Opinion ID: 152248
Heading Depth: 3
Heading Rank: 2

Heading: Because of Property Damage

Text: Mid-Continent also argues that the damages awarded against Bay Rock were not related to any physical injury to tangible property and, therefore, are not covered by the Policies. Specifically, Mid-Continent argues that the following costs are not covered: (1) the costs to control Striebeck No. 1; and (2) the costs to repair, complete, and evaluate the well. [6] The district court found that all of these damages were the result of physical injury to tangible property and, therefore, they were covered by the Policies. Mid-Continent argues that the district court's finding was erroneous. To support its argument, Mid-Continent: (1) argues that Appellees failed to demonstrate that the costs at issue were related to property damage; (2) argues that there was no injury to the wellbore; and (3) argues that the completion and evaluation costs were not incurred because of the blowout. We will address each of Mid-Continent's arguments in turn. Mid-Continent's first argument asserts that Appellees failed to demonstrate that the costs at issue were related to any property damage. Mid-Continent's first argument is based on the fact that HOC and the working interest owners were not awarded other costs beyond the costs to control, repair, complete, and evaluate the well. The bare fact that certain other costs were not awarded does not show that Appellees failed to demonstrate that the costs that were awarded were related to property damage. In the district court, Appellees demonstrated that the costs at issue were related to property damage by showing that they were incurred because of the blowout and the resulting property damage from it. Accordingly, we conclude that Appellees did show that the costs at issue were related to property damage and that Mid-Continent's first argument fails to indicate any genuine issue for trial. Mid-Continent's second argument asserts that there was no injury to the wellbore and, therefore, a reasonable jury could find that none of the costs awarded were related to property damage. The only evidence that Mid-Continent cites to support its argument directly contradicts its assertion. [7] As a result, we hold that Mid-Continent's second argument fails to create a fact issue as to any of the damages awarded against Bay Rock. Mid-Continent's final argument asserts that the evaluation and completion costs awarded against Bay Rock were not related to the blowout and, therefore, a reasonable jury could find that the costs were not covered by the Policies. As an initial matter, we note that the state jury award directly contradicts Mid-Continent's assertion; the jury award states that the completion and evaluation costs awarded were damages that were suffered as a result of the blowout. To the extent that Mid-Continent has created a fact issue as to whether the completion and evaluation costs resulted from the blowout, we hold that Mid-Continent is collaterally estopped from re-litigating this issue because: (1) the jury award shows that this issue was litigated in the underlying liability suit; (2) this issue was essential to the underlying judgment because the jury could not have awarded the completion and evaluation costs if they were not because of the blowout; and (3) Mid-Continent and Bay Rock were in privity with respect to this issue because Mid-Continent controlled Bay Rock's defense and both Mid-Continent and Bay Rock have the same position on the issue. See Getty Oil, 845 S.W.2d at 802; Borum, 53 S.W.3d at 886-88. In summary, because Mid-Continent has failed to create a triable jury issue as to whether any of the damages awarded against Bay Rock were because of physical injury to tangible property, we hold that the district court did not err in concluding that the damages at issue were related to physical injury to tangible property and, therefore, covered by the Policies.