McDermott International Inc. will appeal $42.5M ruling against

New Orleans CityBusiness, Nov 7, 2006 by CityBusiness Staff Report

A $42.5-million jury verdict has been rendered against McDermott International Inc. subsidiary, The Babcock & Wilcox Co.

The total awarded the plaintiffs is approximately $387 million.

The case pitted Citgo Petroleum Corp. and PDV Midwest Refinery LLC versus McDermott International. The case, filed in Cook County, Ill., involves claims for damages in connection with the manufacture and sale in 1981 by a former B&W division of a pipe fitting that allegedly caused an Aug. 14, 2001, fire at a refinery in the Chicago area.

As previously reported, pursuant to a settlement agreement reached in December 2005, B&W paid $7.5 million to the plaintiffs, and limited its additional exposure to the plaintiffs to a maximum of $42.5 million, which would only be payable after all appeals of the Citgo Action and claims against B&W's insurance broker and applicable insurers have been exhausted. The jury apportioned liability of 45 percent to B&W, 15 percent to Citgo and 40 percent to Unocal, prior owner of the refinery. Citgo sought $550 million in damages and full liability for B&W.

While B&W's liability is capped, officials say the verdict, including the findings of fault and liability, are cause for appeal.

The determination of any additional insurance premium charge is subject to the exhaustion of all appeals.

McDermott International is a worldwide energy services company and its subsidiaries provide engineering, construction, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy.