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Continental Refining Co., LLC v. Hartford Steam Boiler Inspection and Insurance Co.

United States District Court, E.D. Kentucky, Southern Division, London

October 4, 2018



          Robert E. Wier, United States District Judge

         Extremes in nature equal ends produce; In man they join to some mysterious use.

         Alexander Pope, An Essay on Man, The Poetical Works of Alexander Pope 79 (H.F. Cary, ed., 1841).

         Pope's aphorism sets an apt stage for this case, involving extremes of the natural world-a ~600° hydrocarbon mixture (naphtha) pulsing through a large piping structure at over 14, 000 pounds per hour, ultimately producing a violent explosion and fireball- and two companies (an oil refiner and an insurer) fighting about EBC policy language with similar vigor. In the end, there is much “myster[y]” here, for the case ends not with a bang-as did the October evening at issue-but with a whimper-a lone discovery admission ensures exclusion and disposes of the case.

         I. BACKGROUND

         During the night of October 11, 2015, part of the F-2001 Charge Heater at Continental Refining Company, LLC's (Continental) crude oil refinery in Somerset, Kentucky, ruptured. See DE ##30 (Conventional Filing) (video of the intense, fiery incident); 1-1, at ¶ 8 (describing damaged equipment as “an F-2001 Rupture Tube and refractory”); 5, at ¶ 7 (describing ruptured equipment as “a single tube . . . in the Alcorn Combustion charge heater”); 28-3 (Gibson Depo.), at 9 (Depo. p. 34) (describing the F-2001 charge heater); 28-9 (QEI Report), at 3-4 (same); id. at 19, 21 (Pictures); 28-6, at 4, 15, 17, 19, 21. Basically, the heater prepared a naphtha stream for additional refining by sending the high-volume and high-pressure stream through a snaking series of pipes within a box-shaped furnace. One of the pipe segments burst. The parties differ over how to describe the precise sequence; suffice it to say the heater refractory suffered significant damage.

         Continental subsequently sought recovery for certain damages under its Hartford Steam Boiler Inspection and Insurance Company (HSB) insurance policy for Equipment Breakdown Coverage (EBC). HSB substantially denied coverage; this suit followed. The parties have litigated the case, and HSB now seeks summary judgment. DE #28 (Motion). Continental opposed. DE #33 (Response). HSB replied. DE #35 (Reply). With Court permission, DE #40, Continental surreplied. DE #41 (Surreply).[1] The matter is ripe for consideration.

         II. STANDARD

         A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A reviewing court must construe the evidence and draw all reasonable inferences from the underlying facts in favor of the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986); Lindsay v. Yates, 578 F.3d 407, 414 (6th Cir. 2009). Additionally, the court may not “weigh the evidence and determine the truth of the matter” at the summary judgment stage. Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986).

         The burden of establishing the absence of a genuine dispute of material fact initially rests with the moving party. Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2553 (1986) (requiring the moving party to set forth “the basis for its motion, and identify[] those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate an absence of a genuine issue of material fact”); Lindsay, 578 F.3d at 414 (“The party moving for summary judgment bears the initial burden of showing that there is no material issue in dispute.”). If the moving party meets its burden, the burden then shifts to the nonmoving party to produce “specific facts” showing a “genuine issue” for trial. Celotex Corp., 106. S.Ct. at 2253; Bass v. Robinson, 167 F.3d 1041, 1044 (6th Cir. 1999). However, “Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp., 106 S.Ct. at 2552; see also Id. at 2557 (Brennan, J., dissenting) (“If the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56's burden of production in either of two ways. First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party's claim.

         Second, the moving party may demonstrate to the Court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.” (emphasis in original)).

         A fact is “material” if the underlying substantive law identifies the fact as critical. Anderson, 106 S.Ct. at 2510. Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. A “genuine” issue exists if “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 2511; Matsushita Elec., 106 S.Ct. at 1356 (“Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'”) (citation omitted). Such evidence must be suitable for admission into evidence at trial. Salt Lick Bancorp v. FDIC, 187 Fed.Appx. 428, 444-45 (6th Cir. 2006).

         III. ANALYSIS

         Under Policy No. FBP2344824, HSB “provide[d] insurance, ” called “Equipment Breakdown Coverage, ” to Continental “for a Covered Cause of Loss, ” which the policy defined to mean an “accident.” DE #1-1, at 19. The agreement defined “accident, ” in turn, as “a fortuitous event that causes direct physical damage to ‘covered equipment.'” Id. (Section A.1). Specifically, “the event must be one of” a series of things. Id. (Section A.1.a). The Court avoids burdening this Opinion with additional detail here ...

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