Cameron Sues Insurer Over Refusal It Says Threatened BP Deal

Cameron International Corp., facing thousands of claims from the 2010 Gulf of Mexico oil spill, sued one of its insurers for allegedly refusing to pay $50 million in coverage, a move the manufacturer says threatened a $250 million settlement with BP Plc. (BP/)

Cameron, in a complaint filed yesterday in federal court in New Orleans, accused a Liberty Mutual Holding Co. unit of breach of contract and of acting in bad faith by holding up the settlement with BP “hostage” so the insurer could negotiate a “steep discount” on the amount it owed.

“When Cameron needed it the most, Liberty refused to provide Cameron the $50 million in insurance limits it sold Cameron,” according to the complaint. “Instead, Liberty offered Cameron a choice: either continue the Gulf oil spill litigation and face potentially crippling liability, or agree to accept much less than what Liberty was contractually obligated to pay under its insurance policy.”

Cameron, which said it paid the $50 million from its own funds, seeks a court order requiring Liberty Insurance Underwriters to indemnify it for that amount.

Cameron said it has now paid $250 million to BP. The settlement proceeds are to be contributed by BP into a fund for the victims of the spill.

Cameron manufactured the blow-out preventer, the subsea device that failed to stop the BP well explosion on April 20, 2010, that killed 11 workers aboard the Deepwater Horizon oil rig. The rig burned and sank, triggering the worst offshore oil spill in U.S. history.

Trial Date

More than 100,000 individual claims filed against BP, Cameron and other defendants, were consolidated before a federal judge in New Orleans who will decide liability and apportion fault after a nonjury trial set to begin Feb. 27.

Cameron said it cooperated with Liberty’s claims investigation, which covered such topics as maintenance of the blow-out preventer and whether it was pressure-tested for use on the deep-water drilling rig, 50 miles off the Louisiana coast.

Adrianne Kaufmann, a Liberty spokeswoman, didn’t return a phone call after regular business hours yesterday seeking comment on the lawsuit. Rhonda Barnat, a spokeswoman for Houston-based Cameron, declined to comment.

The case is Cameron International Corp. (CAM) v. Liberty Insurance Underwriters, 2:12-cv-0311, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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