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

United States Court of Appeals

Fifth Circuit

F I L E D

March 1, 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:

This appeal presents only one of the many disputes that have arisen and

will arise from the explosion and sinking of Transocean’s Deepwater Horizon in

April 2010. Today we address the obligations of Transocean’s primary and

excess-liability insurers to cover BP’s pollution-related liabilities deriving from

the ensuing oil spill in the Gulf of Mexico. Applying Texas law, especially as

clarified since the district court’s decision, we find that the umbrella insurance

policy—notthe indemnity provisions ofTransocean’s and BP’s contract—controls

the extent to which BP is covered for its operations under the Drilling Contract. 

Because we find this policy imposes no relevant limitations upon the extent to

which BP is covered, we REVERSE the judgment of the district court and

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REMAND the case for entry of an appropriate judgment in accordance with this

opinion.

I.

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

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 Policies

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.1 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 

1 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.

3

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(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. Tort Liability

means a liability that would be imposed by law in the absence

of any contract or agreement.2

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

2 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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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, coowners, 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

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.3 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 [C]ontract 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

3

In February 2011,the JudicialPanel onMultidistrict 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.

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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.”4

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

particular, the court read Transocean’s insurance obligation in Exhibit C 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).5

4 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. We agree.

5 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 removalthereof, originating on

or above the surface of the land or water, from spills, leaks, or

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Following further submissions of the parties, the district court then

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

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.”6 BP timely

appealed. 

II.

We review de novo a district court’s grant of judgment on the pleadings

under Rule 12(c). United States v. Renda Marine, Inc., 667 F.3d 651, 654 (5th

Cir. 2012). The standard for dismissal under Rule 12(c) is the same as that for

dismissal under Rule 12(b)(6). Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir.

2004). To survive a Rule 12(b)(6) motion, the plaintiff must plead facts sufficient

“to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)).

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.)

6

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 Insurer’s complaints and claims—not against

Transocean.

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We similarly review issues of contract interpretation de novo. One Beacon

Ins. Co. v. Crowley Marine Servs. Inc., 648 F.3d 258, 262 (5th Cir. 2011). The

parties agree that Texas law governs interpretation of the Policies, under the

Policies’ choice-of-law provisions. “Under Texas law, the same general rules

apply to the interpretation of contracts and insurance policies.” Aubris, 566 F.3d

at 486 (citing Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.

2003)). Courts should consider contracts “as a whole,” affording “each part of the

contract . . . effect.” Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.

1994). Discerning the parties’ true intent, as expressed in the language of the

policy, is the court’s primary concern. Kelley-Coppedge, Inc. v. Highlands Ins.

Co., 980 S.W.2d 462, 464 (Tex. 1998). And the court may not adopt a

construction that renders any portion of a policy meaningless, useless, or

inexplicable. ATOFINA Petrochemicals, Inc. v. Cont’l Cas. Co., 185 S.W.3d 440,

444 (Tex. 2005).

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 clear and unambiguous language.” 

ATOFINA, 256 S.W.3d at 668, 668 n.27 (citing Hudson Energy Co., 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))).

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III.

Under Texas law, to discern “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,” we look to the “terms of the umbrella insurance policy itself,”

instead of looking to the indemnity agreement in the underlying service contract. 

ATOFINA, 256 S.W.3d at 662, 664; see also Aubris, 566 F.3d at 488-89. We

apply this analysis so long as the indemnity agreement and the insurance

coverage provision are separate and independent. ATOFINA, 256 S.W.3d at 664

n.5 (citing Getty Oil Co. v. Ins. of N. Am., 845 S.W.2d 794, 804 (Tex. 1992);

Aubris, 566 F.3d at 489. We examine each step of the analysis in turn.

A.

First, we ask whether the umbrella policy between the Insurers and

Transocean itself limits coverage for any additional insureds, including BP. 

ATOFINA is instructive, as its facts significantly parallel the facts of the case

now before us. 256 S.W.3d 660. 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. Id. at 663. 

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].7

7Petitioner’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.

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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 agreementto indemnifyTriple 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.

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. Id. at 667. 

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)).

This Court subsequently applied ATOFINA’s teachings in Aubris. 566

F.3d 483. Again, this case involved a particularly analogous set of facts: United

hired J&R Valley to service its oilfields pursuant to a services contract that

required J&R Valley to name United as an additional insured in its commercial

general liability policy. Id. at 485. The agreement further contained a general

indemnity provision requiring United to indemnify J&R Valley for causes of

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action deriving from United’s own negligence. Id. at 485-86. The court noted

that “[o]ur starting point is the insurance policy itself.” Id. at 487. This policy

defined an additional insured as

Any person or organization that you agree in a written

contract for insurance to add as an additional protected

person under this agreement is also a protected person

for the following if that written contract for

insurance specifically requires suchcoverages for

that person or organization[.]

Id. (emphasis in original). Because this definition referred to a “written 

contract for insurance,” the court then looked to the additional insured provision

in the services agreement to determine whether coverage was required. Id.

That provision stated, in relevant part:

UNITED . . . shall be named as additional insureds in

each of [J&R Valley’s] policies, except Workers’

Compensation; however, such extension of

coverage shall not apply with respect to

obligations for which UNITED has specifically

agreed to indemnify [J&R Valley].

Id. (emphasis in original). On the basis of this term, J&R Valley’s insurer

argued the general indemnity provision of the services agreement prevented

United from being covered. Id.

The court disagreed, stating, “[w]e take from [ATOFINA] that in

determining whether there is coverage, a court looks only to the additional

insured provision itself; that indemnity is a separate, and later arising, question

from coverage.” Id. at 488. Again, the court noted that United sought coverage

from J&R Valley’s insurer and not indemnity from J&R Valley itself—just as

ATOFINA sought coverage from Evanston and not indemnity from Triple S. Id.

at 489.

The court held:

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[I]t is not material to the [ATOFINA] rule whether the

additional insured provision is finally determined in the

policy or with the aid of the parties’ service contract. 

The separate indemnity provision is not applied to limit

the scope of coverage. Indeed, on this point the Texas

Supreme Court could not have been clearer:

We have noted that where an additional insured

provision is separate from and additional to an

indemnity provision, the scope of the insurance

requirement is not limited by the indemnity clause. 

Id. at 489 (quoting ATOFINA, 256 S.W.3d at 664 (citing Getty Oil Co. v. Ins. Co.

of N. Am., 845 S.W.2d 794, 804 (Tex. 1992))).

Most recently, and subsequent to the district court’s ruling, the Texas

Court of Appeals addressed this same question of coverage in Pasadena Refining

System, Inc. v. McCraven, Nos. 14-10-00837-CV, 14-10-00860-CV, 2012 WL

1693697 (Tex. App. May 15, 2012). The umbrella policy there provided a broad

definition of “additional insured,”8 and the services agreement required the 

8

2012 WL 1693697, at *14-15:

Any person or organization . . . for whom the named insured . . . has

specifically agreed by written contract to procure bodily injury . . .

insurance, provided that:

a. This insurance applies only to the type of coverage which is

otherwise provided by this policy and which the named insured

has agreed to provide by contract, but in no event shall the

coverage exceed, in type or amount, the coverage otherwise

provided by this policy;

b. The amount of insurance is limited to the minimum amount

required by such written contract, or to the limits of liability

provided by this policy, whichever is lower;

c. The insurance applies only with respect to liability arising out

of the work done by or on behalf of the named insured under such

written contract; and

d. This insurance shall apply as primary insurance with regard

to the additional insured for whom the named insured has agreed

by written contract to provide insurance on a primary basis, and

in such cases, any other insurance or self insurance available to

the additional insured shall be excess to, and not contributory

with, the insurance afforded by this policy to that additional

insured. However, if the contract does not specifically require

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COMPANY be named as an additional insured in all

such certificates, except insurance providing protection

against worker’s or workmen’s compensation claims, to

the extent of the coverage required and only in the

minimum amount required by contract, and only with

respect to liability arising out of work done by or on

behalf of the named insured, and only to the extent

COMPANY is indemnified by CONTRACTOR under

the terms of the contract.

Id. at *14. The insurer argued that this clause in the services agreement

expressed the parties’ clear intent to limit additional insured coverage to the

indemnities listed in that agreement. Id. at *16. The court, however, applied

ATOFINA and Shell Chemical L.P. v. Discover Property & Casualty Insurance

Co., CIV. A. No. H-09-2583, 2010 WL 1338068 (S.D. Tex. Mar. 29, 2010), and

concluded that only the policy could limit the scope of additional insured status. 

2012 WL 1693697, at *15-16. Looking to the “unambiguous [umbrella] policy,

which neither contains a limitation on additional insured coverage concerning

indemnity under the [services] agreement nor incorporates any such limitation,”

the court held the company was an additional insured entitled to coverage as a

matter of law. 2012 WL 1693697, at *14, *16-17.

This case law makes clear to us that only the umbrella policy itself may

establish limits upon the extent to which an additional insured is covered in

situations such as the one now before us. As an initial matter we note that here,

as in ATOFINA and Aubris, BP is not seeking indemnity from Transocean, but

is seeking coverage from the Insurers. The umbrella policy in this case defines

an additional insured as “any person or entity to whom the ‘Insured is obliged

that this insurance be primary, this insurance shall be excess

over and not contributory with any other valid and collectible

insurance or self insurance available to the additional insured

whether such other insurance or self insurance is primary,

excess, or contingent, or on any other basis.

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by any oral or written ‘Insurance Contract’ . . . to provide insurance such as is

afforded by this policy.” And it defines “Insurance Contract” as “any written or

oral contract or agreement entered into by the ‘Insured’ . . . 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.” This language is very similar to the

language in the umbrella policies in ATOFINA, Aubris, and Pasadena

Refining—indeed, we can find no principled distinction between the policy

language in these three cases and in the case now at hand.9Just as the policies

in these three earlier cases did not limit coverage, so here the policy itself does

not contain any limitation on additional insured coverage nor incorporate any

limits from the underlying Drilling Contract. 

The Insurers, however, argue that the additional insured provision in the

Drilling Contract specifically limits BP’s status as an additional insured to

circumstances involving those liabilities Transocean specifically assumes under

the Contract. This argument is simply not persuasive given how Texas law has

developed. The language to which the Insurers cite for support is virtually

identical to the additional insured provision contained in the services agreement

in ATOFINA; additionally, it is very similar to the language in both Aubris and

Pasadena Refining. To make the parallels clear, we note again that the

agreement in ATOFINA provided that 

[ATOFINA], its parents, subsidiaries and affiliated

companies, and their respective employees, officers and

9 The district court distinguished the current case from ATOFINA by noting that the

policy in that case, in defining “additional insured,” did not specifically refer to an underlying

services contract. This is a true, but ultimately an unpersuasive distinction. First, that policy

did include in its additional insured definition language referencing entities “for whom you

have agreed to provide insurance as is afforded by this policy.” Second, the policies in both

Aubris and Pasadena Refining specifically reference an underlying contract requiring

insurance coverage in their definitions of additional insureds, yet in each of these cases the

respective courts found this reference insufficient to constitute a limit on coverage.

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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].

And the Drilling Contract here requires:

[BP], its subsidiaries and affiliated companies, coowners, 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.

While the parties ardently disagree as to how this clause in the Drilling

Contract should be interpreted, we find, in the light of ATOFINA, that we need

not now decide this contentious issue. Even if the clause is construed as the

Insurers desire, that is, even if it is understood to mean that BP is an additional

insured under Transocean’s policies only for liabilities Transocean specifically

assumed in the Drilling Contract, the outcome is a clause materially identical

to the additional insured provision in ATOFINA—and the Texas Supreme Court

found that this clause was insufficient to limit coverage. Despite the services

contract’s language, the ATOFINA court found the umbrella policy controlled

coverage. Accordingly, we find we are bound to look only to the policy itself to

determine whether BP is covered in the current case. Because the umbrella

policy’s provision describing an additional insured is substantially similar to the

pertinent policy provisions in ATOFINA, Aubris, and Pasadena Refining, we

hold that there is no relevant limitation to BP’s coverage under the policy as an

additional insured, that is, so long as the insurance provision and the

indemnities clauses in the Drilling Contract are separate and independent. See

ATOFINA, 256 S.W.3d at 664 n.5, 670; Getty Oil, 845 S.W.2d at 804.

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B.

And now that is the question we must next resolve: Whether the Drilling

Contract’s additional insured provision is separate from and additional to the

indemnity provisions. Getty Oil, 845 S.W.2d at 804. Notably, in ATOFINA,

Aubris, and Pasadena Refining, the respective courts found the additional

insured provisions were independent of the indemnity provisions. ATOFINA

considered two cases in reaching this conclusion. First, it examined Fireman’s

Fund v. Commercial Standard Ins. Co., 490 S.W.2d 818 (Tex. 1972), in which the

Texas Supreme Court held GM was not entitled to indemnity because the

contract did not extend indemnity to GM’s negligence. In that case, GM had

contracted with Sam P. Wallace Co., Inc. (“Wallace”) to perform work on GM’s

Arlington assembly plant, and, in the contract, Wallace agreed to indemnify GM

for any losses arising from Wallace’s own negligence and to obtain liability

insurance to satisfy that obligation. Id. at 820. The ATOFINA court

distinguished that case by noting that in Fireman’s Fund, GM was not an

additional insured under Wallace’s liability policy—while Wallace was required

to obtain insurance to cover its liabilities, it was not further required to name

GM as an additional insured in those policies. 256 S.W.3d at 669-70. As

described below, this same distinction applies to the case now before us. 

Second, the ATOFINA court looked to Getty Oil, 845 S.W.2d 794. Getty

contracted with NL Industries to purchase chemicals, and the services contract

included an indemnity provision as well as a broad insurance requirement

providing, in paragraph 1, that “[a]ll insurance coverages carried by [NL],

whether or not required hereby, shall extend to and protect [Getty.]” Id. at 797. 

The Getty Oil court found this contract was “significantly different from that in

Fireman’s Fund.” Id. at 804. It reasoned that, while the indemnity provision in

paragraphs 3-4 of the relevant contract was supported by an insurance

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provision, this provision was “separate from and additional to the additional

insured provision in paragraphs 1-2.” Id. 

The ATOFINA court applied the reasoning in these cases to find that,

“[a]lthough the service contract in this case does not include an insurance

requirement quite as clear as the one in Getty, it is clear enough—it requires

that ATOFINA ‘shall be named as additional insured in each of [Triple S’s]

policies.’” 256 S.W.3d at 670 (alteration in original). The court then concluded

it was 

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. We disapprove the view that this kind of

additional insured requirement fails to establish a

separate and independent obligation for insuring

liability.

Id. (emphasis in original).

Accordingly, to render an additional insured provision separate from and

additional to an indemnity provision, Texas law only requires the additional

insured provision be a discrete requirement. As evidenced in Getty Oil and

ATOFINA, it need not be an entirely separate provision of the contract, and its

independent status is not altered merely by the fact that the contract also

includes a provision requiring the relevant party to obtain insurance to cover its

liabilities under the contract.

Here, as the Insurers note, one clause of Exhibit C (describing

Transocean’s insurance obligations) requires Transocean to obtain coverage for

its contractual liabilities,10 while another provision simply requires Transocean

10 See Exhibit C, ¶ 1.c:

1. The insurance required to be carried by [Transocean] under this

Contract is as follows:

. . .

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to name BP as an additional insured.11

 This setup is similar to the contract in

Getty Oil, which imposed a requirement that NL obtain insurance for its

contractual liabilities in paragraphs 3-4, while requiring Getty be named an

additional insured in paragraphs 1-2. Moreover, the additional insured

provision here is nearly identical to the additional insured provision in

ATOFINA. Accordingly, we hold, under Texas case law, it is “unmistakable”

that the provision in the Drilling Contract extending direct insured status to BP

is separate and independent from BP’s agreement to forego contractual

indemnity in various other circumstances. See ATOFINA, 256 S.W.3d at 670.

IV.

Texas law compels us to interpret insurance coverage provisions in favor

of the insured, so long as that interpretation is reasonable—and even if the

insurer’s proffered interpretation denying coverage is more reasonable. Id. at

668, 668 n.27; Hudson Energy Co., 811 S.W.2d at 555. Texas law further

establishes that “‘where an additional insured provision is separate from and

additional to an indemnity provision, the scope of the insurance requirement is

not limited by the indemnity claims.’” Pasadena Refining, 2012 WL 1693697, at

*17 (quoting ATOFINA, 256 S.W.3d at 664 n.5); see also Aubris, 566 F.3d at 488-

89. Accordingly, we conclude: Because we find the umbrella policies between

the Insurers and Transocean do not impose any relevant limitation upon the

extent to which BP is an additional insured, and because the additional insured

c. Comprehensive General Liability Insurance, including

contractual liability insuring the indemnity agreement as

set forth in the Contract and products-completed operations

coverage with a combined single limit of not less than

$10,000,000 covering bodily injury, sickness, death and property

damage.

(Emphasis added.)

11 Exhibit C, ¶ 3: “[BP] . . . 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.”

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provision in the Drilling Contract is separate from and additional to the

indemnity provisions therein, we find BP is entitled to coverage under each of

Transocean’s policies as an additional insured as a matter of law. We reverse

the judgment of the district court and remand the case with instructions to enter

the appropriate judgment consistent with this opinion.

REVERSED and REMANDED for entry of judgment.

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