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Court rules for insurer in dog food can damage dispute

Court rules for insurer in dog food can damage dispute

CINCINNATI—A packaging company that incorrectly performed its work and damaged cans of dog food leading to a recall cannot seek indemnification for damages under its commercial general liability policy, a U.S. appeals court ruled Friday.

Express Packaging of OH Inc. cannot seek reimbursement from its CGL policy with American States Insurance Co. after it damaged cans of dog food belonging to a pet food unit of Mars Inc. during a packaging process, according to the ruling by a three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati.

Mars Petcare U.S. hired Express Packaging in 2008 to perform packaging services. When a machine that Express Packaging designed and owned that removes cellophane from cases of the dog food malfunctioned sometime between July and September of that year, it punctured many cans of the dog food. The dog food subsequently spoiled and caused Mars to recall 821,424 cases of the product, according to court documents.

The Newcomerstown, Ohio-based packaging company compensated Mars $241,524 for losses and filed a claim under its CGL insurance policy with American States Insurance for property damage, according to court documents.

American States Insurance denied coverage under an exclusion to the policy that states that the insurer will not indemnify a loss related to work incorrectly performed.

On Friday, the 6th Circuit panel unanimously upheld a lower court's ruling siding with the insurer.

“The policy language appears unambiguous as applied to the facts of the plaintiff's claim, and a straightforward reading of that language demonstrates that the damage to the cans is excluded from coverage by the exclusion,” Circuit Judge Eric L. Clay wrote in the ruling.