IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-30230

IN RE: DEEPWATER HORIZON

--------------------------------------------------

RANGER INSURANCE, LIMITED,

Plaintiff - Appellee

v.

TRANSOCEAN OFFSHORE DEEPWATER DRILLING, INCORPORATED;

TRANSOCEAN HOLDINGS, L.L.C.; TRANSOCEAN DEEPWATER,

INCORPORATED; TRITON ASSET LEASING GMBH,

Intervenor Plaintiffs - Appellees

v.

BP P.L.C.; BP EXPLORATION & PRODUCTION, INCORPORATED; BP

AMERICAN PRODUCTION COMPANY; BP CORPORATION NORTH

AMERICA, INCORPORATED; BP COMPANY NORTH AMERICA,

INCORPORATED; BP PRODUCTS NORTH AMERICA, INCORPORATED;

BP AMERICA, INCORPORATED; BP HOLDINGS NORTH AMERICA,

LIMITED,

Defendants - Intervenor Defendants - Appellants

--------------------------------------------------

CERTAIN UNDERWRITERS AT LLOYD’S LONDON,

Plaintiff - Appellee

v.

United States Court of Appeals

Fifth Circuit

F I L E D

August 29, 2013

Lyle W. Cayce

Clerk

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No. 12-30230

TRANSOCEAN OFFSHORE DEEPWATER DRILLING, INCORPORATED;

TRANSOCEAN HOLDINGS, L.L.C.; TRANSOCEAN DEEPWATER,

INCORPORATED; TRITON ASSET LEASING GMBH,

Intervenor Plaintiffs - Appellees

v.

BP P.L.C.; BP EXPLORATION & PRODUCTION, INCORPORATED; BP

AMERICAN PRODUCTION COMPANY; BP CORPORATION NORTH

AMERICA, INCORPORATED; BP COMPANY NORTH AMERICA,

INCORPORATED; BP PRODUCTS NORTH AMERICA, INCORPORATED;

BP AMERICA, INCORPORATED; BP HOLDINGS NORTH AMERICA,

LIMITED,

Defendants - Intervenor Defendants - Appellants

Appeal from the United States District Court

for the Eastern District of Louisiana

Before JOLLY, BENAVIDES, and HIGGINSON, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The original opinion in this case was filed on March 1, 2013.1 Because this

case involves important and determinative questions of Texas law as to which

there is no controlling Texas Supreme Court precedent, the panel, upon the

petition for rehearing, unanimously withdraws the previous opinion and

substitutes the following certified questions to the Supreme Court of Texas.

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF TEXAS,

PURSUANT TO THE TEXAS CONSTITUTION ART. 5 § 3-C AND TEXAS

RULE OF APPELLATE PROCEDURE 58.1.

1

In re Deepwater Horizon, 710 F.3d 338 (5th Cir. 2013).

2

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TO THE SUPREME COURT OF TEXAS AND THE HONORABLE

JUSTICES THEREOF:

I. Style of the Case: Parties and Counsel

The style of the case is In re: Deepwater Horizon: Ranger Insurance,

Limited, Plaintiff–Appellee v. Transocean Offshore Deepwater Drilling,

Incorporated; Transocean Holdings, L.L.C.; Transocean Deepwater,

Incorporated; Triton Asset Leasing GMBH, Intervenor Plaintiffs–Appellees v.

BP P.L.C.; BP Exploration & Production, Incorporated; BP AmericanProduction

Company; BP Corporation North America, Incorporated; BP Company North

America, Incorporated; BP Products North America, Incorporated; BP America,

Incorporated; BP Holdings North America, Limited Defendants–Intervenor

Defendants–Appellants; Certain Underwriters at Lloyd’s London,

Plaintiff–Appellee, Transocean Offshore Deepwater Drilling, Incorporated;

Transocean Holdings, L.L.C.; TransoceanDeepwater, Incorporated;Triton Asset

Leasing GMBH, Intervenor Plaintiffs–Appellees v. BP P.L.C.; BP Exploration

& Production, Incorporated; BP America Production Company; BP Corporation

North America, Incorporated; BP Company North America, Incorporated; BP

Products North America, Incorporated; BP America, Incorporated; BP Holdings

North America, Limited, Defendants–Intervenor Defendants–Appellants. This

is Case No. 12-30230, in the United States Court of Appeals for the Fifth Circuit,

on appeal from the judgment of the United States District Court for the Eastern

District of Louisiana. Federal jurisdiction is premised upon 28 U.S.C. § 1333.

The names of all the parties to the case, each of whom is represented by

counsel, and the respective names, addresses, and telephone numbers of their

counsel, are as follows: 

• Ranger Insurance, Limited, plaintiff in the district court and appellee in

this court, represented by Michael John Maloney of Maloney, Martin &

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Associates, Suite 100, 3401 Allen Parkway, Houston, TX 77019-0000, Tel.

713-759-1600;

• Transocean Offshore Deepwater Drilling, Incorporated; Transocean

Holdings, L.L.C.; Transocean Deepwater, Incorporated; and Triton Asset

Leasing GMBH, intervenor–plaintiffs in the district court and appellees

in this court, represented by Steven Lynn Roberts, of Sutherland Asbill &

Brennan, L.L.P., Suite 3700, 1001 Fannin Street, Houston, TX 77002-

6760, Tel. 713-470-6192;

• BP, P.L.C.; BP Exploration & Production, Incorporated; BP American

Production Company; BP Corporation North America, Incorporated; BP

Company North America, Incorporated; BP Products North America,

Incorporated; BP America, Incorporated; BP Holdings North America

Limited, defendants and defendant-intervenors in the district court and

appellants in this court, represented by David B. Goodwin of Covington &

Burling, L.L.P., 35th Floor, 1 Front Street, San Francisco, CA 94111-5356,

Tel. 415-591-6000; and

• Certain Underwriters at Lloyds London, plaintiff in the district court and

appellee in this court, represented by Richard N. Dicharry of Phelps

Dunbar, L.L.P., Suite 2000, 365 Canal Street, 1 Canal Place, New Orleans,

LA 70130, Tel. 504-556-1311.

II. Statement of the Case

Transocean Holdings, Inc. (“Transocean”) owned the Deepwater Horizon,

a semi-submersible, mobile offshore drilling unit. In April 2010, the Deepwater

Horizon sank into the Gulf of Mexico after burning for two days following an

onboard explosion (“Incident” or “Deepwater Horizon Incident”). At the time of

the Incident, the Deepwater Horizon was engaged in exploratory drilling

activities at the Macondo Well under a Drilling Contract between the Appellant

BP American Production Company’s (together with its affiliates, “BP”)

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predecessor and Transocean’s predecessor. This Contract required Transocean

to maintain certain minimum insurance coverages for the benefit of BP. The

extent to which these policies covered BP’s pollution-related liabilities arising

from the Deepwater Horizon Incident is the subject of this appeal.

The Insurance Contracts

Transocean held insurance policies with a primary liability insurer,

Ranger Insurance Ltd. (“Ranger”), as well as several excess liability insurers led

by London market syndicates (“Excess Insurers;” together with Ranger,

“Insurers”). Transocean’s insurance policy with Ranger provided at least $50

million of general liability coverage, and its policies with the Excess Insurers

formed four layers of excess coverage directly above the Ranger Policy that

provided at least $700 million of additional general liability coverage. The

Ranger and Excess Policies contain materially identical provisions.2 The Policy

terms that are important to this case are “Insured” and “Insured Contract.” The

Policies define “Insured” as including the Named Insured, other parties, and 

(c) any person or entity to whom the “Insured” is obliged by any oral

or written “Insured Contract” (including contracts which are in

agreement but have not been formally concluded in writing) entered

into before any relevant “Occurrence”, to provide insurance such as

is afforded by this Policy . . . . 

The Policies define “Insured Contract” as follows:

The words “Insured Contract”, whenever used in this Policy, shall

mean any written or oral contract or agreement entered into by the

“Insured” (including contracts which are in agreement but have not

been formally concluded in writing) and pertaining to business

under which the “Insured” assumes the tort liability of another

party to pay for “Bodily Injury”, “Property Damage”, “Personal

Injury” or “Advertising Injury” to a “Third Party” or organization. 

2 As the district court noted (and the Insurers have not disputed), this similarity allows

the court to treat all of the Insurers as one for purposes of analysis in this case.

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Tort Liability means a liability that would be imposed by law in the

absence of any contract or agreement.3

The Drilling Contract

The Drilling Contract defines BP’s and Transocean’s obligations to one

another, separately identifying the liabilities each party assumes. Article 20 of

the Contract is a singular provision that imposes upon Transocean an insurance

requirement:

20.1 INSURANCE

Without limiting the indemnity obligations or liabilities of

CONTRACTOR [Transocean] or its insurer, at all times during the

term of this CONTRACT, CONTRACTOR shall maintain

insurance covering the operations to be performed under

this CONTRACT as set forth in Exhibit C.

(Emphasis added.) Exhibit C to the Drilling Contract is titled “Insurance

Requirements” and establishes the types and minimum level of coverage that

Transocean is obligated to maintain. This Exhibit provides that Transocean

shall carry all insurance at its own expense and that the policies “shall be

endorsed to provide that there will be no recourse against [BP] for payment of

premium.” Further, Exhibit C states:

[BP], its subsidiaries and affiliated companies, co-owners, and joint

venturers, if any, and their employees, officers and agents shall be

named as additional insureds in each of [Transocean’s]

policies, except Workers’ Compensation for liabilities

assumed by [Transocean] under the terms of this Contract.

(Emphasis added.)

The Procedural History

3 The Policies contain further provisions addressing other insureds. Endorsement 1

provides a general condition that additional insureds are automatically included where

required by written contract. Condition D.1 to Section I coverage limits the coverage of

additional insureds: Transocean has the privilege to name additional insureds only to the

extent as is required under contract or agreement.

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Following the Incident, BP notified the Insurers of its Deepwater Horizonrelated losses. The Excess Insurers and Ranger each filed a one-count

declaratory judgment action against BP.

4 The Insurers’ complaints are

substantively identical—both request a declaration that the Insurers have “no

additional-insured obligation to BP with respect to pollution claims against BP

for oil emanating from BP’s well” as a result of the Deepwater Horizon Incident. 

The Insurers acknowledge that “the [D]rilling Contract requires additional

insured protection in favor of certain BP entities.” Thus, all parties concede that

the Drilling Contract is an “insured contract” under the policies and that the

policies provide some insurance coverage to BP as an additional insured. The

issue in contention is the scope of BP’s insurance coverage.

In July 2011, BP moved for judgment on the pleadings, under Rule 12(c)

of the Federal Rules of Civil Procedure, against the Insurers. Relying upon

Texas and Fifth Circuit precedent as developed in Evanston Ins. Co. v.

ATOFINA Petrochems., Inc., 256 S.W.3d 660 (Tex. 2008), and in Aubris

Resources LP v. St. Paul Fire & Marine Ins. Co., 566 F.3d 483 (5th Cir. 2009), BP

argued (1) it was an “additional insured” under the insurance policies at issue

and (2) the insurance policies alone—and not the indemnities detailed in the

Drilling Contract—govern the scope of BP’s coverage rights as an “additional

insured.”5

The district court found ATOFINA and Aubris are distinguishable from

the case at hand and denied BP’s Rule 12(c) motion in November 2011. In

4

In February 2011,the Judicial Panel on Multidistrict Litigation transferred both cases

to the United States District Court for the Eastern District of Louisiana for coordinated

pretrial proceedings with the other Deepwater Horizon-related litigation pending in that court.

In March 2011, Transocean moved for leave to intervene in the consolidated actions, which

motion the court granted.

5 BP argues this motion did not require a determination of any rights or obligations of

BP or Transocean to one another under any provisions of the Drilling Contract.

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particular, the court read Transocean’s insurance obligation in Exhibit C to the

Drilling Contract to be to name BP as an “additional insured[] in each of

[Transocean’s] policies . . . for liabilities assumed by [Transocean] under the

terms of the contract.” That is, the district court found BP’s proffered reading

of this clause unreasonable, and read the clause as if there were a comma

following the phrase “except Workers’ Compensation;” this reading rendered

those three words their own discrete carve out from liability. Reasoning further

that this interpretation required Transocean to name BP as an insured only for

liabilities Transocean explicitly assumed under the contract, the court then

looked to Article 24 of the Drilling Contract to conclude that BP was not covered

under Transocean’s policy for the pollution-related liabilities deriving from the

Deepwater Horizon Incident (as the spill originated below the surface of the

water).6

Following further submissions of the parties, the district court then

entered a partial final judgment on the Insurers’ complaints under Rule 54(b). 

6 With respect to pollution-related liabilities, Article 24.1 of the Contract provides:

CONTRACTOR [Transocean] shall assume full responsibility for and shall

protect, release, defend, indemnify, and hold COMPANY [BP] and its joint

owners harmless from and against any loss, damage, expense, claim, fine,

penalty, demand, or liability for pollution or contamination, including

control and removal thereof, originating on or above the surface of the

land or water, from spills, leaks, or discharges of fuels, lubricants, motor oils,

pipe dope, paints, solvents, ballast, air emissions, bilge sludge, garbage, or any

other liquid or solid whatsoever in possession and control of CONTRACTOR .

. . .

(Emphasis added.) Article 24.2 then provides:

COMPANY [BP] shall assume full responsibility for and shall protect, release,

defend, indemnify, and hold CONTRACTOR [Transocean] harmless from and

against any loss, damage, expense, claim, fine, penalty, demand, or liability for

pollution or contamination, including control and removal thereof, arising

out of or connected with operations under this CONTRACT hereunder

and not assumed by CONTRACTOR in Article 24.1 above . . . .

(Emphasis added.)

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Effective March 1, 2012, the court held “by its terms, the Court’s Order and

Reasons [on BP’s motion for judgment on the pleadings] not only denied BP’s

motion but also granted judgment on the pleadings against [BP] and in favor of

the Plaintiff Insurers on the Plaintiff Insurers’ complaints.”7 BP timely

appealed. A unanimous panel of this court initially reversed the district court’s

judgment. In re Deepwater Horizon, 710 F.3d 338 (5th Cir. 2013). The Insurers

and Transocean petitioned for rehearing, and we withdrew that ruling to certify

the following question to the Texas Supreme Court.

III. Legal Issues

BP appeals the district court’s conclusion that it is not entitled to coverage

under the policies, because Transocean was only required to name BP as an

additional insured as to the risks Transocean assumed in the indemnities

provisions of the Drilling Contract.

A.

The first issue is the scope of BP’s coverage as an additional insured, and

whether the umbrella policy itself determines the extent of coverage, or the

indemnity clauses in the Drilling Contract effectively limit BP’s coverage.

In 2008, the Texas Supreme Court addressed “whether a commercial

umbrella insurance policy that was purchased to secure the insured’s indemnity

obligation in a service contract with a third party also provides direct liability

coverage for the third party.” ATOFINA, 256 S.W.3d at 662. Both the

appellants and the appellees agree this case is instructive, but they proffer

different applications of its holding to the facts of the case at issue. Uncertainty

regarding the outcome under ATOFINA ultimately triggered this certification.

7

In its brief, BP notes that this partial final judgment was entered in favor of the

Insurers “and Transocean” and argues that Transocean is not a proper party to this order.

BP’s Rule 12(c) motion was directed only to the Insurers’ complaints and claims—not against

Transocean.

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In ATOFINA, ATOFINA owned an oil refinery at which it hired Triple S

to perform maintenance functions. Id. at 662. ATOFINA and Triple S entered

a services contract which stipulated that ATOFINA was to be named an

additional insured in each of Triple S’s policies. Specifically, this provision

stated:

[ATOFINA], its parents, subsidiaries and affiliated companies, and

their respective employees, officers and agents shall be named as

additional insured in each of [Triple S’s] policies, except Workers’

Compensation; however, such extension of coverage shall not apply

with respect to any obligations for which [ATOFINA] has

specifically agreed to indemnify [Triple S].8

After a Triple S employee drowned while servicing the ATOFINA refinery,

his estate sued ATOFINA and Triple S for wrongful death. Id. at 663. Triple S’s

insurer, Evanston, and ATOFINA disagreed over who was required to pay for

the litigation; ATOFINA contended it was an additional insured and thus

covered, while Evanston argued ATOFINA’s agreement to indemnify Triple S for

ATOFINA’s sole negligence precluded coverage. Id.

The Texas Supreme Court began by noting that ATOFINA sought

coverage from Evanston on the basis that it was Triple S’s additional

insured—and had not sought indemnity directly from Triple S. Id. at 663-64. 

The court next looked to Section III.B.6 of the policy, which defined who is an

insured as

A person or organization for whom you have agreed to provide

insurance as is afforded by this policy; but that person or

organization is an insured only with respect to operations performed

by you or on your behalf, or facilities owned or used by you.

8Petitioner’s Br. on the Merits, Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256

S.W.3d 660 (Tex. 2008) (No. 03-0647), 2004 WL 1047377, at *4. Triple S also agreed to

indemnify ATOFINA from all personal injuries and property losses sustained during the

performance of the contract, “except to the extent that any such loss is attributable to the

concurrent or sole negligence, misconduct, or strict liability of [ATOFINA].” 256 S.W.3d at

662.

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Id. at 664. Because, by its own terms, this Section covered ATOFINA “with

respect to operations performed by” Triple S, the court found this Section

provided ATOFINA direct coverage even for its sole negligence.9

Id. at 667. The

court reached this conclusion, in part, because it found “it . . . unmistakable that

the agreement in this case to extend direct insured status to ATOFINA as an

additional insured is separate and independent from ATOFINA’s agreement to

forego contractual indemnity for its own negligence.”10 Id. at 670.

In this appeal, BP focuses upon the ATOFINA court’s statement that,

“[i]nstead of looking, as the court of appeals did, to the indemnity agreement in

the service contract to determine the scope of coverage, we base our decision on

the terms of the umbrella insurance policy itself.” 256 S.W.3d at 664. And it

further highlights that, as in ATOFINA, it is seeking insurance coverage from

the Insurers, not indemnification from Transocean, and that the umbrella policy

itself does not limit coverage for additional insureds.11

 Because the additional

insured provision and the indemnities provisions in the Drilling Contract are

separate and independent, because the Policy provides coverage to additional

insureds “such as is afforded by this Policy,” and because Transocean would be

covered for the injuries at issue, BP contends it, too, is entitled to coverage.

The Insurers and Transocean, to the contrary, highlight the differences

between the additional insured provisions at issue in ATOFINA and here. The

ATOFINA clause, they proffer, imposed a broad requirement to list ATOFINA

9 Moreover, the court stated that “had the parties intended to insure ATOFINA for

vicarious liability only, ‘language clearly embodying that intention was available.’” Id. at 666

(citing McIntosh v. Scottsdale Ins. Co., 992 F.2d 251, 255 (10th Cir. 1993)).

10 The court further “disapprove[d] of the view that this kind of additional insured

requirement fails to establish a separate and independent obligation for insuring liability.” 

256 S.W.3d at 670.

11 For example, that policy does not say coverage for additional insureds is “limited to

the liabilities assumed by the Named Insured in the agreement between the Named Insured

and Additional Insured.”

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as an additional insured, whereas the analogous clause in the Drilling Contract

creates a far more limited obligation, namely, to name BP as an additional

insured only for liabilities Transocean specifically assumed in the contract. 

Furthermore, they contend that this language renders the additional insured

provision inextricable from the indemnities provisions of the Drilling Contract;

unlike in ATOFINA, the additional insured requirement is not separate and

independent. They argue further the umbrella policy requires an “Insured

Contract” exist between the named insured and the third party, while in

ATOFINA no contract was required. In combination, the appellees contend,

these factors allow the court to consider the indemnities clauses in the Drilling

Contract in discerning the extent to which BP is covered as an additional

insured. 

Because there are potentially important distinctions between the facts of

the instant case and ATOFINA, the outcome is not entirely clear.

B.

In the event the court must consider whether the Drilling Contract

imposes limitations upon BP’s coverage as an additional insured, an issue then

arises of how to interpret the additional insured provision of that Contract. The

parties offer competing interpretations, and which party prevails may depend

upon whether the doctrine of contra proferentem applies. 

Texas law has consistently held that, if an insurance coverage provision

is susceptible to more than one reasonable interpretation, the court must

interpret that provision in favor of the insured, so long as that interpretation is

reasonable. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co.,

811 S.W.2d 552, 555 (Tex. 1991). The court must do so even if the insurer’s

interpretation is more reasonable than the insured’s—“[i]n particular, exceptions

or limitations on liability are strictly construed against the insurer and in favor

of the insured,” id., and “[a]n intent to exclude coverage must be expressed in

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clear and unambiguous language.” ATOFINA, 256 S.W.3d at 668, 668 n.27

(citing Hudson Energy, 811 S.W.2d at 555); see also Certain Underwriters at

Lloyds, London v. Law, 570 F.3d 574, 577 (5th Cir. 2009) (“If . . . ambiguity is

found, the contractual language will be ‘liberally’ construed in favor of the

insured.” (citing Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987))).

This rule favoring the insured derives, in part, from the “special

relationship between insurers and insureds arising from the parties’ unequal

bargaining power.” Balandran v. Safeco Ins. Co. of America, 972 S.W.2d 738,

741 n.1 (Tex. 1998). This aspect of the rule’s foundation hearkens to the doctrine

of contra proferentem, which construes any ambiguities against the drafter, and

the “sophisticated insured” exception, which may apply when the policy is in

some way negotiable (i.e., it is not a contract of adhesion) and the insured is as

capable as the insurer of interpreting the contract. 

The Texas Supreme Court has never recognized a sophisticated insured

exception to the general rule of interpreting insurance coverage clauses, nor has

it ever indicated contra proferentem would not apply in construing these clauses. 

See, e.g., ATOFINA, 256 S.W.3d at 668 (stating the traditional rule construing

coverage clauses in favor of the insured). Given that Texas has long recognized

its rules regarding interpretation of insurance coverage clauses are partially

derivative of the unequal bargaining power typical in many negotiations over

insurance contracts, however, it is possible that such an exception may be

deemed appropriate in a case like this, where all the parties involved are highly

capable contractors.12 On the one hand, the facts here indicate Insurers were not

involved in drafting the Drilling Contract, and thus construing ambiguities in

that contract against them might be inappropriate. But on the other, the

12 One federal district court in Texas has found that the sophisticated insured exception

might apply under Texas law, given the right circumstances. Vought Aircraft Indus., Inc. v.

Falvey Cargo Underwriting, Ltd., 729 F. Supp. 2d 814, 824-25 (N.D. Tex. 2010).

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Insurers were involved in drafting the umbrella policy language at issue, and the

failure of that policy language to limit coverage in underlying “Insured

Contracts” to the liabilities assumed by the named insured in those contracts is

part of what ails the Insurers now.

C.

Each party contends that its interpretation and application of ATOFINA

better advances the goals of Texas insurance law and is more aligned with the

intent of the parties. Their arguments illuminate the magnitude and wide

ramifications, both throughout the oil and gas industry and for insurance law,

of this case. Where state law governs such an issue, these policy factors are

better gauged by the state high court than by a federal court.

IV. Questions Certified

For the reasons discussed above, we hereby certify the following

determinative questions of Texas law to the Supreme Court of Texas.

1. Whether Evanston Ins. Co. v. ATOFINA Petrochems., Inc.,

256 S.W.3d 660 (Tex. 2008), compels a finding that BP is

covered for the damages at issue, because the language of the

umbrella policies alone determines the extent of BP’s coverage

as an additional insured if, and so long as, the additional

insured and indemnity provisions of the Drilling Contract are

“separate and independent”?

2. Whether the doctrine of contra proferentem applies to the

interpretation of the insurance coverage provision of the

Drilling Contract under the ATOFINA case, 256 S.W.3d at

668, given the facts of this case?

We disclaim any intention or desire that the Supreme Court of Texas confine its

reply to the precise form or scope of the questions certified.

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