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Explorer Pipeline Co. v. American Guarantee & Liability Insurance Co.

United States District Court, N.D. Oklahoma

November 17, 2017

EXPLORER PIPELINE COMPANY, Plaintiff,
v.
AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          GREGORY K. FRIZZELL, CHIEF JUDGE UNITED STATES DISTRICT COURT

         This matter comes before the court on the Motion to Strike Defendant's Counterclaim Counts I Through V [Doc. #24');">24] by plaintiff Explorer Pipeline Company (“Explorer”). For the reasons set forth below, the motion is granted. However, defendant American Guarantee & Liability Insurance Company (“AGLIC”) may amend its counterclaim to assert a single claim for declaratory judgment within ten (10) days of the entry of this order.

         I. Background

         AGLIC issued an excess liability policy to Explorer, designated policy no. EOG 9309894 01, for the effective period of October 1, 2003 to October 1, 2004.

         On September 28, 2014, a pipeline owned and operated by Explorer ruptured, resulting in the release of diesel fuel into the environment near Holdenville, Oklahoma. At the behest of the Oklahoma Corporation Commission (“OCC”), Explorer investigated the rupture and undertook remediation efforts.

         Explorer sought indemnification under the AGLIC policy for amounts in excess of fifty million dollars ($50, 000, 000.00)-the collective policy limits of two underlying insurance policies issued to Explorer by National Union Fire Insurance Company of Pittsburgh, PA and Allied World Assurance Company, Ltd., respectively-associated with the investigation and remediation. AGLIC made an initial payment to Explorer in the amount of two million dollars ($2, 000, 000.00), but, to date, has not made any additional payments.

         On June 12, 2017, Explorer initiated this litigation against AGLIC. Explorer asserts a breach of contract claim and seeks a declaratory judgment that “the Policy provides full coverage for payment of past costs expended and all future costs to be incurred by Explorer to complete remediation of the Release and restoration of the land in accordance with the requirements of the OCC until Policy limits are exhausted.”[1] [Doc. #2, p. 7 ¶ 42].

         On July 31, 2017, AGLIC filed its Answer and Affirmative Defenses [Doc. #18], and Counterclaim [Doc. #19]. In its Answer and Affirmative Defenses, AGLIC asserted ten affirmative defenses:

First Affirmative Defense
50. Explorer's Complaint fails to state a claim upon which relief can be granted.
Second Affirmative Defense
51. Coverage under the AGLIC Policy, and each policy underlying the AGLIC Policy, is subject to all of the terms of those policies, including the terms, provisions, definitions, exclusions and conditions to coverage. AGLIC has no duty or obligation to indemnify Explorer, or any coverage obligations may decrease, to the extent (i) there is no coverage available for the Contamination or Remediation, in whole or in part, under the National Union Policy to which the AGLIC policy follows form, or under the AWAC Policy; and/or (ii) the Remediation costs, or other costs, incurred by Explorer were neither reasonable nor necessary.
Third Affirmative Defense
52. Explorer failed to comply with its duty to mitigate, minimize, or avoid its claimed losses related to the ...

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