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Star Insurance Co. v. Continental Services, Inc.

United States District Court, North Dakota, Northwestern Division

January 17, 2013

STAR INSURANCE COMPANY, Plaintiff,
v.
CONTINENTAL SERVICES, INC., Cyclone Drilling, Inc., Plaster & Wald Consulting Corp., Torus Specialty Insurance Group, M-I, LLC, Zurich American Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and Travelers Property Casualty Company of America, Defendants.

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Scott K. Porsborg, Smith Bakke Porsborg & Schweigert, Bismarck, ND, Syed S. Ahmad, Walter J. Andrews, Hunton & Williams LLP, McLean, VA, for Plaintiff.

Lawrence Bender, Michael D. Schoepf, Fredrikson & Byron, PA, Bismarck, ND, Joseph A. Wetch, Jr., Ronald H. McLean, Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, ND, Steven J. Adams, Fellers Snider Blankenship Bailey & Tippens, P.C., Reagan L. Madison, William D. Perrine, Perrine, Redemann, Berry, Taylor & Sloan, P.L.L.C., Tulsa, OK, Tamara L. Novotny, Cousineau McGuire Chartered, Minneapolis, MN, Richard P. Olson, Olson Burns Lee, Minot, ND, Paul F. Ebeltoft, Ebeltoft Sickler Kolling Grosz Bouray, PLLC, Dickinson, ND, Troy A. Wolf, Oppegard Wolf & Quinton, Moorhead, MN, for Defendants.

ORDER DENYING MOTION TO DISMISS

DANIEL L. HOVLAND, District Judge.

Before the Court is Defendant Continental Services, Inc., (" Continental" ) motion to dismiss or, in the alternative, to stay filed on July 19, 2012. See Docket No. 25. Defendant Travelers Property Casualty Company of America (" Travelers" ) joined in the motion on November 1, 2012. See Docket No. 41. The plaintiff, Star Insurance Company (" Star Insurance" ), filed a response in opposition to the motion on November 6, 2012. See Docket No. 48. Continental filed a reply brief on November 19, 2012. See Docket No. 58. For the reasons set forth below, the motion is denied.

I. BACKGROUND

This is a declaratory judgment action filed pursuant to 28 U.S.C. ยงยง 2201-2202. The case involves four oil and gas companies, five insurance companies and seven insurance policies. The underlying dispute arises out of an explosion at an oil and gas well located near Beach, North Dakota, on July 25, 2011, which severely injured three employees of Cyclone Drilling, Inc. (" Cyclone Drilling" ). The well is known as the Beaver Creek State 1-36 H well. The Cyclone Drilling employees sued Continental and a number of other oil service companies in an action captioned Morton et al. v. Continental Resources, Inc., et al., Case No. 53-2011-CV-00698, in the District Court for the Northwest Judicial District of North Dakota, Williams County (the " Williams County action" ). There is a related action pending in a state court in Oklahoma captioned Continental Resources, Inc. v. Plaster and Wald Consulting Corp., Case No. CJ-2012-3033 (the " Oklahoma action" ). Cyclone Drilling has been added to the Oklahoma action as a third-party defendant. Continental asserts claims for breach of contract and declaratory relief and seeks indemnity from Plaster & Wald Consulting Corp. (" P & W" ) for claims relating to the explosion and fire at the Beaver Creek well.

Continental is a corporation organized under Oklahoma law with its principle place of business in Oklahoma. Continental is engaged in the oil and gas business in North Dakota. Continental executed master service contracts with P & W and M-I relating to oil and gas drilling activities in North Dakota. The litigation in Oklahoma concerns these contracts.

Cyclone Drilling is a corporation organized under Wyoming law with its principle

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place of business in Wyoming. Cyclone Drilling is engaged in the oil and gas business in North Dakota. Cyclone Drilling agreed to provide services to Continental related to the drilling of oil and gas in North Dakota. Cyclone Drilling has yet to file an answer or otherwise appear in this action.

P & W is a corporation organized under Oklahoma law with its principle place of business in Oklahoma. P & W is engaged in the oil and gas business in North Dakota. P & W agreed to provide services to Continental related to the oil and gas drilling in North Dakota.

M-I, LLC (" M-I" ) is a corporation organized under Texas law with its principle place of business in Texas. M-I is engaged in the oil and gas business in North Dakota. M-I agreed to provide services to Continental related to oil and gas drilling in North Dakota.

Star Insurance is a corporation organized under Michigan law with its principal place of business in Michigan. Star Insurance issued a commercial general liability policy to Cyclone Drilling. Star Insurance also issued a commercial liability umbrella policy to Cyclone Drilling.

Torus Specialty Insurance Group (" Torus" ) is a corporation organized under Delaware law with its principle place of business in New Jersey. Torus issued general liability policies (primary and excess) to P & W. Continental is named as an additional insured under these policies.

Zurich American Insurance Company (" Zurich" ) is a corporation organized under Illinois law with its principle place of business in Illinois. Zurich issued a commercial general liability policy to Continental.

National Union Fire Insurance Company of Pittsburgh, Pa. (" National Union" ) is a corporation organized under Pennsylvania law with its principle place of business in New York. National Union issued an umbrella policy to Continental.

Travelers Property Casualty Company of America is a corporation organized under Connecticut law with its principle place of business in Connecticut. Travelers issued a commercial general liability policy to M-I. Continental is named as an additional insured under this policy.

Continental requested that Star Insurance defend and indemnify it in connection with the Williams County litigation in North Dakota, as an additional insured under the Star Insurance policies. Continental has also requested that Cyclone Drilling defend and indemnify it in connection with the Williams County action. M-I has requested that Continental defend and indemnify it in connection with the Williams County action. Continental and M-I have requested coverage from Star Insurance for M-I liabilities in the Williams County action. P & W has requested defense and indemnification from Star Insurance as an additional insured under the Star Insurance policies issued in connection with the Williams County action. P & W has requested that Cyclone Drilling defend and indemnify it in connection with the Williams County action. P & W has also requested that Star Insurance defend and indemnify it in connection with ...


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