1

In The

Court of Appeals

Ninth District of Texas at Beaumont

_________________

NO. 09-14-00459-CV

_________________

HOUSTON CASUALTY COMPANY, ET AL, Appellants

V.

ANADARKO PETROLEUM CORPORATION AND ANADARKO E&P 

COMPANY, L.P., Appellees

________________________________________________________________________

On Appeal from the 284th District Court

Montgomery County, Texas

Trial Cause No. 12-08-08760-CV

________________________________________________________________________

MEMORANDUM OPINION

This is an insurance coverage dispute arising from the Deepwater Horizon 

Oil Spill in the Gulf of Mexico. At issue in this case is the interpretation of an 

insurance policy establishing an indemnity obligation for defense costs resulting 

from the spill. Houston Casualty Company, Allianz Global Corporate & Specialty 

AG, Clearwater Insurance Company, Hudson Insurance Company, Lancashire 

Insurance Company (UK) Limited, Navigators Insurance Company, and 
2

Underwriters at Lloyd’s Syndicate Nos. 33, 457, 510, 609, 623, 958, 1036, 1084, 

1183, 1919, 1209, 1221, 1225, 2003, 2007, 2121, 2623, 3000, 4020, 5000 

(collectively “Underwriters”) filed a petition for permissive appeal of the trial 

court’s order denying their motion for summary judgment and granting Anadarko 

Petroleum Corporation and Anadarko E&P Company, L.P.’s (collectively 

“Anadarko”) motion for partial summary judgment. Anadarko filed a response and 

cross-petition for permissive appeal. We granted the petition and the cross-petition 

for permissive appeal of the trial court’s order. We reverse the trial court’s 

judgment and render judgment in favor of Underwriters.

I. Background

Many of the facts leading up to the Deepwater Horizon Oil Spill are wellknown. The Macondo Well was an exploratory well located offshore in the Gulf of 

Mexico. The Deepwater Horizon, a mobile offshore drilling vessel owned and 

operated by several Transocean entities, drilled the Macondo Well. Certain British 

Petroleum entities (collectively “BP”), MOEX Offshore 2007 LLC (“MOEX”), 

and Anadarko entered into an offshore oil and gas lease with the United States for

the continental shelf block in which the well was located (the “Offshore Lease”). 

BP, MOEX, and Anadarko entered into the Macondo Prospect Offshore Deepwater 

Operating Agreement (the “Operating Agreement”). BP was the designated 
3

operator of the Macondo Well, while Anadarko and MOEX were non-operators. 

Anadarko owned a 25 percent working interest in and to the Offshore Lease. 

Underwriters issued an Energy Package Policy to Anadarko covering the 

period from June 30, 2009, to June 30, 2010 (the “Policy”). Section III of the 

Policy provides excess liability insurance coverage and has a limit of liability of 

$150 million per “Occurrence” if Anadarko owns 100 percent of the insured 

operation. The Coverage provision of Section III (hereinafter “Coverage 

Provision”) provides:

In consideration of the payment of the premium . . . and in reliance 

upon the proposal for this policy . . . , statements made, and any 

supplementary information pertaining to the proposal which are all 

deemed incorporated herein, Underwriters agree, subject to the 

Insuring Agreements, Conditions, Exclusions, Definitions and 

Declarations contained in this Policy, to indemnify the “Insured” in 

respect of its operations anywhere in the World, for “Ultimate Net 

Loss” by reason of liability:

(a) imposed upon the “Insured” by law, or

(b) assumed by the “Insured” under an “Insured Contract”, 

for damages in respect of:

(i) “Bodily Injury”

(ii) “Personal Injury”

(iii) “Property Damage”

(iv) “Advertising Injury”,

caused by or arising out of an “Occurrence” that occurred on or after 

the Retroactive Date as set out in . . . the Declarations and for which a 

“Claim” is first made in writing against the “Insured” during the 
4

Policy Period as set out in . . . the Declarations. Nothing contained in 

this Policy shall make this Policy subject to the terms of any other 

Insurance.

Section III includes an endorsement titled, “Joint Venture Provision[,]” which 

replaces the joint venture provision in the Insuring Agreements of Section III. The 

Joint Venture Provision provides:

Effective at inception and in consideration of the premium charged 

hereon, Insuring Agreement 4 Joint Ventures . . . is deleted and 

replaced with the following: 

It is hereby understood and agreed by the Assured and 

Underwriters that as regards any liability of the Assured which 

is insured under this Section III and which arises in any manner 

whatsoever out of the operation or existence of any joint 

venture, co-venture, joint lease, joint operating agreement or 

partnership (hereinafter called ‘Joint Venture’) in which the 

Assured has an interest, the liability of Underwriters under this 

Section III shall be limited to the product of (a) the percentage 

interest of the Assured in said Joint Venture and (b) the total 

limit afforded the Assured under this Section III. Where the 

percentage interest of the Assured in said Joint Venture is not 

set forth in writing, the percentage to be applied shall be that 

which would have been imposed by law at the inception of the 

Joint Venture.

The Joint Venture Clause shall not apply to any liability of the 

Assured, when as a result of the circumstances of the 

Occurrence, the terms of the Joint Venture agreement place the 

whole of the liability of the Joint Venture on the Assured.

In the event the Assured becomes legally liable in a court of 

competent jurisdiction for an amount greater than their 

proportionate ownership interest, Underwriters hereon agree to 

provide coverage to the Assured to the extent the legal liability 
5

increases the Assured’s working interest percentage liability. If 

the Assured becomes legally liable for a greater percentage than 

their ownership interest, the liability of Underwriters shall be 

the combination of the Assured’s working interest percentage 

ownership and the additional percentage(s) for which the 

Assured becomes legally liable.

All other terms and conditions remain unchanged.

As reflected above, the first paragraph of the Joint Venture Provision is a general 

scaling provision, which proportionally reduces Underwriters’ limit of liability 

under Section III in accordance with the percentage of Anadarko’s ownership 

interest in any given joint venture. The second and third paragraphs of the Joint 

Venture Provision provide two exceptions to the general scaling provision in the 

first paragraph. 

On April 20, 2010, BP and Transocean were completing temporary 

abandonment operations of the Macondo Well when the well experienced a 

blowout and the Deepwater Horizon drilling rig exploded, burned, and sank,

resulting in a discharge of oil into the Gulf of Mexico for nearly three months (the 

“Macondo Incident”). See In re Oil Spill by Oil Rig “Deepwater Horizon” in the 

Gulf of Mexico, on Apr. 20, 2010, 148 F. Supp. 3d 563, 565-66 (E.D. La. 2015). A 

number of lawsuits were filed as a result of the Macondo Incident. Id. at 566. Most 

federal cases arising from the Macondo Incident were consolidated into 

Multidistrict Litigation 2179. Id. The United States filed suit against BP, MOEX, 
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Transocean, and Anadarko, seeking civil penalties under the Clean Water Act and 

a declaratory judgment of liability under the Oil Pollution Act of 1990 (“OPA”). 

Id. at 566-67. In February 2012, the MDL Court granted the United States’ request 

for a declaratory judgment finding that BP and Anadarko were jointly and 

severally liable under the OPA for removal costs and damages related to the 

subsurface discharge.

1 See 33 U.S.C.S. § 2717(f)(2) (Lexis through Pub. L. No. 

114-229) (stating that in an action for removal costs, “the court shall enter a 

declaratory judgment on liability for removal costs or damages that will be binding 

on any subsequent action or actions to recover further removal costs or damages.”).

Disputes also arose between the defendants. BP submitted a claim against 

Anadarko for costs incurred by BP in connection with the Macondo Incident. In 

 1 The MDL Court’s finding is as follows: 

Although the words “joint and several” do not appear in OPA, OPA 

defines “liable” and “liability” as the standard of liability which 

obtains under section 1321 of this title [Section 311 of the Clean 

Water Act]. Liability under Section 311, in turn, has been determined 

repeatedly to be strict, joint and several. . . . . Therefore, as to the 

subsurface discharge of oil, the Court finds liability under OPA is 

joint and several.

(internal citations and quotations omitted). The MDL Court found BP and 

Anadarko to be responsible parties for the subsurface discharge of oil, as they were 

co-lessees of the area in which the offshore facility was located at the time of the 

Macondo Incident. The MDL Court then found that “[l]iability for OPA removal 

costs and damages is joint and several vis-à-vis BP and Anadarko and the 

subsurface discharge.” 
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October 2011, Anadarko entered into a settlement agreement with BP wherein 

Anadarko and BP mutually agreed to release all claims against each other 

associated with the Macondo Incident. Anadarko agreed to pay BP $4 billion and 

to transfer its 25 percent interest in the Offshore Lease to BP. BP agreed to release 

Anadarko from all claims arising under the Operating Agreement and to indemnify 

Anadarko, with limited exceptions not relevant here, for all future liability, 

including damages or removal costs under the OPA. 

On November 30, 2015, the MDL Court issued its Findings of Fact and 

Conclusions of Law concerning the amount of civil penalties Anadarko is required 

to pay under the Clean Water Act. In re Oil Spill, 148 F. Supp. 3d at 565. The 

MDL Court found Anadarko liable to the United States for civil penalties under the 

Clean Water Act in the amount of $159.5 million. Id. at 584.

The Macondo Incident implicated two sections of the Policy issued by 

Underwriters. Section II provided “Control of Well and Extra Expense” insurance

coverage, which insured against costs associated with certain types of well blowouts. As noted above, Section III of the Policy provided “Excess Liability”

insurance coverage, which insured against claims in excess of Anadarko’s 

underlying insurance or self-insured retention. Underwriters paid Anadarko $37.5 
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million under Section III of the Policy. Anadarko released Underwriters from 

liability under the Policy, except with regard to “Defence Expenses[.]”2

In August 2012, Anadarko filed suit seeking coverage from Underwriters 

under Section III of the Policy for defense, investigation, and adjustment costs and 

expenses paid by Anadarko arising out of the Macondo Incident. Underwriters 

moved for summary judgment, seeking dismissal of Anadarko’s claims and 

contending essentially that it has fully paid and extinguished all liability for 

coverage under the Policy. Anadarko filed two motions for partial summary 

judgment; the second motion is at issue here. In it, Anadarko sought a ruling that 

Underwriters are required to reimburse the defense expenses incurred by Anadarko 

in connection with the Macondo Incident up to the $150 million limit of Section 

III, reduced only by Underwriters’ prior payments to Anadarko under Section III in 

connection with the Macondo Incident and subject to proof of Anadarko’s damages 

at trial. In construing the Policy, the trial court found that the relevant policy 

provisions are unambiguous. The trial court further found that the defense 

expenses are subject to scaling under the Joint Venture Provision. However, the 

trial court concluded that the MDL Court’s judgment finding Anadarko jointly and 

 2 Because the Policy was developed in the London market, it uses the British 

spelling of certain words, including “defence” and “judgement[.]” We have 

retained the British spelling when quoting the parties or when referencing a 

defined term in the Policy.
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severally liable for OPA removal costs and damages triggered the exception to the

Joint Venture Provision found in the third paragraph. The trial court explained that 

the third paragraph of the Joint Venture Provision provides that Underwriters’ 

liability under Section III of the Policy “increases in the event that Anadarko 

becomes legally liable in a court of competent jurisdiction for an amount greater

than its proportionate interest in a Joint Venture.” The trial court concluded that 

under the third paragraph of the Joint Venture Provision, Underwriters’ liability is

equal to the combination of Anadarko’s working interest percentage ownership and 

the additional percentage for which Anadarko becomes legally liable, up to the full 

limits of the Policy, without regard to any scaling of interest.

II. Standard of Review

When both sides move for summary judgment and the trial court grants one 

motion and denies the other, reviewing courts consider both sides’ summary 

judgment evidence, determine all questions presented, and render the judgment the 

trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at 

Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 2010). Therefore, we review all 

grounds asserted in both Anadarko and Underwriters’ motions.
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III. Rules of Construction

Generally, an insurance policy is governed by the same rules of construction 

that apply to other contracts. RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 118 

(Tex. 2015). In construing an insurance policy, our primary concern is to ascertain 

the intentions of the parties as expressed in the policy. Id. at 118, 127; see also In 

re Deepwater Horizon, 470 S.W.3d 452, 464 (Tex. 2015). Our analysis begins with 

the language of the policy because “we presume parties intend what the words of 

their contract say.” Gilbert, 327 S.W.3d at 126. “We examine the entire agreement 

and seek to harmonize and give effect to all provisions so that none will be 

meaningless.” Id.; see also Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 

157 (Tex. 2003). Unless the policy states otherwise, we give words and phrases 

their ordinary and generally accepted meaning. RSUI, 466 S.W.3d at 118. We 

construe words and phrases in context and in light of the rules of grammar and 

common usage. Id. We will not isolate a phrase, sentence, or section of a policy 

and consider it apart from the other provisions. Id.; Deepwater Horizon, 470 

S.W.3d at 464 (“We must examine the policy as a whole, seeking to harmonize all 

provisions and render none meaningless.”).

Contract ambiguity is a question of law to be determined by the court. 

Schaefer, 124 S.W.3d at 157. Here, Anadarko and Underwriters present conflicting 
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interpretations of the Joint Venture Provision. However, the fact that the parties 

have conflicting views about the policy’s meaning alone does not create an 

ambiguity. State Farm Lloyds v. Page, 315 S.W.3d 525, 527 (Tex. 2010); Tex.

Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123, 126 (Tex. 2004). An 

ambiguity is more than a lack of clarity in the language of a policy. RSUI, 466 

S.W.3d at 119. A policy is ambiguous only if, after applying the rules of 

construction, the policy remains subject to two or more reasonable interpretations. 

Id.; see also New Castle Cty. v. Hartford Accident and Indem. Co., 970 F.2d 1267, 

1270 (3d Cir. 1992) (“Because ambiguity lurks in every word, sentence, and 

paragraph in the eyes of a skilled advocate . . . the question is not whether there is 

an ambiguity in the metaphysical sense, but whether the language has only one 

reasonable meaning when construed, not in a [hyper-technical] fashion, but in an 

ordinary, common sense manner.”). Thus, if we conclude that only one party’s 

construction is reasonable, then the policy is unambiguous and we will adopt that 

party’s construction. RSUI, 466 S.W.3d at 118 (citing Grain Dealers Mut. Ins. Co. 

v. McKee, 943 S.W.2d 455, 459 (Tex. 1997)). However, “if both [parties] present 

reasonable interpretations of the policy’s language, we must conclude that the 

policy is ambiguous.” Id. “To be ambiguous, both interpretations must be a 

reasonable interpretation of the words chosen by the parties when read in the 
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context of the policy as a whole.” Id. at 130. Finally, we may not consider parol 

evidence to create an ambiguity. See Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI 

Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). We may however, read the policy 

in light of the circumstances surrounding the policy’s execution to determine 

whether an ambiguity exists and to settle the meaning of the policy. Houston Expl. 

Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 & n.25 (Tex. 

2011). The surrounding circumstances include “‘the commercial or other setting in 

which the contract was negotiated and other objectively determinable factors that 

give a context to the transaction between the parties.’” Id. at 469 (citing 11 

RICHARD A. LORD, WILLISTON ON CONTRACTS § 32.7 (4th ed. 1999)).

IV. Construing the Joint Venture Provision

Anadarko and Underwriters both contend that the plain language of the 

Policy and specifically, the Joint Venture Provision, is unambiguous and only 

supports their proposed construction. 

A. The Plain Language of the First Paragraph of the Joint Venture Provision

According to Underwriters, the Joint Venture Provision limits the liability of 

Underwriters, including liability as to defense expenses. By contrast, Anadarko 

argues that the Joint Venture Provision only scales Underwriters’ liability to

Anadarko under the Policy for Anadarko’s liability to third parties for damages, 
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not liability for defense expenses, which Anadarko contends is more akin to a firstparty liability. Anadarko contends that defense expenses are insured separately and 

in addition to the Policy coverage for Anadarko’s “liability” for damages and the 

Joint Venture Provision makes no reference to its scaling provision applying to 

defense expenses. The trial court found that “[d]efense [e]xpenses are subject to 

scaling under the Joint Venture Provision.” We conclude that the plain language of 

the Joint Venture Provision only reasonably supports the trial court’s construction 

of the provision, which provided that defense expenses are subject to scaling.

Section III, Endorsement Number 1 of the Policy contains the Joint Venture 

Provision. The first paragraph of the provision provides:

It is hereby understood and agreed by [Anadarko] and Underwriters 

that as regards any liability of [Anadarko] which is insured under this 

Section III and which arises in any manner whatsoever out of the 

operation or existence of any joint venture, co-venture, joint lease, 

joint operating agreement or partnership (hereinafter called “Joint 

Venture”) in which [Anadarko] has an interest, the liability of 

Underwriters under this Section III shall be limited to the product of 

(a) the percentage interest of [Anadarko] in said Joint Venture and (b) 

the total limit afforded [Anadarko] under this Section III. Where the 

percentage interest of [Anadarko] in said Joint Venture is not set forth 

in writing, the percentage to be applied shall be that which would 

have been imposed by law at the inception of the Joint Venture.

The plain language of the Joint Venture Provision provides that this provision 

“regards any liability of [Anadarko] which is insured under this Section III[.]”

Thus, the Joint Venture Provision limits its application to only those liabilities 
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covered in Section III of the Policy. Thus, to construe the Joint Venture Provision, 

we must first determine the scope of coverage in Section III of the Policy.

The Coverage Provision of Section III provides in relevant part that:

Underwriters agree . . . to indemnify [Anadarko] in respect of its 

operations anywhere in the World, for “Ultimate Net Loss” by reason 

of liability:

(a) imposed upon [Anadarko] by law, or

(b) assumed by [Anadarko] under an “Insured Contract”, 

for damages in respect of:

(i) “Bodily Injury” 

(ii) “Personal Injury” 

(iii) “Property Damage” 

(iv) “Advertising Injury”, 

caused by or arising out of an “Occurrence” . . . and for which a 

“Claim” is first made in writing against [Anadarko.]

The Coverage Provision does not specifically include the term “Defence 

Expenses”; however, “Ultimate Net Loss” is specifically included, and we must 

refer to the Policy’s definition of “Ultimate Net Loss” to determine the meaning 

and scope of the Coverage Provision. See Provident Life & Accident Ins. Co. v. 

Knott, 128 S.W.3d 211, 219 (Tex. 2003) (“When terms are defined in an insurance 

policy, those definitions control the interpretation of the policy.”).

The Policy defines “Ultimate Net Loss” as “the amount [Anadarko] is 

obligated to pay, by judgement or settlement, as damages resulting from an 

‘Occurrence’ covered by this Policy, including the service of suit, institution of 
15

arbitration proceedings and all ‘Defence Expenses’ in respect of such 

‘Occurrence’.” The Policy defines “‘Occurrence’” as “an accident, including 

continuous and repeated exposure to substantially the same general harmful 

conditions which results in ‘Bodily Injury’, ‘Personal Injury’, ‘Property Damage’, 

or ‘Advertising Injury”, none of which was expected nor intended by [Anadarko].” 

Because the Policy defines “Ultimate Net Loss” to include the amount Anadarko is 

“obligated to pay” as damages from a judgment or settlement and to include

service of suit, institution of arbitration proceedings, and all defense expenses with 

respect to the Macondo Incident, we construe “Ultimate Net Loss” to include all

liabilities of Anadarko for which Underwriters agreed to indemnify in Section III. 

According to Anadarko, the phrase “any liability” as used in the first 

paragraph of the Joint Venture Provision should not be construed broadly to 

include defense expenses, but should be construed as limited to only those thirdparty liabilities insured in Section III’s Coverage Provision. The term “liability” is 

not a defined term in the Policy. We do not believe that the word “liability” is so 

restricted as to only refer to “third-party” liability. Generally, “liability” is “[t]he 

quality or state of being legally obligated or accountable; legal responsibility to 

another or to society, enforceable by civil remedy or criminal punishment[.]” 

Liability, BLACK’S LAW DICTIONARY (9th ed. 2009). “Liability” can also mean “[a] 
16

financial or pecuniary obligation[.]” Id. There is nothing in the plain language of 

the Policy to suggest that the parties intended to limit the meaning of “liability” to 

only include “third-party” liability. On the contrary, the plain language supports a 

broad, general use of the word. The Joint Venture Provision is written to include 

“‘any liability’” of Anadarko insured under Section III of the Policy. As discussed 

above, the Coverage Provision of Section III is reasonably construed as including 

liabilities for defense expenses. Thus, the Joint Venture Provision is reasonably 

construed as including defense expenses as a liability and therefore subject to 

scaling under the terms of the Joint Venture Provision.

Anadarko’s interpretation of the Policy would render the Policy’s language

that “Underwriters agree . . . to indemnify [Anadarko] . . . for ‘Ultimate Net Loss’” 

meaningless and would also force us to rewrite the language of the Policy. 

Underwriters contend that the plain language of the Joint Venture Provision

implies breadth and inclusiveness, noting that the Joint Venture Provision

expressly includes “‘any liability . . . insured under . . . Section III and . . . [arising]

in any manner whatsoever out of . . . any [Joint Venture]. . . .’” Anadarko’s 

interpretation would require this Court to replace the broad language of the Joint 

Venture Provision in the Policy—“as regards any liability of [Anadarko]”—with 

far more limiting language—“as regards any third-party liability of Anadarko.”
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Underwriters contend that we should not judicially rewrite the Policy by inserting 

the word “third-party” into it. See Gilbert, 327 S.W.3d at 126-27 (declining to 

judicially rewrite the parties’ exclusion by inserting a word into it). We agree.

Finally, we note that the General Declarations section of the Policy, which 

incorporates the limits for the Policy, makes no reference to defense expenses 

being payable on a different basis from costs awarded by way of damages for 

liabilities incurred under the Policy. Section III of the Policy contains a single limit 

of liability—“USD 150,000,000 (100%) any one occurrence without aggregate 

except for Products and Completed Operations (as defined by Policy Wording)

which [are] subject to a USD 150,000,000 aggregate limit of liability.” The Policy 

provision defining the “Limits of Liability” under Section III, provides as follows:

Underwriters shall only be liable for ‘Ultimate Net Loss’ in excess of: 

(a) the Underlying Insurance(s) set out in . . . the Declarations[;] or, 

(b) the Self Insured Retention set out in . . . the Declarations, 

whichever is greater and then only up to the amount stated in Item 

4(a) of the Declarations in respect of each ‘Occurrence.’”

The parties knew how to provide for coverage regarding defense costs on a 

different basis, as they did so for “Products and Completed Operations[,]” which 

are expressly insured on an aggregate limit of liability. 
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We conclude the first paragraph of the Joint Venture Provision is only 

susceptible to one reasonable interpretation, that is, defense expenses are subject to 

scaling under the Joint Venture Provision. 

B. The First Exception of the Joint Venture Provision

The trial court expressly made no ruling regarding the first exception of the 

Joint Venture Provision. The first exception to the Joint Venture Provision

provides:

The Joint Venture Clause shall not apply to any liability 

of [Anadarko], when as a result of the circumstances of 

the Occurrence, the terms of the Joint Venture agreement 

place the whole of the liability of the Joint Venture on 

[Anadarko].

“Joint Venture agreement” is not a defined term in the Policy. Anadarko contends 

that the reference to the “Joint Venture agreement” includes not only the Operating 

Agreement, but also the Offshore Lease. In support, Anadarko cites to the language 

in the first paragraph of the Joint Venture Provision, which states that the provision 

regards any liability of Anadarko that is insured under Section III and that “arises 

in any manner whatsoever out of the operation or existence of any joint venture, 

co-venture, joint lease, joint operating agreement or partnership (hereinafter called 

‘Joint Venture’) in which [Anadarko] has an interest[.]”
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Anadarko contends that the first exception is triggered in this case because 

the Offshore Lease places “the whole of the liability of the Joint Venture” on 

Anadarko. In the Offshore Lease, the United States and BP agreed that the 

Offshore Lease is “subject to . . . all other applicable statutes[.]” BP later assigned 

a percentage of its interest in the Offshore Lease to Anadarko. According to 

Anadarko, because the OPA regulates the discharge of oil into or upon the 

navigable waters or adjoining shorelines, it is an applicable statute and has been 

incorporated into the terms of the Offshore Lease. Anadarko contends that as a

lessee under the Offshore Lease, it is subject to the OPA’s joint and several 

liability and thus, is wholly liable for removal costs and damages from the

wrongful discharge of oil. 

Assuming without deciding that the Offshore Lease is part of the Joint 

Venture agreement under the Policy and that the OPA’s joint and several liability 

provision is made applicable as a term of the Offshore Lease, we conclude that the 

Offshore Lease does not place “the whole of the liability of the Joint Venture” on 

Anadarko.

Anadarko contends that the “whole of the liability of the Joint Venture” was 

placed on it because the MDL Court found it jointly and severally liable for 100 

percent of the OPA removal costs and damages. Underwriters respond that 
20

Anadarko incorrectly limits its analysis to only OPA liability and that there were 

other liabilities of the Joint Venture stemming from the Macondo Incident. We 

conclude that Underwriters’ interpretation of the exception is the only reasonable 

interpretation. 

The Policy states that this exception is applicable “when as a result of the 

circumstances of the Occurrence, the terms of the Joint Venture agreement place 

the whole of the liability of the Joint Venture on [Anadarko].” Here, the 

circumstances of the Occurrence are the circumstances surrounding the Macondo 

Incident. The Policy does not define “whole” but we give it its ordinary meaning. 

“Whole” means “constituting the total sum or undiminished entirety of” 

something. WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2611 (3d ed. 

2002). “Whole” is also defined as “all there is of a thing.” THE OXFORD DESK 

DICTIONARY AND THESAURUS 920 (American Ed. 1997). The phrase “of the 

liability” in the sentence is a prepositional phrase that modifies the word 

“whole[,]” which is used as a noun and is the direct object in the dependent clause 

“when . . . the terms of the Joint Venture agreement place the whole of the liability 

on [Anadarko].” Thus, by the plain language of the Policy, it is clear that the

parties’ intent was that this exception apply in a circumstance in which all of the 
21

Joint Venture’s liability stemming from an Occurrence, not just one particular type 

of liability, i.e., OPA liability, was placed on Anadarko.

The OPA is not the exclusive source of potential liability for the Joint 

Venture partners. Under the OPA, responsible parties are liable for all removal 

costs and damages, including injuries to natural resources, destruction of property, 

loss of subsistence use of natural resources, loss of tax revenue, loss of profits or 

earning capacity, and net increased costs for additional public services. See 33 

U.S.C.S. § 2701(5) (LEXIS through Pub. L. No. 114-229) (defining damages); §

2702 (b)(2) (LEXIS through Pub. L. No. 114-229) (identifying types of damages 

covered under OPA). Notably, the OPA does not provide a cause of action for 

personal injuries. See 33 U.S.C.S. §§ 2701(5); 2702; see also In re Oil Spill by the 

Oil Rig “Deepwater Horizon”, MDL No. 2179, 2011 U.S. Dist. LEXIS 10497, at 

*18 (E.D. La. Feb. 2, 2011) (noting that personal injury and death claims fall 

outside of scope of OPA). Thus, even if Anadarko were declared wholly liable for 

claims asserted under the OPA, the Joint Venture potentially has numerous other 

non-OPA claims in which neither the Operating Agreement, nor the Offshore 

Lease place liability wholly on Anadarko. See e.g. In re Deepwater Horizon Robert 

Young v. BP Expl. & Prod., Inc., 786 F.3d 344, 348 (5th Cir. 2015) (discussing 

non-OPA claims involving physical injury and death under general federal 
22

maritime law); In re Oil Spill by Oil Rig “Deepwater Horizon”, 295 F.R.D. 112,

117-18, 119-120, 134-36, 161 (E.D. La. 2013) (approving class settlement of 

certain claims of individuals engaged as clean-up workers and residents of 

particular geographical boundaries in the Gulf of Mexico related to their exposure 

to oil or dispersants arising from the Macondo Incident and subsequent response 

efforts of BP); see also In re Oil Spill by Oil Rig “Deepwater Horizon”, 808 F. 

Supp. 2d 943, 962-63, 968-69 (E.D. La. 2011), aff’d, 745 F.3d 157 (5th Cir. 2014)

(explaining that the OPA displaces general maritime law claims against 

Responsible Parties but only with regard to procedure, thus, if OPA presentment 

requirements are met, claims for punitive damages are available for general 

maritime law claimants against Responsible Parties); In re Oil Spill by the Oil Rig 

“Deepwater Horizon”, MDL No. 2179, 2011 U.S. Dist. LEXIS 131069, at *29, 50 

(E.D. La. Nov. 1 4, 2011), aff’d, 745 F.3d 157 (5th Cir. 2014) (concluding that the 

states may be entitled to receive punitive damages under general maritime law, but 

ultimately dismissing the states’ general maritime law negligence claims against 

Anadarko and MOEX).

Anadarko bases its entire argument regarding the first exception on the 

Offshore Lease’s incorporation of the OPA and its joint and several liability 

provision. As fully discussed above, even if we accept Anadarko’s argument that 
23

the Offshore Lease is a Joint Venture agreement under the Policy and places all 

OPA liability on Anadarko, the Offshore Lease does not place all of the Joint 

Venture’s liability on Anadarko. Anadarko does not dispute that the Operating 

Agreement governs the relationship between BP and the non-operating Joint 

Venture partners. The Operating Agreement provides that each party to the 

agreement will bear liability in proportion to its percentage of ownership in the 

Macondo Well. The Operating Agreement also places all liability upon one party 

only if that party was grossly negligent or engaged in willful misconduct. The 

MDL Court found only BP grossly negligent, and dismissed all negligence claims 

against Anadarko. See In re Oil Spill by the Oil Rig “Deepwater Horizon”, 21 F.

Supp. 3d 657, 757 (E.D. La. 2014); see also In re Oil Spill, 148 F. Supp. 3d at 567-

68; In re Oil Spill, 808 F. Supp. 2d at 963. Because the Joint Venture Agreement 

did not place the whole of the liability of the Joint Venture on Anadarko, the first 

exception to the Joint Venture Provision is inapplicable. 

C. The Second Exception of the Joint Venture Provision

The trial court found that the MDL Court’s determination that Anadarko was 

jointly and severally liable for the OPA removal costs and damages triggered the 

second exception of the Joint Venture Provision. As a result, the trial court 

concluded that the scaling provision of the Joint Venture Provision was not 
24

applicable and that “Anadarko is entitled . . . to payment of 100 percent of its 

Ultimate Net Loss” under the terms of the Policy. The second exception to the 

Joint Venture Provision provides:

In the event [Anadarko] becomes legally liable in a court of 

competent jurisdiction for an amount greater than their proportionate 

ownership interest, Underwriters hereon agree to provide coverage to 

[Anadarko] to the extent the legal liability increases [Anadarko’s]

working interest percentage liability. If [Anadarko] becomes legally 

liable for a greater percentage than their ownership interest, the 

liability of Underwriters shall be the combination of [Anadarko’s] 

working interest percentage ownership and the additional 

percentage(s) for which [Anadarko] becomes legally liable.

Underwriters contend the trial court erred in finding this exception applicable 

because it is only triggered when Anadarko is first adjudicated to be liable for a 

fixed and certain amount that is greater than its proportionate ownership interest in 

the joint venture and actually pays the fixed amount. Underwriters contend that an 

actual judgment for a specific amount is required because a finding of potential 

liability does not satisfy the provision’s requirement for a finding of legal liability. 

Second, according to Underwriters, the trial court’s finding must actually increase 

Anadarko’s working interest percentage in the joint venture. 

The second exception contained in the Joint Venture Provision is made up of 

two complementary sentences. The first sentence establishes the basis for 

indemnifying Anadarko for a greater percentage than its working interest 
25

percentage—i.e., when Anadarko becomes legally liable for an amount greater 

than 25 percent. The second sentence establishes how Underwriters’ new limit of 

liability is to be calculated in such event, i.e.,—25 percent plus the additional 

percentage for which Anadarko is found legally liable.

At the heart of this dispute is the MDL Court’s ruling that Anadarko was 

jointly and severally liable for OPA costs and damages. Underwriters contend the

MDL Court’s ruling amounts only to a ruling of “potential liability” because the 

MDL Court did not actually hold Anadarko legally liable for a specific amount of 

damages. Anadarko responds that the MDL Court did find it liable for a specific 

amount of damages, namely, 100 percent of the OPA costs and damages. And, 

according to Anadarko, the Joint Venture Provision does not require a finding that 

Anadarko pay a specific amount of damages. Anadarko contends the finding that it 

was jointly and severally liable is sufficient to meet the Policy’s requirement that it 

be held legally liable for an amount greater than its percentage of ownership. 

To resolve this dispute, we must look first to the MDL Court’s order. 

Pursuant to 33 U.S.C.S. § 2717(f)(2), the MDL Court’s order granted the United 

States’ motion requesting a declaratory judgment that Anadarko and BP were 

jointly and severally liable for OPA removal costs and damages. See generally 33 

U.S.C.S. § 2717(f)(2). However, we conclude the MDL court’s declaratory 
26

judgment did not trigger the Joint Venture Provision’s second exception because a 

judgment holding a party jointly and severally liable for OPA costs and damages is 

not the same as a judgment for recovery of a particular amount for such costs. See 

Am. Cyanamid Co. v. Capuano, 381 F.3d 6, 12-13 (1st Cir. 2004) (interpreting 

effect of declaratory judgment issued in an action under CERCLA and finding that 

judgment on liability for future costs is not itself a judgment for recovery of such 

costs or damages). An action to declare rights is not an action for money damages. 

See Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 

660-61 (Tex. 2009). Thus, the MDL Court’s order successfully declared Anadarko 

jointly and severally liable, but did not set the amount for which Anadarko was 

liable, which is what the second exception to the Joint Venture Provision 

contemplated in providing that Anadarko must become “legally liable . . . for an 

amount greater than [its] proportionate ownership interest” (emphasis added).The

United States prevailed on its request for declaratory judgment and the trial court 

rendered judgment on liability, but the MDL Court did not rule on the amount of

monetary damages for which Anadarko was liable.

As explained above, coverage under Section III of the Policy is for 

Anadarko’s “Ultimate Net Loss,” which is defined in part as “the amount 

[Anadarko] is obligated to pay, by judgement or settlement, as damages[.]” Thus, 
27

for a damages claim to be covered under Section III of the Policy, the plain 

language of the Policy supports that the damages amount must be set forth in a 

judgment or settlement creating an actual obligation for Anadarko to pay. A 

“judgment” is a “court’s final determination of the rights and obligations of the 

parties in a case.” Judgment, BLACK’S LAW DICTIONARY (9th ed. 2009). There is 

no dispute that the MDL Court found Anadarko jointly and severally liable with 

BP for OPA removal costs and damages. The MDL Court determined that BP and 

Anadarko are both liable as responsible parties under the OPA. However, after 

making this finding, the MDL Court noted that though the issue of BP and 

Anadarko’s liability was settled, “there may be issues regarding quantum in 

subsequent actions[.]” The MDL Court did not further expound on the meaning of 

this statement. “[Q]uantum” means “quantity” or “amount[.]” WEBSTER’S THIRD 

NEW INTERNATIONAL DICTIONARY 1859 (3d ed. 2002). Webster’s gives the 

following verbal illustration of an appropriate use of the word “quantum” in 

context—“the [quantum] of damages to be assessed[.]” Id. It also defines 

“quantum” as “a certain or an allotted amount[.]” Id. Thus, the MDL Court’s order 

could reasonably be interpreted as indicating the MDL Court anticipated further 

litigation on this matter to determine the actual amount of OPA removal costs and 

damages for which Anadarko and BP would be liable. The MDL Court did not 
28

make a final determination as to the amount of Anadarko’s actual legal obligation.

Nothing in the record before us shows that Anadarko has been ordered to pay any 

specific amount of OPA expenses in a judgment. Anadarko did enter into a 

settlement agreement with BP wherein Anadarko paid $4 billion to BP for 

damages and cleanup costs arising from the Macondo Incident. There is some

evidence in the record to support that Anadarko’s payment to BP is an amount that

is less than Anadarko’s 25 percent proportionate ownership interest in the well.3 In 

the settlement agreement, BP agreed to indemnify Anadarko for any OPA liability. 

There is no evidence in the record of other settlement agreements in which 

Anadarko agreed to pay additional funds for the Macondo Incident. And, in April 

2016, the MDL Court entered a final judgment adopting a consent decree in which 

the United States agreed to not pursue Anadarko for any OPA liability. In re Oil 

Spill by the Oil Rig “Deepwater Horizon”, MDL No. 2179, 2016 U.S. Dist. LEXIS 

50466, at *83-86 (E.D. La. Apr. 4, 2016). Thus, while the MDL Court’s order 

suggests that the MDL Court initially anticipated future litigation to determine the 

 3

 As explained above, the MDL Court found Anadarko liable for a $159.5 

million fine under the Clean Water Act. See In re Oil Spill by Oil Rig “Deepwater 

Horizon”, 148 F. Supp. 3d 563, 584 (E.D. La. 2015); see also 33 U.S.C.S. § 

1321(b)(7) (LEXIS through Pub. L. No. 114-244). Without deciding whether the 

fine was a covered liability under the Policy, we note that even if we considered 

the fine, Anadarko’s actual share of the costs stemming from the Macondo Incident 

remains well below its 25 percent working interest percentage in the joint venture. 
29

actual amount of OPA liability for BP and Anadarko, the MDL Court ultimately 

never made that determination concerning Anadarko because BP accepted full 

responsibility for Anadarko’s OPA liability. See id.

We are unable to reconcile Anadarko’s interpretation of the third paragraph 

of the Joint Venture Provision with the Policy’s definition of “Ultimate Net 

Loss[.]” Anadarko’s interpretation of this part of the Joint Venture Provision

would ultimately require Underwriters to indemnify Anadarko for a loss for which 

Anadarko has not become obligated to pay by judgment or settlement. Because 

Anadarko’s interpretation renders a substantial part of the “Ultimate Net Loss”

provision meaningless, we conclude Anadarko’s construction is not reasonable and 

Underwriters construction is the only reasonable construction of the provision. See

Deepwater Horizon, 470 S.W.3d at 464; Gilbert, 327 S.W.3d at 126.

For the reasons stated above, we conclude the trial court erred in granting 

Anadarko’s motion for summary judgment. We reverse the trial court’s judgment 

and render judgment granting Underwriters’ motion for summary judgment.

REVERSED AND RENDERED.

 

 

______________________________

 CHARLES KREGER

 Justice
30

Submitted on May 7, 2015

Opinion Delivered November 17, 2016

Before McKeithen, C.J., Kreger and Horton, JJ.