Court Opinion

ID: 4103157
Source: CourtListenerOpinion
Date Created: 2016-11-30 01:01:00.852709+00
Date Added: 2024-06-11T07:46:04.241093
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
               FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                  Fifth Circuit

                                                                    FILED
                                                                November 29, 2016
                             No. 15-50953
                                                                  Lyle W. Cayce
                                                                       Clerk
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
                                         No. 15-50953
                    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.”
                                            2
                                           No. 15-50953
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.”).

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