A Houston-based oil and gas trader, Grey Rock Gathering and Marketing LLC, has set its sights on recovering over $2.4 million from Liberty Mutual Insurance Co., alleging wrongful denial of coverage concerning a contaminated oil shipment. In a move that has ignited a legal firestorm, Grey Rock contends that Liberty Mutual’s refusal is based on a perilous interpretation of the policy’s perils and property exclusion.
Liberty Mutual Contamination Lawsuit : Exclusion Under Scrutiny
Grey Rock asserted in a motion filed on Monday that it is unequivocally entitled to summary judgment in its coverage lawsuit against Liberty Mutual. The oil trader argued that the insurer’s actions constitute a breach of its all-risks warehouse policy and further, a case of bad faith.
Grey Rock argued passionately, stating, “The exclusion relied upon by defendant is vague and ambiguous,” adding that Liberty Mutual’s interpretation of the exclusion “results in illusory coverage.” The trader claims that this interpretation does not hold water when considering the broader declaration page covering contamination.
A Costly Discovery
The dispute between Grey Rock and Liberty Mutual stems from an alarming discovery made by the oil trader in July 2021. It was revealed that their inventory of crude oil at the primary storage facility in Lake Charles, Louisiana, had become contaminated with organic chlorides, potentially causing extensive damages.
