ACE Must Defend Additional Insured In Eight Underlying Natural Gas Explosion Cases

Lexington Insurance commenced action against ACE American regarding whether ACE had a duty to defend Midcontinent Express Pipeline, LLC and its affiliates (MEP) in eight underlying lawsuits arising out of a natural gas explosion.  Lexington sought a declaration that (1) MEP Parties are additional insureds under the ACE Policy, (2) the MEP Parties, as additional insureds under the ACE policy, are entitled to a defense of underlying lawsuits; and (3) ACE is liable to Lexington for the costs and expenses incurred defending the MEP Parties in the underlying lawsuits. In response to Lexington’s motion for summary judgment and ACE’s cross-motion for summary judgment, the Court found that as a matter of law that MEP were additional insureds under the terms of the ACE Policy and endorsements, which policy constituted MEP’s primary insurance. The court determined that the allegations in the eight underlying suits were potentially within the scope of coverage of the ACE Policy and therefore ACE’s duty to defend was triggered. The court also found that the ACE Policy was primary to the Lexington Policy, with the later providing excess coverage. The court determined that Lexington was entitled to recover reasonable and necessary defense costs incurred after tendering the defense of the MEP Parties to ACE.  Finally the court determines that ACE is solely obligated to provide a defense to the MEP Parties in the underlying lawsuits until they are resolved.

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