Hunton Insurance Recovery Blog

GreenGate Fresh’s romaine lettuce might once have made you ill, but their recent victory in the New York Appellate Division certainly won’t. GreenGate was one of many lettuce producers forced to recall their lettuce amidst two E. Coli outbreaks in 2018. GreenGate sought coverage for the recall from its insurer, Houston Casualty Company, who denied coverage, contending that the government recall was not specifically directed at GreenGate. The trial court disagreed and entered judgment in favor of GreenGate. The New York Appellate Division affirmed, finding it irrelevant that GreenGate was not specifically named in the government’s recall recommendation.

On Wednesday, a federal judge in Texas denied Factory Mutual’s Rule 12(c) motion for judgment on the pleadings, finding that the plaintiffs adequately alleged that the presence of COVID-19 on their property caused covered physical loss or damage in the case of Cinemark Holdings, Inc. v. Factory Mutual Insurance Co., No. 4:21-CV-00011 (E.D. Tex. May 5, 2021). This is the third COVID-19-related business interruption decision from Judge Amos Mazzant since March, but the first in favor of a policyholder. Taken together, the three decisions have two key takeaways and provide a roadmap for policyholders in all jurisdictions.

On Wednesday, a federal judge in New York denied FM’s Rule 12(c) motion for judgment on the pleadings after finding the Contamination Exclusion in the Factory Mutual policy to be ambiguous as to whether it bars coverage for business interruption losses resulting from communicable disease.  The case is Thor Equities, LLC v. Factory Mutual Ins. Co., No. 20 Civ. 3380 (AT) (SDNY).  This is a critical decision under the Factory Mutual policy form, which is substantively the same as policies issued by Factory Mutual’s sister company, Affiliated FM Insurance Company.  Factory Mutual and Affiliated FM have maintained that the contamination coverages are “exceptions” to this exclusion, with the exclusion precluding coverage for communicable disease loss under other policy coverages.  But the ruling validates what policyholders have been arguing – that communicable disease “loss” is covered throughout the Factory Mutual policy, in addition to under the sublimited communicable disease emergency response coverages.

Hunton insurance attorneys Syed Ahmad, Geoffrey Fehling, and Kevin Small commented on a retailer’s insurance dispute related to COVID-19 in the latest edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.

In a setback for retail-policyholders hoping to enforce coverage for losses due to COVID-19 in federal court, a Tennessee district court recently knocked out a complaint filed by a sprawling Nashville establishment seeking coverage under a food contamination provision in its property policy. The court’s opinion dismissing Nashville Underground LLC v. AMCO Insurance Co. is noteworthy due to the great lengths taken to define a policy provision—intended to provide broad coverage for disruption of business due to the suspicion of food contamination—in a way that limits coverage contrary to the reasonable expectations of businesses purchasing policies specifically tailored to protect against actual or suspected contamination.

Hunton insurance attorneys Syed Ahmad and Geoffrey Fehling provide several updates on recent recall insurance disputes in the latest edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.

A group of Las Vegas-based restaurants recently filed a class action lawsuit to recover business interruption damages against their insurer. The Egg Works chain alleged that U.S. Specialty wrongly denied their claims for financial losses stemming from the Nevada governor’s closure of non-essential businesses during the COVID-19 pandemic. The governor’s orders limited the restaurants to takeout and delivery service only.

Hunton Insurance attorneys Syed Ahmad and Geoffrey Fehling provided several updates on recent recall insurance disputes in the most recent edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.

In a recent Law360 expert analysis, titled “Considering Disclosure Risks In Sensitive Product Recalls,” Hunton Andrews Kurth insurance lawyers Syed S. Ahmad and Geoffrey B. Fehling discuss the disclosure risks companies face in pursuing insurance coverage for losses arising from product recalls that involve potentially sensitive communications with the Food and Drug Administration or other government agencies. The authors focus on a recent New York opinion, which denied a pharmaceutical company’s motion to seal status reports between the company and the FDA, and ...

Commercial general liability policies typically provide coverage to insureds for losses resulting from property damage caused by an “occurrence,” usually defined in the policy as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.” In the context of food recalls, however, the exact cause of the food damage, whether contamination, spoilage or something else, may be unknown. This creates uncertainty, and in turn, a coverage dispute, over whether the cause of damage was indeed accidental, and thus a covered ...

Product recalls are on the rise in many industries. As regulatory and consumer protection standards are getting tougher, product supply chains are becoming more complex. This increases the risk of errors, defects and contamination at all levels of operation. Too often, these problems do not manifest themselves until after a product hits the market. All of this can lead to staggering expenses for food and product manufacturers facing the risks and realities of product recalls.

On May 27, 2016, the U.S. District Court for the Western District of Washington allowed a declaratory judgment action filed by the Seattle Times Company for excess coverage to proceed to trial despite the insurer's arguments that the underlying policies had not been exhausted.

An article titled “A Primer On Insurance Coverage for Food Contamination Losses”, written by Syed Ahmad and Matthew McLellan, was published in the April 2016 issue of Food Logistics Magazine. The article provides an overview of insurance protection for food contamination events confronted by companies in the food and beverage supply chain. The article describes the availability of coverage under standard-form policies as well as specialized coverage for food contamination events. Through illustrations based on recent high profile contamination events and product ...