What happened: Phillips 66 alleges its insurer accepted a defense obligation, collected months of legal invoices, then reversed course and denied coverage
Who's involved: Phillips 66 (additional insured), Berkley National Insurance Company (insurer), Cavern Solutions (general contractor)
What's at stake: defense costs, settlement payments, and $882,237.50 in crane damage, plus penalty interest under the Texas Insurance Code
Why it matters: the complaint raises questions about what happens when an insurer reverses an accepted defense obligation after receiving privileged case strategy
Where it stands: complaint filed November 5, 2026, in the Southern District of Texas
For months, the invoices went out. Not one was paid.
That is the core of a new lawsuit from Phillips 66, which alleges that Berkley National Insurance Company agreed in writing to cover the energy company's defense in two personal injury and wrongful death cases - then quietly reversed course, left the invoices unpaid, and walked away from its coverage obligations.
The complaint, filed November 5, 2026, in the US District Court for the Southern District of Texas, accuses Berkley National - a subsidiary of W.R. Berkley Corporation - of breach of contract, bad faith, and violations of the Texas Insurance Code.
Here is the backstory. Berkley National sold energy general liability and umbrella policies to two subcontractors, Cased Hole Wellhead Services and Universal Wellhead Services. Under those policies, Phillips 66 says it qualifies as an additional insured - meaning it is entitled to the same defense and coverage as the named policyholders for claims arising from the subcontractors' work.
The dispute traces back to January 17, 2023, when a fire broke out at Phillips 66's Borger Refinery in Texas. According to the complaint, hydrocarbons were released when workers were manipulating lock pins after a hanger was landed during a snubbing operation. The fire led to two lawsuits alleging injuries and death - one brought by Shannon Thompson and others, the other by Debra Scharene Huff and others - both filed in Harris County, Texas.
Phillips 66 asked Berkley National to step in and cover its defense. In February 2025, the complaint alleges, the insurer accepted that obligation in writing.
What followed, according to the filing, is where the story turns. Defense counsel for Phillips 66 began sending invoices and case status reports to Berkley National, including material related to defense strategy and the merits of the underlying litigation. The complaint alleges the insurer never raised a single objection to the invoices and never questioned the defense strategy.
Then, according to the complaint, "nearly seven months" after accepting the defense, Berkley National reversed its position under the Universal policies on October 17, 2025 - despite, Phillips 66 alleges, no change in the underlying facts. Days later, it did the same under the Cased Hole policies.
What followed was a string of demands that went largely unanswered. On December 5, 2025, Phillips 66 asked Berkley National to reconsider. The insurer refused in a December 30 letter - the last substantive response the complaint records for months.
On January 21, 2026, Phillips 66 tried again, this time ahead of a mediation of the underlying lawsuits. It also requested settlement authority. No response, the complaint states. On January 30, Phillips 66 demanded that Berkley National accept a settlement within policy limits. No response. On February 5, it set a deadline of February 9. No response.
On February 20, Berkley National again refused to recognize its coverage obligations, the complaint alleges.
According to the filing, Phillips 66 then entered into settlements with the plaintiffs in both underlying lawsuits. The complaint describes these as "good faith, reasonable, and confidential."
There was also a crane. A crane leased from Scott Macon Equipment was damaged in the refinery fire. Phillips 66 alleges it paid $882,237.50 to cover that property damage - and that Berkley National has refused to reimburse it.
The complaint also points to a recent win for Phillips 66 in the underlying cases. On October 16, 2026, a court granted Phillips 66's request for a ruling - without a trial - that two of the contractors owed it indemnification. The court found that Cavern Solutions owed Phillips 66 indemnification for the Thompson lawsuit, and that Cased Hole owed Phillips 66 indemnification for the Huff lawsuit.
Phillips 66 brings three legal claims. The first is breach of contract, alleging Berkley National failed to defend and cover Phillips 66 under the policies. The second alleges violations of the Texas Prompt Payment of Claims Act, a state law that requires insurers to acknowledge, investigate, and pay claims on time. The third alleges broader bad faith under the Texas Insurance Code, claiming the insurer failed to settle when its liability had become reasonably clear and misrepresented the terms of its own policies by accepting and then backing away from its defense obligations.
Phillips 66 is seeking damages, penalty interest under the Texas Insurance Code, and attorneys' fees. The company has demanded a jury trial.
The complaint alleges that Berkley National's refusal to settle caused Phillips 66 damages exceeding the insurer's own policy limits - a detail that coverage professionals and excess carriers will want to watch closely.
The allegations in the complaint have not been tested, and no court has ruled on the merits of Phillips 66's claims.
