Aspen Ins. UK, LTD v. Dune Energy, Inc.
(United States District Court, Eastern District Louisiana, March 16, 2010)
This action arose from an oil leak caused by the catastrophic failure of a pipeline operated by Dune, which spent $1.2 million to remediate the property covered by a liability policy issued by Aspen. Dune made a claim under the policy to recover the clean up costs, but Aspen denied coverage and sought a declaratory judgment that the policy did not afford coverage for the incident based on the exclusion pertaining to “property rented or occupied by the insured” and which excluded pollution liabilities if the damage occurred to property “leased by or in the care, custody, or control of the insured.”
Dune argued that the exclusion did not apply because Dune’s lease of mineral rights was not a lease of property in the “traditional sense,” as it did not include a lease of the surface rights. Thus, it claimed that damage done to the surface of the land should not be considered damage to Dune’s leased property.
The court held that Dune’s answers to interrogatories suggested otherwise and further held that Dune’s argument that its mineral lease did not extend to the damaged property was of no consequence as the unambiguous exclusion precluded coverage for the “soil mineral, water or any other substance on, in, or under such owned, leased, rented or occupied property.”
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Paul Steck and Rick Cohen