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Insurer Liable for $6.3 Million in Attorneys’ Fees and Costs in Katrina Coverage Dispute

Case:Cox Operating, LLC v. St. Paul Surplus Lines Insurance Company
           Civil Action No. 4:07-cv-02724
           Federal District Court, Southern District of Texas

This coverage action stemmed from oil field operator Cox Operating LLC’s dispute with its insurer, St. Paul Surplus Lines Insurance Company, over Hurricane Katrina cleanup coverage. Cox’s oil wells and related facilities in Louisiana were allegedly insured under a $2 million primary pollution policy and a $20 million excess pollution policy issued by St. Paul. After sustaining damage to its oil fields and equipment, which resulted in the release of oil at various well sites, Cox claimed over $15 million in covered expenses, which claim was denied in part by St. Paul as unrelated to pollution. The breach of contract and bad faith issues were tried by a jury in 2013. Following a 23 day trial, the jury rendered a unanimous verdict in favor of Plaintiff, Cox, finding that St. Paul failed to comply with the excess insurance policy, under which St. Paul was required to pay Cox $9.47 million (over and above those amounts already paid) for pollution clean-up costs resulting from Hurricane Katrina. The jury also found that St. Paul failed to reasonably investigate the claim and attempt to settle the claim in good faith. In total, Cox obtained a judgment of over $24 million.

St. Paul objected to the jury award on the basis that the jury awarded Cox double recovery for amounts paid by other insurers and clean-up costs submitted one year after the completion of the pollution work. However, federal district Judge Gray H. Miller rejected St. Paul’s arguments, reasoning there was no definitive evidence that Cox’s pollution cleanup costs were the same as those paid by other insurers, and Cox’s total claim far exceeded the other insurer’s policy limits and the jury’s award. In so holding, Judge Miller acknowledged, pursuant to the “one satisfaction rule” in Texas, a plaintiff should not be compensated twice for the same injury.

Following the issuance of a Final Judgment and Amended Final Judgment, Judge Miller ruled that Cox will recover against St. Paul taxable costs, attorneys’ fees and non-taxable expenses related to attorneys’ fees. On February 26, 2015, Judge Miller entered a Final Judgment ordering that Cox Operating, LLC recover from St. Paul Surplus Lines nearly $6.3 million in attorneys’ fees and costs resulting from the long-standing litigation, including $309,410.89 for costs pursuant to 28 U.S.C. § 1920 and Federal Rule of Civil Procedure 54(d)(1); $59,512.88 for nontaxable expenses related to attorneys' fees; $5,396,281.75 for legal services performed through the entry of the amended final judgment; $480,948.00 for legal services performed in connection with an appeal to the United States Court of Appeals for the Fifth Circuit; $51,750 for legal services that would be performed in connection with the preparation of briefing in the Texas Supreme Court if a question, or questions, were certified by the United States Court of Appeals for the Fifth Circuit to the Texas Supreme Court and accepted by the Texas Supreme Court; and post judgment interest.

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