BPX Prod. Co. v. Certain Underwriters at Lloyd’s London
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 4 months 6 days ago
- Case Type:
- Business
- Case Status:
- Affirmed in part and Reversed in part
- Citation:
- No. 23-20034 (5th Circuit, Oct 20,2025) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Fifth Circuit, among other rulings, held a magistrate judge (a) erred in granting a motion to dismiss a duty to indemnify claim, explaining that a claimant's inability to recover from an insured party in bankruptcy does not preclude a duty-to-indemnify claim against the insurer brought by the bankrupt entity's assignee, and (b) correctly dismissed an extra-contractual duty-of-good-faith claim because, under Texas law, the insured's bankruptcy discharge precluded it from suffering actual liability in excess of policy limits.
- Procedural context:
- The Fifth Circuit's opinion addresses the intersection of Texas insurance law and bankruptcy law, but primarily concerns Texas insurance law.
- Facts:
- BPX Production Company (BPX) operated a well in Texas. It hired BJ Services (BJ) to cement the production casing on the well. BJ used the wrong components in mixing the cement, leading to a plug in the well. BPX initiated a contractual dispute resolution process with BJ. BJ provided notice of the claim to its insurer, Certain Underwriters at Lloyd’s London (Underwriters), and demanded they defend and indemnify BJ against the claim. Underwriters denied coverage. BJ filed a chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the Southern District of Texas. The bankruptcy court approved a settlement between BJ and BPX pursuant to which BJ "assigned to BPX any and all 'rights, claims, and causes of action' that BJ [] had against Underwriters 'relating to or arising out of [Underwriters’] failure and refusal to defend and indemnify BJ [] for BPX’s claims and demand for loss and damages' relating to the Well. In return, BPX released its claims against BJ [] 'for any loss or damages arising from or related to BJ’s work.'” BPX, as assignee, sued Underwriters in Texas state court, and Underwriters removed the case to the U.S. District Court for the Southern District of Texas. Underwriters moved to dismiss the claims against it pursuant to Fed. R. Civ. P. 12(b)(6), and a magistrate judge, with party authority to enter a final judgment, granted the motion. BPX timely appealed.
- Judge(s):
- Richman, Haynes, and Duncan
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