do not “necessarily” result from it. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). The death of Mr. Counts and the resulting lawsuit, defense costs, and settlement certainly did not “necessarily” flow from the mere fact that Kinder Morgan had a different insurance program than Plaintiffs now claim they wanted. 3. Even more, a case previously cited by Plaintiffs is instructive and shows that the costs Plaintiffs paid to defend and settle their liability in the Counts’ case were consequential in nature. In Cherokee Cty. Cogeneration Partners, L.P. v. Dynegy Mktg. & Trade, 305 S.W.3d 309, 314 (Tex. App.—Houston [14th Dist.] 2009, no pet.), the Court explained that lost profits can be classified as either direct or consequential, depending on their nature. Id. at 314. The court reasoned that profits lost on the contract itself — such as the amount a party would have received as payment for the performance of the contract minus saved expenses — are direct damages. Whereas, profits lost on other contracts or relationships resulting from the breach are classified as indirect or consequential damages. Id. “Stated differently, if a party’s expectation of profit is incidental to the performance of the contract, the loss of that expectancy is consequential.” Id. TOTAL’s expectation damages resulting from the coverage available under Kinder Morgan’s insurance policies are consequential, as the main purpose of the Crane Contract was for the provision of services related to operating a crane to move petcoke, not to secure insurance for TOTAL. 2 4. Plaintiffs do not cite to any cases in which a court actually considered whether costs incurred to defend/settle a third–party lawsuit in the absence of coverage as an additional insured on the named insured’s policy are direct damages against the named insured, as opposed to consequential damages. Plaintiffs do cite to cases in which the plaintiffs were able to recover the costs to defend/settle third-party lawsuits but none of those cases analyze whether those costs were consequential versus direct damages. TOTAL and CHUBB cite no controverting authority in their responses that conclusively show that the damages they seek are anything other than consequential damages, and instead focus their efforts on trying to distinguish cases cited by Kinder Morgan that show various analogous scenarios were the damages have been classified as consequential. 5. Plaintiffs’ damages, if any, were consequential, and thus waived expressly by the Crane Contract. Thus, the Court should grant Kinder Morgan summary judgment on this issue. II. CHUBB’s contract interpretation argument is a non sequitur. 6. In itsresponse, CHUBB makes the argument that because there is an indemnity provision in the Crane Contract that the rules of contract interpretation would read the consequential damages waiver out of the contract. This is certainly a novel argument because the inclusion of both indemnity provisions and a consequential damages waiver in the same contract is incredibly common. Under the rules of contract interpretation, Texas courts consider the entire contract, harmonizing and giving effect to all of the contract’s provisions so that none will be rendered meaningless. Title Res. Guar. co. v. Lighthouse Church & Ministries, No. 01-18-00015- CV, 2019 Tex. App. LEXIS 6242, at *12 (Tex. App.—Houston [lst Dist] July 23, 2019, no pet. h.); see Chubb’s Response. However, CHUBB’s argument would erase the consequential damages waiver (rendering it meaningless) in favor of the indemnity provision. Both provisions can co- exist in a contract under the corollary rule of contractual interpretation that when reading and harmonizing all provisions such that none are rendered meaningless, the specific controls over the 3 general. See Nustar Energy, LP v. Diamond Offshore Co., 402 S.W.3d 461 (Tex App.—Houston [14th Dist], 2013, no pet.)(the parties may choose to set out a general rule in one provision and exceptions to that rule in other provisions. Thus, to the extent of any conflict, specific provisions control over more general ones). Based upon this principal of contract interpretation, the general waiver of consequential damages applies unless the more specific provisions of the indemnity clause apply. Here, it is not even contested that the indemnity provision does not apply. Thus, the general consequential damages waiver does apply. III. Plaintiffs’ damages, if any, are capped at the $6,000,000 combined limits in the Crane Contract, inclusive of its reasonable defense costs. 7. Even if Kinder Morgan breached in such a way that caused damage that were not consequential, there is no contractual or legal basis to hold Kinder Morgan liable for amounts beyond the minimum required combined limits in the Crane Contract of $6 million. Very simply, if Kinder Morgan breached the Crane Contract by failing to obtain coverage for TOTAL as an additional insured, and if that breach caused damages, the damages are measured by what Kinder Morgan should have obtained—$6 million in combined limits. See Exhibit A to Kinder Morgan’s Motion, Crane Contract, Exhibit X §1.1(b) and (d) at TPR00000581. Plaintiffs’ argument is that Kinder Morgan breached by failing to obtain the required additional insurance. If correct, nothing permits Plaintiffs to recover any amount beyond the $6 million insurance requirement of the Crane Contract. 8. TOTAL’s response cites to Forest Oil Corp. v. Strata Energy, 929 F.2d 1039, 1044- 45 (5th Cir. 1991). Forest Oil Corp. v. Strat Energy, Inc. is not directly on point but actually is supportive of Kinder Morgan. In that case, the Fifth Circuit resolved Strata’s entitlement to benefits under two polices. TOTAL only discusses the first policy at issue in Forest Oil —the American primary policy—under which there was no dispute as to coverage. Id. at 1045. The 4 Fifth Circuit did find that Strata could recover up to the limits of that policy, but again there was coverage under that policy. Id. However, TOTAL does not discuss the Southern excess policy, which did not provide coverage to Strata and the Fifth Circuit affirmed the judgment that Strata was not entitled to proceeds under that policy. Id. at 1046. Even more, the Fifth Circuit concluded there was not coverage under the Southern excess policy because the insurance policy specifically stated it provided coverage only to “any organization … to whom the Named Assured [Forest] is obligated by virtue of a written contract or agreement to provide insurance such as is afforded by this policy … but only to the extent of such [contractual] obligation” and the underlying contract did not require limits beyond $100,000/$300,000. Id. at 1045. In other words, the Southern excess policy incorporated limitations based on the underlying contract between the parties, which limited coverage, and because the underlying contract did not require limits in excess of $100,000/$300,000, Strata was not entitled to coverage under the Southern excess policy. See id. 9. This case supports the fact that Plaintiffs are not entitled to anything beyond the $6 million combined limits set forth in the Crane Contract.1 10. CHUBB also quotes from Ironshore Specialty Ins. Co. v. Aspen Underwriting, Ltd., 788 F.3d 456 (5th Cir. 2015). Ironshore is another case that supports Kinder Morgan’s argument. The court in Ironshore used the underlying contract to limit the coverage available to the additional insured to the contractually required $5 million of minimum combined limits despite the fact that the named insured, Basic, obtained policies with $51 million in combined limits. Id. at 458, 463. 1 The case also stands for the proposition that that it is permissible for an insurance policy—such as Kinder Morgan’s—to expressly incorporate the underlying contract between the parties to limit coverage available under that insurance policy. Like Strata in Forrest Oil Corp., TOTAL had no coverage under Kinder Morgan’s insurance policy because the policy incorporate the limits on the contractual indemnity.Therefore, Plaintiffs are not entitled to benefits under that policy, regardless of what the limits were. 5 11. In Ironshore, a fire at a well owned by Endeavor killed two employees of Basic. At the time of the fire, Basic was performing work for Endeavor under the terms of an MSA. Id. at 457. The MSA required Basic to obtain at least $5 million of combined limits ($1 million primary and $4 million excess) that would cover the Endeavor as an additional insured for the claims based upon the employees deaths. Id. at 458. Basic actually obtained $51 million of insurance ($1 million primary, $10 million excess, and a second excess policy of $40 million). Id. The policies did not expressly limit the coverage for additional insureds like Endeavor to the required $5 million of combined limits. 12. With the tort liability for the two fatalities, likely exceeding $5 million, Endeavor’s excess insurer, Ironshore Specially Indemnity Company, brought a declaratory judgment against Basic’s excess insurers. Id. at 458-59. Ironshore contended that Basic’s insurers were obligated to provide coverage to Endeavor up to the full $51 million limits of their policies because the policies did not expressly limit the coverage available to an additional insured like Endeavor. Id. In response, Basic’s excess insurers (referred to collectively as “Aspen”) contended that the insurance policies incorporated a $5 million limit because the policies referred to the MSA. Id. at 459. Based upon language in the MSA that is remarkably similar to the language in the Crane Contract, the Fifth Circuit agreed with Aspen and limited the available coverage to the contractually required $5 million in combined limits. Id. at 463. 13. The excess policies in Ironshore defined “Insured” parties to include: “(c) any person or entity to whom [Basic] is obliged by any oral or written Insured Contract … .” Id. at 461. The Fifth Circuit, made an “Erie Guess” based on Deepwater Horizon, and determined that Endeavor was only entitled to $5 million of coverage under Basic’s insurance policies because 6 Basic was only “obliged” under the MSA to procure insurance with $5 million in combined limits. Id. at 463. 14. The facts in our case are remarkably similar to Ironshore. Like the underlying MSA in Ironshore, the underlying Crane Contract here set forth minimum limits of $6 million, and with respect to additional insureds, the Kinder Morgan’s policy contained language very similar to the Aspen policies. Specifically, the Kinder Morgan policy defined “Additional Insured” to mean “any person or organization to whom [Kinder Morgan] is obliged by a written Contract … .” Thus, for the same reasons held by the Fifth Circuit in Ironshore, the policy limits that would have been available to TOTAL would be the $6 million that Kinder Morgan was “obliged” to obtain despite the fact that Kinder Morgan actually obtained insurance policies for itself in excess of that amount. In the event of a breach by failing to obtain insurance, the law simply does not permit Plaintiffs to access any coverage beyond the limits required by the contract that was allegedly breached. 15. Ironshore Specialty Ins. Co. v. Aspen Underwriting, Ltd., could not more clearly support Kinder Morgan’s arguments that: (1) a policy is permitted to incorporate an underlying contract that limits the coverage available to an additional insured2; and (2) despite the insurance limits obtained by and available to the named insured, a Plaintiff seeking damages resulting from a breach for failure to obtain coverage as an additional insured, is only entitled to the contractual limits set forth in the provision allegedly breached—here $6 million at most. 2 “[I]nsurance policies can incorporate limitations on coverage encompassed in extrinsic documents by reference to those documents,” and the “Insured Contract” provision in the policy was a sufficient ground in Deepwater Horizon to incorporate the contract’s limitation on coverage Id. at 460, 463. 7 CONCLUSION 16. Kinder Morgan disputes that Plaintiffs are entitled to anything because: (1) Kinder Morgan did not breach the Crane Contract in a way that caused them any damages; (2) any damages they incurred were consequential and waived by the Crane Contract; and (3) even if there had been damages caused by the breach that were not consequential, they would have been limited to the $6 million limits set forth in the Crane Contract. PRAYER WHEREFORE, PREMISES CONSIDERED, Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC pray that their motion for summary judgment as to damages be granted in its entirety and that Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC’s recover all other relief at law or in equity to which they are entitled. Respectfully submitted, MUNSCH HARDT KOPF & HARR, P.C. /s/ James M. Bettis, Jr. James M. Bettis, Jr. jbettis@munsch.com State Bar No. 02268650 Justin K. Ratley State Bar No. 24093011 jratley@munsch.com 700 Milam Street, Suite 2700 Houston, Texas 77002-2806 Tel: (713) 222-1470 Fax: (713) 222-1475 8 BUTCH BOYD LAW FIRM /s/ Butch Boyd, Jr. Ernest “Butch” Boyd Jr. butchboyd@butchboydlawfirm.com State Bar No. 00783694 2905 Sackett St. Houston, Texas 77098 Tel: (713) 589-8477 ATTORNEYS FOR DEFENDANTS, KINDER MORGAN PETCOKE, LP AND KINDER MORGAN PETCOKE GP, LLC CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing pleading has been th electronically filed and served on the following counsel of record on this the 13 day of September 2019: Jack G. Carnegie Kelly H. Leonard Strasburger & Price, LLP 909 Fannin, Suite 2300 Houston, Texas 77010 Jack.carnegie@strasburger.com Kelly.leonard@strasburger.com Sarah R. Smith Lewis Brisbois Bisgaard & Smith, LLP 24 East Greenway Plaza, Suite 1400 Houston, Texas 77046 Sarah.Smith@lewisbrisbois.com /s/ James M. Bettis, Jr. James M. Bettis, Jr. 9 4830-5791-5301v.1