in thenews

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Ellen Earle Chaffee, PhD, President,
Valley City State University

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Mar 09, 2015

Attorneys Nicholas Grant and Paul Ebeltoft successful in summary judgment

Two of our partners, Nicholas Grant and Paul Ebeltoft, obtained summary judgment for Travelers Property Casualty Company of America in a complex, multi-party coverage and indemnity case. The case arose after personal injury claims were made following a well explosion. The decision from the federal court for the District of North Dakota reflects and strengthens a current trend in the Eighth Circuit, which is to look to the indemnity contract, and not solely the insurance policy, when resolving certain coverage questions.

The injured were employees of Cyclone Drilling, who was contracted to the well operator, Continental Resources, Inc. M-I, LLC, insured by Travelers, was the mud consultant and had a Master Service Contract (“MSC”) with Continental. A lawsuit was commenced to determine the scope of the indemnity agreements between Continental and its contractors and the priority and limits of coverage provided by multiple insurers.

Star, who insured Cyclone, argued that, based on the Travelers policy issued to M-I under which Continental qualified as an additional insured, Continental was entitled to defense and indemnity from Travelers and M-I and that the Travelers policy was primary. This conclusion was in direct conflict with the language of the MSC, which required Continental to defend and indemnify M-I, a duty Continental had accepted without reservation.

In granting summary judgment in favor of Travelers, the Court held that both the question of indemnity and which insurer is primary or excess was determined by applicable MSCs, not the language in the insurance policies. The Court found that the MSC required Continental to indemnify M-I for the injuries sustained by Cyclone employees. Accordingly, Travelers and M-I had no duty to defend or indemnify Continental, nor to contribute to the settlement of the underlying injury claims.

Congratulations, Nick and Paul, for your hard work and resulting great outcome!