(USA Herald) – Investigative Journalist for the USA Herald, Samuel Lopez reports that Markel Corp. insurer, and its unit Evanston Insurance Co., has suffered a legal setback in a $1.5 million fracking well damage lawsuit.
US Magistrate Judge Dena Palermo ruled that the insurer must defend OPF Enterprises LLC in the case. OPF’s customer, Apache Corp, had claimed that its oil well was damaged by OPF’s tainted ceramic fracking materials.
The judge found that OPF gave sufficient notice to Evanston Insurance Co. of the $1.5 million claim. OPF held a professional liability policy with Evanston, which covered certain claims made against the company. The policy contained a “discovery clause” that allowed OPF to secure coverage for a claim filed after the policy expires if the company gave written notice to Evanston of the circumstances giving rise to the claim during the policy period.
Although Apache did not file its demand letter until April 2017, it had contacted OPF regarding problems with the fracking materials in February 2017. The company had quickly notified its insurance agent, Porter Insurance Agency, which sent an email to Evanston’s broker outlining Apache’s complaints on March 3, 2017.
Judge Palermo concluded that the email was sufficient to notify Evanston of Apache’s later demand against OPF. As a result, the claim was “deemed…to have been first made” on March 3, 2017, during the 2016 policy period. Evanston Insurance Co. denied coverage, and then filed the current lawsuit in Texas federal court in July 2017.
Evanston and OPF filed competing motions for summary judgment last summer. Evanston argued that Porter’s email to AmWins Broker of Texas LLC did not constitute written notice of a potential claim during the policy period, rendering the discovery clause inapplicable. The insurer took the position that the clause required OPF to give direct notice to Evanston and that AmWins was not authorized to accept notice on its behalf.
However, Judge Palermo rejected Evanston’s arguments, noting that AmWins was contractually obligated to apprise Evanston of any notices it receives from policyholders. Therefore, the broker was indeed authorized to accept OPF’s notice of the Apache situation on Evanston’s behalf.
The legal ruling comes as a blow to Evanston Insurance Co., which is now obliged to defend OPF Enterprises LLC in the fracking well damage lawsuit. The decision highlights the importance of clear communication and timely notice in insurance claims.
