ace american insurance company v. m-i, l.l.c. complaint

8/8/2019 ACE AMERICAN INSURANCE COMPANY v. M-I, L.L.C. Complaint

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF TEXASHOUSTON DIVISIONACE AMERICAN INSURANCECOMPANY

Plaintiff,v.M-I, L.L.C.

s$ss$ Civil Action No.s$$$Defendant.

ACE AMERICAN INSURANCE COMPANY'S ORIGINALCOMPLAINT FOR DECLARATORY JUDGMENTTO THE HONORABLE I-]NITED STATES DISTRICT JUDGE:

This Complaint for Declaratory Judgment is filed by ACE American Insurance Company("ACE") against M-I, L.L.C. ("M-I") pursuant to the Declaratory Judgment Act, 28 U.S.C. $2201 and Rule 57 of the Federal Rules of Civil Procedure to determine an actual case orcontroversy involving a declaration of rights and obligations under an insurance policy issued byACE to M-I.

I. INrRonucrroN1 .1 This dispute arises out of the Macondo Discovery Well blowout in the Mississippi

Canyon Block 252 and ensuing fire, explosion and sinking of the vessel known as the DeepwaterHorzon on April 20,2010 (the "Deepwater Horizon Incident").

1.2 At the time of the Deepwater Honzon Incident, M-I was performing mudengineering activities within the Macondo Discovery V/ell pursuant to a written contract betweenit and BP Exploration and Production, Inc. ("8P").

1.3 M-I contends that it has incurred, and may continue to incur in the future,significant liabilities in connection with the Deepwater Honzon Incident. These liabilities

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include, but are not limited to, liabilities for damages to individuals and businesses whosepersons or properties have been or will be impacted by the Deepwater Horizon lncident.

1.4 M-I is pursuing or intends to pursue coverage for the claims and losses arising outof the Deepwater Horizon lncident under ACE Policy No. HDO G 24940354 (Ihe "ACEPolicy'').

1.5 ACE is seeking a judgment declaring that no coverage exists under the ACEPolicy for any claims against M-I arising out of the Deepwater Horizon Incident.

il. PtRrms2.1 Plaintiff ACE is a Pennsylvania corporation with its headquarters at 436 Walnut

St., Philadelphia, PA 19106-3703.2.2 Defendant M-I is a Delaware limited liability company with its principal place of

business in Houston, Harris County, Texas. It can be served through its registered agent: CapitolCorporate Services, Inc., 800 Brazos, Suite 400, Austin, Texas 78701.

III. JurusorcrroNaNoVnNun3.1 This Court has jurisdiction of this controversy under 28 U.S.C. g 1332 (a) in that

the dispute is between citizens of different states and the amount in controversy exceeds the sumor value of $75,000.00 exclusive of interest and costs.

3.2 Venue is proper in this district pursuant to 28 U.S.C. $ 1391 because this is ajudicial district in which the Defendant is subject to personal jurisdiction and because the policyof insurance was issued and delivered to M-I in Houston, Texas

IV. BacxcnouNo4.1 BP retained the mud engineering services of M-I to be performed in accordance

with a written contract entitled "Contract for Gulf of Mexico Strategic Performance Unit



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Offshore Well Services between BP Exploration and Production, Inc. and M-I, L.L.C. (the"BP/M-I Agreement").

4.2 The services under the BP/M-I Agreement included, among other things, that M-Idevise and prepare a mud program for the Macondo Discovery V/ell.

4.3 On or about April 19, 2010, the Macondo Discovery Well had reached a depth of13,293 feet below the sea floor.

4.4 A blowout commenced on April 20,2010.4.5 Gas escaped from the subsea well and into the riser. The gas shot water out of the

riser and above the crown of the derrick. The gas subsequently ignited and exploded resulting inthe Deepw ater Honzon Incident.

4.6 As a result of the Deepwater Horizon lncident, numerous lawsuits have been filedagainst M-I alleging that it failed to maintain the appropriate drilling mud weight before andduring the drilling operation of the Macondo Discovery Well. These lawsuits include, but are notlimited to, allegations of liabilities for damages to individuals and businesses (collectively the"Complaints"). V. Tsn ACE Por.rcv

5. I The ACE Policy issued to M-I has a policy period of April | , 2010 through AprilI,2071. The coverage afforded under the ACE Policy is subject to certain terms, conditions,limitations, and exclusions.A. The Watercraft Exclusion

5.2 The ACE Policy contains an Aircraft, Auto Or Watercraft Exclusion (the"Watercraft Exclusion") that operates to exclude coverage for all claims arising out of theDeepwater Horizon Incident.



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5.3 The Complaints asserted against M-I contain allegations that the DeepwaterHorizon was a vessel used and chartered or operated by BP.

5.4 BP is an additional insured under the ACE Policy by virrue of the terms,conditions, and limitations contained in the BP/M-I Agreement and in accordance with the termsand conditions of the ACE Policy.

5.5 Pursuant to Articles 20.I and 20.2 of the BP/M-I Agreement, M-I agreed topurchase certain types of insurance coverage, including Commercial General Liability Insurance.Article 20.1 of the BP/M-I Agreement also provides:

All insurance other than Employers LiabilityInsurance/Workmen's Compensation only, shall to the extent ofthe liabilities assumed and indemnities offered by Contractor [M-I]under the Contract, include Company [BP], co-venturers and itsand their respective affiliates as additional insured.

5.6 The ACE Policy provides Commercial General Liability Insurance, and thecontractual requirement under the BP/M-I Agreement for extension of additional insured statusfor BP is addressed in Endorsement #18. See Ex. A Endorsement #18 of the ACE Policy isentitled "Additional Insured - Designated Person or Organization" and provides as follows:

SCHEDULEName of Additional Insured Person(s) Or Organization(s)Any person or organization whom you [M-I] have agreed toinclude as an additional insured under a written contract, providedsuch contract was executed prior to the date of loss.Section II - Who Is An Insured is amended to include as anadditional insured the person(s) or organization(s) shown in theSchedule, but only with respect to liability for "bodily injury","property damage" or "personal and advertising injury" caused, inwhole or in part, by your acts or omissions or the acts or omissionsof those acting on your behalf . . . [in] the performance of yourongoing operations . . . .

SeeEx. A, Endorsement #18.



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5.7 Because BP is an additional insured under the ACE Policy, the WatercraftExclusion operates to exclude coverage under the ACE Policy for all losses arising out of theDeepwater Horizon Incident. The Watercraft Exclusion provides, in pertinent part, as follows:

This insurance does not apply to:"Bodily injury" or "property damage" arising out of the ownership,maintenance, use or entrustment to others of any . . watercraftowned or operated by or rented or loaned to any insured. Useincludes operation and "loading and unloading."This exclusion applies even if the claims against an) insured allegenegligence or other wrongdoing in the supervision, hiring,employrnent, training or monitoring of others by that insured, if the"occurrence" which caused the "bodily injury" or "propertydamage" involved the ownership, maintenance, use or entrustmentto others of any . .watercraft that is owned or operated by orrented or loaned to an) insured.This exclusion does not apply to:(1)(2) A watercraft you do not own that is:

(a) Less than 50 feet long; and(b) Not being used to caffy persons or property for a charge;

(3)(4) Liability assumed under any "insured contract" for theownership, maintenance or use of . . . watercraft; or(s)

Ex. A at Exclusion G. in "2. Exclusions" of Section l-Coverages, Coverage A Bodily Injury andProperty Damage Liability as amended by Endorsement #13 (emphasis added).

5.8 The Watercraft Exclusion references the phrase "any insured" under the ACEPolicy, which term encompasses an additional insured.



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5.9 Thus, if any insured meets the parameters of the Watercraft Exclusion, it willoperate to exclude coverage for all insureds under the ACE Policy.

5.10 As noted above, BP qualifies as an additional insured under the ACE Policy.5.11 BP was leasing and using the Deepwater Horizon under a charter agreement with

Transocean at the time of the Deepwater Horizon Incident.5.12 The Deepwater Horizon was 396 feet long and 256 feet wide.5.13 The Watercraft Exclusion operates to exclude coverage for all insureds under the

ACE Policy.B. The Professional Liability Exclusion

5.14 The ACE Policy also contains exclusions entitled "Professional LiabilityExclusion Endorsement" in Endorsement #15 and "Exclusion - Engineers, Architects orSurveyors Professional Liability'' in Endorsement # 27. These exclusions (collectively the"Professional Services Exclusions") also operate to exclude coverage for all claims arising out ofthe Deepwater Horizon Incident .

5.15 Endorsement #15 provides that "[t]his insurance does not apply to any damagesarising out of any professional services, including, but not limited to, any accounting,architectural, or engineering service." Id. at ACE Policy.

5.16 Endorsement#27 provides as follows:This insurance does not apply to "bodily injury", "property damage" or"personal and advertising injury" arising out of the rendering of or failureto render any professional services by you or any engineer, architect orsurveyor who is either employed by you or performing work on yourbehalf in such capacity.Professional services include :1. The preparing, approving, or failing to prepare or approve,maps, shop drawings, opinions, reports, surveys, fieldorders, change orders or drawings and specifications; and



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2. Supervisory, inspection, architectural orengineeringactivities.5.11 M-I was engaged by BP to provide mud engineering activities and services.5.18 The mud engineering activities and services are engineering activities and

services that trigger application of the Professional Services Exclusions as a result of theDeepwater Horizon Incident, thus abrogating coverage under the ACE Policy.C. The Duties of the Insured Condition

5.19 The ACE Policy also contains a condition entitled "Duties in the Event ofOccurrence, Offense, Claim or Suit" (the "Duties of the Insured Condition") that may operate toexclude coverage for all claims arising out of the Deepwater Horizon lncident. Ex. A, ACEPolicy at Condition2.d., "Duties in the Event of Occurrence, Offense, Claim or Suit," Section IV- Commercial General Liability Conditions.

5.20 The Deepwater Horizon Incident involved a blowout, fire, explosion, or anuncontrolled well condition.

5.21 The Deepwater Honzon Incident has also resulted in pollution from the reservoirassociated with the Macondo Discovery Well.

5.22 As noted above, the BP/M-I Agreement expressly provides that BP will assumeresponsibility for liability arising out of such an event:

Notwithstanding the provisions of clause 19.3(b) and except asprovided by clause 19.1(a), clause 19.1(b) and clause 19.4(b) Company[BP] shall save, indemnifu, release, defend and hold harmlessContractor Group [M-I and others] from and against any claim ofwhatsoever nature arising from pollution andlor contaminationincluding without limitation such pollution or contamination from thereservoir or from the property or equipment of Company Group IBPand others] arising from the property or equipment of Company GroupIBP and others] arising from or related to the performance of theContract.



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Subject to clauses 19.1 and 19.4(b), but notwithstanding anythingcontained elsewhere in the Contract to the contrary, Company IBP]shall save, indemnifu, release, defend and hold harmless ContractorGroup [M-I and others] against all claims, losses, damages, costs(including legal costs) expenses and liabilities resulting from:(a) loss or damage to any well or hole (including the cost to re-drill);(b) blowout, fire, explosion, cratering, or any uncontrolled wellcondition (including the costs to control a wild well and theremoval of debris);(c) damage to any reservoir, aquifer, geological formation or(d) ::l"t*o"nd strata or the loss of oil or gas therefrom;

Articles .a@) and 19.6 of the BP/M-I Agreement.5.23 As a result of Articles T9.a@) and 19.6 of the BP/M-I Agreement, M-I is entitled

to indemnity from BP.5.24 In spite of this indemnity M-I has not tendered these claims to BP for

indemnification as contemplated by Articles 19.a@) and 19.6 of the BP/M-I Agreement. Thisunilateral decision by M-I constitutes a voluntary assumption of an obligation. Furthermore, ifM-I has elected, or will elect, to incur defense costs without first attempting to seekindemnification from BP as contemplated by Articles 19.a@) and 19.6 of the BP/M-I Agreement,such an election constitutes a voluntary payrnent of these costs. The ACE Policy prohibits anyvoluntary assumption of an obligation by M-I, as well as any voluntary pa).rnents, if any, thathave been or may be made by M-I.

5.25 The ACE Policy contains a Condition which provides as follows:No insured will, except at that insured's own cost, voluntarilymake a payment, assume any obligation, or incur any expense,other than for first aid, without our consent.

Ex. A, ACE Policy at Condition 2.d., "Duties in the Event of Occurrence, Offense, Claim orSuit," Section IV - Commercial General Liability Conditions.



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5.26 ACE has not been asked to consent to, nor has it consented to, any assumption ofan obligation or to these payrnents; rather, ACE has encouraged M-I to tender these claims toBP. As a result of M-I's unilateral decision declining to tender these claims to BP, M-I hasviolated the Duties of the Insured Condition of the ACE Policy, and ACE has been prejudicedthereby. Therefore, M-I's actions have obviated coverage under the ACE Policy.D. The Pollution Exclusion

5.27 The ACE Policy also contains an exclusion entitled "Pollution Exclusion-Combination Exception Time Element and Named Perils" found in Endorsement # 14 (the"Pollution Exclusion").

5.28 The Pollution Exclusion provides that ACE has no duty to defend M-I against anyand all pollution claims arising out of the Deepwater Horizon Incident. Ex. A, Endorsement 14.

5.29 The last line of the Pollution Exclusion states: "[n]otwithstanding the foregoing,we shall have no duty to defend any 'suit', claim or proceeding arising out of or in any wayrelated to 'pollution'." Id. The Pollution Exclusion defines the terms "Pollution" and"Pollutants" as follows:

"Pollution" means the actual, alleged, or potential presence in orintroduction into the environment of any "pollutants", if such"pollutants" have, or are alleged to have, the effect of making theenvironment impure, harmful, or dangerous. Environment includesany air, land, structure or the air therein, watercourse or water,including underground water, and biota."Pollutants" means any solid, liquid, gaseous or thermal irritant orcontaminant, including smoke, vapor, soot, fumes, acids, alkalis,chemicals, bacteria, virus, and waste.

Id.



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5.30 Crude oil, methane, and other discharges from the Macondo Discovery Well inthe Mississippi Canyon Block 252 fall within the definition of "pollutants" under the PollutionExclusion.1d.

5.31 The discharges are solid, liquid, or gaseous, and the substances discharged areirritants or contaminants. The presence of these discharges in the "environment" - in the oceanand atmosphere and on the seabed - makes the "environment impure, harmful or dangerous." Id.

5.32 The fact that these pollutants were discharged into the environment and havemade the environment "impure, harmful, or dangerous" establishes that their presence in orintroduction into the environment constitutes "pollution." Id.

5.33 Consequently, ACE has no duty to defend any lawsuit, claim or proceedingarising out of or in any way related to the pollution from the Deepwater Horizon Incident.

5.34 In addition to the aforementioned language of the Pollution Exclusion, thatexclusion also contains the following provision:

Notwithstanding anything to the contrary in the foregoing paragraphsIthe exception] and regardless of the cause of the "pollution", this policyshall not apply to:

l. loss of, damage to or loss of use of property directly orindirectly resulting from subsurface operations of theinsured, andlor removal of, loss or damage to subsurfaceoil, gas or other substance. . ..(hereinafter, the "Subsurface Exclusion").

5.35 M-l's operations for the Macondo Discovery Well were subsurface in nature.Accordingly, no coverage is afforded under the ACE Policy for any claims against M-I arisingout of the Deepwater lF,lnzon Incident for loss of, damage to or loss of use of any propertyresulting from the subsurface operations of M-I, whether on or in proximity to the Deepwater

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Horizon vessel and Macondo Discovery Well or any property damage occurring away from theDeepwater Horizon vessel and Macondo Discovery Well.

5.36 Further, the ACE Policy will not apply to any claims against M-I arising out ofthe Deepw ater Hoizon Incident for any loss of, damage to or loss of use of property directly orindirectly resulting from removal of, loss or damage to subsurface oil, gas or other substance.

5.37 The ACE Policy will therefore not respond to any property damage claims againstM-I arising out of the Deepwater Horizon Incident. Any coverage for such claims is barred byapplication of the Pollution Exclusion.E. The Medical Payments Exclusion

5.38 The ACE Policy does not afford any coverage for Coverage C Medical Payments.See Ex. A at Endorsement #26, entitled, "Exclusion - Coverage C - Medical Payments." Thus,in the event that M-I tenders such claims to ACE under the ACE Policy, ACE has no obligationto pay these expenses under that policy.

VI. Dncr-IruroRY JUDGMENTThe allegations contained in Paragraphs 1.1-5.38 are incorporated by reference

herein.6.2 On June 8, 2010, M-I presented ACE with correspondence regarding claims or

suits against M-I. This correspondence presents an actual and existing controversy between ACEand M-I with respect to the existence and scope of any obligations of ACE in connection withM-I's liabilities emanating from the Deepwater Horizon Incident. The ACE Policy, however,does not respond to any claim or suit arising out of the Deepwater Horizon Incident.

6.3 Pursuant to the Declaratory Judgment Act,28 U.S.C. 5 2201-2202, ACE seeks ajudicial declaration of its rights and duties to M-I, if any, under the ACE Policy in connectionwith M-I's liabilities related to the Deepwater Horizon Incident. The Court's declaration will

6.1

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provide the parties with certainty with respect to their rights and obligations under the ACEpolicy, and therefore will serve the interests ofjustice.

6.4 ACE hereby seeks the following declarations:A. The Watercraft Exclusion contained in the ACE Policy operates toexclude coverage under the ACE Policy for all losses claimedagainst M-I arising out of the Deepwater Horizon Incident

because:1. BP and its affiliates are additional insureds underthe ACE Policy; and2. The Deepwater Horizon was a vessel, and it was

used, operated, and rented by a BP affiliate;B. The Professional Liability Exclusions contained in Endorsements#15 and#21 of the ACE Policy operate to exclude coverage for allclaims against M-I arising out of the Deepwater Horizon Incidentbecause, at all material times of the Deepwater Horizon lncident,M-I was engaged in performing professional services for BP.These professional services included, but were not limited to, thefollowing:

1. The preparing, approving, or failing to preparemaps, shop drawings, opinions, reports, surveys,field orders, change orders or drawings andspecifications; and

2. Supervisory, inspection, architectural or engineeringactivities;C. M-I has violated the "Duties in the Event of Occurrence, Offense,Claim or Suit" condition of the ACE Policy thereby excludingcoverage for all claims arising out of the Deepwater HorizonIncident because:

1. the Deepwater Horizon Incident involved a blowout, fire,explosion, or an uncontrolled well condition;

2. The BP/M-I Agreement provides for defense and indemnityin favor of M-I for claims arising out of;a. any loss or damage to any well or hole(including the cost to re-drill);

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b. blowout, fire, explosion, cratering, or anyuncontrolled well condition (including thecosts to control a wild well and the removalof debris); orc. damage to any reservoir, aquifer, geologicalformation or underground strata or the lossof oil or gas therefrom; and

3. M-I has elected not to tender any and all claims arisingout of the Deepwater Horizon Incident to BP;D. ACE has no duty to defend M-I against any and all pollutionclaims arising out of or in any way related to the DeepwaterHorizon Incident;E. The Pollution Exclusion contained in Endorsement #14 of the ACEPolicy operates to exclude coverage for all claims against M-Iarising out of the Deepwater Horizon Incident.F. ACE has no obligation to pay any expenses under Coverage C -Medical Palmrents of the ACE Policy;G. ACE has no duty to defend any suit, claim or proceeding arisingout of or in any way related to M-I's liabilities concerning theDeepwater Horizon Incident; andH. M-I is not entitled to coverage under the ACE Policy for any of

M-I's liabilities related to the Deepwater Horizon Incident.6.5 ACE pleads all other conditions, terms, limitations, definitions and exclusions

contained in the ACE Policy, which may be found to be applicable, and ACE specificallyreserves the right to amend this Complaint for Declaratory Judgment as additional andlor morespecific information becomes availabl e.

VII. ArroRNnys, Fnns1.1 Pursuant to Chapter 38 and Section 37.009 of the Texas Civil Practice and

Remedies Code and 28 U.S.C. 2202, ACE requests recovery of its attomeys' fees and costs.

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VIII. Pnrn8.1 ACE American Insurance Company prays for declaratory judgment in its favor

confirming that it has no duty to defend and no duty to indemnify M-I, L.L.C. under Policy No.HDO G 24940354 (the "ACE Policy") for any claims against M-I, L.L.C. arising out of theDeepwater Horizon Incident, and further prays for all such other and further relief as equity andthe justice of this cause may require and permit.

Respectfully submitted,BROWN SIMS, PCBy: /s/ Kenneth G. Engerrand

Kenneth G. EngerrandTexas Bar No. 06619500Southem District I.D. 207 8Charles Clayton ConradTexas Bar No. 24040721Southern District I.D. 37 220Michael A. VarnerTexas Bar No. 20499425Southern District I.D. 151111177 West Loop South, Tenth FloorHouston, Texas 71 027 -9007Tel:713.629-1580Fax: 773.629-5021

ATTORNEYS FOR PLAINTIFFACE AMERICAN INSURANCE COMPANY

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EXHIBIT APart 1 of 2

Case 4:10-cv-02931 Document 1-1 Filed in TXSD on 08/16/10 Page 1 of 57


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1#\ffiSM

Policy lD: HDOG24940354Effective Date: 0410112010



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POLICY IDENTIFICATIONDECLARATIONS - GENERAL LIABILITY POLICY Page 4 e24940354FORMSANDENDORSEMENTS (Pase 1 of 3)

FORMS AND ENDORSEMENTS ATTACHED TO THIS POLICY AT INCEPTION

Ar,L20887rLPo010104rL00171198cco0011207ATLAXOTAJ,I,22368AIL5X45tI,2u78bAII5S54AI,L4Y3OdAf.L11559d

LD6X26LD2G44aLD2t732LDg863ALD3R16LD8R38LD4S35LD15284IjDz0287LDsT98LD12988arDo846

SCHEDULE OF CO\/ERAGE FORMSACE Producer Compensaion Practices & PoliciesU.S. Treasury Department's Office of Foreign AssetsControl ("OFAC") Advisory Notice to PolicyholdersConrnon Policy ConditionsComnercial General Liability Coverage FormAn Important Notice To Our Alaska PolicyholdersColorado Fraud StatementQuestions About Your Insurance?Notice To AII Oklahoma PolicyholdersNotice To Pennsylvania Property and Casualty fnsuranceInformation and Complaints (TX) :.:Risk Control Services for Exas':1,:Policyholders':SCHEDUTE OF FORTS ArD ENDoaSP'EDITS

:::.: : ::::: .:::Description .'Schedule of Named Insureds'Reimbursement f Deductible EndorsementAdditional Inquied - Employees Fellow Employees - BodilyInjury onJ-y:, , ,Alienated:, PremisesAmendment:: :of ConditionsConstruction Project(s) General Aggregate I,imitEmployee Benefits Lability EndorsementExcl.usion - AsbestosExclusion Extremely Lor* Frequency Electromagnetic Fields(ELF-EMr)Exclusion - LeadI'IBE ExclusionNon-Contributory Endorsement For Additional InsuredsNonowned fatercraft ExceptionPoll-ution Exclusion - Combination Exception Time Elementand Named PerilsProfessional Liability Exclusion Endorsement

the coverage form(s) and endorsements, if any, listed above and attached, completes this policy.AUTHORIZED AGENT:

LD-2448a (Ed. 3/87) Printed in U.S.A. AA 067266a



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SCHEDULE OF FORMS AID ENDORSEMENTS

Namedlnsured M-I, L.L.C. Endorsement Number(Page 2 of 3)Policy SymbolHDO Policy Numbere24940354 Policy Period04/OL/20L0 to oAloLl2oLL Effective Date of Endorsemento4/oL/20LOIssued By (Name oflnsurance Company)ACE American Insurance Companylnsert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

Endt. No. Form No. Description16. LD2l733 Radioactive Matter ExclusionL7. 4IL18057- Notification of Premj-um Adjustment030518. CG2O26O7O4 Additional Insured - Designated Person or Organizaior19. CG20100704 Addiional Insured - Owners, Lessees or Contractors -Scheduled Person or Organization20. CG20150704 Additional Insured - Vendors21. CG21700108 Cap on Losses From Certified Acts of: Temorism22- CG24L7LOO1 Contractual Liability - Railroads :23- CG'O224LO93 Earlier Notice Of Cancellaion Provided By Us24- C2L47L2O7 Enplo]ment-Related Practices Exclusion25. Cc21?30108 Exclusion of Certified Acts of Terrorism26. CG21351001 Exclusion - Coverage C - Medica1 Pa!'nents27. CG2243O798 Exclusion - Engineers, Architects or Surveyors ProfessionalLiability28. CG2233O798 Exclusion - Testing or Consul-ting E*ors and Omissions29. C2L67L2O4 Eungi or Bacteria Exlusion30. CG2274LOO1 Limited Contractul LiabiJ-ity Coverage For Personal andAdvertising Injury31. CG21960305 Silica or Silica-Related Dust Exclusion32. CG24040509 ?laiver of Transfer of Rights of Recovery gainst Others ToUs33. I,O985O1O8 Discloure Pursuant to Terrorism Risk Insurance Act34. 4LL21101 Tradr.or Ecnomic Sanctions Endorsement35. It00210908 Nuc-lear:Energy Liability Exclusion Endorsement (Broad Form)36. CG21300509 Alaska Recording and Distribution of Material or Informationin Violation of Law Exclusion37. Cc26701001 Alaska Changes - Definition of Metatag38. Cc26970306 A1aska Var tiabiliy Exclusion39. IL01210603 Alaska Changes - Atorney's Fees40. IL02800908 Alaska Changes - Cancellaion and Nonrenewal4t. CG32340105 California Changes42. IL02700908 California Changes - Cancellation and Nonrenewal43- IL02280907 Colorado Changes - Cancellation and Nonrenewal44. TI-02620908 Georgia Changes - Cancellatj-on and Nonrenewal45. CG01091185 Kansas And Oklahoma Changes - Transfer of Rights46. IL02610907 Kansas Changes - Cancellation And Nonrenewal

Authorizedcc-lE15 Ptd. h u.s.A.



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Namedlnsured M-I, L.L.C. Endorsement Number(Page 3 of 3)Policy Symbol I Policy NumberHDO I eZgOgSA Policy Periodo4/0t/20L0 to O4/0L/2OLL Effective Date of Endorsement04/0L/20L0Issued By (Name oflnsurance Company)CE American Insurance Companyis to be when this

SCITEDULE OF FORMS AI{D ENDORSEMENTS

policy completed only when this endorsement is issued subsequent to the preparation of the policyEndt. No. Form No. Description

47. IL02630908 Kentucky Changes - Cancellation and Nonrenevral48. Cc01181204 Louisiana Changes - Legal_ Action Against. Us49. Cc01250303 Louisiana Changes - Insuring greernent50. CG26841204 Louisiana Changes - Transfer of Rights of Recovery AgainstOthers To Us Condition51. II,O27709OB Loui-siana Changes - Cancellation and Nonrenewal52. CG01340803 Missouri Chanfes - Pollution Exclusion '::, ,,,,',,53. Cc26250405 Missouri Changes - Guaranty Association54. CG265OL298 Missouri Changes - Medical payments::,,.,.55. IL02740908 Missouri Changes - Cancellation,,nd:Nnrenewal56. IL02820908 Mississippi Changes - Cancellation and Nonrenewal57. Cc26611001 Montana Changes - Medical palznents58. IL016?0908 Montana Changes - Conformity fith Statutes59. IL02430907 Montana Changes60. ILO29809OB New Mexico Changes - Cancellation and Nonrenewal61. IL01150110 Nevada Changes - Donestic,partnership62. IL02510907 Nevada Changes -:CaneeLLation and Nonrenetral63. CG01091185 Kansas And Oklahoma Changes - Transfer of Rights64. It02360907 Oklahoma Changes - Cancellation and. Nonreneral65. TLO2460907 PennsyJ-vania Changes - Cancellation and Nonrene!,ral66. CG01030606 Texas Changes67. CC1K11e Signatures

AuthorizedCC-lEl5 Ptd. In U.S.A.



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ACE fNA Privacy StaementThe ACE INA group of companies strongly believes in maintaining the privacy of informationwe collect about individuals. We want you to understand how and why we use and disclosethe collected information. The following provides details of our practices and procedures forprotecting the security of nonpublic personal information that we have collected aboutindividuals. This privacy statement applies to policies underwritten by the ACE INA groupmember companies listed below.

INFORMATION WE COLLECTThe information we collect will vary depending on the type of product or service individualsseek or purchase, and may include: ' ,",i

. lnformation we receive from individuals, such as their name,i "address, age, phonenumber, social security number, assets, income, or beneficiaries;. lnformation about individuals' transactions with us, with our affiliates, or with others,such as policy coverage, premium, payment history, motor vehicle records; and. lnformation we receive from a consumer reporting agency, such as a credit history.INFORMATION WE DISCLOSE

We do not disclose any personal information::to.:anyone except as is necessary in order toprovide our products or services to a person, or otherwise as we are required or permitted bylaw.We may disclose any of the information that we collect to companies that perform marketingservices on our behalf or to other. firancial institutions with whom we have joint marketingagreements.

THE RIGHT TO VERTFY THE ACCURACY OF TNFORMATTON WE COLLECT,. ''t ''Keeping information accurate and up to date is important to us. lndividuals may see andcorrect their personal information that we collect except for information relating to a claim or acriminal or civil proceeding.

CONFIDENTIALITY AND SECURITYWe restrict access to personal information to our employees, our affiliates' employees, orothers who need to know that information to service the account or in the course of conductingour normal business operations. We maintain physical, electronic, and procedural safeguardsto protect personal information.Pr-19668 (02/06) Page 1 of 2



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CONTACTING USlf you have any questions about this privacy statement or would like to learn more about howwe protect privacy, please write to us at ACE INA Customer Services, P.O. Box 1000, 436Walnut Street, WA04F, Philadelphia, PA 19106. Please include the policy number on anycorrespondence with us.ACE American lnsurance CompanyACE American Lloyds lnsurance CompanyACE Fire Underwriters lnsurance CompanyACE lndemnity lnsurance CompanyACE lnsurance Company of lllinoisACE lnsurance Company of Ohio ,aa* ,ACE lnsurance Company of the MidwestACE Property and Casualty lnsurance CompanyAtlantic Employers lnsurance CompanyBankers Standard Fire and Marine CompanyBankers Standard lnsurance CompanyCentury lndemnity Companylllinois Union lnsurance Companylndemnity lnsurance Company of North Americalnsurance Company of North AmericaPacific Employers lnsurance CompanyWestchester Fire lnsurance CompanyWestchester Surplus Lines lnsurance CompanyESIS, lnc.

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General Liability Policy - Declarations

NAMED INSURED AND ADDRESSM-r, L.L.C.5950 North Couse DriveHouston, lX 77072

ACE USA

POLICY IDENTIFICATIONe24940354E

n Bankers Standard lnsurance Company436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 19106-3703Century lndemnity Company436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 1910G3703ACE Fire Underwriters lnsurance Company436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 1 91 06-3703ACE American lnsurance Company436 Walnut Street, PO Box 1000

n ACE Property and Casualty lnsurance Company436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 1 910G3703lndemnity lnsurance Company of North America436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 191 0G3703lnsurance Company of North America436 Walnut Street, PO Box 1000Philadelphia, Pennsylvania 1 91 06-3703Pacific Employers lnsurance Company436 Walnut Street, PO Box 1000

tr nn nx !

ia. Pennsvlvania 191 06-3703 ia, Pennsvlvania I 9106-3703

POLICY ISNAMED INSURED ISBUSINESS OF INSUREDPOLICY PERIOD

RenewalLimited Liability CorporationMiningFROM o4/oL/20LO

OF HDo G2375LLL2

TO 4/0L/2OLL12:01 A.M.,STANDARD TIME AT YOUR MAILING ADDRESS SHOWN ABOVE.PREMIUM PAYMENT CONDITIONSAUDIT PERIOD ' **,

:PAYMENTFREQUENCY,, *1,,:PAYMENT SCHEDULE : ***Includes - KY Dornestic, Foreign and Alien Insurers $312;liMnsurance Premium $11

TOTAL ADVANCE PREMIUM: $ *403,526PREMIUMS RESULTING FROM AUDIT ARE NOT INCLUDED IN THE ABOVE.

LD-BE0Ob (8/96) Printed in the U.S.A.



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POLICY IDENTIFDECLARATIONS - GENERAL LIABILITY POLICY Page 2 e24940354COVERAGES AND LIMITS OF INSURANCE

ln return for the payment of premium indicated above, we agree with you to provide the followingcoverage(s) at the limits shown, subject to all of the terms and conditions of this policy.Coverage Form: Limits of lnsuranceCOMMERCIAL GENERAL LIABILIryEach Occurrence Limit $ 2 , 000 ,000Damage to Premises Rented to You Limit g 2 , 000 ,000MedicalExpenseLimit(anyoneperSonororganization)$Personal & Advertising lnjury Limit $ 2 ,000 ,000General Aggregate Limit (other than Products/ $ 25,000,000Completed Operations)Products/Completed Operations Aggregate Limit $ 4,000, 000 ',,",,

$$$

$$SCHEDULE OF LOCATIONS

LOCATION NUMBER AND ADDRESS

LD-2F52b (Ed.10/01) Printed in U.S.A. 44067274a



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POLICY IDENTIFICATIONDECLARATIONS - GENERAL LIABILITY POLICY Page 3 e24940354SCHEDULE OF COVERAGES

COVERAGE PART:Location Class Code/ PremiumNumber Coverage Classification Description Basis Exposure Rate Premium10050All AII Mining ** ** $ ** $ 403,576**Refer to the Noice of Election$ $

$ $

$ $

$ $

$ $

$ $

$ $

TOTAL PREMIUM FOR THIS COVERI\GE PART g 403,576When used as a premium basis the following code definitions apply:A - Area - Per 1,000 square feet of areaC - Total Cost - per $1,000 of total costD- lfAnyE - Admissions - per 1,000 admissionsF - Flat ChargeJ - Total Operating Expenditures - per $1,000 of Expenditures

O - OtherP - Payroll - per $1,000 of payrollS - Gross Sales - per $1,000 of Gross SalesU - UnitsX - Each

LD-2F51a (Ed.3/87) Printed in U.S.A. 44067271a



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POLICY NUMBER: HDO G24940354

ACE Producer CompensatonPractices & PoliciesACE believes that policyholders should have access to information about ACE's practices and policies related tothe payment of compensation to brokers and independent agents. You can obtain that information by accessingour website at http://www.aceoroducercompensation.com or by calling the following toll-free telephone number:1-866-512-2862.

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lL P 001 01 04U.S. TREASURY DEPARTMENT'S OFFICE OF FOREIGN

ASSETS CONTROL ("OFAC")ADVISORY NOTIGE TO POLICYHOLDERSNo coverage is provided by this Policyholder Notice nor can it be construed to replace any provisions of yourpolicy. You should read your policy and review your Declarations page for complete information on the cover-ages you are providedThis Notice provides information concerning possible impact on your insurance coverage due to directives issuedby OFAC. Please read this Notice carefully.The Office of Foreign Assets Control (OFAC) administers and enforces sanctions policy, based on Presidentialdeclarations of "national emergency". OFAC has identified and listed numerous:. Foreign agents;

o Front organizations;o Terrorists, '"o'o Terrorist organizations; ando Narcotics traffickers;as "Specially Designated Nationals and Blocked Persons". This list can be located on the United States Treas-ury's web site - http//uaaUfteaS.gOv/ofaeln accordance with OFAC regulations, if it is determined that you or any other insured, or any person or entityclaiming the benefits of this insurance has violated U.S. sanctions law or is a Specially Designated National andBlocked Person, as identified by OFAC, this insurance will be considered a blocked or frozen contract and allprovisions of this insurance are immediately subject to OFAC. When an insurance policy is considered to besuch a blocked or frozen contract, no payments nor premium refunds may be made without authorization fromOFAC. Other limitations on the premiums and payments also apply.

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COMMON POLICY CONDITIONSAll Coverage Parts included in this policy are subject to the following conditions.A. CancellationL The first Named lnsured shown in theDeclarations may cancel this policy by mailingor delivering to us advance written notice ofcancellation.2. We may cancel this policy by mailing ordelivering to the first Named lnsured writtennotice of cancellation at least:a. 10 days before the effective date ofcancellation if we cancel for nonpayment ofpremium; orb. 30 days before the effective date ofcancellation if we cancel for any otherreason.3. We will mail or deliver our notice to the firstNamed lnsured's last mailing address known tous.4. Notice of cancellation will state the effectivedate of cancellation. The policy period will endon that date.5. lf this policy is cancelled, we will send the firstNamed lnsured any premium refund due. lf wecancel, the refund will be pro rata. lf the firstNamed lnsured cancels, the refund may beless than pro rata. The cancellation will beeffective even if we have not made or offered

a refund.6. lf notice is mailed, proof of mailing will besufficient proof of notice.B. ChangesThis policy contains all the agreements betweenyou and us concerning the insurance afforded.The first Named lnsured shown in theDeclarations is authorized to make changes in theterms of this policy with our consent. This policy'sterms can be amended or waived only byendorsement issued by us and made a part of thispolicy.C. Examination Of Your Books And RecordsWe may examine and audit your books andrecords as they relate to this policy at any timeduring the policy period and up to three yearsafterward.D. lnspections And Surveys1. We have the right to:a. Make inspections and surveys at any time;


E.

F.

lL 00 17 11 98

b. Give you reports on the conditions we find;andc. Recommend changes.2. We are not obligated to make any inspections,surveys, reports or recommendations and anysuch actions we do undertake relate only toinsurability and the premiums to be charged.We do not make safety inspections. We do notundertake to perform the duty of any person ororganization to provide for the health or safetyof workers or the public. And we do not warrantthat conditions:a. Are safe or healthful; orb. Comply wilh',laws, regulations, codes orstandards.3. Paragraphs 1. and 2. of this condition applynot only to us,:bt also to any rating, advisory,rate service or similar organization whichmakes inSrance nspections, surveys, reports. or recommendations.4'., Paragraph 2. of this condition does not apply:, to any inspections, surveys, reports or' recommendations we may make relative tocertification, under state or municipal statutes,ordinances or regulations, of boilers, pressurevessels or elevators.PremiumsThe first Named lnsured shown in theDeclarations:1. ls responsible for the payment of all premiums;and2. Will be the payee for any return premiums wepay.Transfer Of Your Rights And Duties UnderThis PolicyYour rights and duties under this policy may notbe transferred without our written consent exceptin the case of death of an individual namedinsured.lf you die, your rights and duties will betransferred to your legal representative but onlywhile acting within the scope of duties as yourlegal representative. Until your legalrepresentative is appointed, anyone having propertemporary custody of your property will have yourrights and duties but only with respect to thatproperty.

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COMMERCIAL GENERAL LIABILITY COVERAGE FORMVarious provisions in this policy restrict coverage.Read the entire policy carefully to determine rights,duties and what is and is not covered.Throughout this policy the words "you" and "yollr"refer to the Named lnsured shown in the Declarations,and any other person or organization qualifying as aNamed lnsured under this policy. The words "we","us" and "our" refer to the company providing thisinsurance.The word "insured" means any person or organizationqualifying as such under Section ll - Who ls An ln-sured.Other words and phrases that appear in quotationmarks have special meaning. Refer to Section V -Definitions.SECTION I- COVERAGESCOVERAGE A BODILY INJURY AND PROPERTYDAMAGE LIABILITYL lnsuring Agreementa. We will pay those sums that the insured be-comes legally obligated to pay as damagesbecause of "bodily injury" or "property damage"to which this insurance applies. We will havethe right and duty to defend the insured against

any "suit" seeking those damages. However,we will have no duty to defend the insuredagainst any "suit" seeking damages for "bodilyinjury" or "property damage" to which this in-surance does not apply. We may, at our discre-tion, investigate any "occurrenc-'! and settleany claim or "suit" that may fesult. But:(1) The amount we will pay :for damages islimited as described in Section lll - LimitsOf lnsurance' and , '(2) Our right and duty to defend ends when wehave used up the applicable limit of insur-ance in the payment of judgments or set-tlements under Coverages A or B or medi-cal expenses under Coverage G.No other obligation or liability to pay sums orperform acts or services is covered unless ex-plicitly provided for under Supplementary Pay-ments - Coverages A and B.

POLICY NUMBER: HDO G24940354COMMERCIAL GENERAL LIABILITYcG 00 01 12 07

b. This insurance applies to "bodily injury" and"property damage" only if:(1) The "bodily injury" or "property damage" iscaused by an "occurrence" that takes placein the "coverage territory";(2) The "bodily injury" or "property damage"occurs during the policy period; and(3) Prior to the policy period, no insured listedunder Paragraph 1. of Section ll - Who lsAn lnsured and no "employee" authorizedby you to give or ieceive notice of an "oc-currence" or clim, knew that the "bodily in-jury" or'property damage" had occurred, inwhole or in part.,lf such a listed insured orauthorized "employee" knew, prior to thepolicy period, that the "bodily injury" or'lproperty'dmage" occurred, then any con-tinuation, change or resumption of such, "bodily ihjury" or "property damage" duringor after the policy period will be deemed tohave been known prior to the policy period.c. "Bodily injury" or "property damage" which, occurs during the policy period and was not,prior to the policy period, known to have oc-curred by any insured listed under Paragraph1. of Section ll - Who ls An lnsured or any"employee" authorized by you to give or re-ceive notice of an "occurrence" or claim, in-cludes any continuation, change or resumptionof that "bodily injury" or "property damage" af-ter the end of the policy period.d. "Bodily injury" or "property damage" will bedeemed to have been known to have occurredat the earliest time when any insured listed un-der Paragraph 1. of Section ll -Who ls An ln-sured or any "employee" authorized by you togive or receive notice of an "occurrence" orclaim:(1) Reports all, or any part, of the "bodily injury"or "property damage" to us or any other in-surer;(2) Receives a written or verbal demand orclaim for damages because of the "bodilyinjury" or "property damage"; or(3) Becomes aware by any other means that"bodily injury" or "property damage" has oc-curred or has begun to occur.

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e. Damages because of "bodily injury" includedamages claimed by any person or organiza-tion for care, loss of services or death resultingat any time from the "bodily injury".2. ExclusionsThis insurance does not apply to:a. Expected Or lntended lnjury"Bodily injury" or "property damage" expectedor intended from the standpoint of the insured.This exclusion does not apply to "bodily injury"resulting from the use of reasonable force toprotect persons or property.b. Gontractual Liability"Bodily injury" or "property damage" for whichthe insured is obligated to pay damages byreason of the assumption of liability in a con-tract or agreement. This exclusion does notapply to liability for damages:(1) That the insured would have in the absenceof the contract or agreement; or(2) Assumed in a contract or agreement that isan "insured contract", provided the "bodilyinjury" or "property damage" occurs subse-quent to the execution of the contract oragreement. Solely for the purposes of liabil-ity assumed in an "insured contract", rea-sonable attorney fees and necessary litiga-tion expenses incurred by or for a partyother than an insured are deemed to bedamages because of "bodily injury" o"property damage", provided :(a) Liability to such party for, or for the cost

of, that party's defense has,,,'also beenassumed in the same "insured contract";and(b) Such attorney fees and ,litigation ex-penses are for defense. of that partyagainst a civil or alternative disputeresolution proceeding in which damagesto which this insurance applies are al-leged.

c. Liquor Liability"Bodily injury" or "property damage" for whichany insured may be held liable by reason of:(1) Causing or contributing to the intoxication ofany person;(2) The furnishing of alcoholic beverages to aperson under the legal drinking age or un-der the influence of alcohol; or(3) Any statute, ordinance or regulation relatingto the sale, gift, distribution or use of alco-holic beverages.This exclusion applies only if you are in thebusiness of manufacturing, distributing, selling,serving or furnishing alcoholic beverages.d. Workers'Compensation And Similar LawsAny obligation of the insured under a workers'compensation, disability benefits or unem-ployment compensation law or any similar law.e. Employer's Liability"Bodily injury" to:(1) "employ' of the insured arising out ofhd in the course of:(a) Emlyment by the insured; or,, (b) Performing duties related to the conduct' ,:., .' of the insured's business; or(2) The spouse, child, parent, brother or sister' ,1," of that "employee" as a consequence ofParagraph (1) above.This exclusion applies whether the insuredmay be liable as an employer or in any othercapacity and to any obligation to share dam-ages with or repay someone else who mustpay damages because of the injury.This exclusion does not apply to liability as-sumed by the insured under an "insured con-tract".

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f. Pollution(1) "Bodily injury" or "property damage" arisingout of the actual, alleged or threatened dis-charge, dispersal, seepage, migraton, re-lease or escape of "pollutants":(a) At or from any premises, site or locationwhich is or was at any time owned oroccupied by, or rented or loaned to, anyinsured. However, this subparagraphdoes not apply to:(i) "Bodily injury" if sustained within abuilding and caused by smoke,fumes, vapor or soot produced by ororiginating from equipment that isused to heat, cool or dehumidify thebuilding, or equipment that is used toheat water for personal use, by thebuilding's occupants or their guests;(ii) "Bodily injury" or "property damage"for which you may be held liable, ifyou are a contractor and the owneror lessee of such premises, site orlocation has been added to your pol-icy as an additional insured with re-spect to your ongoing operationsperformed for that additional insuredat that premises, site or location andsuch premises, site or location is notand never was owned or occupiedby, or rented or loaned to, any in-sured, other than that additional in-sured; or(iii) "Bodily injury" or "property damage"arising out of heat, smoke or fumesfrom a "hostile fire";(b) At or from any premises, sit or locationwhich is or was at any time used by orfor any insured or others for the han-dling, storage, disposal; processing ortreatment oJ waste;(c) Which are:,or were at any time trans-ported, handled, stored, treated, dis-posed of, or processed as waste by orfor:(i) Any insured; or(ii) Any person or organization for whomyou may be legally responsible; or

(d) At or from any premises, site or locationon which any insured or any contractorsor subcontractors working directly or in-directly on any insured's behalf are per-forming operations if the "pollutants" arebrought on or to the premises, site or lo-cation in connection with such opera-tions by such insured, contractor or sub-contractor. However, this subparagraphdoes not apply to:(i) "Bodily injury" or "property damage"arising out of the escape of fuels, lu-bricants or other operating fluidswhich are needed to perform thenormal electrical, hydraulic or me-chanical functions necessary for theoperation of "mobile equipment" orits parts, if such fuels, lubricants orother operating fluids escape from avehicle part designed to hold, storeor receive them. This exception doesnot pply if: the "bodily injury" or"pro-perty damage" arises out of theintentional discharge, dispersal or re-lease of the fuels,lubricants or otheroprating fluids, or if such fuels, lu-bricants or other operating fluids arebrought on or to the premises, site orlocation with the intent that they bedischarged, dispersed or released aspart of the operations being per-formed by such insured, contractoror subcontractor;(ii) "Bodily injury" or "property damage"sustained within a buildng andcaused by the release of gases,fumes or vapors from materialsbrought into that building in connec-tion with operations being performedby you or on your behalf by a con-tractor or subcontractor; or(iii) "Bodily injury" or "property damage"arising out of heat, smoke or fumesfrom a "hostile fire".(e) At or from any premises, site or locationon which any insured or any contractorsor subcontractors working directly or in-directly on any insured's behalf are per-forming operations if the operations areto test for, monitor, clean up, remove,contain, treat, detoxify or neutralize, orin any way respond to, or assess the ef-fects of, "pollutants".

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(2) Any loss, cost or expense arising out ofany:(a) Request, demand, order or statutory orregulatory requirement that any insuredor others test for, monitor, clean up, re-move, contain, treat, detoxify or neutral-ize, or in any way respond to, or assessthe effects of, "pollutants"; or(b) Claim or "suit" by or on behalf of a gov-ernmental authority for damages be-cause of testing for, monitoring, cleaningup, removing, containing, treating, de-toxifying or neutralizing, or in any wayresponding to, or assessing the effectsof, "pollutants".However, this paragraph does not apply toliability for damages because of "propertydamage" that the insured would have in theabsence of such request, demand, order orstatutory or regulatory requirement, or such

claim or "suit" by or on behalf of a govern-mental authority.g. Aircraft, Auto Or Watercraft"Bodily injury" or "property damage" arising outof the ownership, maintenance, use or en-trustment to others of any aircraft, "auto" or wa-tercraft owned or operated by or rented orloaned to any insured. Use includes operationand "loading or unloading".This exclusion applies even if the claimsagainst any insured allege negligence or otherwrongdoing in the supervision, hiring, employ-ment, training or monitoring of others by thatinsured, if the "occurrence" which caused the"bodily injury" or "property damage" involvedthe ownership, maintenance, use or entrust-ment to others of any aircraft, "auto" or water-craft that is owned or operated by or:rented orloaned to any insured. :This exclusion does not apply to:(1) A watercraft while ashore on premises youown or rent;(2) A watercraft you do not own that is:(a) Less than 26 feet long; and(b) Not being used to carry persons orproperty for a charge;(3) Parking an "auto" on, or on the ways nextto, premises you own or rent, provided the"auto" is not owned by or rented or loanedto you or the insured;(4) Liability assumed under any "insured con-tract" for the ownership, maintenance oruse of aircraft or watercraft; or

(5) "Bodily injury" or "property damage" arisingout of:(a) The operation of machinery or equip-ment that is attached to, or part of, aland vehicle that would qualify under thedefinition of "mobile equipment" if it werenot subject to a compulsory or financialresponsibility law or other motor vehicleinsurance law in the state where it is li-censed or principally garaged; or(b) the operation of any of the machinery orequipment listed in Paragraph .(21 orf.(3) of the definition of "mobile equip-ment".h. Mobile Equipment"Bodily injury" or "property damage" arising outof:(1) The transportation of "mobile equipment" byan "auto" owned or operated by or rented or

loaned to qny insured; or(2) The use f "mobil equipment" in, or whilein.ictice for, or while being prepared for,any prearranged racing, speed, demolition,or:,s.tunting activity.i. War ":"Bodily injury" or "property damage", howevercaused, arising, directly or indirectly, out of:(l) War, including undeclared or civil war;, (2) Warlike action by a military force, includingaction in hindering or defending against anactual or expected attack, by any govern-ment, sovereign or other authority usingmilitary personnel or other agents; or(3) lnsurrection, rebellion, revolution, usurpedpower, or action taken by governmental au-thori in hindering or defending against anyof these.j. Damage To Property"Property damage" to:(1) Property you own, rent, or occupy, includingany costs or expenses incurred by you, orany other person, organization or entity, forrepar, replacement, enhancement, restora-tion or maintenance of such property forany reason, including prevention of injury toa person or damage to another's property;(2) Premises you sell, give away or abandon, ifthe "property damage" arises out of anypart of those premises;(3) Property loaned to you;(4) Personal property in the care, custody orcontrol of the insured;

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(5) That particular part of real property onwhich you or any contractors or subcontrac-tors working directly or indirectly on yourbehalf are performing operations, if the"property damage" arises out of those op-erations; or(6) That particular part of any property thatmust be restored, repaired or replaced be-cause "your work" was incorrectly per-formed on it.Paragraphs (1), (3) and (4) of this exclusion donot apply to "property damage" (other thandamage by fire)to premises, including the con-tents of such premises, rented to you for a pe-riod of 7 or fewer consecutive days. A separatelimit of insurance applies to Damage To Prem-ises Rented To You as described in Section lll- Limits Of lnsurance.Paragraph (2) of this exclusion does not applyif the premises are "your work" and were neveroccupied, rented or held for rental by you.Paragraphs (3), (4), (5) and (6) of this exclu-sion do not apply to liability assumed under asidetrack agreement.Paragraph (6) of this exclusion does not applyto "property damage" included in the "products-completed operations hazard" .k. Damage To Your Product"Propefty damage" to "your product" arising outof it or any part of it.l. Damage To Your Work"Property damage" to "your work" arising out ofit or any part of it and included in the "products-completed operations hazard" .This exclusion does not apply if the damagedwork or the work out of which:,.the damagearises was performed on your behalf by a sub-contractor.m. Damage To lmpaired Proerty Or PropertyNot Physically lnjured"Property damage" to "impaired property" orproperty that has not been physically injured,arising out of:(1) A defect, deficency, inadequacy or danger-ous condition in "your product" or "your

work"; or(2) A delay or failure by you or anyone actingon your behalf to perform a contract oragreement in accordance with its terms.

This exclusion does not apply to the loss of useof other property arising out of sudden and ac-cidental physical injury to "your product" or"your work" after it has been put to its intendeduse.n. Recall Of Products, Work Or lmpairedPropertyDamages claimed for any loss, cost or ex-pense incurred by you or others for the loss ofuse, withdrawal, recall, inspection, repair, re-placement, adjustment, removal or disposal of:(1) "Your product";(2) "Your work"; or(3) "lmpaired property";if such product, work, or property is withdrawnor recalled from the market or from use by anyperson or organization because of a known orsuspected defect, deflcincy, inadequacy ordangerous condition in it,o. Personal And Advertising lnjury"Bodily injurytl arising ot of "personal and ad-vertising injury".p. Electronic DataDamages arising out of the loss of, loss of useof, damage to, conuption of, inability to access,or inability to manipulate electronic data.' As used in this exclusion, electronic datameans information, facts or programs stored asor on, created or used on, or transmitted to orfrom computer software, including systems andapplications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processingdevices or any other media which are usedwith electronically controlled equipment.q. Distribution Of Material ln Violation OfStatutes"Bodily injury" or "property damage" arising di-rectly or indirectly out of any action or omissionthat violates or is alleged to violate:(1) The Telephone Consumer Protection Act(TCPA), including any amendment of oraddition to such law; or(2) The CAN-SPAM Act of 2003, including anyamendment of or addition to such law; or

(3) Any statute, ordinance or regulation, otherthan the TCPA or CAN-SPAM Act of 2003,that prohibits or limits the sending, transmit-ting, communicating or distribution of mate-rial or information.

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Exclusions c. through n. do not apply to damageby fire to premises while rented to you or tempo-rarily occupied by you with permission of theowner. A separate limit of insurance applies to thiscoverage as described in Section lll - Limits Oflnsurance.COVERAGE B PERSONAL AND ADVERTISINGINJURY LIABILITYL lnsuring Agreementa. We will pay those sums that the nsured be-comes legally obligated to pay as damagesbecause of "personal and advertising injury" towhich this insurance applies. We will have theright and duty to defend the insured againstany "suit" seeking those damages. However,we will have no duty to defend the insuredagainst any "suit" seeking damages for "per-sonal and advertising injury" to which this in-surance does not apply. We may, at our discre-tion, investigate any offense and settle anyclaim or "suit" that may result. But:(1) The amount we will pay for damages islimited as described in Section lll - LimitsOf lnsurance; and(2) Our right and duty to defend end when wehave used up the applicable limit of insur-ance in the payment of judgments or set-tlements under Coverages A or B or medi-cal expenses under Coverage G.No other obligation or liability to pay sums orperform acts or services is covered unless ex-plicitly provided for under Supplementary Pay-ments - Coverages A and B.

b. This insurance applies to "personal and adver-tising injury" caused by an offense arising outof your business but only if th offense wascommitted in the "coverage territory!'during thepolicy period2. ExclusionsThis insurance does not apply to:a. Knowing Violation Of Rights Of Another"Personal and advertising injury" caused by orat the direction of the insured with the knowl-edge that the act would violate the rights of an-other and would inflict "personal and advertis-ing injury".b. Material Published With Knowledge OfFalsity"Personal and advertising injury" arising out oforal or written publication of material, if done byor at the direction of the insured with knowl-edge of its falsity.

c. Material Published PriorTo Policy Period"Personal and advertising injury" arising out oforal or written publication of material whosefirst publication took place before the beginningof the policy period.d. CriminalActs"Personal and advertising injury" arising out ofa criminal act committed by or at the directionof the insured.e. Gontractual Liability"Personal and adveising injury" for which theinsured has assumed liability in a contract oragreement. This exclusion does not apply to li-ability for damages that the insured would havein the absence of the contract or agreement.f. Breach Of Contract"Personal and advertising injury" arising out ofa breach of contiact, except an implied con-tract to use another's advertising idea in your"advertisement'i.g. Quality Or Performance Of Goods - FailureTo Conform To',:Statements"Personal and advertising injury" arising out ofthe failui of goods, products or services to:conform with any statement of quality or per-formance made in your "advertisement".h. Wrng Description Of Prices"Personal and advertising injury" arising out ofthe wrong description of the price of goods,products or services stated in your "advertise-ment".

i. lnfringement Of Gopyright, Patent,Trademark Or Trade Secret"Personal and advertising injury" arising out ofthe infringement of copyright, patent, trade-mark, trade secret or other intellectual properlyrights. Under this exclusion, such other intellec-tual property rights do not include the use ofanother's advertising idea in your "advertise-mgnt".However, this exclusion does not apply to in-fringement, in your "advertisement", of copy-right, trade dress or slogan.j. lnsureds ln Media And lnternetTypeBusinesses"Personal and advertising injury" committed byan insured whose business is:(1) Advertising, broadcasting, publishing ortelecasting;(2) Designing or determining content of web-sites for others; or

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(3) An lnternet search, access, content orservice provider.However, this exclusion does not apply toParagraphs 14.a., b. and c. of "personal andadvertising injury" under the Definitions Sec-tion.For the purposes of this exclusion, the placingof frames, borders or links, or advertising, foryou or others anywhere on the lnternet, is notby itself, considered the business of advertis-ing, broadcasting, publishing or telecasting.k. Electronic Chatrooms Or Bulletin Boards"Personal and advertising injury" arising out ofan electronic chatroom or bulletin board the in-sured hosts, owns, or over which the insuredexercises control.l. Unauthorized Use Of Another's Name OrProduct"Personal and advertising injury" arising out ofthe unauthorized use of another's name orproduct in your e-mail address, domain nameor metatag, or any other similar tactics to mis-lead another's potential customers.m. Pollution"Personal and advertising injury" arising out ofthe actual, alleged or threatened discharge,dispersal, seepage, migration, release or es-cape of "pollutants" at any time.n. Pollution-RelatedAny loss, cost or expense arising out of any:(1) Request, demand, order or statutory orregulatory requirement that any insured orothers test for, monitor, clean up; remve,contain, treat, detoxify or neutralize,,or inany way respond to, or assess the effectsof, "pollutants"; or(2) Claim or suit by or on behalf of a govern-mental authoity for damages because oftesting for, monitoring, cleaning up, remov-ing, containing,' treating, detoxifying or neu-tralizing, or in any way responding to, orassessing the effects of, "pollutants".o. War"Personal and advertising injury", howevercaused, arising, directly or indirectly, out of:(1) War, including undeclared or civil war;(2) Warlike action by a military force, includingaction in hindering or defending against anactual or expected attack, by any govern-ment, sovereign or other authority usingmilitary personnel or other agents; or

(3) lnsurrection, rebellion, revolution, usurpedpower, or action taken by governmental au-thority in hindering or defending against anyof these.p. Distribution Of Material ln Violation OfStatutes"Personal and advertising injury" arising di-rectly or indirectly out of any action or omissionthat violates or is alleged to violate:(1) The Telephone Consumer Protection Act(TCPA), including any amendment of oraddition to such law; or(2) The CAN-SPAM Act of 2003, including anyamendment of or addition to such law; or(3) Any statute, ordinance or regulation, otherthan the TCPA or CAN-SPAM Act of 2003,that prohibits or limits the sending, transmit-ting, communicating or distribution of mate-rial or information.

COVERAGE C MEDICAL PAYMENTSl. lnsuring Agreement.a. We will pay medical expenses as describedbelow for "bodily injury" caused by an accident:(1) On prmises you own or rent;. (2) On ways next to premises you own or rent;or(3) Because of your operations;provided that:(a) The accident takes place in the "cover-age territory" and during the policy pe-riod;(b) The expenses are incurred and reportedto us within one year of the date of theaccident; and(c) The injured person submits to examina-tion, at our expense, by physicians ofour choice as often as we reasonablyrequire.b. We will make these payments regardless offault. These payments will not exceed the ap-plicable limit of insurance. We will pay reason-able expenses for:(1) First aid administered at the time of anaccident;(2) Necessary medical, surgical, x+ay anddental services, including prosthetic de-vices; and(3) Necessary ambulance, hospital, profes-sional nursing and funeral services.

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2. ExclusionsWe will not pay expenses for "bodily injury":a. Any InsuredTo any insured, except "volunteer workers".b. Hired Person

To a person hired to do work for or on behalf ofany insured or a tenant of any insured.c. lnjury On Normally Occupied PremisesTo a person injured on that part of premisesyou own or rent that the person normally occu-pies.d. Workers Compensation And Similar LawsTo a person, whether or not an "employee" ofany insured, if benefits for the "bodily injury"are payable or must be provided under a work-ers' compensation or disability benefits law or asimilar law.e. Athletics ActivitiesTo a person injured while practicing, instructingor participating in any physical exercises orgames, sports, or athletic contests.f. Products-Completed Operations Hazardlncluded within the "products-completed opera-tions hazard".g. Coverage A ExclusionsExcluded under Coverage A.SUPPLEMENTARY PAYMENTS - COVERAGES AAND B1. We will pay, with respect to any claim we investi-gate or settle, or any "suit" against an insured wedefend:a. All expenses we incur.b. Up to $250 for cost of bail bonds ,requiredbecause of accidents or traffic law violationsarising out of the use of any vehicle to whichthe Bodily lnjury Liability Coverage applies. Wedo not have to furnish these bonds.c. The cost of bonds to :release attachments, butonly for bond amounts within the applicablelimit of insurance. We do not have to furnishthese bonds.d. All reasonable expenses incurred by the in-

sured at our request to assist us in the investi-gation or defense of the claim or "suit", includ-ing actual loss of earnings up to $250 a daybecause of time off from work.e. All court costs taxed against the insured in the"suit". However, these payments do not includeattorneys' fees or attorneys' expenses taxedagainst the insured.

f. Prejudgment interest awarded against theinsured on that part of the judgment we pay. lfwe make an offer to pay the applicable limit ofinsurance, we will not pay any prejudgment in-terest based on that period of time after the of-fer.g. All interest on the full amount of any judgmentthat accrues after entry of the judgment andbefore we have paid, offered to pay, or depos-ited in court the part of the judgment that iswithin the applicable limit of insurance.These payments will not reduce the limits of insur-ance.2. lf we defend an insured against a "suit" and anindemnitee of the insured is also named as a partyto the "suit", we will defend that indemnitee if all ofthe following conditions are met:a. The "suit" against the indemnitee seeks dam-ages for which the insured has assumed the li-ability of the indemnite:in a contract or agree-ment that is an "insured contract";b. This : insurance applies to such liability as-sumed by the inSred;c. The obligaiion to defend, or the cost of thedefense,'of.,"that indemnitee, has also been as-sumed by the insured in the same "insuredcontract";d. Th allegations in the "suit" and the information' :,we know about the "occurrence" are such that,' no conflict appears to exist between the inter-ests of the insured and the interests of the in-demnitee;e. The indemnitee and the insured ask us toconduct and control the defense of that indem-nitee against such "suit" and agree that we canassign the same counsel to defend the insuredand the indemnitee; andf. The indemnitee:(1) Agrees in writing to:(a) Cooperate with us in the investigation,settlement or defense of the "suit";(b) lmmediately send us copies of anydemands, notices, summonses or legalpapers received in connection with the"suit";

(c) Notify any other insurer whose coverageis available to the indemnitee; and(d) Cooperate with us with respect to coor-dinating other applicable insuranceavailable to the indemnitee; and(2) Provides us with written authorization to:(a) Obtain records and other informationrelated to the "suit"; and

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(b) Conduct and control the defense of theindemnitee in such "suit".So long as the above conditions are met, attor-neys' fees incurred by us in the defense of that in-demnitee, necessary litigation expenses incurredby us and necessary litigation expenses incurredby the indemnitee at our request will be paid asSupplementary Payments. Notwithstanding theprovisions of Paragraph 2.b.(21of Section I - Cov-erage A - Bodily lnjury And Property Damage Li-ability, such payments will not be deemed to bedamages for "bodily injury" and "property damage"and will not reduce the limits of insurance.Our obligation to defend an insured's indemniteeand to pay for attorneys'fees and necessary litiga-tion expenses as Supplementary Payments endswhen we have used up the applicable limit of in-surance in the payment of judgments or setfle-ments or the conditions set forth above, or theterms of the agreement described in Paragraph f.above, are no longer met.SECTION II - WHO IS AN INSURED1. lf you are designated in the Declarations as:a. An individual, you and your spouse are insur-eds, but only with respect to the conduct of abusiness of which you are the sole owner.b. A partnership or joint venture, you are an in-sured. Your members, your partners, and theirspouses are also insureds, but only with re-spect to the conduct of your business.c. A limited liability company, you are an insured.Your members are also insureds, but only withrespect to the conduct of your business. Your

managers are insureds, but only with respectto their duties as your managers.d. An organization other than a partnership, jointventure or limited liability company, you are aninsured. Your "executive officers" and directorsare insureds, but only with respect to their du-ties as your officeis or dirc-tors. Your stock-holders are also insureds, but only with respectto their liability as stockholders.e. A trust, you are an insured. Your trustees arealso insureds, but only with respect to their du-ties as trustees.

2. Each of the following is also an insured:a. Your "volunteer workers" only while performingduties related to the conduct of your business,or your "employees", other than either your"executive officers" (if you are an organizationother than a partnership, joint venture or limitedliability company) or your managers (if you area limited liability company), but onty for actswithin the scope of their employment by you orwhile performing duties related to the conductof your business. However, none of these "em-ployees" or "volunteer workers" are insuredsfor:(1) "Bodily injury" or "personal and advertisinginjury":(a) To you, to your pertners or members (ifyou are a partnership or joint venture),to your members (if you are a limited li-ability company), to a colemployee"while in the course of his or l-ler em-

ployment or performing duties related tothe cohduct of your business, or to your' other 'fvolunteer workers" while perform-ing duties ielated to the conduct of yourbusinss;(b) To the spouse, child, parent, brother or: sister of that co-"employee" or "volun-, teer worker" as a consequence of Para-graph (1Xa) above;', , (c) For which there is any obligation toshare damages with or repay someoneelse who must pay damages because ofthe injury described in Paragraphs (1)(a)or (b) above; or(d) Arising out of his or her providing orfailing to provide professional healthcare services.(2) "Property damage" to property:(a) Owned, occupied or used by,(b) Rented to, in the care, custody or con-trol of, or over which physical control isbeing exercised for any purpose byyou, any of your "employees", "volunteerworkers", any partner or member (if you area partnership or joint venture), or any mem-ber (if you are a limited liability company).

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b. Any person (other than your "employee" or"volunteer worker"), or any organization whileacting as your real estate manager.c. Any person or organization having propertemporary custody of your property if you die,but only:(1) With respect to liability arising out of themaintenance or use of that property; and(2) Until your legal representative has beenappointed.d. Your legal representative if you die, but onlywith respect to duties as such. That represen-tative will have all your rights and duties underthis Coverage Part.3. Any organization you newly acquire or form, otherthan a partnership, joint venture or limited liabilitycompany, and over which you maintain ownershipor majority interest, will qualify as a Named ln-sured if there is no other similar insurance avail-

able to that organization. However:a. Coverage under this provision is afforded onlyuntil the 90th day after you acquire or form theorganization or the end of the policy period,whichever is earlier;b. Coverage A does not apply to "bodily injury" or"property damage" that occurred before youacquired or formed the organization; andc. Coverage B does not apply to "personal andadvertising injury" arising out of an offensecommitted before you acquired or formed theorganization.No person or organization is an insured with respectto the conduct of any current or past partnership; jointventure or limited liability company that is not shownas a Named lnsured in the Declarations.sEcTloN ilt- LtMtTS oF |NSURANCE ,1. The Limits of lnsurance shown in the,Declarationsand the rules below fix the most we will pay re-gardless of the number of:a. lnsureds;b. Claims made or "suits" brought; orc. Persons or organizations making claims orbringing "suits".2. The General Aggregate Limit is the most we willpay for the sum of:a. Medical expenses under Coverage C;b. Damages under Coverage A, except damagesbecause of "bodily injury" or "property damage"included in the "products-completed operationshazard"; andc. Damages under Coverage B.

3. The Products-Completed Operations AggregateLimit is the most we will pay under Coverage A fordamages because of "bodily injury" and "propertydamage" included in the "products-completed op-erations hazatd".4. Subject to Paragraph 2. above, the Personal andAdvertising lnjury Limit is the most we will pay un-der Coverage B for the sum of all damages be-cause of all "personal and advertising injury" sus-tained by any one person or organization.5. Subject to Paragraph 2. or 3. above, whicheverapplies, the Each Occurrence Limit is the most wewill pay for the sum of:a. Damages under Coverage A; andb. Medical expenses under Coverage Gbecause of all "bodily injury1 and "property dam-age" arising out of any one I'occurrence".6. Subject to Paragraph 5. above, the Damage ToPremises Rented To You Limit is the most we willpay under Coverage A for damages because of"propertr damage" to any one premises, whilerented ,to you, or,in'the case of damage by fire,while rented to you or temporarily occupied by youwith permission of the owner.7. Subject to Prgraph 5. above, the Medical Ex-: pnse Limit is the most we will pay under Cover-,ag. G for all medical expenses because of "bodily,,, ",'njury'r sustained by any one person.ite iimts of lnsurance of this Coverage Part applysearately to each consecutive annual period and toariy remaining period of less lhan 12 months, startingwith the beginning of the policy period shown in theDeclarations, unless the policy period is extendedafter issuance for an additional period of less than 12months. ln that case, the additional period will bedeemed part of the last preceding period for purposesof determining the Limits of lnsurance.SECTION IV - COMMERCIAL GENERAL LIABILITYCONDITIONS1. BankruptcyBankruptcy or insolvency of the insured or of theinsured's estate will not relieve us of our obliga-tions under this Coverage Part.2. Duties ln The Event Of Occurrence, Offense,Glaim Or Suita. You must see to it that we are notified as soonas practicable of an "occurrence" or an offensewhich may result in a claim. To the extent pos-sible, notice should include:(1) How, when and where the "occurrence" oroffense took place;(2) The names and addresses of any injuredpersons and witnesses; and

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(3) The nature and location of any injury ordamage arising out of the "occurrence" oroffense.b. lf a claim is made or "suit" is brought againstany insured, you must:(1) lmmediately record the specifcs of theclaim or "suit" and the date received; and(2) Notify us as soon as practicable.You must see to it that we receive written no-tice of the claim or "suit" as soon as practica-ble.c. You and any other involved insured must:(1) lmmediately send us copies of any de-mands, notices, summonses or legal pa-pers received in connection with the claimor "suit";(2) Authorize us to obtain records and otherinformation;

(3) Cooperate with us in the investigation orsettlement of the claim or defense againstthe "suit"; and(4) Assist us, upon our request, in the en-forcement of any right against any personor organization which may be liable to theinsured because of injury or damage towhich this insurance may also apply.d. No insured will, except at that insured's owncost, voluntarily make a payment, assume anyobligation, or incur any expense, other than forfirst aid, without our consent.3. LegalAction Against UsNo person or organization has a right under thisCoverage Part:a. To join us as a party or otherwise bring us intoa "suit" asking for damages from an insured; orb. To sue us on this Coverage Part unless all ofits terms have been fully complied with.A person or organization may sue us to recover onan agreed settlement or on a final judgmentagainst an insured; but we,will not be liable fordamages that are not payable under the terms ofthis Coverage Part or that are in excess of the ap-plicable limit of insurance. An agreed settlementmeans a settlement and release of liability signedby us, the insured and the claimant or the claim-ant's legal representative.

4. Other lnsurancelf other valid and collectible insurance is availableto the insured for a loss we cover under Cover-ages A or B of this Coverage Part, our obligationsare limited as follows:a. Primary lnsuranceThis insurance is primary except when Para-graph b. below applies. lf this insurance is pri-mary, our obligations are not affected unlessany of the other insurance is also primary.Then, we will share with all that other insur-ance by the method described in Paragraph c.below.b. Excess lnsurance(1) This insurance is excess over:(a) Any of the other insurance, whetherprimary, excess, contingent or on anyother basis:(i) That is Fire, Extended Coverage,Buildels Risk, lnstallation Risk orsirnilar coverage for "your work";(ii) That is Fire insurance for premisesrented to you or temporarily occu-pied by you with permission of theowner;(i) That is insurance purchased by youto cover your liability as a tenant for"property damage" to premisesrented to you or temporarily occu-pied by you with permission of theowner; or(iv) lf the loss arises out of the mainte-

nance or use of aircraft, "autos" orwatercraft to the extent not subject toExclusion g. of Section I - CoverageA - Bodily lnjury And Property Dam-age Liability.(b) Any other primary insurance available toyou covering liability for damages aris-ing out of the premises or operations, orthe products and completed operations,for which you have been added as anadditional insured by attachment of anendorsement.(2) When this insurance is excess, we will haveno duty under Coverages A or B to defendthe insured against any "suit" if any otherinsurer has a duty to defend the insuredagainst that "suit". lf no other insurer de-fends, we will undertake to do so, but wewill be entitled to the insured's rightsagainst all those other insurers.

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(3) When this insurance is excess over otherinsurance, we will pay only our share of theamount of the loss, if any, that exceeds thesum of:(a) The total amount that all such otherinsurance would pay for the loss in theabsence of this insurance; and(b) The total of all deductible and self-insured amounts under all that other in-surance.(a) We will share the remaining loss, if any,with any other insurance that is not de-scribed in this Excess lnsurance provisionand was not bought specifically to apply inexcess of the Limits of lnsurance shown inthe Declarations of

ace american insurance company v. m-i, l.l.c. complaint

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