Hot Stuff Foods, LLC v. Houston Casualty Co., No. 14-1192 (8th Cir. 2014)
Annotate this CaseAfter Hot Stuff recalled mislabeled sandwiches containing MSG, Hot Stuff sought indemnification from HCC for losses sustained due to the recall. HCC denied coverage on the ground that the claim did not involve an "Accidental Product Contamination" as defined by the policy. The district court granted Hot Stuff's motion for partial summary judgment. The court disagreed with the district court's interpretation of the policy term "may likely result." The court concluded that whether the consumption of the mislabeled sandwiches "may likely result" in physical symptoms of sickness or disease is a genuine dispute of material fact that cannot be answered by a summary judgment record that consists of inconclusive government reports and scientific studies and the dueling opinions of experts far removed from the relevant marketplace. Unless the district court determines on remand that summary judgment is appropriate based on the full trial record, the coverage question must be submitted to the jury. However, as the damages issues appear to be distinct and separable from the question of coverage, damages need not be retried. Further, the court concluded that the district court did not err when it denied HCC's motion for judgment as a matter of law in regards to the loss gross profit award, and the district court did not clearly err in denying an award of attorney's fees.
Court Description: Civil case - Insurance. Where the plaintiff manufacturer voluntarily recalled some of its sandwich products because their labeling failed to disclose the presence of MSG, the manufacturer bore the burden under the insurance policy in question of proving that consuming the mislabeled sandwiches may likely result in physical symptoms of bodily injury, sickness or disease, and on the record before it, the district court erred in granting partial summary judgment for the manufacturer on the coverage issue; on remand, unless the district court determines that summary judgment is appropriate on the full trial record, the coverage issue must be submitted to a jury; the district court did not err in denying the insurer's motion for judgment as a matter of law on the manufacturer's claim for lost profits; there was no clear error in denying the manufacturer's request for an award of attorney's fees under South Dakota Codified Law Section 58-12-3 which allows recovery of attorneys' fees in cases where the insurer has vexatiously or without reasonable cause refused to pay the full amount of the loss.
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