On July 11, US District Court judges in Arkansas, USA ruled that a US$2.8 million award to pet food and poultry producer Simmons Foods Inc. would stand, reported Law360. The Eighth Circuit judiciary panel upheld the jury award to Simmons, which had resulted from a dispute over the insurance coverage of a canning plant that needed to be rebuilt. However, the panel struck down Simmons' demand for a nearly US$600,000 award of prejudgement interest.
The damages to Simmons' facilites in Oklahoma, USA occured during a 2011 snowstorm in the US Midwest. Simmons is headquartered in Siloam Springs, Arkansas with an annual pet food division revenue of US$260 million in 2016, according to the Petfood Industry Top Companies database.
Legal reason why Simmons’ award was upheld
The insurers involved had argued that they shouldn’t have to pay out because Simmons Foods had filed their claim beyond the one-year deadline established by the insurance companies, according to court documents posted by Justia. However, the panel of judges ruled that there was a five-year window for such claims under Arkansas law, which trumped the insurance companies’ rules. So, the jury award was still valid.
“The district court applied Arkansas law—which voids such contractual provisions, unlike Oklahoma law—and denied the motion,” wrote Circuit Judge William Riley in the decision.
The judges denied Simmons’ request that the insurers pay an additional 12 percent in prejudgement interest.
The insurance companies involved were Industrial Risk Insurers and Ironshore Specialty Insurance Company. Swiss Reinsurance America Corporation and Westport Insurance Corporation were also named in the documents.
Background of Simmons’ legal battle with insurers
In February 2011, a massive snowstorm blanketed Oklahoma and Missouri, damaging Simmons' facilities, including covered buildings and farms. Simmons filed a claim, but there was a dispute about their can-making facility in Fort Gibson, Oklahoma. The 300 by 400 foot metal structure suffered damage to its roof and support columns.
Simmons and insurers disagreed over how much repair was covered by the insurance policy. Simmons argued that the entire structure needed rebuilding and that cost should be covered. The insurers argued that only the damages to the roof and columns were covered. A series of legal challenges ensured, culminating in the most recent decision by Judge Riley and the others on the panel.
