Lago Agrio: Insurance Coverage Decision Goes Against Stratus Consulting

Here is an interesting footnote in the Lago Agrio saga. Stratus Consulting, one of the defendants in the RICO case Chevron has brought in New York against Donziger and others, had a dispute with its insurers about whether the insurers had a duty to defend Stratus and two of its employees, Douglas Beltman and Ann Maest, against Chevron’s RICO claims. Unsurprisingly, the judge held that there was no duty to defend. This is a consequence of the way Chevron pleaded its claims. It pleaded claims of intentional wrongdoing but not of negligence. In general, insurance policies don’t provide coverage of insureds against their own intentional wrongdoing, and an insurer has no duty to defend against such a claim. If Chevron’s complaint had included both claims of intentional wrongdoing and claims within the scope of one of the policies, then there would have been a duty to defend (at least here in Massachusetts—I don’t know the law on this in other states), but by pleading the claims as it did, Chevron gave the insurers a get-out-of-jail card.

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