Stephen Prignano and Denise Kraft, of Edwards Angell Palmer & Dodge, LLP, have obtained summary judgment for Lexington Insurance Company (“Lexington”) in an insurance coverage dispute arising out of a salmonella outbreak caused by contaminated peanut butter. Lexington’s insured, ConAgra Foods, Inc., (“ConAgra”) argued that Lexington had a duty to defend it against approximately 24,000 claims alleging injuries from its peanut butter, and asserted claims against Lexington for breach of contract and bad faith. The issue before the court was the interpretation of the insurance policy’s “Lot or Batch” provision, which Lexington argued broke the peanut butter production into a series of occurrences, which were each subject to a separate $5 million self-insured retention to be paid by ConAgra before Lexington’s duty to defend or indemnify was triggered. ConAgra argued that the “Lot or Batch” provision did not apply, and that the peanut butter claims all arose from a single occurrence subject to a single retention. In an opinion issued last Friday, the Delaware Superior Court sided with Lexington and found that the “Lot or Batch” provision was applicable to the peanut butter claims, and that Lexington has no duty to defend until ConAgra establishes that it has paid the $5 million self-insured retention for each lot or batch of peanut butter that was produced. Accordingly, the court granted summary judgment for Lexington on ConAgra’s breach of contract claim, allowing only limited discovery on the bad faith claims to go forward.
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