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Contractor Needs Permission of Insurer to be Protected by an \\nOwner-Controlled Insurance Program\\n\\nTeam Industrial Services, Inc. (Team) found it had incurred a $222 \\nmillion judgment against it in a wrongful-death lawsuit arising out of a\\n steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) \\npower plant. \\n\\nTeam sought indemnity for the judgment from Westar, Zurich American \\nInsurance Company (Zurich), and two other insurance companies, arguing \\nthat it was, or should have been, provided protection by Westar\'s \\nOwner-Controlled Insurance Program (OCIP) through insurance policies \\nissued by Zurich and the two other insurers.\\n\\nIn Team Industrial Services, Inc. v. Zurich American Insurance Company, \\net al, No. 22-3275, USCA, Tenth Circuit (November 29, 2023) resolved the\\n dispute acknowledging that Team\'s arguments were well reasoned and \\ncreative.BACKGROUNDIn 2013 Westar instituted its OCIP, through which \\ncontractors and subcontractors could obtain insurance protection for \\nwork performed at covered locations. \\n\\nWestar had discretion to decide which contractors would be eligible to \\nenroll in the OCIP. Eligible contractors had to complete enrollment \\nforms to be considered for participation. During the time relevant to \\nthis dispute, insurance was provided by a Zurich policy, whose premiums \\nwere paid by Westar. According to Zurich\'s policy, an enrolled \\ncontractor\'s "rights and duties under this policy may not be transferred\\n without [Zurich\'s] written consent." (emphasis added)Westar never made \\nTeam eligible to enroll in the OCIP.\\xa0 \\n\\nTeam never submitted an enrollment application, and it was never \\nenrolled. Team\'s parent company acquired Furmanite\'s parent \\ncompany.Although Team and Furmanite became "sister companies," they were\\n distinct legal entities and never merged. Team assumed Furmanite\'s \\nworkload at the power plant. Furmanite\'s insurance coverage under the \\nWestar OCIP continued even though its service contract had been retired.\\n \\n\\nFurmanite\'s coverage continued, even after it perhaps should have \\nended.Team argued to the District Court that it inherited Furmanite\'s \\ncoverage under the OCIP.The District Court ruled that Change Order No. 2\\n unambiguously retired Furmanite\'s MSA and left Team\'s MSA as the sole \\ngoverning document. \\n\\nDISCUSSION\\n\\nTeam ignored that the enrollment in Westar\'s OCIP was not automatic. \\nSince Team never enrolled nor was it even invited to enroll in Westar\'s \\nOCIP, nor did Zurich ever give written approval to a transfer of \\ncoverage from Furmanite to Team, coverage did not exist.The Change Order\\n did not contain a mention of insurance coverage or the OCIP. \\n\\nThere is no ambiguity in the language of the change order from \\n\\nFinally, Team raises a perfunctory claim of promissory estoppel. \\xa0Since \\nthere was no allegation that Westar knew about the reporting it could \\nhardly have expected to induce Team\'s reliance. Nor was there any \\nevidence of a promise by Zurich to provide insurance coverage to \\nTeam.The Tenth Circuit affirmed the judgment.\\n\\nZALMA OPINION\\n\\nWhen Team\'s parent company acquired Furmanites parent company and took \\nover the work originally done by Furmanite it assumed that it was \\ncovered under the OCIP but did nothing to confirm the fact, proving that\\n breaking it up into its component part and will cost Team $222 million.\\n Insurance, even a contract as complex as an OCIP, must be fulfilled and\\n to gain the coverage Westar needed to allow them to apply, Team needed \\nto file an application with Zurich and Zurich had to agree. None of \\nthose things happened and Team had no coverage.\\n\\n(c) 2023 Barry Zalma & ClaimSchool, Inc.\\n\\nPlease tell your friends and colleagues about this blog and the videos \\n\\n