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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 PETCOKE
GP LLC 129th DISTRICT COURT
TOTAL AND CHUBB’S MOTION TO MODIFY,
CORRECT OR REFORM JUDGMENT
TOTAL Petrochemicals & Refining USA, Inc. (“TOTAL”) and Ace Property & Casualty
Insurance Company (“Chubb”) move to modify, correct or reform the Final Summary Judgment
signed on August 25, 2020, which impermissibly awarded $6 million to Plaintiffs instead of the
$9 million as contractually required. The Final Summary Judgment should be modified,
corrected, or reformed because:
This Court already previously established that Kinder Morgan was liable for
breaching its contract with TOTAL by limiting the scope of coverage owed to
TOTAL under Kinder Morgan’s insurance program,
Kinder Morgan has already admitted that TOTAL is an “additional insured” on its
insurance program,
Kinder Morgan’s insurance program contains no $6 million limitation,
Reading into a policy a limitation that otherwise does not exist is contrary to the
facts and the law of this case.
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 1
INTRODUCTION
TOTAL and its subrogated excess insurer, Chubb, sued Kinder Morgan for failing to
provide TOTAL with contractually required insurance coverage, which should have covered
TOTAL for a wrongful death claim. In September 2015, a Kinder Morgan employee named
Gary Counts was fatally injured while working at TOTAL’s Port Arthur refinery under Kinder
Morgan’s direction and control. Mr. Counts’ wife and mother sued Kinder Morgan, TOTAL,
and two of TOTAL’s employees, for wrongful death (the “Underlying Claims”). The claims
against Kinder Morgan were dismissed because it was protected under the Longshore and Harbor
Workers’ Compensation Act. TOTAL funded its employees’ defense, and the claims against
them were eventually dismissed.
To resolve the Underlying Claims, TOTAL paid $5 million in defense and settlement
costs -- the full amount of its primary fronting policy -- and TOTAL’s excess carrier Chubb paid
$4 million, for a total of $9 million. Had Kinder Morgan not breached its contract with
TOTAL, these amounts would have been fully covered under its insurance program.
On August 17, 2019, Judge Michael Gomez granted partial summary judgment on
liability for breach of contract in favor of TOTAL and Chubb. That Order established that
Kinder Morgan breached its contract with TOTAL by, inter alia, limiting the scope of coverage
afforded to TOTAL to the scope of Kinder Morgan’s indemnity, which did not cover the
A “fronting policy” is a policy with a deductable equal to policy limits. Thus, any loss covered by the policy is
paid by TOTAL.
The actual defense and settlement costs exceeded the $9 million sought in this case. Pursuant to a Settlement
Funding Agreement between the parties, Kinder Morgan contributed a certain amount to the settlement. That
agreement was entered into without prejudice to any party seeking to recoup the amounts paid under that agreement.
The actual settlement amounts paid are confidential and the settlement agreements were therefore filed under seal
with the Court. All parties in the present case have agreed the settlement amounts were reasonable.
This case was originally filed in the 164th District Court but, because of the absence of Judge Smoots-Thomas, the
motions in this case were heard by other judges
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 2
Underlying Claims. The sole remaining issue was what damages flowed from Kinder Morgan’s
breach in improperly limiting the scope of coverage.
On August 25, 2020, visiting Judge Grant Dorfman signed a Final Summary Judgment
awarding only $6 million, $5 million to TOTAL and $1 million to Chubb, rather than their $9
million loss. In doing so, the Final Summary Judgment erred in at least two respects:
First, despite the fact that the contract plainly states that “all insurance carried by
[Kinder Morgan], … shall, be endorsed to make TOTAL … additional insureds” and Kinder
Morgan had a $25 million excess policy, the Final Summary Judgment misconstrues the contract
as only obligating Kinder Morgan to provide $6 million in coverage to TOTAL.
Second, the Final Summary Judgment failed to recognize that Kinder Morgan itself
agreed that TOTAL was an additional insured under Kinder Morgan’s insurance program and
nothing in that insurance program limits coverage to $6 million. Thus, the issue before the Court
was what TOTAL would have received as an additional insured had Kinder Morgan not
improperly limited the scope of coverage as this Court held when it granted summary judgment
on liability. TOTAL and Chubb demonstrated as a matter of law that TOTAL would have been
covered for the full $9 million sought in this suit.
Pursuant to Rule 329(b), a motion to modify, correct or reform a judgment may be filed
within 30 days after a judgment is signed. Given that this is a summary judgment involving
questions of law, this Court should reconsider the Final Summary Judgment de novo and render a
final judgment awarding TOTAL $5 million and Chubb $4 million plus prejudgment interest.
II. BACKGROUND FACTS AND PROCEDURAL HISTORY
A. Kinder Morgan’s Insuring Obligations
The “Coke Cutting and Crane Contract” (the “Crane Contract”) under which Kinder
Morgan provides services to TOTAL required Kinder Morgan to carry certain minimum
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 3
insurance, including a Commercial General Liability (“CGL”) policy “[i]ncluding, but not
limited to coverage for death” with $1 million limits, and “[e]xcess (umbrella) liability coverage
… with a combined single limit for death ...of not less than $5,000,000 for each occurrence.”
Ex. A, attached ex. X at ¶ 1.1(b), (d).
The Crane Contract also required Kinder Morgan to make TOTAL and its employees
(among others) additional insureds, not only on the minimum required insurance but,
importantly, on “all insurance carried by [Kinder Morgan], except Worker’s Compensation and
Employer’ Liability, whether required hereby.” Ex. A, Art. 9 (emphasis added). See also Ex. A
at Ex. X ¶ 1.3 (“TOTAL … shall be named as additional insureds to the extent required by the
contract, except Workers’ Compensation and Employers’ Liability.”) Thus, Kinder Morgan’s
obligation to make TOTAL and its employees additional insureds was not limited to the
minimum required insurance, but extended to “all insurance carried by” Kinder Morgan, with the
sole exception of Worker’s Compensation and Employer Liability.
The Crane Contract also states that the coverage provided to additional insureds “is
primary and shall not be considered contributory with any insurance policies of the Additional
Insureds,” and makes Kinder Morgan responsible for “any and all deductibles.” Ex. A, attached
ex. X at ¶ 1.3(b), 1.6. That is, Kinder Morgan’s insurance is to pay before TOTAL’s insurance
and Kinder Morgan must pay any amounts owed before the insurance starts to pay.
Lloyds’ Syndicate 457 v. Floatec LLC, No. H-16-3050, 2019 WL 2943269 (S.D. Tex. July 9, 2019) ("If a policy is
primary and noncontributory, the insurer ‘is responsible for indemnifying an insured up to the applicable policy limit
before any other insurer covering the same liabilityis obligated to indemnify, and the latterinsurers are not
obligated to share in the primary and non-contributory insurer’s costs.’") (Rosenthal J.)
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 4
B. The Motions For Summary Judgment
Kinder Morgan’s Motion for Summary Judgment - March 6, 2019.
On March 6, 2019, Kinder Morgan filed a Motion for Summary Judgment. That motion
acknowledged that rather than carrying the minimum specified insurance, Kinder Morgan’s
insurance program consisted of a $10 million self-insured retention (“SIR”) followed by a $25
million excess policy. See Ex. B § I(B) (Insurance policy). Kinder Morgan contended that this
insurance program constituted “sufficient coverage to meet the $6,000,000 limits required by the
Crane Contract” and relied on the fact that “Kinder Morgan agreed that TOTAL is an additional
insured under its insurance program and accepted TOTAL’s status as such…”. Kinder Morgan’s
Motion for Summary Judgment - March 6, 2019, at ¶ 2, ¶ 8.
Kinder Morgan argued, however, that it was entitled to limit the scope of coverage to the
scope of its indemnity, which did not cover the Underlying Claims. See id. at ¶ 11 (“the Policies
specifically incorporate and limit coverage for additional insureds to the extent of the contractual
indemnity.”); ¶ 12 (same). Thus, while it admitted TOTAL was an additional insured, Kinder
Morgan contended that it“was not required to pay the first $10,000,000 [its SIR] because the
claims against TOTAL in the Counts Lawsuit did not fall within the scope of coverage provided
to additional insureds under the Kinder Morgan insurance program.” See id. at ¶ 10.
TOTAL and Chubb’s Cross-Motions for Partial Summary Judgment
TOTAL responded to Kinder Morgan’s motion and filed a Cross-Motion for Partial
Summary Judgment on Liability pointing out that the Crane Contract:
required Kinder Morgan to make TOTAL “and its … employees, officers,
directors, and agents, additional insureds” on “all insurance carried by [Kinder
Morgan] … whether required hereby.” Ex. A, Art. 9 (emphasis added). Thus,
Kinder Morgan’s obligation to make TOTAL and related persons and entities
See Ex. B § II(A) (Insurance policy) (limiting coverage for additional insureds “only to the extent required by any
indemnity given by [Kinder Morgan] under said CONTRACT to the ADDITIONAL INSURED”).
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 5
additional insureds was not limited to the minimum required insurance or to
particular sub-parts of the insurance carried by Kinder Morgan.
TOTAL’s Cross-Motion for Partial Summary Judgment on Liability at p. 2.
Given Kinder Morgan’s admission that it “agreed that TOTAL is an additional insured
under its insurance program and accepted TOTAL’s status as such,” the primary issue was that
“Kinder Morgan improperly restricted the insurance afforded to TOTAL to the scope of Kinder
Morgan’s indemnity, which did not cover the Underlying Claims.” Id. at p. 5. While TOTAL
also pointed to other breaches, including Kinder Morgan’s failure to carry the minimum
specified coverage and failing to make TOTAL’s employees additional insureds, those breaches
would be immaterial if Kinder Morgan was entitled to limit coverage to the scope of its
indemnity. See id. at p. 6, fn 3. TOTAL’s Motion went on to demonstrate that because Kinder
Morgan’s indemnity obligation and its insurance obligation were separate, and its insurance
obligation was unqualified, Kinder Morgan breached by limiting the scope of coverage to the
scope of its indemnity as a matter of law.
See also TOTAL’s Cross-Motion for Partial Summary Judgment on Liability at p. 7 (“The obligation to cover
these entities and individuals as additional insureds applies not just to the minimum required insurance but to ‘all
insurance carried by [Kinder Morgan], except Worker’s Compensation and Employer’ Liability, whether required’
by the contract or not.”); Response to Kinder Morgan’s Motion for Summary Judgment dated June 3, 2019 (again
pointing out thatthe contract required Kinder Morgan to make TOTAL an additional insured “not only on the
minimum insurance specified in Exhibit X, but on “all insurance carried by [Kinder Morgan], except Worker’s
Compensation and Employer’ Liability, whether required hereby.” Ex. A, Art. 9.”)
See Kinder Morgan’s Motion for Summary Judgment - March 6, 2019, at p. 2, ¶ 2.
See 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, 670 (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); Pasadena Refining System
v. McCraven, No 14-10-00837, 2012 WL 1693697 (Tex. App. -- Houston [14th Dist.] 2012, pet. dism’d) (“‘where
an additional insured requirement is separate from and additional to an indemnity provision, the scope of the
insurance requirement is not limited by the indemnity claims.’”); Travelers Lloyds Ins. Co. v. Pacific Employers
Ins. Co., 602 F.3d 677, 682-83 (5th Cir. 2010) (“The Supreme Court of Texas has recognized that ‘the express
negligence doctrine in Texas has been applied only to indemnity provisions, not insurance shifting provisions.’ …
[A] ‘briefstatement’ requiring Triple S to include ATOFINA as an additional insured was ‘clear enough’ and
sufficient to extend insured status to ATOFINA for its own negligence.’”); 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
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 6
Chubb separately filed a similar Motion for Partial Summary Judgment.
In its response, Kinder Morgan again relied on the fact that “TOTAL was an additional
insured on Kinder Morgan’s Insurance Program,” but argued that it was entitled to limit the
scope of coverage afforded to TOTAL to the scope of Kinder Morgan’s indemnity.
C. Summary Judgment on Liability.
This Court denied Kinder Morgan’s Motion for Summary Judgment, thus rejecting
Kinder Morgan’s argument that itwas entitled to limit the scope of coverage to the scope of
Kinder Morgan’s indemnity. See Ex. D (Order signed 6/25/19).
This Court then issued a blanket Order granting TOTAL and Chubb’s motions for
summary judgment on liability for breach of contract, stating that the Court hereby:
GRANTS TOTAL Petrochemicals & Refining U.S.A., Inc.’s (“TOTAL’s”) Cross
Motion for Summary Judgment on Liability and Ace Property And Casualty
Company’s (“Chubb’s”) Motion for Summary Judgment. It is therefore
ORDERED Chubb’s claims for subrogation are granted. It is further ORDERED
that Total’s and Chubb’s claims for breach of contract against Kinder Morgan
Petcoke, LP are granted as to liability only.
See Ex. E (Order signed 8/17/19). Because the Order did not specify a particular breach, it
necessarily upheld all of TOTAL and Chubb’s breach of contract claims, including that Kinder
Morgan was obligated to make TOTAL an additional insured on the insurance it carried in lieu
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 (5th 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 'sliabilitypolicies "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).
See Defendants’ Response to Plaintiff’sMotion for Partial Summary Judgment and Cross-Motion for Partial
Summary Judgment at ¶ 1 (“TOTAL and CHUBB’s motions should be denied in their entirety because: (1) TOTAL
was an additional insured on Kinder Morgan’s Insurance Program; (2) the scope of the additional insurance
provided complied with the Crane Contract....”); id. at ¶ 2 (“Kinder Morgan’s Insurance Program contains Blanket
Additional Insured Provisions and Kinder Morgan accepted TOTAL as an additional insured for the Counts’
claims under its Insurance Program.”) (emphasis added).
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 7
of the specified minimums and that Kinder Morgan was not entitled to limit the scope of
coverage to the scope of its indemnity.
D. Motions for Final Summary Judgment
TOTAL and Chubb subsequently filed a Motion for Final Summary Judgment. In that
motion, TOTAL and Chubb argued that Final Summary Judgment should be granted because,
inter alia:
Summary judgment had been granted on liability for breach of contract as a
matter of law;
the amounts paid by TOTAL and Chubb were undisputed, TOTAL paid $5
million (the full amount of its primary fronting policy), and Chubb paid an
additional $4 million;
the parties had stipulated that the amounts paid for settlement of the Underlying
Claims were reasonable;
Kinder Morgan was responsible for its full SIR after which itsinsurance should
have paid the remainder of the loss;
by its terms, Kinder Morgan’s policy covered all defense costs; and,
having breached, Kinder Morgan was not entitled to dispute the reasonableness of
the amounts for defense and settlement of the Underlying Claims in any event.
See TOTAL Petrochemicals & Refining USA, Inc.’s and Ace Property & Casualty Insurance
Company’s Motion for Final Summary Judgment filed 7/30/19.10
Kinder Morgan also filed another Motion for Partial Summary Judgment on Damages
arguing that the consequential damage disclaimer in the Crane Contract barred all of TOTAL and
10
TOTAL filed its Motion for Final Summary Judgment before the partial summary judgment on liability had been
signed, but the Court had indicated its intention to grant the motion.
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 8
Chubb’s damages and that, alternatively, Kinder Morgan should be liable only for the minimum
required coverage. See Defendants’ Motion for Partial Summary Judgment as to Damages filed
8/13/19, at p. 2.
E. Final Summary Judgment
On August 25, 2020, visiting Judge Dorfman issued a Final Summary Judgment. The
Judgment correctly denied Kinder Morgan’s argument that the consequential damage disclaimer
in the Crane Contract precluded damages. However, the judgment incorrectly limited damages
to a total of $6 million.
The Final Judgment reasoned that Kinder Morgan was only obligated to make TOTAL an
additional insured on the minimum required insurance policies. In effect, it ruled that TOTAL
was not an additional insured at all because Kinder Morgan had no insurance below $10 million
(its SIR is not insurance). In doing so, it misconstrued the language of the Crane Contract
requiring that TOTAL and its employees be made additional insureds on “all insurance carried
by [Kinder Morgan], except Worker’s Compensation and Employer liability, whether required
hereby.” Equally important, it failed to recognize the fact, admitted by Kinder Morgan, that
TOTAL actually was an additional insured on Kinder Morgan’s insurance program, and that
Kinder Morgan’s insurance would have covered TOTAL but for Kinder Morgan’s breach in
limiting the scope of coverage. The insurance on which TOTAL was an additional insured
should have fully covered TOTAL’s $9 million loss.
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 9
III. ARGUMENT
A. But For Kinder Morgan’s Limitation on the Scope Of Coverage Provided to
TOTAL, TOTAL Would Have Been Covered for All of Its Defense and
Settlement Costs.
TOTAL was an additional insured.
As discussed, Kinder Morgan repeatedly admitted, and relied on, the fact that TOTAL
was an additional insured under Kinder Morgan’s insurance program, and contended that the
insurance it carried satisfied the Crane Contract’s insurance requirements. Kinder Morgan
stated:
“Kinder Morgan agreed that TOTAL is an additional insured under its insurance
program and accepted TOTAL’s status as such…”;11
“TOTAL was an additional insured on Kinder Morgan’s Insurance Program”;12
“Kinder Morgan’s Insurance Program contains Blanket Additional Insured
Provisions and Kinder Morgan accepted TOTAL as an additional insured for the
Counts’ claims under its Insurance Program.”13
“Kinder Morgan did in fact obtain sufficient coverage to meet the $6,000,000
limits required by the Crane Contract. See, Exhibit B, the insurance policy. As
part of this coverage, Kinder Morgan’s insurance program has a $10,000,000 self-
11
Defendant’s Motion for Summary Judgment - March 6, 2019, at p. 2, ¶ 2.
12
Defendants’ Response to Plaintiff’sMotion for Partial Summary Judgment and Cross-Motion for Partial
Summary Judgment at ¶ 1.
13
Id. at ¶ 2. These admissions are consistent with Kinder Morgan’s policy, which defines Additional Insured to
“mean any person or organization to whom [Kinder Morgan] is obliged by a written CONTRACT entered into
before any relevant OCCURRENCE and/or CLAIM to provide insurance such as is afforded by this Policy…”. Ex.
B § II(A) (Insurance policy). The policy must of course be construed in favor of coverage. RSUI Indem. Co. v.
Lynd Co., 466 S.W.3d 113, 118-19 (Tex. 2015) (when the insured presents a reasonable construction, the court must
adopt “the construction that most favors the insured” even if the insurer’s construction “appears to be more
reasonable…”.); Aubris, 566 F.3d at 486 (“If a provision has more than one reasonable interpretation, a court must
interpret itin favor of the insured, provided that interpretation isnot unreasonable, and even ifthe insurer's
interpretation is more reasonable.”)
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 10
insured retention (“SIR”) with respect to these types of policies. Id. The Crane
Contract does not forbid Kinder Morgan from having an SIR, and, in fact, the
Crane Contract contemplates that deductibles may exist and, pursuant to Article
1.6 of Exhibit X, Kinder Morgan is responsible for all deductibles. See, Exhibit A
at its Exhibit X.”14
“TOTAL would have had coverage [had the conditions of Kinder Morgan’s
indemnity been met].”15
These statements are judicial admissions that “TOTAL was an additional insured on
Kinder Morgan’s Insurance Program.” See Holy Cross Church of God in Christ v. Wolf, 44
S.W.3d 562, 568 (Tex. 2001) (statements in summary judgment response and counter-motion for
summary judgment were judicial admissions with conclusive effect). Thus, there can be no
dispute that TOTAL was an additional insured under Kinder Morgan’s insurance program. The
issue was what damages were caused by Kinder Morgan improperly limiting the scope of
coverage to the scope of Kinder Morgan’s indemnity.
Kinder Morgan’s insurance program would have fully covered
TOTAL but for the improper limitation on the scope of coverage.
As an additional insured, TOTAL would have been fully covered for the Underlying
Claims but for Kinder Morgan’s breach in restricting coverage for additional insureds to the
scope of its indemnity.
Kinder Morgan’s excess policy generally covers insureds “for any and all sums which the
INSURED shall become legally obligated to pay as ULTIMATE NET LOSS by reason of
liability imposed upon the INSURED by law ...for damages because of BODILY INJURY ...
14
Defendant’s Motion for Summary Judgment - March 6, 2019, at ¶ 8.
15
Defendants’ Response to Plaintiff’s Motion for Final Summary Judgment at p. 7 fn. 6.
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 11
which is caused by an OCCURRENCE …”. Ex. B § 1(A) (Insurance Policy). Thus, it clearly
covers events like those that gave rise to the Underlying Claims.
The policy covers defense costs as well as liability. “Ultimate Net Loss” is defined as
“the total INDEMNITY and DEFENSE COSTS with respect to each OCCURRENCE to which
this POLICY applies.” Id. at § II(Y) (KM MSJ 000042). “Defense Costs,” in turn, are defined as
including:
all expenses incurred by the INSURED in the investigation, negotiation,
settlement and defense of any CLAIM or in the investigation of any
OCCURRENCE or circumstances of which NOTICE OF CIRCUMSTANCES
has been given, excluding all salaries, wages and benefit expenses of employees
and office expenses of the INSURED; however, Underwriters shall not be liable
for expenses as aforesaid when such expenses are included in other valid and
collectible insurance, except where that insurance is subject to at least one
hundred percent (100%) reimbursement by the INSURED.
Id. at § II(G) (KM MSJ 000039) (emphasis added).
The only reason Kinder Morgan’s insurance program did not cover TOTAL for all of its
defense and settlement costs was that Kinder Morgan breached by limiting the scope of coverage
for additional insureds like TOTAL.
Kinder Morgan’s insurance program should have paid before
TOTAL’s insurance.
The Crane Contract also specified that Kinder Morgan’s insurance “is primary insurance
and shall not be considered contributory insurance with any insurance policies of the Additional
Insureds.” Ex. A at ex. X ¶ 1.3(b). Consistent with that requirement, Kinder Morgan’s policy
contains a Primary Insurance Endorsement stating that the policy “shall respond on a primary
basis for liability arising from work performed pursuant to CONTRACT, if said CONTRACT
requires that the insurance provided by this POLICY is to be primary.” Ex. B, End’t 5
(Insurance Policy). But, of course, notwithstanding the primary endorsement, for Kinder
Morgan’s policy to pay at all, Kinder Morgan’s SIR must first be satisfied because the policy
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 12
only applies in excess of Kinder Morgan’s SIR. See Ex. B (Declarations and § l(B)); Ex. C
(Shidlofsky Declaration).16 Thus, to comply with the Crane Contract’s requirement that Kinder
Morgan’s insurance shall be primary and not contributory with any insurance policies of the
Additional Insureds, Kinder Morgan must pay its full $10 million SIR.
Kinder Morgan admitted this principle in its Motion for Summary Judgment:
Under a policy written with an SIR provision, the insured (rather than the insurer)
would pay defense and/or indemnity costs associated with covered claims until
the SIR limit was reached. After that point, the insurer would make any additional
payments for defense and indemnity for claims that are covered by the policy.
Defendant’s Motion for Summary Judgment - March 6, 2019, at ¶ 16 (emphasis added in part).
In sum, but for the fact that Kinder Morgan breached by improperly limiting the scope of
coverage afforded to TOTAL under Kinder Morgan’s insurance program, Kinder Morgan would
have had to pay defense and indemnity costs “until the SIR limit was reached,” i.e. $10 million,
after which the insurer would pay the remainder of the loss. The Final Judgment therefore
erroneously limits TOTAL and Chubb’s recovery to $6 million and should have awarded the full
$9 million loss -- $5 million paid by TOTAL and $4 million paid by Chubb.
B. The Final Judgment Misconstrues the Crane Contract.
In addition to failing to recognize that TOTAL was an additional insured under Kinder
Morgan’s insurance program, the Final Judgment also erred by misconstruing the contract.
Contrary to the clear contract language requiring that TOTAL be made an additional insured on
“all insurance carried by” Kinder Morgan, the Final Summary Judgment concluded that “the
requirement to name TOTAL an additional insured” was limited to the $6 million minimum
insurance specified in Exhibit X to the contract.
16
Ex. B, § I(B) (Insurance Policy) ("Underwriters shall only be liable hereunder for ULTIMATE NET LOSS in
excess of the UNDERLYING LIMITS as stated in Item 6A or6B of the Declarations, whichever is applicable.")
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 13
Not only is that conclusion at odds with the contract language, it would mean that
TOTAL was not an additional insured at all since Kinder Morgan carried no insurance below
$10 million; it had only an SIR. Thus the reasoning in the Final Summary Judgment conflicts
with Kinder Morgan’s own admissions that TOTAL was in fact an additional insured, as well as
with the blanket additional insured provision in Kinder Morgan’s policy. Given that TOTAL
was an additional insured, the amount of coverage is governed by the terms of the policy and
nothing in Kinder Morgan’s policy limits coverage to $6 million
Finally, this ruling ignores this Court’s prior summary judgment on liability establishing
that Kinder Morgan breached by limiting the scope of coverage afforded to TOTAL as an
additional insured under Kinder Morgan’s insurance program.
The Final Judgment reasoned as follows:
The Court further finds that TOTAL’s damages for the foregoing breaches
of contract are limited to the $6 million minimum policy limits required by the
terms of the Contract. Specifically, the Court adopts KINDER MORGAN’s
interpretation of the contract’s terms on this point because, without limitation: a)
its obligation to provide insurance coverage extends (per Article 9 of the
Contract) to the “insurance coverage set forth on Exhibit ‘X’”; (b) the requirement
to name TOTAL an additional insured likewise relates to those policies “as
outlined in greater detail in Exhibit X” and, per Section 1.3 of Exhibit X, “to the
extent required by the Contract ….”; (c) Exhibit X references neither Kinder
Morgan’s $10 million self-insured retention nor its $25 million excess (umbrella)
liability coverage (which, undisputedly, is not “follow form” of the required CGL
coverage); and (d) Section 1.3(b) of Exhibit X clarifies that it is the “coverage
provided to the Additional Insureds by [Kinder Morgan’s] insurance under this
Contract” that must be primary and non-contributory. (Emphasis added.)
TOTAL’s interpretation of the Crane Contract’s additional insured
requirements effectively reads the prefatory phrase -- “as outlined in greater detail
in Exhibit X” -- out of the contract, contrary to Texas law. The Court further
finds that Article 9’s phrase, “whether required hereby,” modifies the immediately
preceding exclusion respecting Worker’s Compensation and Employer’ [sic]
Liability coverages rather than the more distant reference to “all insurance carried
by [Kinder Morgan] [as outlined in Exhibit X].
Addressing these in order:
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 14
The Final Judgment first states that “a) [Kinder Morgan’s] obligation to provide
insurance coverage extends (per Article 9 of the Contract) to the ‘insurance coverage set forth on
Exhibit ‘X’’.” There is no question that Kinder Morgan was obligated to provide the insurance
coverage set forth on Exhibit X, but nothing in Exhibit X or elsewhere limits Kinder Morgan’s
obligation to make TOTAL an additional insured to the coverage specified in Exhibit X if it has
additional or different coverage. On the contrary, Exhibit X is clear that the insurance
requirements it sets forth are minimum amounts and types of insurance coverage. Exhibit X
begins by stating: “1.1 MINIMUM REQUIRED COVERAGES. [Kinder Morgan] shall
provide … the following minimum amounts and types of insurance: …”. See Exhibit A at Ex.
X ¶ 1.1 (emphasis added in part).
The additional insured clause in Exhibit X is not limited to the minimum insurance
required by Exhibit X; it states that “TOTAL … shall be named as additional insureds to the
extent required by the Contract, except Workers’ Compensation and Employers’ Liability.” See
Exhibit A at Ex. X ¶ 1.3. The “extent required by the Contract” is specified in Article 9, which
states that “As outlined in greater detail in Exhibit X, all insurance carried by [Kinder Morgan],
except Worker’s Compensation and Employer’ Liability, whether required hereby, shall, be
endorsed to make TOTAL … additional insureds…”. See Exhibit A, Art. 9.
Nothing in Exhibit X remotely suggests that if Kinder Morgan carries a greater amount
or different type, of coverage than the minimum required coverage, that such insurance is not to
extend to cover TOTAL.
The Final Judgment goes on to reason that “(b) the requirement to name TOTAL an
additional insured likewise relates to those policies ‘as outlined in greater detail in Exhibit X’
and, per Section 1.3 of Exhibit X, ‘to the extent required by the Contract …’.” But, as already
TOTAL AND CHUBB’S MOTION TO MODIFY, CORRECT OR REFORM JUDGMENT – Page 15
shown, the additional insured clause in Exhibit X references the Contract, and the “extent
required by the Contract” is that “all insurance carried by [Kinder Morgan], except Worker’s
Compensation and Employer’ Liability, whether required hereby, shall, be endorsed to make
TOTAL … additional insureds…”. See Exhibit A, Art. 9.
The Final Judgment next states that “(c) Exhibit X references neither Kinder Morgan’s
$10 million self-insured retention nor its $25 million excess (umbrella) liability coverage (which,
undisputedly, is not “follow form” of the required CGL coverage).” There is no way Exhibit X
could reference the coverage Kinder Morgan carried in lieu of the minimum required coverage
because the contract was entered into in 2009, long before Kinder Morgan implemented the
insurance structure it had in place at the time of the Counts Incident.17 Instead, anticipating just
such a situation, the Crane Contract contains a blanket reference to “all insurance carried by
[Kinder Morgan].” The point of requiring that “all insurance carried by [Kinder Morgan] …
shall, be endorsed to make TOTAL … additional insureds…” is to operate as a catch-all
ensuring that TOTAL receives the benefit of insurance that Kinder Morgan may carry in excess
of the required minimums, as well as any insurance that Kinder Morgan carries in lieu of the
required insurance if it fails to adhere to the contract’s insurance requirements. See Ex. C
(Shidlofsky Declaration).
The fourth rationale set forth in the Final Judgment is that “(d) Section 1.3(b) of Exhibit
X clarifies that it is the ‘coverage provided to the Additional Insureds by [Kinder Morgan’s]
insurance under this Contract’ that must be primary and non-contributory.” This language does
not reference the minimum required coverage, it refers to the “coverage provided to the
Additional Insureds by [Kinder Morgan’s] insurance under this Contract.” Again, the contract
17
Kinder Morgan’s insurance was compliant with the Crane Contract’s insurance requirements until shortly before
the Counts incident took place. Indeed, one of the beaches alleged by TOTAL was Kinder Morgan’s failure to
inform TOTAL of the change in scope of its coverage provided to TOTAL.