A petfood packaging company that damaged cans of dog food leading to a recall cannot seek compensation for damages under its commercial general liability policy, a US appeals court ruled.
The petfood packaging company, Express Packaging of OH Inc., cannot seek reimbursement from its CGL policy with American States Insurance Co. after damaging cans of dog food belonging to petfood producer Mars Inc. during a packaging process, according to a ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati, Ohio, USA.
According to court documents, after Mars Petcare hired Express Packaging in 2008, a machine designed by Express Packaging to remove cellophane from cases of dog food malfunctioned sometime between July-September 2008. The machine's defect punctured the dog food cans, causing it to spoil and forcing Mars to recall 821,424 cases of the product.
Express Packaging compensated Mars US$241,524 for losses and then filed the claim under its CGL insuance policy with American States Insurance for property damage. 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, which was upheld by the Ohio appeals court's ruling, according to a report.
“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,” stated Circuit Judge Eric L. Clay's ruling.