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United Refining Co. v. National Union Fire Insurance Co. of Pittsburgh

United States District Court, Third Circuit

December 13, 2013

UNITED REFINING CO., Plaintiff,
v.
NATIONAL UNION FIRE INSURANCE COMPANY of PITTSBURGH, et al., Defendants.

MEMORANDUM

C. DARNELL JONES, II, District Judge.

Pending before the court is defendants' motion to dismiss plaintiff's amended complaint on the following grounds: (1) all claims in the complaint are subject to arbitration pursuant to plaintiff's insurance policy, (2) plaintiff has failed to state a claim for which relief can be granted in Counts II and III, (3) New York law applies to these claims pursuant to a choice of law clause, and (4) plaintiff filed an untimely complaint. (Doc. No. 13 (Def. Br.)) Defendants also move to stay proceedings on those claims that do not merit arbitration to the extent that any exist. (Doc. No. 13 (Def. Br.)) After a thorough review of the record, the court will GRANT the motion IN PART and DENY IN PART. The motion will be GRANTED as to Counts I, II, and IV and DENIED as to Count III. Plaintiff SHALL SUBMIT all dismissed claims to ARBITRATION in accordance with the terms of its insurance policy. The court will STAY the remaining claims PENDING COMPLETION OF ARBITRATION.

BACKGROUND

This case arises out of an insurance coverage dispute in which plaintiff claims that defendants are liable for business losses incurred by plaintiff when a ruptured pipeline delayed shipments of crude oil to plaintiff's refining facilities. The parties' relationship began in 2009 when each of the following insurance companies sold plaintiff a "quota share" of a business insurance policy: National Fire Insurance Company of Pittsburgh, Allianz Global Risks U.S. Insurance Company, Certain Underwriters at Lloyd's of London, XL Insurance (Bermuda) Ltd., and Swiss Re International SE.[1] (Doc. No. 11, at 4-5 (Am. Compl.))

Plaintiff's insurance policy was an "all-risk" policy and covered "the property insured hereunder against all risks of direct physical loss or damage occurring during the term of the policy from any external cause, except as hereinafter excluded." (Doc. No. 11, at 6 (Am. Compl.)) The policy further provided coverage for:

All Risk of Direct Physical Loss or Damage to all Real or Personal Property of every kind and description including but not limited to... Time Element including but not limited to Business Interruption (including Interdependency), Extra Expense, Leasehold Interest, Rental Insurance, Commission Profits and Royalties, Contingent Time Element, and/or as may be more fully defined in this Policy Wording.

(Doc. No. 11, at 5 (Am. Compl.))

The contract also contained "Contingent Business Income Coverage" as follows:

A. This policy covers against loss resulting directly from the necessary interruption of business by the peril(s) insured against during the term of this policy, at locations of the Insured as described under the Property Insured, caused by direct physical damage of the time insured against to
1. Real or personal property of the type covered at CONTRIBUTING PROPERTY(IES) not operated by the Insured which wholly or partially prevents the delivery of materials to the Insured;

(Doc. No. 11, at 6 (Am. Compl.))

Finally, the contract contained a clause concerning "Contingent Extra Expense Coverage":

A. This policy covers the necessary Contingent Extra Expense, as hereinafter defined, incurred by the Insured in order to continue as nearly as practicable the normal operation of the Insured's business following damage to or destruction of real or personal property, by the peril(s) insured against during the term of this policy, at location of the insured as described under Property Insured, caused by the direct physical damage of the type insured against to:
1. Real or personal property of the type covered at CONTRIBUTING PROPERTY(IES) not operated by the Insured which wholly or partially prevents the delivery of materials to the Insured or others for the account of the Insured.

(Doc. No. 11, at 6-7 (Am. Compl.))

Continent Extra Expense was defined by the agreement as:

The excess (if any) of the cost(s) incurred during the period of restoration, chargeable to the operation of the Insured's business, over and above the cost(s) that would normally have been incurred to conduct the business ...

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