                                     In The

                               Court of Appeals
                   Ninth District of Texas at Beaumont
                             _________________
                              NO. 09-14-00459-CV
                             _________________

          HOUSTON CASUALTY COMPANY, ET AL, Appellants

                                       V.

  ANADARKO PETROLEUM CORPORATION AND ANADARKO E&P
                COMPANY, L.P., Appellees
________________________________________________________________________

                   On Appeal from the 284th District Court
                        Montgomery County, Texas
                      Trial Cause No. 12-08-08760-CV
________________________________________________________________________

                         MEMORANDUM OPINION

      This is an insurance coverage dispute arising from the Deepwater Horizon

Oil Spill in the Gulf of Mexico. At issue in this case is the interpretation of an

insurance policy establishing an indemnity obligation for defense costs resulting

from the spill. Houston Casualty Company, Allianz Global Corporate & Specialty

AG, Clearwater Insurance Company, Hudson Insurance Company, Lancashire

Insurance Company (UK) Limited, Navigators Insurance Company, and

                                        1
Underwriters at Lloyd’s Syndicate Nos. 33, 457, 510, 609, 623, 958, 1036, 1084,

1183, 1919, 1209, 1221, 1225, 2003, 2007, 2121, 2623, 3000, 4020, 5000

(collectively “Underwriters”) filed a petition for permissive appeal of the trial

court’s order denying their motion for summary judgment and granting Anadarko

Petroleum Corporation and Anadarko E&P Company, L.P.’s (collectively

“Anadarko”) motion for partial summary judgment. Anadarko filed a response and

cross-petition for permissive appeal. We granted the petition and the cross-petition

for permissive appeal of the trial court’s order. We reverse the trial court’s

judgment and render judgment in favor of Underwriters.

                                  I. Background

      Many of the facts leading up to the Deepwater Horizon Oil Spill are well-

known. The Macondo Well was an exploratory well located offshore in the Gulf of

Mexico. The Deepwater Horizon, a mobile offshore drilling vessel owned and

operated by several Transocean entities, drilled the Macondo Well. Certain British

Petroleum entities (collectively “BP”), MOEX Offshore 2007 LLC (“MOEX”),

and Anadarko entered into an offshore oil and gas lease with the United States for

the continental shelf block in which the well was located (the “Offshore Lease”).

BP, MOEX, and Anadarko entered into the Macondo Prospect Offshore Deepwater

Operating Agreement (the “Operating Agreement”). BP was the designated

                                         2
operator of the Macondo Well, while Anadarko and MOEX were non-operators.

Anadarko owned a 25 percent working interest in and to the Offshore Lease.

      Underwriters issued an Energy Package Policy to Anadarko covering the

period from June 30, 2009, to June 30, 2010 (the “Policy”). Section III of the

Policy provides excess liability insurance coverage and has a limit of liability of

$150 million per “Occurrence” if Anadarko owns 100 percent of the insured

operation. The Coverage provision of Section III (hereinafter “Coverage

Provision”) provides:

      In consideration of the payment of the premium . . . and in reliance
      upon the proposal for this policy . . . , statements made, and any
      supplementary information pertaining to the proposal which are all
      deemed incorporated herein, Underwriters agree, subject to the
      Insuring Agreements, Conditions, Exclusions, Definitions and
      Declarations contained in this Policy, to indemnify the “Insured” in
      respect of its operations anywhere in the World, for “Ultimate Net
      Loss” by reason of liability:
            (a) imposed upon the “Insured” by law, or
            (b) assumed by the “Insured” under an “Insured Contract”,
            for damages in respect of:
            (i) “Bodily Injury”
            (ii) “Personal Injury”
            (iii) “Property Damage”
            (iv) “Advertising Injury”,
      caused by or arising out of an “Occurrence” that occurred on or after
      the Retroactive Date as set out in . . . the Declarations and for which a
      “Claim” is first made in writing against the “Insured” during the
                                          3
      Policy Period as set out in . . . the Declarations. Nothing contained in
      this Policy shall make this Policy subject to the terms of any other
      Insurance.
Section III includes an endorsement titled, “Joint Venture Provision[,]” which

replaces the joint venture provision in the Insuring Agreements of Section III. The

Joint Venture Provision provides:

      Effective at inception and in consideration of the premium charged
      hereon, Insuring Agreement 4 Joint Ventures . . . is deleted and
      replaced with the following:

            It is hereby understood and agreed by the Assured and
            Underwriters that as regards any liability of the Assured which
            is insured under this Section III and which arises in any manner
            whatsoever out of the operation or existence of any joint
            venture, co-venture, joint lease, joint operating agreement or
            partnership (hereinafter called ‘Joint Venture’) in which the
            Assured has an interest, the liability of Underwriters under this
            Section III shall be limited to the product of (a) the percentage
            interest of the Assured in said Joint Venture and (b) the total
            limit afforded the Assured under this Section III. Where the
            percentage interest of the Assured in said Joint Venture is not
            set forth in writing, the percentage to be applied shall be that
            which would have been imposed by law at the inception of the
            Joint Venture.

            The Joint Venture Clause shall not apply to any liability of the
            Assured, when as a result of the circumstances of the
            Occurrence, the terms of the Joint Venture agreement place the
            whole of the liability of the Joint Venture on the Assured.

            In the event the Assured becomes legally liable in a court of
            competent jurisdiction for an amount greater than their
            proportionate ownership interest, Underwriters hereon agree to
            provide coverage to the Assured to the extent the legal liability

                                         4
             increases the Assured’s working interest percentage liability. If
             the Assured becomes legally liable for a greater percentage than
             their ownership interest, the liability of Underwriters shall be
             the combination of the Assured’s working interest percentage
             ownership and the additional percentage(s) for which the
             Assured becomes legally liable.

      All other terms and conditions remain unchanged.

As reflected above, the first paragraph of the Joint Venture Provision is a general

scaling provision, which proportionally reduces Underwriters’ limit of liability

under Section III in accordance with the percentage of Anadarko’s ownership

interest in any given joint venture. The second and third paragraphs of the Joint

Venture Provision provide two exceptions to the general scaling provision in the

first paragraph.

      On April 20, 2010, BP and Transocean were completing temporary

abandonment operations of the Macondo Well when the well experienced a

blowout and the Deepwater Horizon drilling rig exploded, burned, and sank,

resulting in a discharge of oil into the Gulf of Mexico for nearly three months (the

“Macondo Incident”). See In re Oil Spill by Oil Rig “Deepwater Horizon” in the

Gulf of Mexico, on Apr. 20, 2010, 148 F. Supp. 3d 563, 565-66 (E.D. La. 2015). A

number of lawsuits were filed as a result of the Macondo Incident. Id. at 566. Most

federal cases arising from the Macondo Incident were consolidated into

Multidistrict Litigation 2179. Id. The United States filed suit against BP, MOEX,
                                        5
Transocean, and Anadarko, seeking civil penalties under the Clean Water Act and

a declaratory judgment of liability under the Oil Pollution Act of 1990 (“OPA”).

Id. at 566-67. In February 2012, the MDL Court granted the United States’ request

for a declaratory judgment finding that BP and Anadarko were jointly and

severally liable under the OPA for removal costs and damages related to the

subsurface discharge.1 See 33 U.S.C.S. § 2717(f)(2) (Lexis through Pub. L. No.

114-229) (stating that in an action for removal costs, “the court shall enter a

declaratory judgment on liability for removal costs or damages that will be binding

on any subsequent action or actions to recover further removal costs or damages.”).

      Disputes also arose between the defendants. BP submitted a claim against

Anadarko for costs incurred by BP in connection with the Macondo Incident. In
      1
          The MDL Court’s finding is as follows:

      Although the words “joint and several” do not appear in OPA, OPA
      defines “liable” and “liability” as the standard of liability which
      obtains under section 1321 of this title [Section 311 of the Clean
      Water Act]. Liability under Section 311, in turn, has been determined
      repeatedly to be strict, joint and several. . . . . Therefore, as to the
      subsurface discharge of oil, the Court finds liability under OPA is
      joint and several.

(internal citations and quotations omitted). The MDL Court found BP and
Anadarko to be responsible parties for the subsurface discharge of oil, as they were
co-lessees of the area in which the offshore facility was located at the time of the
Macondo Incident. The MDL Court then found that “[l]iability for OPA removal
costs and damages is joint and several vis-à-vis BP and Anadarko and the
subsurface discharge.”
                                         6
October 2011, Anadarko entered into a settlement agreement with BP wherein

Anadarko and BP mutually agreed to release all claims against each other

associated with the Macondo Incident. Anadarko agreed to pay BP $4 billion and

to transfer its 25 percent interest in the Offshore Lease to BP. BP agreed to release

Anadarko from all claims arising under the Operating Agreement and to indemnify

Anadarko, with limited exceptions not relevant here, for all future liability,

including damages or removal costs under the OPA.

      On November 30, 2015, the MDL Court issued its Findings of Fact and

Conclusions of Law concerning the amount of civil penalties Anadarko is required

to pay under the Clean Water Act. In re Oil Spill, 148 F. Supp. 3d at 565. The

MDL Court found Anadarko liable to the United States for civil penalties under the

Clean Water Act in the amount of $159.5 million. Id. at 584.

      The Macondo Incident implicated two sections of the Policy issued by

Underwriters. Section II provided “Control of Well and Extra Expense” insurance

coverage, which insured against costs associated with certain types of well blow-

outs. As noted above, Section III of the Policy provided “Excess Liability”

insurance coverage, which insured against claims in excess of Anadarko’s

underlying insurance or self-insured retention. Underwriters paid Anadarko $37.5



                                         7
million under Section III of the Policy. Anadarko released Underwriters from

liability under the Policy, except with regard to “Defence Expenses[.]” 2

      In August 2012, Anadarko filed suit seeking coverage from Underwriters

under Section III of the Policy for defense, investigation, and adjustment costs and

expenses paid by Anadarko arising out of the Macondo Incident. Underwriters

moved for summary judgment, seeking dismissal of Anadarko’s claims and

contending essentially that it has fully paid and extinguished all liability for

coverage under the Policy. Anadarko filed two motions for partial summary

judgment; the second motion is at issue here. In it, Anadarko sought a ruling that

Underwriters are required to reimburse the defense expenses incurred by Anadarko

in connection with the Macondo Incident up to the $150 million limit of Section

III, reduced only by Underwriters’ prior payments to Anadarko under Section III in

connection with the Macondo Incident and subject to proof of Anadarko’s damages

at trial. In construing the Policy, the trial court found that the relevant policy

provisions are unambiguous. The trial court further found that the defense

expenses are subject to scaling under the Joint Venture Provision. However, the

trial court concluded that the MDL Court’s judgment finding Anadarko jointly and
      2
        Because the Policy was developed in the London market, it uses the British
spelling of certain words, including “defence” and “judgement[.]” We have
retained the British spelling when quoting the parties or when referencing a
defined term in the Policy.
                                       8
severally liable for OPA removal costs and damages triggered the exception to the

Joint Venture Provision found in the third paragraph. The trial court explained that

the third paragraph of the Joint Venture Provision provides that Underwriters’

liability under Section III of the Policy “increases in the event that Anadarko

becomes legally liable in a court of competent jurisdiction for an amount greater

than its proportionate interest in a Joint Venture.” The trial court concluded that

under the third paragraph of the Joint Venture Provision, Underwriters’ liability is

equal to the combination of Anadarko’s working interest percentage ownership and

the additional percentage for which Anadarko becomes legally liable, up to the full

limits of the Policy, without regard to any scaling of interest.

                               II. Standard of Review

      When both sides move for summary judgment and the trial court grants one

motion and denies the other, reviewing courts consider both sides’ summary

judgment evidence, determine all questions presented, and render the judgment the

trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at

Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 2010). Therefore, we review all

grounds asserted in both Anadarko and Underwriters’ motions.




                                           9
                            III. Rules of Construction

      Generally, an insurance policy is governed by the same rules of construction

that apply to other contracts. RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 118

(Tex. 2015). In construing an insurance policy, our primary concern is to ascertain

the intentions of the parties as expressed in the policy. Id. at 118, 127; see also In

re Deepwater Horizon, 470 S.W.3d 452, 464 (Tex. 2015). Our analysis begins with

the language of the policy because “we presume parties intend what the words of

their contract say.” Gilbert, 327 S.W.3d at 126. “We examine the entire agreement

and seek to harmonize and give effect to all provisions so that none will be

meaningless.” Id.; see also Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154,

157 (Tex. 2003). Unless the policy states otherwise, we give words and phrases

their ordinary and generally accepted meaning. RSUI, 466 S.W.3d at 118. We

construe words and phrases in context and in light of the rules of grammar and

common usage. Id. We will not isolate a phrase, sentence, or section of a policy

and consider it apart from the other provisions. Id.; Deepwater Horizon, 470

S.W.3d at 464 (“We must examine the policy as a whole, seeking to harmonize all

provisions and render none meaningless.”).

      Contract ambiguity is a question of law to be determined by the court.

Schaefer, 124 S.W.3d at 157. Here, Anadarko and Underwriters present conflicting

                                         10
interpretations of the Joint Venture Provision. However, the fact that the parties

have conflicting views about the policy’s meaning alone does not create an

ambiguity. State Farm Lloyds v. Page, 315 S.W.3d 525, 527 (Tex. 2010); Tex.

Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123, 126 (Tex. 2004). An

ambiguity is more than a lack of clarity in the language of a policy. RSUI, 466

S.W.3d at 119. A policy is ambiguous only if, after applying the rules of

construction, the policy remains subject to two or more reasonable interpretations.

Id.; see also New Castle Cty. v. Hartford Accident and Indem. Co., 970 F.2d 1267,

1270 (3d Cir. 1992) (“Because ambiguity lurks in every word, sentence, and

paragraph in the eyes of a skilled advocate . . . the question is not whether there is

an ambiguity in the metaphysical sense, but whether the language has only one

reasonable meaning when construed, not in a [hyper-technical] fashion, but in an

ordinary, common sense manner.”). Thus, if we conclude that only one party’s

construction is reasonable, then the policy is unambiguous and we will adopt that

party’s construction. RSUI, 466 S.W.3d at 118 (citing Grain Dealers Mut. Ins. Co.

v. McKee, 943 S.W.2d 455, 459 (Tex. 1997)). However, “if both [parties] present

reasonable interpretations of the policy’s language, we must conclude that the

policy is ambiguous.” Id. “To be ambiguous, both interpretations must be a

reasonable interpretation of the words chosen by the parties when read in the

                                         11
context of the policy as a whole.” Id. at 130. Finally, we may not consider parol

evidence to create an ambiguity. See Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI

Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). We may however, read the policy

in light of the circumstances surrounding the policy’s execution to determine

whether an ambiguity exists and to settle the meaning of the policy. Houston Expl.

Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 & n.25 (Tex.

2011). The surrounding circumstances include “‘the commercial or other setting in

which the contract was negotiated and other objectively determinable factors that

give a context to the transaction between the parties.’” Id. at 469 (citing 11

RICHARD A. LORD, WILLISTON ON CONTRACTS § 32.7 (4th ed. 1999)).

                  IV. Construing the Joint Venture Provision

      Anadarko and Underwriters both contend that the plain language of the

Policy and specifically, the Joint Venture Provision, is unambiguous and only

supports their proposed construction.

A. The Plain Language of the First Paragraph of the Joint Venture Provision

      According to Underwriters, the Joint Venture Provision limits the liability of

Underwriters, including liability as to defense expenses. By contrast, Anadarko

argues that the Joint Venture Provision only scales Underwriters’ liability to

Anadarko under the Policy for Anadarko’s liability to third parties for damages,

                                        12
not liability for defense expenses, which Anadarko contends is more akin to a first-

party liability. Anadarko contends that defense expenses are insured separately and

in addition to the Policy coverage for Anadarko’s “liability” for damages and the

Joint Venture Provision makes no reference to its scaling provision applying to

defense expenses. The trial court found that “[d]efense [e]xpenses are subject to

scaling under the Joint Venture Provision.” We conclude that the plain language of

the Joint Venture Provision only reasonably supports the trial court’s construction

of the provision, which provided that defense expenses are subject to scaling.

      Section III, Endorsement Number 1 of the Policy contains the Joint Venture

Provision. The first paragraph of the provision provides:

      It is hereby understood and agreed by [Anadarko] and Underwriters
      that as regards any liability of [Anadarko] which is insured under this
      Section III and which arises in any manner whatsoever out of the
      operation or existence of any joint venture, co-venture, joint lease,
      joint operating agreement or partnership (hereinafter called “Joint
      Venture”) in which [Anadarko] has an interest, the liability of
      Underwriters under this Section III shall be limited to the product of
      (a) the percentage interest of [Anadarko] in said Joint Venture and (b)
      the total limit afforded [Anadarko] under this Section III. Where the
      percentage interest of [Anadarko] in said Joint Venture is not set forth
      in writing, the percentage to be applied shall be that which would
      have been imposed by law at the inception of the Joint Venture.

The plain language of the Joint Venture Provision provides that this provision

“regards any liability of [Anadarko] which is insured under this Section III[.]”

Thus, the Joint Venture Provision limits its application to only those liabilities
                                      13
covered in Section III of the Policy. Thus, to construe the Joint Venture Provision,

we must first determine the scope of coverage in Section III of the Policy.

      The Coverage Provision of Section III provides in relevant part that:

      Underwriters agree . . . to indemnify [Anadarko] in respect of its
      operations anywhere in the World, for “Ultimate Net Loss” by reason
      of liability:

             (a) imposed upon [Anadarko] by law, or
             (b) assumed by [Anadarko] under an “Insured Contract”,
             for damages in respect of:
             (i) “Bodily Injury”
             (ii) “Personal Injury”
             (iii) “Property Damage”
             (iv) “Advertising Injury”,

      caused by or arising out of an “Occurrence” . . . and for which a
      “Claim” is first made in writing against [Anadarko.]

The Coverage Provision does not specifically include the term “Defence

Expenses”; however, “Ultimate Net Loss” is specifically included, and we must

refer to the Policy’s definition of “Ultimate Net Loss” to determine the meaning

and scope of the Coverage Provision. See Provident Life & Accident Ins. Co. v.

Knott, 128 S.W.3d 211, 219 (Tex. 2003) (“When terms are defined in an insurance

policy, those definitions control the interpretation of the policy.”).

      The Policy defines “Ultimate Net Loss” as “the amount [Anadarko] is

obligated to pay, by judgement or settlement, as damages resulting from an

‘Occurrence’ covered by this Policy, including the service of suit, institution of
                                      14
arbitration proceedings and all ‘Defence Expenses’ in respect of such

‘Occurrence’.” The Policy defines “‘Occurrence’” as “an accident, including

continuous and repeated exposure to substantially the same general harmful

conditions which results in ‘Bodily Injury’, ‘Personal Injury’, ‘Property Damage’,

or ‘Advertising Injury”, none of which was expected nor intended by [Anadarko].”

Because the Policy defines “Ultimate Net Loss” to include the amount Anadarko is

“obligated to pay” as damages from a judgment or settlement and to include

service of suit, institution of arbitration proceedings, and all defense expenses with

respect to the Macondo Incident, we construe “Ultimate Net Loss” to include all

liabilities of Anadarko for which Underwriters agreed to indemnify in Section III.

      According to Anadarko, the phrase “any liability” as used in the first

paragraph of the Joint Venture Provision should not be construed broadly to

include defense expenses, but should be construed as limited to only those third-

party liabilities insured in Section III’s Coverage Provision. The term “liability” is

not a defined term in the Policy. We do not believe that the word “liability” is so

restricted as to only refer to “third-party” liability. Generally, “liability” is “[t]he

quality or state of being legally obligated or accountable; legal responsibility to

another or to society, enforceable by civil remedy or criminal punishment[.]”

Liability, BLACK’S LAW DICTIONARY (9th ed. 2009). “Liability” can also mean “[a]

                                          15
financial or pecuniary obligation[.]” Id. There is nothing in the plain language of

the Policy to suggest that the parties intended to limit the meaning of “liability” to

only include “third-party” liability. On the contrary, the plain language supports a

broad, general use of the word. The Joint Venture Provision is written to include

“‘any liability’” of Anadarko insured under Section III of the Policy. As discussed

above, the Coverage Provision of Section III is reasonably construed as including

liabilities for defense expenses. Thus, the Joint Venture Provision is reasonably

construed as including defense expenses as a liability and therefore subject to

scaling under the terms of the Joint Venture Provision.

       Anadarko’s interpretation of the Policy would render the Policy’s language

that “Underwriters agree . . . to indemnify [Anadarko] . . . for ‘Ultimate Net Loss’”

meaningless and would also force us to rewrite the language of the Policy.

Underwriters contend that the plain language of the Joint Venture Provision

implies breadth and inclusiveness, noting that the Joint Venture Provision

expressly includes “‘any liability . . . insured under . . . Section III and . . . [arising]

in any manner whatsoever out of . . . any [Joint Venture]. . . .’” Anadarko’s

interpretation would require this Court to replace the broad language of the Joint

Venture Provision in the Policy—“as regards any liability of [Anadarko]”—with

far more limiting language—“as regards any third-party liability of Anadarko.”

                                            16
Underwriters contend that we should not judicially rewrite the Policy by inserting

the word “third-party” into it. See Gilbert, 327 S.W.3d at 126-27 (declining to

judicially rewrite the parties’ exclusion by inserting a word into it). We agree.

      Finally, we note that the General Declarations section of the Policy, which

incorporates the limits for the Policy, makes no reference to defense expenses

being payable on a different basis from costs awarded by way of damages for

liabilities incurred under the Policy. Section III of the Policy contains a single limit

of liability—“USD 150,000,000 (100%) any one occurrence without aggregate

except for Products and Completed Operations (as defined by Policy Wording)

which [are] subject to a USD 150,000,000 aggregate limit of liability.” The Policy

provision defining the “Limits of Liability” under Section III, provides as follows:

      Underwriters shall only be liable for ‘Ultimate Net Loss’ in excess of:
      (a) the Underlying Insurance(s) set out in . . . the Declarations[;] or,
      (b) the Self Insured Retention set out in . . . the Declarations,
      whichever is greater and then only up to the amount stated in Item
      4(a) of the Declarations in respect of each ‘Occurrence.’”

The parties knew how to provide for coverage regarding defense costs on a

different basis, as they did so for “Products and Completed Operations[,]” which

are expressly insured on an aggregate limit of liability.




                                          17
      We conclude the first paragraph of the Joint Venture Provision is only

susceptible to one reasonable interpretation, that is, defense expenses are subject to

scaling under the Joint Venture Provision.

B. The First Exception of the Joint Venture Provision

      The trial court expressly made no ruling regarding the first exception of the

Joint Venture Provision. The first exception to the Joint Venture Provision

provides:

             The Joint Venture Clause shall not apply to any liability
             of [Anadarko], when as a result of the circumstances of
             the Occurrence, the terms of the Joint Venture agreement
             place the whole of the liability of the Joint Venture on
             [Anadarko].

“Joint Venture agreement” is not a defined term in the Policy. Anadarko contends

that the reference to the “Joint Venture agreement” includes not only the Operating

Agreement, but also the Offshore Lease. In support, Anadarko cites to the language

in the first paragraph of the Joint Venture Provision, which states that the provision

regards any liability of Anadarko that is insured under Section III and that “arises

in any manner whatsoever out of the operation or existence of any joint venture,

co-venture, joint lease, joint operating agreement or partnership (hereinafter called

‘Joint Venture’) in which [Anadarko] has an interest[.]”



                                         18
      Anadarko contends that the first exception is triggered in this case because

the Offshore Lease places “the whole of the liability of the Joint Venture” on

Anadarko. In the Offshore Lease, the United States and BP agreed that the

Offshore Lease is “subject to . . . all other applicable statutes[.]” BP later assigned

a percentage of its interest in the Offshore Lease to Anadarko. According to

Anadarko, because the OPA regulates the discharge of oil into or upon the

navigable waters or adjoining shorelines, it is an applicable statute and has been

incorporated into the terms of the Offshore Lease. Anadarko contends that as a

lessee under the Offshore Lease, it is subject to the OPA’s joint and several

liability and thus, is wholly liable for removal costs and damages from the

wrongful discharge of oil.

      Assuming without deciding that the Offshore Lease is part of the Joint

Venture agreement under the Policy and that the OPA’s joint and several liability

provision is made applicable as a term of the Offshore Lease, we conclude that the

Offshore Lease does not place “the whole of the liability of the Joint Venture” on

Anadarko.

      Anadarko contends that the “whole of the liability of the Joint Venture” was

placed on it because the MDL Court found it jointly and severally liable for 100

percent of the OPA removal costs and damages. Underwriters respond that

                                          19
Anadarko incorrectly limits its analysis to only OPA liability and that there were

other liabilities of the Joint Venture stemming from the Macondo Incident. We

conclude that Underwriters’ interpretation of the exception is the only reasonable

interpretation.

      The Policy states that this exception is applicable “when as a result of the

circumstances of the Occurrence, the terms of the Joint Venture agreement place

the whole of the liability of the Joint Venture on [Anadarko].” Here, the

circumstances of the Occurrence are the circumstances surrounding the Macondo

Incident. The Policy does not define “whole” but we give it its ordinary meaning.

“Whole” means “constituting the total sum or undiminished entirety of”

something. WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2611 (3d ed.

2002). “Whole” is also defined as “all there is of a thing.” THE OXFORD DESK

DICTIONARY    AND   THESAURUS 920 (American Ed. 1997). The phrase “of the

liability” in the sentence is a prepositional phrase that modifies the word

“whole[,]” which is used as a noun and is the direct object in the dependent clause

“when . . . the terms of the Joint Venture agreement place the whole of the liability

on [Anadarko].” Thus, by the plain language of the Policy, it is clear that the

parties’ intent was that this exception apply in a circumstance in which all of the



                                         20
Joint Venture’s liability stemming from an Occurrence, not just one particular type

of liability, i.e., OPA liability, was placed on Anadarko.

      The OPA is not the exclusive source of potential liability for the Joint

Venture partners. Under the OPA, responsible parties are liable for all removal

costs and damages, including injuries to natural resources, destruction of property,

loss of subsistence use of natural resources, loss of tax revenue, loss of profits or

earning capacity, and net increased costs for additional public services. See 33

U.S.C.S. § 2701(5) (LEXIS through Pub. L. No. 114-229) (defining damages); §

2702 (b)(2) (LEXIS through Pub. L. No. 114-229) (identifying types of damages

covered under OPA). Notably, the OPA does not provide a cause of action for

personal injuries. See 33 U.S.C.S. §§ 2701(5); 2702; see also In re Oil Spill by the

Oil Rig “Deepwater Horizon”, MDL No. 2179, 2011 U.S. Dist. LEXIS 10497, at

*18 (E.D. La. Feb. 2, 2011) (noting that personal injury and death claims fall

outside of scope of OPA). Thus, even if Anadarko were declared wholly liable for

claims asserted under the OPA, the Joint Venture potentially has numerous other

non-OPA claims in which neither the Operating Agreement, nor the Offshore

Lease place liability wholly on Anadarko. See e.g. In re Deepwater Horizon Robert

Young v. BP Expl. & Prod., Inc., 786 F.3d 344, 348 (5th Cir. 2015) (discussing

non-OPA claims involving physical injury and death under general federal

                                         21
maritime law); In re Oil Spill by Oil Rig “Deepwater Horizon”, 295 F.R.D. 112,

117-18, 119-120, 134-36, 161 (E.D. La. 2013) (approving class settlement of

certain claims of individuals engaged as clean-up workers and residents of

particular geographical boundaries in the Gulf of Mexico related to their exposure

to oil or dispersants arising from the Macondo Incident and subsequent response

efforts of BP); see also In re Oil Spill by Oil Rig “Deepwater Horizon”, 808 F.

Supp. 2d 943, 962-63, 968-69 (E.D. La. 2011), aff’d, 745 F.3d 157 (5th Cir. 2014)

(explaining that the OPA displaces general maritime law claims against

Responsible Parties but only with regard to procedure, thus, if OPA presentment

requirements are met, claims for punitive damages are available for general

maritime law claimants against Responsible Parties); In re Oil Spill by the Oil Rig

“Deepwater Horizon”, MDL No. 2179, 2011 U.S. Dist. LEXIS 131069, at *29, 50

(E.D. La. Nov. 1 4, 2011), aff’d, 745 F.3d 157 (5th Cir. 2014) (concluding that the

states may be entitled to receive punitive damages under general maritime law, but

ultimately dismissing the states’ general maritime law negligence claims against

Anadarko and MOEX).

      Anadarko bases its entire argument regarding the first exception on the

Offshore Lease’s incorporation of the OPA and its joint and several liability

provision. As fully discussed above, even if we accept Anadarko’s argument that

                                        22
the Offshore Lease is a Joint Venture agreement under the Policy and places all

OPA liability on Anadarko, the Offshore Lease does not place all of the Joint

Venture’s liability on Anadarko. Anadarko does not dispute that the Operating

Agreement governs the relationship between BP and the non-operating Joint

Venture partners. The Operating Agreement provides that each party to the

agreement will bear liability in proportion to its percentage of ownership in the

Macondo Well. The Operating Agreement also places all liability upon one party

only if that party was grossly negligent or engaged in willful misconduct. The

MDL Court found only BP grossly negligent, and dismissed all negligence claims

against Anadarko. See In re Oil Spill by the Oil Rig “Deepwater Horizon”, 21 F.

Supp. 3d 657, 757 (E.D. La. 2014); see also In re Oil Spill, 148 F. Supp. 3d at 567-

68; In re Oil Spill, 808 F. Supp. 2d at 963. Because the Joint Venture Agreement

did not place the whole of the liability of the Joint Venture on Anadarko, the first

exception to the Joint Venture Provision is inapplicable.

C. The Second Exception of the Joint Venture Provision

      The trial court found that the MDL Court’s determination that Anadarko was

jointly and severally liable for the OPA removal costs and damages triggered the

second exception of the Joint Venture Provision. As a result, the trial court

concluded that the scaling provision of the Joint Venture Provision was not

                                         23
applicable and that “Anadarko is entitled . . . to payment of 100 percent of its

Ultimate Net Loss” under the terms of the Policy. The second exception to the

Joint Venture Provision provides:

      In the event [Anadarko] becomes legally liable in a court of
      competent jurisdiction for an amount greater than their proportionate
      ownership interest, Underwriters hereon agree to provide coverage to
      [Anadarko] to the extent the legal liability increases [Anadarko’s]
      working interest percentage liability. If [Anadarko] becomes legally
      liable for a greater percentage than their ownership interest, the
      liability of Underwriters shall be the combination of [Anadarko’s]
      working interest percentage ownership and the additional
      percentage(s) for which [Anadarko] becomes legally liable.

Underwriters contend the trial court erred in finding this exception applicable

because it is only triggered when Anadarko is first adjudicated to be liable for a

fixed and certain amount that is greater than its proportionate ownership interest in

the joint venture and actually pays the fixed amount. Underwriters contend that an

actual judgment for a specific amount is required because a finding of potential

liability does not satisfy the provision’s requirement for a finding of legal liability.

Second, according to Underwriters, the trial court’s finding must actually increase

Anadarko’s working interest percentage in the joint venture.

      The second exception contained in the Joint Venture Provision is made up of

two complementary sentences. The first sentence establishes the basis for

indemnifying Anadarko for a greater percentage than its working interest

                                          24
percentage—i.e., when Anadarko becomes legally liable for an amount greater

than 25 percent. The second sentence establishes how Underwriters’ new limit of

liability is to be calculated in such event, i.e.,—25 percent plus the additional

percentage for which Anadarko is found legally liable.

      At the heart of this dispute is the MDL Court’s ruling that Anadarko was

jointly and severally liable for OPA costs and damages. Underwriters contend the

MDL Court’s ruling amounts only to a ruling of “potential liability” because the

MDL Court did not actually hold Anadarko legally liable for a specific amount of

damages. Anadarko responds that the MDL Court did find it liable for a specific

amount of damages, namely, 100 percent of the OPA costs and damages. And,

according to Anadarko, the Joint Venture Provision does not require a finding that

Anadarko pay a specific amount of damages. Anadarko contends the finding that it

was jointly and severally liable is sufficient to meet the Policy’s requirement that it

be held legally liable for an amount greater than its percentage of ownership.

      To resolve this dispute, we must look first to the MDL Court’s order.

Pursuant to 33 U.S.C.S. § 2717(f)(2), the MDL Court’s order granted the United

States’ motion requesting a declaratory judgment that Anadarko and BP were

jointly and severally liable for OPA removal costs and damages. See generally 33

U.S.C.S. § 2717(f)(2). However, we conclude the MDL court’s declaratory

                                          25
judgment did not trigger the Joint Venture Provision’s second exception because a

judgment holding a party jointly and severally liable for OPA costs and damages is

not the same as a judgment for recovery of a particular amount for such costs. See

Am. Cyanamid Co. v. Capuano, 381 F.3d 6, 12-13 (1st Cir. 2004) (interpreting

effect of declaratory judgment issued in an action under CERCLA and finding that

judgment on liability for future costs is not itself a judgment for recovery of such

costs or damages). An action to declare rights is not an action for money damages.

See Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650,

660-61 (Tex. 2009). Thus, the MDL Court’s order successfully declared Anadarko

jointly and severally liable, but did not set the amount for which Anadarko was

liable, which is what the second exception to the Joint Venture Provision

contemplated in providing that Anadarko must become “legally liable . . . for an

amount greater than [its] proportionate ownership interest” (emphasis added).The

United States prevailed on its request for declaratory judgment and the trial court

rendered judgment on liability, but the MDL Court did not rule on the amount of

monetary damages for which Anadarko was liable.

      As explained above, coverage under Section III of the Policy is for

Anadarko’s “Ultimate Net Loss,” which is defined in part as “the amount

[Anadarko] is obligated to pay, by judgement or settlement, as damages[.]” Thus,

                                        26
for a damages claim to be covered under Section III of the Policy, the plain

language of the Policy supports that the damages amount must be set forth in a

judgment or settlement creating an actual obligation for Anadarko to pay. A

“judgment” is a “court’s final determination of the rights and obligations of the

parties in a case.” Judgment, BLACK’S LAW DICTIONARY (9th ed. 2009). There is

no dispute that the MDL Court found Anadarko jointly and severally liable with

BP for OPA removal costs and damages. The MDL Court determined that BP and

Anadarko are both liable as responsible parties under the OPA. However, after

making this finding, the MDL Court noted that though the issue of BP and

Anadarko’s liability was settled, “there may be issues regarding quantum in

subsequent actions[.]” The MDL Court did not further expound on the meaning of

this statement. “[Q]uantum” means “quantity” or “amount[.]” WEBSTER’S THIRD

NEW INTERNATIONAL DICTIONARY 1859 (3d ed. 2002). Webster’s gives the

following verbal illustration of an appropriate use of the word “quantum” in

context—“the [quantum] of damages to be assessed[.]” Id. It also defines

“quantum” as “a certain or an allotted amount[.]” Id. Thus, the MDL Court’s order

could reasonably be interpreted as indicating the MDL Court anticipated further

litigation on this matter to determine the actual amount of OPA removal costs and

damages for which Anadarko and BP would be liable. The MDL Court did not

                                       27
make a final determination as to the amount of Anadarko’s actual legal obligation.

Nothing in the record before us shows that Anadarko has been ordered to pay any

specific amount of OPA expenses in a judgment. Anadarko did enter into a

settlement agreement with BP wherein Anadarko paid $4 billion to BP for

damages and cleanup costs arising from the Macondo Incident. There is some

evidence in the record to support that Anadarko’s payment to BP is an amount that

is less than Anadarko’s 25 percent proportionate ownership interest in the well. 3 In

the settlement agreement, BP agreed to indemnify Anadarko for any OPA liability.

There is no evidence in the record of other settlement agreements in which

Anadarko agreed to pay additional funds for the Macondo Incident. And, in April

2016, the MDL Court entered a final judgment adopting a consent decree in which

the United States agreed to not pursue Anadarko for any OPA liability. In re Oil

Spill by the Oil Rig “Deepwater Horizon”, MDL No. 2179, 2016 U.S. Dist. LEXIS

50466, at *83-86 (E.D. La. Apr. 4, 2016). Thus, while the MDL Court’s order

suggests that the MDL Court initially anticipated future litigation to determine the

      3
          As explained above, the MDL Court found Anadarko liable for a $159.5
million fine under the Clean Water Act. See In re Oil Spill by Oil Rig “Deepwater
Horizon”, 148 F. Supp. 3d 563, 584 (E.D. La. 2015); see also 33 U.S.C.S. §
1321(b)(7) (LEXIS through Pub. L. No. 114-244). Without deciding whether the
fine was a covered liability under the Policy, we note that even if we considered
the fine, Anadarko’s actual share of the costs stemming from the Macondo Incident
remains well below its 25 percent working interest percentage in the joint venture.
                                         28
actual amount of OPA liability for BP and Anadarko, the MDL Court ultimately

never made that determination concerning Anadarko because BP accepted full

responsibility for Anadarko’s OPA liability. See id.

      We are unable to reconcile Anadarko’s interpretation of the third paragraph

of the Joint Venture Provision with the Policy’s definition of “Ultimate Net

Loss[.]” Anadarko’s interpretation of this part of the Joint Venture Provision

would ultimately require Underwriters to indemnify Anadarko for a loss for which

Anadarko has not become obligated to pay by judgment or settlement. Because

Anadarko’s interpretation renders a substantial part of the “Ultimate Net Loss”

provision meaningless, we conclude Anadarko’s construction is not reasonable and

Underwriters construction is the only reasonable construction of the provision. See

Deepwater Horizon, 470 S.W.3d at 464; Gilbert, 327 S.W.3d at 126.

      For the reasons stated above, we conclude the trial court erred in granting

Anadarko’s motion for summary judgment. We reverse the trial court’s judgment

and render judgment granting Underwriters’ motion for summary judgment.

      REVERSED AND RENDERED.



                                             ______________________________
                                                    CHARLES KREGER
                                                         Justice

                                        29
Submitted on May 7, 2015
Opinion Delivered November 17, 2016

Before McKeithen, C.J., Kreger and Horton, JJ.




                                       30
