Freeport LNG explosion saga continues as judge’s $1.3 billion dismissal appealed

Freeport LNG and its cadre of insurers have appealed a federal judge’s decision to dismiss their US$1.3 billion lawsuit, filed this summer, seeking to blame a joint venture of contractors for a June 2022 explosion at the Texas liquefied natural gas export facility.

The Freeport coalition filed its appeal notice on Monday, US court filings show. Freeport’s insurers include Allianz Global Risks US Insurance Company, Lloyd’s of London, Great Lakes Insurance, Guideone National Insurance Company and Tokio Marine America Insurance Company.

Freeport and their insurers sued the engineering, procurement and construction (EPC) contracting joint venture — comprising subsidiaries of Zachry Group, Chiyoda, CB&I, McDermott International and PSRG — alleging that the builders were responsible for issues with the facility’s construction that Freeport LNG claimed ultimately led to the explosion, court filings show.

Seeking recompense of $1.3 billion, Freeport LNG and the insurers originally filed suit in a Texas state court in July, but the proceedings were later moved to a federal bankruptcy court.

US Bankruptcy Judge, Marvin Isgur, sided with the contractors, saying Freeport LNG and its insurers lacked standing to bring the subrogation lawsuit. He issued his order on 20 November.

Freeport LNG on 2 December appealed the ruling that had dismissed all claims against the EPC contracting JV, which related to the June 2022 fire and explosion.

The plaintiffs — the insurance companies of the owners of Freeport LNG — had originally filed two lawsuits against the contractors, seeking subrogation of the insurance proceeds they had made to the Freeport LNG owners.

The US Bankruptcy Court for the Southern District of Texas dismissed the plaintiffs’ claims in their entirety. However, Chiyoda on Thursday confirmed that the plaintiffs who are dissatisfied with the court order on had filed their appeal.

The Japanese company said that the details of legal basis for the appeal are currently unknown and would be clarified during the appeal proceedings.

The legal action names its Houston-based subsidiary Chiyoda International Corporation (CIC), which has $394.16 million in capital.

In a statement, Chiyoda said Isgur’s order was a “reasonable judgment”.

“The impact of this appeal on our business performance is currently unknown, but Chiyoda will promptly announce any matters that should be disclosed in the future.”

Freeport LNG still has another active lawsuit against the EPC JV over a compressor motor failure in January at one of the facility’s liquefaction trains. Isgur has yet to make a ruling in that case.

Upstream has approached Zachry, McDermott and PSRG for comment.