Court Opinion

ID: 6348822
Source: CourtListenerOpinion
Date Created: 2022-06-10 18:00:19.400674+00
Date Added: 2024-06-11T08:42:37.715803
License: Public Domain

Case: 21-20548     Document: 00516352369         Page: 1     Date Filed: 06/10/2022

              United States Court of Appeals
                   for the Fifth Circuit                               United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                          June 10, 2022
                                  No. 21-20548
                                                                         Lyle W. Cayce
                                                                              Clerk

   Anadarko E&P Onshore, L.L.C.,

                                                           Plaintiff—Appellant,

                                       versus

   California Union Insurance Company;
   Century Indemnity Company, solely as successor-in-
   interest to CIGNA Specialty Insurance Company,
   formerly known as California Union Insurance
   Company,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:21-CV-1743

   Before Jones, Southwick, and Oldham, Circuit Judges.
   Per Curiam:*
          This insurance case poses questions about removal, contract
   interpretation, and arbitration. We have carefully considered the appeal in

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-20548      Document: 00516352369           Page: 2     Date Filed: 06/10/2022

                                     No. 21-20548

   light of the briefs, oral argument, and the record and AFFIRM for
   essentially the reasons stated by the district court.
          California Union Insurance Company, now Century Indemnity
   Company, (“Insurers”) issued excess umbrella liability insurance policies to
   the corporate predecessor of Anadarko E&P Onshore LLC. The first policy
   was effective from April 1, 1979 to April 1, 1980 while the second had effect
   from April 1, 1980 to April 1, 1981. Both provide that “[i]f limits of liability
   of the underlying insurance are exhausted because of . . . property
   damage, . . . [the Insurers] have the right and duty to defend any suit against
   the Insured seeking damages on account of such . . . property damage.”
   They also contain a service-of-suit provision that states:
          [I]n the event of the failure of [the Insurers] to pay any amount
          claimed to be due hereunder, [the Insurers] hereon, at the
          request of the Insured, will submit to the jurisdiction of any
          court of competent jurisdiction within the United States of
          America and will comply with all requirements necessary to
          give such Court jurisdiction . . . .
          In 2007, Anadarko and its Insurers entered into a settlement
   agreement that, in relevant part, covered “private action claims” involving
   “property damage, bodily injury, sickness, disease, or death resulting
   therefrom allegedly caused from exposure to environmental conditions
   stemming from Anadarko’s facilities, operations, or products prior to
   January 1, 1986.” With respect to these claims, the Insurers agreed to “pay
   Anadarko a portion of . . . future defense costs that [it] incurr[ed] following
   the effective date of [the] agreement.” Future defense costs are defined,
   without limitation, as “the reasonable and necessary fees, costs, and
   expenses incurred in the investigation and defense of . . . private action
   claims.” Critically, the parties also agreed that:

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                                         No. 21-20548

           Any controversy or claim between [them] relating to the
           payment, non-payment, or reimbursement by either party of
           any . . . future defense costs . . . , and any controversy or claim
           concerning this agreement, shall be settled by arbitration . . . .”
   The settlement and defense costs agreements “contain the entire agreement
   between the parties as respects their subject matter.”
           Ten years later, the parties entered into an addendum to the
   settlement agreement to resolve Anadarko’s claims for defense costs
   associated with the “Louisiana Parish lawsuits,” which alleged that
   Anadarko caused property damage during the policy periods. The 2017
   addendum “incorporated [the 2007 agreement’s terms] by reference, except
   as otherwise provided . . . .”         Anadarko did not, however, “release or
   discharge [its Insurers] from any claim, demand, cause of action, damage, or
   liability . . . relating to or arising out of any defense costs or indemnity costs
   relating to the Louisiana Parish Lawsuits not expressly included in the
   definition of past defense costs provided in this addendum[.]” Thus, post-
   September 2016 defense costs lie outside the addendum’s scope.
           In 2021, Anadarko brought this action against its Insurers in Texas
   state court, asserting that they breached the policies and violated the Texas
   Insurance Code by failing to “pay any defense expenses incurred by
   Anadarko from September 2016 forward[.]” The Insurers removed the
   action before moving to dismiss and compel arbitration. Anadarko then
   moved to remand.
           The district court denied the motion to remand, granted the motion
   to compel, and dismissed the action without prejudice. In doing so, the court
   made three dispositive determinations. 1 We review each de novo. See

           1
            Aside from the merits, the district court ruled that Anadarko had standing to bring
   its breach of contract claim and that diversity jurisdiction exists because the parties are

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Case: 21-20548        Document: 00516352369           Page: 4      Date Filed: 06/10/2022

                                       No. 21-20548

   Halliburton Energy Servs. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 529-30
   (5th Cir. 2019).
          First, the district court found that the 2007 agreement superseded the
   original policies. We agree. Anadarko presently seeks “future defense
   costs” as defined by the 2007 agreement because they are associated with
   “private action claims” pursuing redress for alleged property damage. The
   2007 agreement therefore mandates arbitration. The policies’ service of suit
   provisions, by contrast, broadly allow Anadarko to select any forum to
   adjudicate this dispute. These provisions point in opposite directions. Such
   an irreconcilable inconsistency gives rise to “a presumption that the second
   superseded the first.” IP Petroleum Co., Inc. v. Wevanco Energy, L.L.C.,
   116 S.W.3d 888, 899 (Tex. App.—Houston [1st Dist.] 2003, pet. denied)
   (citing Willeke v. Bailey, 189 S.W.2d 477, 479 (Tex. 1945)). And Anadarko
   has not overcome that presumption, so Anadarko cannot rely on the service-
   of-suit clause to contest removal. Further, the 2007 agreement’s merger
   clause only reinforces its eclipse of the policies in this regard. See Rieder v.
   Woods, 603 S.W.3d 86, 94 (Tex. 2020) (quoting Fort Worth Indep. Sch. Dist.
   v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000)).
          Second, the district court ruled that the 2017 addendum to the 2007
   agreement did not supersede the latter’s arbitration clause. That is correct.
   The 2017 addendum expressly incorporated by reference all the defined
   terms from the 2007 agreement except as otherwise provided. As to the
   arbitration clause, it did not affect the application of the 2007 agreement to
   post-September 2016 defense costs incurred by Anadarko. Such costs are at
   issue here and remain subject to the 2007 agreement’s arbitration clause.

   completely diverse. No party challenges these rulings on appeal, and after supplemental
   briefing we conclude that this controversy is justiciable in federal court.

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                                    No. 21-20548

   Moreover, any attempt by Anadarko to choose the forum for future defense
   cost disputes under the 2017 addendum was a nullity because it had already
   relinquished that right in 2007 and incorporated that relinquishment into the
   addendum.
          Third, the district court found that the 2007 agreement’s arbitration
   clause was valid and that this dispute fell within its scope. It was right to do
   so. A two-step analysis determines whether to compel parties to arbitrate.
   Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016).
   “First, the court asks whether there is a valid agreement to arbitrate and,
   second, whether the current dispute falls within the scope of a valid
   agreement.” Edwards v. Doordash, Inc., 888 F.3d 738, 743 (5th Cir. 2018)
   (citation omitted).   Anadarko does not dispute that it entered a valid
   agreement to arbitrate with its Insurers. And, for reasons already explained,
   this dispute falls within the scope of the 2007 agreement. That determination
   is further warranted because “as a matter of federal law, any doubts
   concerning the scope of arbitrable issues should be resolved in favor of
   arbitration[.]” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S.
   1, 24-25, 103 S. Ct. 927, 941 (1983).
          AFFIRMED.

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