IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-50953

AIG SPECIALTY INSURANCE COMPANY, formerly known as Chartis 

Specialty Insurance Company,

Plaintiff - Appellee

v.

TESORO CORPORATION,

Defendant - Appellant

_______________________________________________________________________

TESORO CORPORATION, a Delaware Corporation; TESORO REFINING 

AND MARKETING COMPANY, L.L.C., 

Plaintiffs - Appellants

v.

AIG SPECIALTY INSURANCE COMPANY, formerly known as Chartis 

Specialty Insurance Company,

Defendant - Appellee

Appeal from the United States District Court 

for the Western District of Texas

United States Court of Appeals

Fifth Circuit

FILED

November 29, 2016

Lyle W. Cayce

Clerk
No. 15-50953

2

ON PETITION FOR PANEL REHEARING

Before SMITH, HAYNES, and COSTA, Circuit Judges.

ORDER:

The petition for panel rehearing filed by Tesoro Corporation and Tesoro 

Refining and Marketing (collectively, “the Tesoro Parties”) is DENIED. 

Furthermore, the Tesoro Parties’ belated request that this court certify the 

question of how the discovery rule applies in light of Cosgrove v. Cade, 468

S.W.3d 32 (Tex. 2015), to the Texas Supreme Court is also DENIED. 

The opinion in this case follows clear Texas precedent. However, even if 

we were to assume arguendo that the discovery rule could apply to a case such 

as this, the Tesoro Parties fail to point to evidence that would support a 

conclusion that, exercising diligence, they should not have discovered their 

claimed injury before August of 2008 (four years before they asserted the 

reformation claim and six years after they received the allegedly mistaken 

policy). See Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667, 675 (5th 

Cir. 2013)(explaining discovery rule).1 Indeed, the Tesoro Parties’ real 

argument is that they did not discover the alleged mistake not that they could 

or should not have discovered it had they exercised reasonable diligence. 

Clearly, any diligence at all would have revealed the alleged mistake, which is 

obvious in the listing of Tesoro Corporation as named insured and the 

definition of “Insured” in the policy. Certainly at some point in the six years 

 

1 The Tesoro Parties’ argument on diligence is as follows: “The proper inquiry for 

the district court was to consider when, through the exercise of reasonable diligence, the 

Tesoro parties ought to have realized the error in the Chartis policy. And on this point, 

Chartis’s own behavior demonstrated the existence of a material fact issue. If the district 

court’s conclusion were an accurate generalization of what any reasonably prudent 

corporation might have done—to ‘examine the Policy and the scope of coverage’ in the 

dispute—Chartis would have presumably realized, and asserted, the defense that Tesoro 

Refining is not an insured party when Tesoro Refining first notified Chartis of a potential 

claim.”
No. 15-50953

3

between receipt of the policy in 2002 and August 2008, during several years of 

ongoing litigation where the policy was front and center, someone could and 

should have looked at the policy.2 Thus, the issue is not “determinative.” TEX.

R. APP. PRO. 58.1

 

2 While the Tesoro Parties argue that diligence is usually a fact question, they point 

to no evidence about their own conduct that would raise such a fact issue. See In re Placid 

Oil Co., 932 F.2d 394, 398–99 (5th Cir. 1991) (“Even if PGI had no inkling that its rights were 

being invaded, it was in a circumstance in which a reasonable person would have investigated 

the situation.”).