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.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *