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Matador Petroleum Corp. v. St. Paul Surplus Lines Ins. Co.

Citation: 29 ELR 21226
No. No. 98-10289, 174 F.3d 653/(5th Cir., 05/12/1999)

Applying Texas law, the court holds that an insurer properly denied an oil company coverage for a discharge of pollutants that contaminated adjacent property and waterways. The pollution was caused when a drilling pit collapsed in the company's well. The court first holds that the insurer legitimately denied coverage to the company. The policy unambiguously requires the company to provide notice to the insurer within 30 days of a covered event, and the company failed to provide notice until 38 days after the incident. The court then holds that the nature of the company's and the insurer's bargain resembles the nature of the bargain underlying a "claims-made" policy. Therefore, the insurer need not demonstrate that it suffered prejudice as a result of the company's untimely notice. Last, the court holds that although the insurer charged and accepted a deductible relating to the incident after it became aware of the late notice, the insurer did not waive its right to deny coverage. Under Texas law, waiver and estoppel cannot operate to change either the risks covered or the insurance extended under a policy.

Counsel for Plaintiff
Robert R. Roby
Gwinn & Roby
4100 Renaissance Tower
1201 Elm St., Dallas TX 75270
(214) 698-4100

Counsel for Defendant
Ruth G. Malinas
Ball & Weed
Trinity Plaza II
745 E. Mulberry Ave., Ste. 500, San Antonio TX 78212
(210) 731-6300

Before Jones and Smith, JJ.