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Page 434 DEFENSE COUNSEL JOURNAL–October 2012asphalt shingles. Tamko purchasedcoating grade asphalt from its supplier,Bitumar USA, Inc. Coating grade asphaltis produced with a product call asphaltflux, which was purchased from IrvingOil, which operates an oil refinery in NewBrunswick, Canada.Irving Oil’s operations consist of athree-room monobuoy located in the Bayof Fundy, to which ships dock whileunloading oil and a pipeline systemconnecting the monobuoy to onshorestorage tanks. Collectively, the monobuoyand subsea pipeline is referred to as a“single point mooring” (SPM) system.In August 2008 Irving Oil was forcedto shut down its pipeline because ofdamage to its pipeline. Due to theshutdown, Bitumar was unable to obtainasphalt flux from Irving Oil and Tamkowas unable to receive coating gradeasphalt from Bitumar. Tamko’soperations slowed and eventually stoppedcompletely in September and did notresume until October 2008.Factory Mutual had issued aCommercial Property Insurance Policy.Tamko submitted a claim for its loss inthe amount of $12 million. The FactoryMutual insurance provided “dependenttime element” coverage, which wasdescribed as, “cover[ing] the Actual LossSustained and EXTRA EXPENSEincurred by the Insured during thePERIOD OF LIABILITY directlyresulting from physical loss or damage ofthe type insured to property of the typeinsured at Dependent Time ElementLocations located within theTERRITORY of this Policy.”The policy defined a “dependent timeelement location as:(i) Any Location:(a) of a direct customer,supplier, contractmanufacturer or contractservice provider to theInsured.(b) of any companyunder a royalty, licensingfee or commissionagreement with theInsured.(ii) Any Location of acompany that is a director indirect customer,supplier, contractmanufacturer or contractservice provider to aLocation described ina)(i) above.The policy's Declarations broadlydefines an “Insured Location” under thepolicy as:A. The coverages under thisPolicy apply to anInsured Location unlessotherwise provided.Insured Location is alocation:1) listed on aSchedule ofLocations, AppendixA attached to thisPolicy.2) covered as aMiscellaneous
The Global Supply Chain Page 435UnnamedLocation.3) covered under theterms and conditionsof the AutomaticCoverage or Errorsand Omissionsprovisions.B. References andApplication. Thefollowing term(s)wherever used in thisPolicy means:1) MiscellaneousUnnamed Location:A Location owned,leased or rented bythe Insured but notspecified in theSchedule ofLocations.2) Location:a) as specified inthe Schedule ofLocations, orb) if not specifiedin the Schedule ofLocations, aLocation is abuilding, yard,dock, wharf, pieror bulkhead (orany group of theforegoing)bounded on allsides by publicstreets, clear landspace or openwaterways, eachnot less than fiftyfeet wide. Anybridge or tunnelcrossing suchstreet, space orwaterway willrender suchseparationinoperative for thepurpose of thisReference andApplication. 76The court characterized the coveragedispute as whether the damage to IrvingOil’s pipeline occurred at a covered“dependent time element” and a covered“dependent time element” (DTE)location. It was undisputed that under theterms of the policy, Irving Oil was asupplier to Tamko, and any of its“locations” suffering physical loss ordamage would be covered under thepolicy. The policy defined “location” as a“building, yard, dock, wharf, pier orbulkhead (or any group of theforegoing).” These terms were notseparately defined in the policy.Tamko argued that the SPM systemfit within the ordinary meaning of theterms dock, wharf, and building. Thecourt cited Merriam-Webster's CollegiateDictionary, which defined “dock” as “aplace (as a wharf or platform) for theloading or unloading of materials.” 77Similarly, the term “wharf” was definedas “a structure built along or at an anglefrom the shore of navigable waters so that76 Id. at *8-*9.77Id. at *11 (citing Merriam-Webster'sCollegiate Dictionary 341 (10th ed. 2002)).
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