Lexington Insurance Company v. Precision Drilling Company

FILED United States Court of Appeals PUBLISH Tenth Circuit UNITED STATES COURT OF APPEALS February 26, 2020 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________ LEXINGTON INSURANCE COMPANY, Plaintiff – Appellant/Cross- Appellee, v. Nos. 18-8072 & 18-8080 PRECISION DRILLING COMPANY, L.P., f/k/a Grey Wolf Drilling Company, LP; LLOYD’S OF LONDON SYNDICATE #4711, a/k/a Aspen Syndicate #4711; LLOYD’S OF LONDON SYNDICATE #33; LLOYD’S OF LONDON SYNDICATE #1209; ACE GLOBAL MARKETS, Defendants – Appellees/Cross- Appellants. _________________________________ Appeal from the United States District Court for the District of Wyoming (D.C. No. 2:12-CV-00070-ABJ) _________________________________ Mark J. Sobczak (Matthew J. Fink with him on the briefs), Nicolaides Fink Thorpe Michaelides Sullivan, LLP, Chicago, Illinois, for Plaintiff–Appellant/Cross–Appellee. Robert J. Walker (John M. Walker with him on the briefs), Hickey & Evans, LLP, Cheyenne, Wyoming, Defendant–Appellee/Cross–Appellant. _________________________________ Before PHILLIPS, EBEL, and O’BRIEN, Circuit Judges. _________________________________ PHILLIPS, Circuit Judge. _________________________________ In an earlier appeal, we ruled that Wyoming’s anti-indemnity statute would not defeat possible insurance coverage to an additional insured. In this second appeal and cross-appeal, we must decide whether the district court correctly ruled that additional-insured coverage exists under the applicable insurance policies; whether the district court entered judgment for the additional insured in an amount greater than the policy limits; and whether the district court correctly ruled that the additional insured was not entitled to prejudgment interest and attorneys’ fees. We conclude that the district court ruled correctly on each issue, so we affirm. BACKGROUND I. Factual Background At all relevant times, Ultra Resources, Inc. (“Ultra”), held a lease for a Wyoming well site. In January 2007, Ultra contracted with Upstream International, LLC (“Upstream”), under a Master Service Agreement to manage the well site. The Ultra-Upstream contract required Upstream to obtain insurance policies with a stated minimum amount of coverage for Ultra and Ultra’s contractors and subcontractors. To do so, Upstream obtained two policies from Lexington Insurance Company (“Lexington”)—a General Liability Policy (“General Policy”) and a Commercial Umbrella Policy (“Umbrella Policy”). Lexington issued and delivered the two policies in Texas. 2 In October 2007, Upstream employed Darrell Jent as an independent contractor/consultant (calling him its “company man”) to help it manage some of Ultra’s well sites. Appellant’s App. vol. 1 at 218, 240. In March 2008, Ultra contracted with Precision Drilling (“Precision”) to operate a drilling rig at the well site. Precision maintained a separate insurance policy with Lloyd’s of London (“Lloyd’s”), covering Precision for primary and excess liability. Then in August or September, in coordination with Ultra, Upstream re- assigned Jent from his work duties as rig manager on a different rig at an Ultra well site to supervise Precision’s rig, hoping to improve the rig’s performance and get it on budget. Appellees’ Principal Br. 4 (“Jent was assigned by Upstream to Rig #841 [Precision] to fulfill the contractual obligations set forth within the Ultra-Upstream Contract.”). Several times, Jent (after consulting with Ultra) temporarily shut down the rig for deficiencies in Precision’s performance. Jent enforced safety protocols on the rig, sometimes reprimanding …Original document