The New York Times

Tuesday, June 11, 1996

Exxon wins $250 million from Lloyd's for Alaska Oil Spill

By Stephanie Storm

The Exxon Corporation won $250 million yesterday from Lloyd's of London underwriting syndicates and other insurers that sold policies to protect the oil company form liabilities like those incurred after the Exxon Valdez oil spill.

A Texas state court jury voted 11 to 1 that the insurance underwriters should honor a policy that covered Exxon as the owner of some 11 million gallons of oil spilled into Prince William Sound, Alaska, in 1989.

"We did the right thing in responding to this accident and we are pleased that the jury agreed that the insurance underwriters have a responsibility to honor their policy," Lee R. Raymond, chairman of Exxon, said in a statement.

The full meaning of the jury's decision was muddled , however, because coincidentally the Supreme Court yesterday rejected Exxon's attempt to avoid a lawsuit filed in Federal court in New York by more than 100 of its insurers charging that the oil company’s own negligence led to the disaster.

The insurance companies contend that Exxon should not have knowingly allowed Joseph Hazelwood, who had a history of alcohol abuse, to be captain of the Valdez. Mr. Hazelwood was acquitted of operating the tanker while drunk.

The state court considered the same issue, but in that case, Exxon sued its insures

J. Donald Bowen, the lawyers representing Exxon, told Bloomberg Business News that he thought the resolution of the state case would make the Federal case moot.

The state court decision clears the way for Exxon to pursue another lawsuit seeking an additional $550 million form its insurers for acting in bad faith under the Texas Insurance Code.

Exxon has spent $2.5 billion cleaning up the spill. It previously won a $300 million partial settlement form insurers, including Lloyd's syndicates.

Lawyers for Lloyd's which has led the fight against Exxon could not be reached for comment.

The Supreme Court also ruled against Exxon in two other cases yesterday. It ruled that Exxon could not sue a terminal operator in Hawaii for damages connected to the grounding of the tanker Exxon Houston, which broke free form a terminal in a storm. And it ruled that Exxon could not dismiss a seaman who refused to take a drug test after marijuana was found in his luggage.

The Texas state court jury's decision was disclosed after the stock market closed. Exxon’s shares ended 50 cents lower at $85.375.