Wyoming v. Federated Serv. Ins. Co.
Citation: 30 ELR 20629
No. No. 98-8096, 211 F.3d 1279/50 ERC 1539/(10th Cir., 05/02/2000)
The court, applying Wyoming law, affirms a district court decision holding that a state, as subrogee to an insured oil company, is not entitled to coverage from the company's insurer for remediation of a petroleum discharge on the company's property. The court first holds that the plain language of the no action clause in the company's policy prohibits an action from being brought against the insurer by the company or its subrogee until the amount of the company's legal obligation is determined and a claim for indemnification of that obligation is denied by the insurer. The no action clause of the company's policy plainly and unambiguously states that no action lies against the insurer until the insured's obligation to pay has been determined by judgment or settlement. The amount that the company is obligated to pay as a result of the oil leak has not been determined, and the existence and extent of liability remains an open question. The court rejects the state's argument that the no action clause does not apply to an insured or an insured's subrogee. Moreover, the doctrine of judicial estoppel does not bar application of the no action clause. The position taken by the insurer in a previous case, in which it argued that a no action clause applies only to third-party claims, is not contrary to the insurer's argument that further remediation and a legal determination of liability are necessary in the present case. Last, public policy considerations do not militate against requiring the state to bring a separate action to establish the extent of the company's liability.
Counsel for Plaintiff
Thomas Davidson, Ass't Attorney General
Attorney General's Office
123 State Capitol, Cheyenne WY 82002
Counsel for Defendant
Thomas A. Nicholas III
Hurston & Applegate
Boyd Bldg., Cheyenne WY 82001
Before McWilliams and Brown,* JJ.