On September 3, Arnold & Porter secured an appellate victory for AIG when the U.S. Court of Appeals for the Eighth Circuit reversed a district court ruling that required AIG subsidiary Commerce and Industry Insurance Company (Commerce) to provide $25 million in coverage to XTO Energy, Inc.—a subsidiary of Exxon—in an insurance coverage dispute arising from an explosion at an oil and gas well in North Dakota.
The Eighth Circuit held that a pollution exclusion in Commerce’s umbrella policy barred coverage and that XTO’s failure to satisfy a 21-day notice condition prevented XTO from invoking an exception to the exclusion to restore coverage. The court also rejected XTO’s arguments that Commerce was required to demonstrate prejudice from the late notice and that Commerce’s policy should be read to incorporate additional exceptions included in the underlying policy. The panel unanimously reversed the district court’s judgment and vacated the award of $25 million in damages, as well as interest, attorneys’ fees, and costs.
The Eighth Circuit’s opinion marks the third appellate victory in the past month for Arnold & Porter, following wins in the Tenth Circuit for AstraZeneca and in the D.C. Circuit for an international hotelier in a cross-border RICO dispute.
The Arnold & Porter team representing AIG was led by partner Reeves Anderson, senior associate Sam Callahan, and associate Casey Corcoran.