QBE wins ruling in dispute over immobilized pipeline machinery

A federal appeals court reversed a lower court and ruled in favor of QBE Insurance Corp. in litigation over an immobilized micro-tunnel boring machine.

Dallas, Oregon-based James W. Fowler Co. was using the machine in the construction of a pipeline in North Dakota in 2017 when, because of earth movement, it could no longer progress forward and was immobilized at about 100 feet below the surface, according to court papers in James W. Fowler Co. v. QBE insurance Co.

After QBE refused to indemnify Fowler for the loss, the company filed suit in U.S. District court in Portland, Oregon.  The court ruled in Fowler’s favor, holding that the company had alleged a “direct physical loss.”

A unanimous three-judge appeals court panel overturned the

ruling in a three-page opinion, saying the parties and their experts “dispute whether the (machine) is impossible to recover and (assuming it is recoverable) whether recovery costs would be unreasonably expensive.”

“That dispute is genuine and material and therefore precluded summary judgment for Fowler,” the panel said in reversing the lower court and remanding the case for further proceedings.

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

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