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Edward Grauman Quoted in Law360 and Texas Lawbook on Deepwater Horizon Insurance Coverage Dispute Before Texas Supreme Court

September 16, 2014

Edward Grauman, a Principal in Beveridge & Diamond’s Austin, Texas office, was quoted in two recent articles examining the Deepwater Horizon insurance coverage dispute. He is quoted by Law360 in an article titled, “BP’s Bid For $750M Transocean Coverage Shaking Up CGLs,” and by The Texas Lawbook in “TX Supreme Court Hears BP, Transocean $500 Million Dispute.”

Mr. Grauman, who represents policyholders in insurance coverage disputes, provided insight on the potential implications of the Texas Supreme Court’s ruling in the pending Deepwater Horizon insurance coverage case. That case raises the question of whether, and under what circumstances, an “additional insured” provision in a general liability policy must be read in light of an indemnity obligation undertaken by the policyholder in an underlying service contract. The court may also consider whether Texas law should recognize an exception for “sophisticated insureds” (such as BP) to the contra proferentem rule that interprets any ambiguities in an insurance policy in favor of the insured.

Mr. Grauman told Law360 that if the court were to recognize a sophisticated-insured exception, “it would be unsettling a well established rule of law and could unsettle expectations between parties that have already entered contracts and paid premiums based on a framework and understanding in which there wasn’t such a rule.”  Read the full Law360 article (subscription required).

Mr. Grauman told the Texas Lawbook that “regardless of how the Texas Supreme Court rules, you’re likely to see policyholders be more attentive to the provisions in their insurance policies regarding the scope of coverage for additional insureds.”

The Deepwater Horizon coverage dispute came before the Texas Supreme Court by virtue of an August 29, 2013 decision by the U.S. Court of Appeals for the Fifth Circuit certifying two questions to the court:  (1) whether BP is covered as an additional insured under certain policies issued to Transocean (the owner of the drilling rig), based solely on the language of the policies; and (2) whether contra proferentem applies to sophisticated parties. See Beveridge & Diamond’s news alert for more information.

Oral argument was held on September 16. The court’s decision could have a significant impact on insurance policies offered to insureds across a broad range of industries, including the energy sector. 

Beveridge & Diamond’s Insurance Coverage & Recovery Practice represents policyholders in securing coverage for business clients facing environmental, toxic tort, product, employment and financial liability claims, as well as other losses, including business interruption. We also advise clients on the sufficiency of their insurance programs and negotiate insurance policies to best protect their needs and effectuate transactions. Our goals are to maximize our clients’ insurance coverage, obtain recovery in the most economical manner possible and use insurance creatively in solving clients’ problems.