A federal appeals court affirmed dismissal of a bad faith charge against an insurer that was charged with inadequately compensating a recycling company’s business interruption loss in connection with a fire.

Phoenix C & D Recycling, Inc., which operates a plant in Des Moines, Iowa, that recycles construction debris and produces biofuel from wood products, suffered a fire in July 2017, according to Friday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Hallmark Specialty Insurance Co. v. Phoenix C & D Recycling Inc.

Dallas-based Hallmark Specialty insured Phoenix for up to about $6.5 million in property damage and business interruption. Hallmark paid Phoenix $124,800 for damaged wiring and equipment, among other costs in July 2018, although Phoenix contended it should have paid it in October 2017.

In addition, the company demanded $200,000 for business interruption losses, although it was paid only $28,774.34, according to the ruling.

Hallmark filed suit in U.S. District Court in Des Moines, seeking a declaratory judgment it did not breach the insurance policy or act in bad faith when it adjusted Phoenix’s claims.

The court granted Hallmark’s motion for summary judgment, although it granted Phoenix’s motion that the insurer was not entitled to the insurer’s request for attorneys fees.

The ruling was affirmed by a three-judge appeals court panel. In discussing the disputed business interruption payment, the ruling said the insurer’s consulting firm indicated its $28,774.34 calculation was preliminary and subject to change upon receipt of additional financial information.

“However, rather than supplying the missing information, Phoenix simply reasserted its belief that it had provided sufficient information and that, based on the financial information provided, it was entitled to a larger payment,” the ruling said.

“Phoenix did not provide an alternative calculation or explain why Hallmark’s calculation was incorrect. Based on these facts, we find that Hallmark had an objectively reasonable basis for denying Phoenix’s demand in limiting its payment to $82,774,34,” it said, in affirming the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.