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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

LION OIL COMPANY v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA et al

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:13-cv-01071 Search Pacer
ACE Group party(s): 
Opposing Party: 
Lion Oil Company
Court Type: 
Federal
US District Court: 
Western District of Arkansas
Date Filed: 
Oct 8 2013

"C. Plaintiffs Claim and Mitigation Efforts

35. As a result of the loss of service from the North Line from the date of shutdown on April 28, 2012, until shipments were first received on March 19, 2013, Plaintiff suffered substantial covered losses, in an amount totaling in excess of $80,000,000.

36. As a result of the Rupture, Plaintiff incurred significant expense in attempting to mitigate its losses. These included the cost of:
    •    Securing additional volume from other pipeline suppliers and making spot purchases of crude oil;
    •    Arranging storage agreements to store part of Lion Oil's contracted crude oil supply that was intended for delivery into the North Line;
    •    Reaching agreements with suppliers to defer scheduled May 2012 crude delivery until restart of the North Line;
    •    Selling stranded crude supply back to suppliers on best-available terms to avoid extended storage fees;
    •    Expediting the construction and commission, with Rail Tran LLC, of a crude oil
    •    rail unloading facility with connection into Lion Oil's crude receiving system;
    •    Leasing additional rail cars;
    •    Repurposing existing asphalt rail cars for crude transport;
    •    Reconfiguring existing land transfer and storage facilities to maximize volumes
    •    through alternate supply systems;
    •    Reducing short term costs by entering into a 4-year railcar unloading contract
    •    with RailTran, LLC;
    •    Increasing purchases of rail-delivered crude from approximately 1,000 BPD in
    •    May 2012 to 20,000 BPD in November 2012;
    •    Purchasing intermediates from Delek Refining, Ltd.'s Tyler, Texas, refinery in
    •    order to meet minimum throughput requirements;
    •    Purchasing asphalt from other suppliers in order to meet customer grade
    •    requirements (substitute crude supplies were of inconsistent grade);
    •    Transporting on-spec asphalt back to El Dorado from outlying terminals to meet
    •    customer requirements;
    •    Purchasing additional acidic and vegetable oil-based additives to meet
    •    specifications;
    •    Selling off-spec asphalt into discounted markets to avoid complete refinery
    •    shutdown;
    •    Operating refinery, inefficiently to avoid shutdown, including recycling crude
    •    bottoms; and
    •    Pressuring EMPCO to restart the pipeline.

37. By undertaking these efforts, Plaintiff was able to avoid a complete shut-down of its refinery, meet its contractual obligations with most of its customers, maintain its skilled workforce and reduce the amount of its losses.

38. Nevertheless, Plaintiff still suffered significant losses, including approximately $44,000,000 in lost earnings and another $36,000,000 in expenses incurred as a result of the Rupture.

39. Plaintiff timely and properly filed a claim ("Claim") under the insurance policies purchased from Defendants.

D. The Policy
40. Plaintiff purchased "all risk" insurance policies from Defendants to protect its business against a number of risks, including losses that resulted from the Rupture.

41. The Defendants each severally issued the same or substantially similar versions of the policy form at issue in this action. That policy form will be referred to as the "Policy." A copy of the Policy is attached hereto as Exhibit B.

42. The Policy period incepted May 1, 2011, and remained in effect until May 1, 2012 ("Policy Period").

43. The Policy was in effect at the time of the Rupture.

44. The Policy expressly names the EMPCO pipeline as a "named supplier."

45. The Policy is an "all risk" insurance policy. The Policy reads as follows:"

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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