5th Cir. Issues Important Decision re Environmental Cleanup/Insurance Coverage


In another recent Fifth Circuit case, Cox Operating , L.L.C. v. St. Paul Surplus Lines Insurance Company, decided July 30, 2015, the Court of Appeals issued an important environmental/insurance ruling in an insurance recovery controversy.  The Court of Appeals affirmed the lower court’s decision that the insurance company breached its policy commitments to Cox, by failing to cover Cox’s costs  for the millions of dollars that the company spent to clean up the pollution and debris caused to Cox’s Louisiana oil and gas facilities after they were severely damaged by Hurricane Katrina in 2005.

After a long jury trial, the district court awarded Cox $9.5 million in damages for breach of the policy and $13 million in penalty interest for failing to promptly and properly respond to Cox’s claims that were subject to the strictures of the Texas Prompt Payments of Claims Act, which is now part of the Texas Insurance Code.  The Court of Appeals noted that his natural disaster forced Cox and its agents to comply with various federal statutes and regulations, and to spend millions of dollars cleaning up oil pollution and removing wreckage from the bays.