Oklahoma High Court Rules National American Off Hook in Earthquake Lawsuits
The Oklahoma Supreme Court ruled last week that an earth-movement exclusion precludes insurance coverage for an oil and gas company facing several lawsuits accusing its operations of causing earthquakes.
National American Insurance Company brought suit against New Dominion, LLC, an oil and gas company based in Tulsa, Oklahoma, seeking declaratory judgment that four consecutive commercial general liability policies it had issued to New Dominion did not provide coverage for bodily injury and property damage claims asserted in a number of separate lawsuits.
According to court filings, these claims allegedly arose out of seismic activity caused by New Dominion’s oil and gas operations.
New Dominion then filed a counterclaim alleging breach of contract, seeking defense and indemnity, and asserting equitable claims for estoppel and reformation.
In the Oklahoma high court’s ruling, it said a trial court divided the issues pleaded, conducting separate bench trials for the contract interpretation questions and the equitable claims.
After the first bench trial, the court issued a declaratory judgment holding that the Total Pollution Exclusions and the Subsidence and Earth Movement Exclusions in the commercial general liability policies clearly and unambiguously precluded coverage for the claims asserted in the Earthquake Lawsuits
Following the second trial, the court barred NAICO from denying claims for bodily injury during one of the four policy periods but denied all other equitable claims. Both parties appealed, raising issues with the trial court’s orders.
In its decision, the Oklahoma Supreme Court wrote, “We find that the Total Pollution Exclusions are ambiguous insofar as the phrase “irritant or contaminant” is reasonably susceptible to more than one interpretation.”
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