On August 27, 2016, at about 8:26 a.m., a railroad tank car sustained a 42-inch long crack in its tank shell shortly after being loaded with 178,400 pounds of liquefied compressed chlorine at the Axiall Corporation Natrium plant in New Martinsville, West Virginia. Over the next 2.5 hours, the entire 178,400-pound chlorine load was released, forming a large vapor cloud that migrated south along the Ohio River valley.
According to the chemical company’s claims, the recently repaired rail car ruptured inside the Axiall plant, causing as much as $400 million in corrosion and other damages to equipment. The 12 insurers denied the company’s claims, noting that policies “excluded corrosion, faulty workmanship, and contamination.”
Axiall sued the insurers for breach of contract and bad faith.
A County judge agreed, granting partial summary judgment to the chemical company(s). The judge wrote that…
“the policies corrosion exclusions did not exclude corrosion damage from a loss but only excluded coverage for claims where corrosion was the cause of the loss”
He also said…
“faulty workmanship exclusions barred recovery only for damage to the rail tank car, not for damage to the chlorine manufacturing facility”.
Lastly, the trial court found that the contamination exclusions were designed to address only environmental pollution, “which is not what this case is about.” The insurers appealed those orders. The state Supreme Court found that the orders were not final and that the complex litigation continues.
“The applicability of any of the policy exclusions at issue, which is the focus of the declaratory judgment count, is dependent on a determination of causation, one of many issues which are not yet resolved in this case,” Justice William Wooten wrote in the opinion.
A Pennsylvania jury in a separate case decided against the rail-car repair firm awarded $6 million to Axiall.