An Arkansas federal jury has awarded an oil company nearly $72 million in damages from lost income and expenses stemming from a 2012 breach of a pipeline carrying oil from Louisiana to Arkansas.
In litigation heard in federal court in the Western District of Arkansas, Lion Oil Co. had been seeking $80 million in claims from 14 different insurance companies stemming from the breach of a pipeline delivering oil to a Lion Oil Co. refinery, according to the attorneys from the law firm Pillsbury who represented the oil company in its suit.
Lion was seeking coverage for business income losses and expenses resulting from the rupture of a critical crude oil supply pipeline built in 1956 and operated by Exxon-Mobile subsidiary EMPCo, according to the Pillsbury attorneys. The North Line pipeline carries some 440,000 barrels oil more than 200 miles to reach the Lion refinery.
The rupture caused the pipeline to be shut down for 10 months, a period the insurers argued should not be covered.
Lion asserted that the all-risk policies it had purchased from 14 different insurance companies should collectively cover the company for its massive business disruption while its refinery was forced to operate at a lower capacity and find alternative sources of crude oil.
The insurance carriers denying Lion’s claims — principally AIG — had argued that the rupture was not the predominant cause of Lion Oil’s loss, but rather it was the result of an independent decision by Exxon to test the pipeline.
Jurors apparently felt otherwise. After deliberating for two hours, the jury returned a verdict finding that damage to EMPCo.’s property was the “dominant, direct and efficient cause” of Lion Oil’s losses and expenses, the court document shows.
The jury awarded Lion Oil $60.4 million for income loss. Jurors awarded an additional $11.3 million to cover expenses incurred by Lion as a direct result of the damaged pipeline.
Pillsbury partner Peter Gillon, head of the firm’s insurance recovery practice who served as trial co-counsel, stated: “Proving a company’s rights to insurance for damages to a supplier can be challenging, and we are pleased that both the jury and the court understood the way these policies are supposed to work and awarded our client the compensation they were owed.”
In addition to AIG, other insurance companies denying Lion’s claims included Lloyd’s, ACE and XL Insurance America, according to Pillsbury.
Was this article valuable?
Here are more articles you may enjoy.
Homebuilders Cut on ‘Sluggish’ Housing Market, Florida Woes 
Wall Street Pushes Back After Activists Escalate Protests 
Marsh McLennan Agency to Acquire The Horton Group 
Allstate Seeking 34% Rate Hike on California Homeowners Insurance 
