BPX Prod Co v. Certain Underwriters
Split Score
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Case Summary
Disposition
Reversed in Part
In this diversity insurance-coverage dispute, the Fifth Circuit held that contractually required settlement discussions between BPX and BJ Services qualified as an "alternative dispute resolution proceeding," thereby constituting a "suit" that triggered the underwriters’ duty to defend. The court reversed the district court’s dismissal of the duty-to-defend and duty-to-indemnify claims, vacated and remanded the declaratory-judgment claim, and affirmed dismissal of BPX’s extra-contractual bad-faith claims.
Circuit Split Identified
Legal Issue
Whether the definition of “suit” in a Commercial General Liability policy—"a civil proceeding … [and] any other alternative dispute resolution proceeding in which damages are claimed and to which the insured submits with the insurer’s consent"—encompasses contractually mandated settlement negotiations that occur before a formal lawsuit is filed.
Circuit Positions
Contractually or statutorily mandated settlement negotiations are "alternative dispute resolution proceedings" included in the policy definition of "suit," so they can trigger the insurer’s duty to defend.
Only formal civil proceedings qualify as a "suit"; pre-suit settlement procedures do not trigger the duty to defend.
Conflict Summary
The Fifth Circuit construed the policy language broadly, concluding that mandated settlement negotiations are an "alternative dispute resolution proceeding" that can trigger the duty to defend even if no formal civil action has been filed, especially where the insurer has wrongfully denied coverage and thereby waived any consent requirement. The Tenth Circuit, by contrast, reads identical language narrowly, holding that only proceedings qualifying as formal "civil proceedings" fall within the policy definition of a "suit," so pre-suit negotiation processes do not trigger a duty to defend.