Hartree Natural Gas Storage, LLC v. AIG Specialty Insurance Company

CourtSuperior Court of Delaware
DecidedDecember 9, 2025
DocketN22C-05-081 PRW CCLD
StatusPublished

This text of Hartree Natural Gas Storage, LLC v. AIG Specialty Insurance Company (Hartree Natural Gas Storage, LLC v. AIG Specialty Insurance Company) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartree Natural Gas Storage, LLC v. AIG Specialty Insurance Company, (Del. Ct. App. 2025).

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

HARTREE NATURAL ) GAS STORAGE, LLC, ) Plaintiff, ) v. ) C.A. No. N22C-05-081 PRW ) CCLD AIG SPECIALTY ) INSURANCE COMPANY, ) Defendant.* )

Submitted: September 11, 2025 Decided: December 9, 2025

Upon Defendant AIG Specialty Insurance Company’s Motion for Summary Judgment, DENIED.

MEMORANDUM OPINION AND ORDER

David J. Baldwin, Esquire, and Peter C. McGivney, Esquire, BERGER MCDERMOTT LLP, Wilmington, Delaware; Christine S. Haskett, Esquire (argued), Hakeem S. Rizk, Esquire, Billie Mandelbaum, Esquire, David A. Luttinger, Jr., Esquire, COVINGTON & BURLING LLP, San Francisco, California, Attorneys for Plaintiff Hartree Natural Gas Storage, LLC.

Kurt M. Heyman, Esquire, Aaron M. Nelson, Esquire (argued), and Denise S. Kraft, Esquire, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, Delaware, Attorneys for Defendant AIG Specialty Insurance Company.

WALLACE, J. This Memorandum Opinion and Order resolves AIG Specialty’s Motion for

Summary Judgment. For the reasons explained now, that motion is DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. THE REMAINING PARTIES

Plaintiff Hartree Natural Gas Storage, LLC, is a Delaware limited liability

company that operates out of Texas and is the named insured on the insurance

policies at issue in this action.1 Defendant AIG Specialty Insurance Company is an

Illinois corporation with its principal place of business in New York.2

B. THE UNDERLYING TRANSACTION AND RELATED INSURANCE

In June 2021, Hartree entered into a Membership Interest Purchase Agreement

with PAA Natural Gas Storage, L.P. (“PAA”), in part for the acquisition of the Pine

Prairie Energy Center.3

In connection with the MIPA, Hartree purchased buyer-side representations

* The most recent iteration of this case’s caption included the numerous former Insurer- Defendants—North American Capacity Insurance Company, Aspen Specialty Insurance Company, General Security Indemnity Company of Arizona, and Steadfast Insurance Company—and Euclid Transactional, LLC. See generally Second Amended Complaint (“Compl.”) (D.I. 212). These long-dismissed defendants were the primary-layer insurers and the underwriting representative. Id., ¶¶ 1, 17; D.I. 170. Since-dismissed Liberty Surplus Insurance Corporation was the first-layer excess insurer. Compl. ¶ 18; D.I. 330. For simplicity, the Court now uses just the names of the two remaining parties. 1 Compl. ¶ 8. 2 Compl. ¶ 10; AIG provided the second excess layer of the buyer-side representations and warranties insurance at issue here. Id., ¶¶ 17, 19. 3 AIG’s Mot. for Summ. J., Ex. D (D.I. 335) [hereinafter the “MIPA”].

-1- and warranties insurance policies from the Insurers.4 Euclid issued the primary

policy, which provided $25,000,000 in coverage in excess of a $6,375,000 retention.5

Liberty issued the first excess layer policy for $25,000,000 of coverage for Hartree’s

Loss in excess of its primary policy.6 And Hartree’s policy with AIG is its second

excess policy of $13,750,000.7 This means that AIG’s policy is only triggered if

Hartree’s losses are in excess of $56,375,000.8

After Hartree officially acquired the Pine Prairie Energy Center, it found

various issues.9 Hartree told its insurers that it may have “overpaid for the

acquisition of Pine Prairie” and that “Hartree’s Loss under the Policy will also

include the amount that [it] overpaid for the acquisition that is above the cost of

replacing the Base Gas.”10 When Hartree sought confirmation that its losses would

be covered, the Insurers denied coverage.11

4 See, e.g., AIG’s Mot. for Summ. J., Ex. F [hereinafter “Euclid Primary Policy”]; see also AIG’s Mot. for Summ. J., Ex. H [hereinafter “AIG Second Excess Policy”]. 5 See generally Euclid Primary Policy. 6 See AIG Second Excess Policy at 2 (referencing the Liberty policy). 7 AIG Second Excess Policy. 8 See AIG Second Excess Policy at 2; see also Mot. for Summ. J., at 7; Hartree’s Answering Br., at 25 (D.I. 337). 9 See generally Hartree’s Answering Br., Ex. A [hereinafter “Hartree’s May 3, 2022 Letter”]. 10 Hartree’s May 3, 2022 Letter, at 4. 11 Hartree’s Answering Br., Ex. E, at 3 (“We reiterate our position that Hartree’s Loss does not reach AIG Specialty’s layer.”) [hereinafter “AIG Coverage Emails”].

-2- C. THIS COVERAGE SUIT

This suit was brought against the insurers seeking coverage for those

purported losses. Hartree’s complaint now effectively has two remaining counts: a

request for declaratory judgment against AIG (Count I);12 and a breach-of-contract

claim against AIG (Count II).13

This action was stayed pending this Court’s decision in the underlying fraud

action Hartree brought against PAA.14 There, the Court found for Hartree in the

amount of $30,247,277.60—the loss incurred for the missing gas at the time of the

transfer of Pine Prairie.15

Now before the Court is Defendant AIG’s motion for summary judgment.16

1. Relevant Policy Language

AIG’s second excess insurance policy for loss is not triggered “unless and

until the aggregate limits of liability of the Underlying Insurance have been

exhausted and/or exceeded . . .”17

12 Compl. ¶¶ 72−78. 13 Compl. ¶¶ 79−85. 14 D.I. 32. 15 Hartree Nat. Gas Storage, LLC v. PAA Nat. Gas Storage, L.P., 2025 WL 101638, at *15 (Del. Super. Ct. Jan. 15, 2025) [hereinafter “Hartree v. PAA”]. 16 D.I. 335. 17 AIG Second Excess Policy at 6.

-3- Loss, as defined by the primary policy, is:

“Loss” means the aggregate of (i) any loss, liability, demand, claim of any kind, action, cause of action, cost, damage, fee, deficiency, Tax, penalty, fine, assessment, interest or expense (including the amount of Damages that the Insureds have incurred, suffered, sustained, paid, or become subject to), in each case, arising out of or resulting from any Breach (other than Defense Costs and Prosecution Costs), (ii) any Defense Costs, and (iii) any Prosecution Costs, in each case, determined without regard or giving effect to, and ignoring any reference to, the Limitation Provisions or the Materiality Qualifiers, as if such words, clauses or phrases, as applicable, were deleted from the applicable provision in the Acquisition Agreement or the Certificates.18

But “Loss” is reduced by any “Recovered Amount”:

Recovered Amounts. Loss shall be reduced by any Recovered Amounts. For the avoidance of doubt, to the extent any Recovered Amount is received or realized after payment by the Insurers hereunder, such Recovered Amount shall be applied in the following order: first, to reimburse the Insureds for any Loss borne by them in excess of the Limit of Liability; second, to reduce any Loss incurred by the Insureds which is covered by this Policy; and third, to reimburse the Insureds in respect of any Loss which the Insureds have retained by reason of the Retention.19

The primary policy also has a “mitigation” clause, which states:

To the extent required by applicable law, the Insureds shall use commercially reasonable efforts within their control, including, to the extent commercially reasonable, making requests or demands of third parties, to mitigate any Loss or potential Loss after any Specified Person has Actual Knowledge of any event which would reasonably be expected to give rise to any Loss; provided that the failure of any

18 Euclid Primary Policy § II(Z). 19 Euclid Primary Policy § IV(C). “Recovered Amount” is defined as “in relation to any Loss, the net amount (after any reasonable costs and expenses incurred in connection with such recovery) of any related offsetting recoveries . . .

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