Federal appeals court affirms ruling for insurers in wrongful death suit

A federal appeals court Wednesday affirmed a lower court ruling in favor of Zurich Insurance Group, Chubb Ltd. and Sompo Holding Inc. units in a dispute over a $222 million judgment in a wrongful death suit.

Benecia, California-based Team Industrial Services had a judgment issued against it in the wrongful death suit that arose out of a steam turbine failure in June 2018 at a power plant operated by Kansas City, Missouri-based Westar Energy Inc., according to the ruling by the 10th U.S. Circuit Court of Appeals in Denver in Team Industrial Services Inc. v. Zurich American Insurance Co. et al.

Zurich issued the primary liability policy to Westar, with Chubb Ltd. unit Westchester Fire Insurance Co. and Sompo unit Endurance American Insurance Co. providing two layers of excess coverage, according to the ruling.

Team sued Westar and the three insurers in U.S. District Court in Kansas City, Kansas, arguing coverage should have been provided by Westar’s owner-controlled insurance program through the policies issued by the three insurers.

The district court ruled in the insurers’ favor and was affirmed by a three-judge appeals court panel.

Team’s claims in the case “derive from the fact that its liability for the failure at the Westar power plant arose from work that had been previously performed by Houston-based Furmanite Inc.,” the ruling said.

In February 2016, Team’s parent company acquired Furmanite’s parent company.  “Although Team and Furmanite became ‘sister companies,’ they were distinct legal entities and never merged,” the ruling said.

The panel’s ruling said Furmanite’s master services agreement “does not even grant permission to Furmanite to seek enrollment in the OCIP, much less provide coverage.  

“Thus, even if Team had been assigned to the Furmanite MSA, it would not thereby obtain any insurance coverage,” the ruling said in affirming the lower court.

Attorneys in the case did not respond to requests for comment.