The U.S. Fifth Circuit Court of Appeals, applying Louisiana law, affirmed a Texas federal court’s summary judgment in favor of an engineering firm precluding recovery by subrogated insurers of losses from the failure of an offshore oil rig. Lloyd’s Syndicate 457, et al. v. FloaTEC LLC, et al., 2019 U.S. LEXIS 11256 (5th Cir. Tex., Apr. 17, 2019).
After paying substantial losses due to failed tendons on an offshore oil rig, insurers brought an action in subrogation against the engineering firm that designed the tendons. The engineering firm contended that the insurers were precluded from doing so because the insured’s contract with the firm contained a waiver of subrogation clause against any “other assured” under the policy. The term “other assured” was defined to include companies with whom the insured had entered into a written contract for work on the project and that the engineering firm had done so. The insurers argued that the “other assured” status occurred only if the insured had been contractually obligated also to provide insurance for that contracting company, which the insured was not obligated to do for the engineering firm. The Fifth Circuit disagreed, noting that the policy’s definition of “other assured” did not require that the insured also be obligated to provide coverage, and the court would not insert that requirement into the contract.