Court Says Insurer Not Responsible For Refinery’s Fire Damage

Valero energy corporation purchased an oil refinery from Murphy Oil Corporation. One year later, that refinery had a large fire, causing extensive structural damage. Valero reviewed the fire and, upon investigation, concluded it was directly linked to various acts and omissions Murphy committed prior to the deal. To make matters worse, the Environmental Protection Agency (EPA) informed Valero it would seek to impose penalties for violations of the Clean Air Act based on the fire. Valero sent Murphy a letter demanding indemnity for the fire and any EPA penalties that were in the works. The letter further described additional violations of environmental law Valero’s investigation uncovered, accusing Murphy of having made misrepresentations/omissions during their deal.
In total, Valero expected $52 million in indemnification.