CM Special Report on the Gulf Oil Spill (2010)
2010 Summer
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
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Articles in this report
* To Our Friends in the Business and Insurance Communities:
To assist our clients in responding to this catastrophic event, we have prepared this CM Special Report to provide a comprehensive analysis of the claims that may arise from the Gulf Oil Spill including property damage, casualties, and directors' and officers' liability, as well as the insurance coverage issues arising from those claims.
Director And Officer Insurance And The Gulf Oil Spill
To date, three Shareholder Derivative Lawsuits have been filed against the Directors and Officers of BP, arising out of the Gulf Oil Spill. ...Defending shareholder derivative actions can be difficult for those unfamiliar with the insurance products available to protect directors and officers in these types of lawsuits. It is extremely important to retain counsel familiar with D&O insurance policies in order to minimize the costs of defending a shareholder derivative lawsuit.
Excluded DEEPWATER HORIZON Claims Under Traditional Homeowners’ Policies
The DEEPWATER HORIZON blowout has led to the spill of millions of gallons of crude oil into the Gulf of Mexico. ...Since claims related to the oil contamination of the shoreline and perhaps other property may be made, we will analyze some of the reasons these claims are excluded under the standard ISO forms.
Fear Strikes Out: Fear Of Property Damage Is Insufficient To Establish Business Income Coverage
Commercial property policyholders are understandably concerned about the potential impact that the DEEPWATER HORIZON blowout may have on their businesses. But, is the fear of future property damage sufficient to establish a time element claim under a first party property insurance policy? In the context of "civil authority" claims, the few courts considering the issue typically find no coverage.
First Party Property Coverage Issues Checklist
The DEEPWATER HORIZON oil spill is a massive environmental disaster, with impacts likely for years to come. That said, what implications might the Gulf Oil Spill have on claims for first-party coverage? ... [I]n the form of a practical checklist, we run down assorted coverage issues which might arise in the context of claims under property policies (generally, from the perspective of commercial, all risk policies).
Gulf Oil Spill: Liability Insurance Coverage Implications
While we expect to see claims brought against policyholders central to the spill, such as BP, Halliburton, Transocean and related players, the "downstream" potential of liability claims may herald coverage disputes under liability policies in manners not previously contemplated by the underwriters.
Maritime Law – How Admiralty Jurisdiction Will Impact Virtually All Litigation
Undoubtedly, most claims arising directly out of the Gulf Oil Spill will fall under admiralty jurisdiction. Admiralty jurisdiction exists if injury is caused by a vessel on navigable waters while she is engaged in traditional maritime activity. The DEEPWATER HORIZON was a movable rig. Therefore, it will be regarded as a vessel under maritime law.
Navigating The BP Fund – Will BP Payments Cap Ensuing Lawsuits And Insurance Claims?
The BP Oil Spill Victim Compensation Fund ("Fund") administrator has not yet detailed the Fund’s claim process to the public. Even then, confusion and debate will likely ensue as to the implications of the Fund’s payment for oil related loss and/or damage upon a claimant’s right to further litigate against BP and other third parties or, if applicable, to make claim under insurance policies affording first party property coverage.
Professional Services Exclusion Bars Coverage For Oil Well Blowout Claim
The U.S. Court of Appeals for the Fifth Circuit recently ruled that the Professional Services Exclusion in a commercial general liability ("CGL") policy issued to an oil field consultant barred coverage for damages arising out of an oil well blowout allegedly caused by the consultant's failure to properly create an oil well drilling plan and monitor drilling operations.
Subrogating The Spill: What Are An Insurer’s Options For Recovering Claims Paid As A Result Of The Gulf Oil Spill?
Prudent insurers must prepare for the worst, and always be aware of the subrogation potential for any claims that are eventually paid. This article presents three possible avenues of subrogation recovery: 1) recovery from tortfeasors (both direct and indirect); 2) recovery from the government; and 3) recovery from special funds.
The DEEPWATER HORIZON Blowout And Oil Spill – Who Is Suing And Being Sued, How, Where And Why?
On August 10, 2010, the Panel on Multidistrict Litigation released its decision ordering the massive body of litigation be heard in New Orleans before U.S. District Judge Carl Barbier. The ruling may be regarded as a win for plaintiffs as the cases will be tried in a jurisdiction that tended to favor their interests even before its citizens were impacted by the spill. The panel is expected to announce its decision in August. Most actions are stayed pending the panel's decision.
The Impact Of Potential Bankruptcies On Insurer Rights And Obligations
The continuing investigation into the Gulf Oil Spill ... is likely to result in claims against other, smaller businesses, that had indirect involvement in the drilling operations, or who manufactured components used or incorporated in the blowout preventer or other aspects of DEEPWATER HORIZON's drilling operations, or who are alleged to have negligently performed cleanup efforts or exacerbated the impact of the Gulf Oil Spill through their acts or omissions.
