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CAUSE NO. 2017-48075
TOTAL PETROCHEMICALS & IN THE DISTRICT COURT OF
REFINING USA, INC., and
ACE PROPERTY & CASUALTY
INSURANCE COMPANY,
HARRIS COUNTY
KINDER MORGAN PETCOKE, LP
AND KINDER MORGAN 164th DISTRICT COURT
PETCOKE GP LLC
TOTAL’s Reply to Kinder Morgan’s Response to Motion for Summary J udgment and
Response to Kinder Morgan’s Objections and Motion to Strike Summary J udgment
Evidence
TOTAL Petrochemicals and Refining U.S.A., Inc. (f/k/a TOTAL Petrochemicals U.S.A.,
Inc.) (“TOTAL”) replies to Kinder Morgan's Response to TOTAL’s Cross Motion for Summary
Judgment (“Kinder Morgan’s Response”), and responds to Kinder Morgan's Objections and
Motion to Strike to Summary Judgment Evidence (“Kinder Morgan’ s Objections”), as follows:
REPLY TO KINDER MORGAN’S RESPONSE
Kinder Morgan’s Response begins by addressing non-issues
Kinder Morgan first asserts that “TOTAL claim[s] Kinder Morgan breached the Crane
Contract by failing to have TOTAL specifically named as an additional insured under Kinder
Morgan's Insurance Program.” KM's Response at {| 2 (emphasis in original). TOTAL made
such argument. TOTAL contend — that Kinder Morgan had a contractual obligation
to carry
certain minimum specified coverage, and to make TOTAL and its “partners, partnerships, joint
ventures, joint venture partners, parents, subsidiaries, and affiliated companies and their
respective employees, officers, directors, and agents additional insureds” on “all insurance
camied by Kinder Morgan ... whether required [by the rane Contract]” ornot. TOTAL’s MSJ
Ex. A, Art. 9 and attached
ex. X {ff Whether these entities are “specifically
named” as
additional insureds is not an issue as they could have been made additional insureds without
being “specifically named.”
Kinder Morgan Failed to Carry the Minimum Required C overage
The Crane Contract required, at a minimum, that Kinder
Morgan carry a $1 million CGL
policy and a $5 million excess (umbrella) policy. It is undisputed that Kinder Morgan had no
such insurance policies. Instead, Kinder Morgan had no insurance for the first $10 million of
loss, and for losses above $10 million it had a $25 million excess policy.
Kinder Morgan Failed to Make TOTAL’s Employees A dditional Insureds
It is also undisputed that Kinder Morgan did not make TOTAL’s employees additional
insure as requiredb the Crane ContractKinder
Morgan admits that breach but contend
without any summary judgment evidence that Mr. Tranter
and Mr. Nunley,
the TOTAL
employees
who were sued “did not even incur any defense costs that would not have been
incurred by TOTAL because they were represented by the same attomeys as TOTAL” and
therefore “the breach would not have caused
any damages. KM’s Response
at {] This is
another non issue.The question of damages is not before this Court because TOTAL moved for
summary judgment only on liability. Moreover, Kinder Morgan's failure to include any
evidence to support these statements is, by itself, fatal to argument Contrary
to Kinder
Morgan’s statements, it is a matter of public record that 1. Nunley had separate counsel and,
even if the employees had been represented
solely by TOTAL’s counsel it would
have increased.
the cost of defenseto address their potential individual liabilit
Iv. Kinder Morgan Improperly Restricted the Scope f Coverage
Kinder Morgan contends it made TOTAL an additional insured, albeit with coverage
restricted to the scope of Kinder Morgan’s indemnity. Kinder Morgan cites no case law
Michael K. Eaves of Clavert, Eaves, Clark & Stelly LLP.
supporting its position that it was entitled to restrict the scope of coverage to the scope of its
indenmity. Instead, Kinder Morgan quotes from an article written by the undersigned, stating
that:
The coverage that the additional insured will receive is determined by the
language of the insurance policy, and may or may not relate to the scope of any
indenmnity contract.
That of course
is correct. The actual scope of coverage is determined by the language of the
policy itself. The required scope of coverage is determined by the underlying contract. If the
actual scope of coverage is not at least as broad as the required scope of coverage the
contracting
party is in breach. Thus, depending on the policy language, the actual scope of
coverage
may or may not relate
to the scope of an underlying indemnity. And, whether limiting
the scope of coverage to the scope of an underlying indemnity constitutes a breach depend on
the language of the underlying contract.
Kinder Morgan makes no attempt to address any of the case law cited by TOTAL other
than to say the Getty and Atofina cases “hold that the insurance policies stand on their own terms
unless the policies themselves incorporate the contractual limitations on the required additional
insurance.” KM’s Response at Atofina does make that point and it is undisputed that Kinder
Morgan's policy did not cover TOTAL. However both cases as well as several others cited by
TOTAL also address the language of the underlying contracts and whether the contracting party
‘was permitted to limit the scope of coverage to the scope of the party’s indemnity. Those cases
uniformly hold that absent some explicit permission in the contract the scope of coverage
afforded to an additional insured may not be limited to the scope of a separate indemnity. Getty
Oil Co. v. Insurance Company of North America et al, 845 S.W.2d 794, 804 (Tex. 1992)
(requirement
that seller's insurance “whether
or not required hereby, shall extend
to and protect
Purchaser” was not limited to scope of seller's indemnity) Evanston Ins. Co. v. Atofina
Petrochemicals, Inc., 256 S.W.3d 660, (Tex. 2008) (“brief statement’ that ATOFINA “shall
be named as additional insured in each of [Triple S’s] policies did not limit the required scope
of coverage to the scope of a separate indemnity clause.)(citing Getty); Aubris Resources LP v.
St. Paul Fire and Marine Ins. Co., 566 F.3d 483, 489 (5th Cir. 2009) (“The separate indemnity
provision is not applied to limit the scope of coverage [required under the additional insured
provision]. Indeed, on this point the Texas Supreme Court could not have been clearer...”);
Lubrizol Corp. v. Gray Ins. Co., 2009 U.S. App. LEXIS 2807 (Sth Cir. 2009) (coverage
obligation under contract requiring contractor to maintain “Comprehensive General Liability”
insurance and “include Lubrizol as an additional insured” was not limited to the scope of
contractor’ s indemnity obligation); ExxonMobil Corp. v. Electrical Reliability Services, Inc., 868
F.3d 408 (5th Cir. 2017) (holding
that the required scope of coverage
under an additional insured
provision stating that ERS’s liability policies “shall: (i) cover Purchaser [Exxon] and Affiliates
as additional insureds in connection with the performance of Services; and (ii) be primary as to
all other policies (including any deductibles or self insured retentions) and self insurance which
may provide coverage” was not limited to scope of indemnity obligation).
Kinder Morgan admits the scope of coverage afforded to TOTAL under Kinder Morgan’ s
excess policy is limited to the scope of Kinder Morgan's indemnity. See KM’s Response
at 8.
However, nothing in the Crane Contrac allows the scope of coverage to be so limited.
Accordingly, Kinder Morgan breached.
Kinder Morgan does not argue that the Crane Contract allows the scope of coverage to be
limited to the scope of Kinder Morgan's indemnity. It argues only that the ontract was “was
silent on the coverage to be afforded to additional insureds.” As shown in TOTAL’s earlier
filings, that is not true. Ample language
in the Crane Contract demonstrates
that the scope of the
additional insured obligation is not limited to the scope of Kinder Morgan's indemnity he two
provisions do not even cover the same entities and individuals and it is plain that the additional
insureds were to receive the benefit of the required coverages including coverage for death
during the work period.
qually important, even if the Crane Contract were silent on the scope of coverage
Kinder Morgan would not be entitled to restrict the scope of coverage to the scope of its
indemnity Kinder Morgan’s proposed rule _ that it is entitled to restrict the scope of coverage
however it wants if the contract does not explicitly define the required scope of coverage
would allow contracting parties to render additional insured clauses meaningless by restricting
coverage so narrowly that it is never likely to apply. The legal standard
is the opposite. All of
the cases cited above involved brief statements requiring a party to be made an additional
insured and all of them hold that under such language the scope of coverage not be limited
to
the scope of aseparateindemnity
Kinder Morgan failed to notify TOTAL that it had reduced the scope of coverage.
The Crane Contract requires Kinder Morgan to give TOTAL 30 days written notice of a
material modification in its policies. See Ex. A to TOTAL’s MSJ (Crane Contract) at Art. 9 and
attached Ex. X
Kinder Morgan argues that it notified TOTAL that Kinder Morgan added a $10 million
self insured retention. However, even Kinder Morgan does not contend that it notified TOTAL
that its new insurance structure reduced the scope of coverage to the scope of Kinder Morgan’ s
indennmnity or that it was modified to exclude coverage for TOTAL’s employees.Had TOTAL
been so informed it could have taken steps to address the issue before a major loss occurred.
RESPONSE TO KINDER MORGAN'S OBJECTIONS
Kinder Morgan objects to Exhibits C through K and L through O attached to TOTAL’s
Cross Motion for Summary Judgment as irrelevant and inadmissible parol evidence Exhibits
K are copies of insurance policies obtained by TGS, the original party to the Crane Contract
before the contract was assigned to Kinder Morgan. Exhibits L O are copies of Kinder Morgan
insurance policies that predate the policy Kinder Morgan had in force at the time of the incident
giving rise to the Underlying Claims.
These exhibits were offered for two purposes. First, the Crane Contract required Kinder
Morgan to give 30 days notice of any “material modificatior of the required insurance. See Ex.
to TOTAL’s MSJ Crane Contract) at Art. 9 and attached
Ex. X The prior policies are
admissible to show the coverage afforded by those policies in comparison to the policies Kinder
Morgan had in force at the time of the incident giving rise to the ndedying laims to
demonstrate
that there was a material modification
in the coverage provided. For that purpose
they are neither irrelevant nor parol evidence.
Second, all parties agree that the Crane Contract is unambiguous. f the Court disagrees,
however, the prior policies are admissible to show the parties’ course of performance from the
inception of the Crane Contract to demonstrate how the parties themselves construed the
Contract’s insurance requirements. Far from altering or contradicting the Crane Contract, this
course of performance confirms TOTAL’s construction of the Crane Contract because these
earlier policies did not limit coverage for additional insureds to the scope of Kinder Morgan’s
indemnityand would have covered TOTAL and its employees for the underlying claims had they
been in force when the incident occurred.
CONCLUSION
TOTAL re spectfully requests that Kinder Morgan’s Motion for Summary Judgment be
Denied and that TOTAL’s
cross motion
be granted, and that this Court grant such other relief to
which TOTAL may be entitled.
Respectfully submitted,
CLARK HILL STRASBURGER
/s/ Jack ie
JACK CARNEGIE
State Bar No. 03826100
909 Fannin Street, Suite 2300
Houston, Texas 77010
(713) 951 Telephone
(713) 951 Facsimile
jack.camegie@clarkhillstrasburger.com
COUNSEL FOR TOTAL PETROCHEMICALS
& REFINING USA, INC.
CERTIFICATE OF SERVICE
This is to certify that the foregoing document has been forwarded to all counsel pursuant
to the Texas Rules of Civil Procedure on June
/s/ JackC. ie
JACK CARNEGIE
1250 7033.1/A7284/A26161/062119