Facts

Foster Poultry Farms Inc. sued Certain Underwriters at Lloyd's London involving an alleged breach of an insurance contract.

The court granted partial summary judgment to plaintiff on coverage, holding that there was an insured event. The parties conducted a bench trial on damages.

PLAINTIFF'S CONTENTIONS:
Plaintiff had to shut down its processing plant in Livingston twice and destroy millions of pounds of chicken after federal authorities found the facility was noncompliant. Plaintiff filed a claim with defendant-insurer to cover losses in connection with the shutdown. Defendant, however, declined coverage for the entire event.

DEFENDANT'S CONTENTIONS:
Defendants contended that under the court's partial summary judgment ruling, only losses related to the first, government-imposed shutdown were covered, as the losses related to the second, voluntary shutdown did not arise solely and directly from an "insured event" under the policy.

Result

Following a bench trial, the court found that the second shut down was not covered, only the first one, and therefore, awarded only damages resulting from the first shutdown. The court found that plaintiff's insurable losses, before application of the policy's $2 million retention, amounted to $2,706,398. Accordingly, it awarded Foster $14,958 in PR expenses, $1,047,400 for the loss Foster Farms incurred for having to dispose of condemned chicken products. The $1,107,550 award was for lost profits on a customer, $3,726 for loss of gross profit resulting from downgrading organic chicken, $346,164 in loss associated with unfilled orders, $54,241 in loss associated with customer claims and credits, $11,457 in incremental labor costs, and $101,369 in increased cost of working. In sum, the court awarded $2,706,398 in total damages to Foster..

Other Information

FILING DATE: June 18, 2014.