Lion Oil Gets Early Victory in Pipeline Suit

by Mark Friedman  on Monday, Jan. 27, 2014 12:00 am  

Lion Oil Co. of Brentwood, Tenn., received an early legal victory against its insurance carrier involving an oil pipeline rupture that Lion said cost it more than $80 million in damage at its oil refinery in El Dorado.

A U.S. District Court judge in Tennessee ruled on Jan. 16 that the lawsuit that Lexington Insurance Co. filed against Lion Oil will be stayed while Lion’s case against the insurance carrier will go forward in U.S. District Court in El Dorado.

The case was part of a growing trend of people or companies taking their insurance carriers to court after their claims were denied.

In Lion’s case, it relied on a pipeline that was run by ExxonMobil Pipeline Co. to deliver crude oil to Lion’s refinery in El Dorado. When the pipeline broke near Torbert, La., in April 2012, ExxonMobil closed the line. Oil didn’t start flowing again for nearly 11 months.

Lion Oil suffered $44 million in lost earnings and had $36 million in spill-related expenses, according to its lawsuit.

Lexington first filed its lawsuit in Tennessee in September and wanted a judge to rule that it didn’t have to cover Lion Oil’s claims. Eleven days later, Lion filed suit in Arkansas to try to force payment.

In the Tennessee case, Lexington filed a motion urging the judge to stop Lion Oil from moving forward with its case in Arkansas. Lion Oil then filed its motion to have the lawsuit dismissed or stayed.

U.S. District Judge Aleta Trauger agreed to stay the case. She said in her order that the case “presumably will turn on the interpretation of coverage and exclusion provisions in the policies, and the facts relating to actions that occurred in Louisiana and Arkansas.”

Attorneys for Lexington and Lion declined to comment on the order.



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