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Crown Energy Co. v. Mid-Continent Cas. Co.

Crown Energy Co. v. Mid-Continent Cas. Co.

Supreme Court of Oklahoma

June 14, 2022, Decided

116989

Opinion

 [*P0]  [**1065]   Crown Energy Company ("Crown") brought suit against Mid-Continent Casualty Company ("Mid-Continent") seeking declaratory judgment that two commercial general liability policies issued to Crown provided coverage for claims of property damage brought against Crown in a separate action. The claims arose out of seismic activity allegedly caused by Crown's use of waste water disposal wells in its oil and gas operations. Mid-Continent filed a counterclaim, seeking declaratory judgment that the claims [***2]  were not covered under the policies because the seismic activity did not constitute an "occurrence" and that the claims fell within a pollution exclusion to the policies. The trial court granted summary judgment in favor of Crown. Mid-Continent appealed, and the matter was assigned to the Court of Civil Appeals, Division II. The Court of Civil Appeals affirmed the trial court's judgment. We  [**1066]  hold that the seismic activity did constitute an occurrence under the policies and that the pollution exclusion does not bar coverage.

ROWE, J.:

I. BACKGROUND

 [*P1]  Appellee, Crown Energy Company ("Crown"), is an Oklahoma City-based oil and gas producer operating in the Payne County formations. In the course of its oil and gas operations, Crown produces a large volume of waste water, which it stores in underground disposal wells.

 [*P2]  In 2015, Crown sought commercial general liability insurance from Appellant, Mid-Continent Casualty Company ("Mid-Continent"). As part of its application, Crown included specific information about the nature of Crown's oil and gas operations. Mid-Continent ultimately issued two commercial general liability policies to Crown, Policy Number 04-GL-943967 and Policy Number 04-GL-963176, [***3]  which covered two consecutive one-year periods from October 2015 to November 2017 ("the Policies"). Section I of the Policies provides:

1. Insuring Agreement

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2022 OK 60 *; 511 P.3d 1064 **; 2022 Okla. LEXIS 59 ***; 2022 WL 2128667

CROWN ENERGY COMPANY, Plaintiff/Appellee, v. MID-CONTINENT CASUALTY CO., Defendant/Appellant.

Prior History:  [***1] ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION II. Honorable Aletia Haynes Timmons, District Judge.

Disposition: CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; JUDGMENT OF THE TRIAL COURT AFFIRMED.

CORE TERMS

pollution exclusion, pollutants, Lawsuit, coverage, property damage, Policies, wastewater, ambiguous, bodily injury, contaminants, insured, irritants, occurrence, disposal, seismic, oil and gas, unambiguous, Endorsement, prompted, insurance contract, allegations, injection, damages, liquids, terms, preclude coverage, waste material, foreseeability, declaratory, wastewater

Civil Procedure, Appeals, Standards of Review, De Novo Review, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Judicial Review, Summary Judgment, Appellate Review, Standards of Review, Questions of Fact & Law, Contracts Law, Contract Interpretation, Intent, Ordinary & Usual Meanings, Ambiguous Terms, Construction Against Insurers, Coverage Favored, Reasonable Expectations, Reasonable Person, Commercial General Liability Insurance, Coverage, Environmental Claims, Exclusions, Pollution, Claims Made Policies, Exclusions