The dispute originated from a minor, accidental discharge of molten metal at JW Aluminum’s facility in August 2020. The molten metal droplets landed on a beam supporting the facility’s roof, causing aluminum dust to ignite. The company shut down its power and gas lines to avoid an explosion, and the fire department’s efforts to extinguish the fire resulted in further water damage. JW Aluminum reported nearly $35 million in property damage due to this series of events.
JW Aluminum sought coverage from its insurers, who argued that the endorsement limited coverage to $10 million. The company subsequently sued the insurers in April 2021, claiming that its losses were due to fire damage, not directly from the molten material.
In December, the lower court sided with the insurers, finding that the losses from fire, debris, and water ultimately stemmed from the accidental discharge of molten material.
In its appeal, JW Aluminum contended that U.S. District Judge Bruce Howe Hendricks’ ruling was misguided. The company argued that the relevant policy sections are unclear and inconsistent and that, at a minimum, the policy could be reasonably interpreted to afford more than the $10 million sublimit for its losses.
