Swiss insurer on hook for $4.5M of Wyoming refinery fire

A federal appeals court has upheld a lower court decision against a Swiss insurer, and ruled it is liable to contribute $4.5 million in connection with a 2013 Wyoming refinery fire.

The fire caused Sinclair, Wyoming-based Sinclair Wyoming Refining Co. to restrict operations for several months, according to Monday’s ruling by the 10th U.S. Circuit Court of Appeals in Denver in Sinclair Wyoming Refining Co. v. Infrassure Ltd.

Sinclair filed a claim with its 18 insurers, including Zurich-based Infrassure Ltd., which collectively provided Sinclair business interruption coverage for losses under an all-risk insurance policy, according to the ruling.

In 2015, after 20 months of claim adjustment, Sinclair and the other 17 insurers settled the claim.

But Infrassure disagreed with the settlement value and eventually exercised its right under the policy to have Sinclair’s loss calculated by a panel of three appraisers. The panel valued the loss at $60.4 million, with Infrassure liable for $4.5 million, the ruling said.

Infrassure sought to invalidate the award in U.S. District Court in Cheyenne, Wyoming, arguing the appraisers relied improperly on the settlement amount rather than independently valuing the loss.

The district confirmed the award, holding the insurer had “failed to show any actionable misconduct on behalf of the appraisers.”

The district court’s ruling was affirmed by a unanimous three-judge appeals court panel. “Taken as a whole, the appraisal award and communications amongst the panel reveal no lack of good faith, fraud or bias, or failure to comply with the terms of the Policy and Stipulated Procedures. Accordingly, the award cannot be set aside for the panel’s alleged failure to appraise the loss,” the panel said, in affirming the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.