Court Opinion

ID: 9784806
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:54:29.398153+00
Date Added: 2024-06-11T07:35:59.641850
License: Public Domain

STEELE, Chief Justice, and NEWELL, Judge,
dissenting:
ConAgra Foods, Inc. filed suit against Lexington Insurance Co. to obtain insurance coverage for claims arising out of ConAgra’s production of salmonella-tainted peanut butter. The Superior Court awarded summary judgment to Lexington on the basis of the insurance contract between the parties. ConAgra now appeals this judgment. Because we believe the contractual text is unambiguous and favors Lexington’s position, we would affirm. Therefore, we respectfully dissent.
I. FACTS AND PROCEDURAL HISTORY
In 2006, ConAgra bought an insurance policy from Lexington which provides broad general liability coverage to ConA-gra once ConAgra satisfies stipulated retained limits. These retained limits operate like deductibles — ConAgra pays up to the stipulated level, and under the conditions provided in the contract, Lexington *74pays ConAgra’s liabilities that exceed the retained limits. The general liability retained limit is $3 million for what the policy defines as a general “Occurrence.”50
With regard to product liability claims specifically, the policy provides coverage according to a defined “Products-Completed Operations Hazard.”51 The policy clarifies the limits of coverage pertaining to this Products-Completed Operations Hazard in the “Lot or Batch Provision” made part of the policy by Endorsement #3. According to Endorsement # 3, “[w]ith respect to the Products-Completed Operations Hazard, all Bodily Injury or Property Damage arising out of one lot or batch of products prepared or acquired by [ConA-gra], shall be considered one Occurrence.” Endorsement # 3 also defines “lot or batch” as “a single production run at a single facility not to exceed a 7 day period.” Finally, Endorsement # 10 amends the schedule of retained limits applicable under various conditions to show that while the limit for general liability is $3 million per Occurrence, the limit for lot or batch coverage is $5 million per Occurrence.
ConAgra manufactures its peanut butter at a plant in Sylvester, Georgia in an uninterrupted, continuous process that exceeds seven days in duration. On February 15, 2007, ConAgra notified Lexington that it had recalled Peter Pan Peanut Butter it produced at its Georgia plant after the Centers for Disease Control identified salmonella contamination in the peanut butter. Later, ConAgra faced thousands of claims asserting that ConAgra was liable for damages for its failure to detect and eliminate the salmonella at its Georgia plant.
ConAgra notified Lexington that defending the peanut butter claims would likely exceed the $3 million retained limit on general liability and trigger Lexington’s obligations under the policy. On November 8, 2007, Lexington issued a reservation of rights letter advising ConAgra of the potential applicability of the Lot or Batch Provision and requesting documents related to ConAgra’s manufacturing process. On June 23, 2008, ConAgra informed Lexington that it was about to exceed the $3 million general liability retained limit, and on June 25, 2008, ConAgra exceeded it. On October 31, 2008, Lexington sent Con-Agra another reservation of rights letter in which it informed ConAgra that the Lot or Batch Provision applied. In this letter, Lexington did not deny coverage, but informed ConAgra of its belief that ConAgra had not yet triggered Lexington’s obligations because ConAgra had not alleged that it had satisfied the $5 million retained limit applicable under the Lot or Batch Provision.
The central issue in this case is whether the Lot or Batch Provision applies. ConA-gra argues that it does not apply. According to ConAgra, the general Occurrence definition applies, the peanut butter claims arise from a single Occurrence, and ConA-*75gra must pay a single $3 million retained limit in order to trigger Lexington’s coverage obligation. Because ConAgra has spent more than $3 million defending against the peanut butter claims, it argues that it has triggered Lexington’s insurance coverage. Contrarily, Lexington argues that the Lot or Batch Provision applies. According to Lexington, the Endorsement’s Occurrence definition applies, the peanut butter claims arise out of multiple lots or batches of product, and therefore ConAgra must pay a $5 million retained limit for each lot or batch represented by the peanut butter claims before it triggers Lexington’s coverage obligation. Because ConAgra neither has asserted that it has exceeded the $5 million lot or batch retained limit, nor has provided documentation to that effect, Lexington argues that it has no coverage obligation.
The parties pursued the same arguments in Superior Court. ConAgra sued Lexington to collect all excess liability over the $3 million general retained limit. Lexington counterclaimed and sought a declaration that the Lot or Batch Provision applied and that it had no coverage obligation unless and until ConAgra exceeded the $5 million per lot or batch retained limit. Lexington filed a Motion for Summary Judgment and ConAgra filed a Cross Motion for Summary Judgment. A Superior Court judge found the insurance policy unambiguous, agreed that the Endorsement’s Occurrence definition applied and granted summary judgment to Lexington. ConAgra appeals that judgment.
II. STANDARD OF REVIEW
We review a trial court’s decision to grant summary judgment de novo with respect to both the facts and the law.52 We also review the proper interpretation and construction of an insurance contract de novo.53 If the relevant contract language is clear and unambiguous, we must give it its plain meaning.54
III. ANALYSIS
We believe the language of this insurance policy is clear and unambiguous on its face. The Products-Completed Operations Hazard provisions of the policy apply to product liability claims, and Endorsement # 3 changes the definition of Occurrence for purposes of those claims. The peanut butter claims in this case fall within the purview of the Products-Completed Operations Hazard because they are bodily injury claims occurring away from ConA-gra’s premises and arising out of ConA-gra’s products. Endorsement # 3 instructs the parties to treat as a single Occurrence all bodily injury claims that arise from each lot or batch of product, and it defines a “lot or batch” as “a single production run at a single facility not to exceed a 7 day period.” Consequently, with respect to products liability claims arising out of the Products-Completed Operations Hazard, there is one Occurrence for, at most, every seven day period of production during which bodily injury claims, like the peanut butter claims here, arise.
ConAgra argued that the policy’s general Occurrence definition applies in this case, primarily because it manufactured the tainted peanut butter products in an uninterrupted, continuous production schedule that exceeded seven days in du*76ration. ConAgra’s argument implies that reliance upon Endorsement #3 disaggre-gates claims that should otherwise be aggregated and defeats coverage rather than enhances it. This interpretation, however, conflicts with the explicit agreement of the parties. ConAgra and Lexington agreed to specific terms — in Endorsement # 3— that apply to the precise product liability bodily injury claims that are asserted here. Specifically, those terms dictate that all bodily injury claims arising out of one lot or batch of completed products constitute one Occurrence, and they define one lot or batch as a single seven day production run. They make no exception nor are they subject to any caveat that depends upon the de facto production schedule ConAgra decides to pursue. Accepting ConAgra’s argument that the general policy definition of Occurrence applies in this case would eviscerate the seven day limitation contained in the Lot or Batch Provision and defeat the method that the parties expressly agreed upon for determining an Occurrence for purposes of product liability claims.
The insurance policy in this case is a general insurance policy. The parties agreed to a general definition of Occurrence that applies in cases of general liability. The parties also agreed to the terms of Endorsement # 3, including the Lot or Batch Provision. The very purpose of Endorsement # 3 and its Lot or Batch Provision is to allow the parties to zero in on production — specifically, products liability claims. It explicitly changes the definition of Occurrence for purposes of bodily injury claims subject to the Products-Completed Operations Hazard. In cases involving those claims, which include this case, Endorsement # 3 intentionally temporally limits the aggregation of claims to those arising out of the same discrete seven day period of production and then subjects those aggregated claims to an increased retained limit of $5 million.
Considering the vast scope of potential liability that could arise from ConAgra’s completed products it produces in continuous manufacturing cycles, imposing these dual limitations — redefining Occurrence to permit aggregation of claims only within distinct seven day production runs and raising the applicable retained limit from $3 million to $5 million — may have been the only way that Lexington could offer insurance coverage at a price ConAgra would pay. Regardless of the motivation underlying the inclusion of these terms in the policy, however, their import is clear. With respect to bodily injury claims arising out of finished products under the Products-Completed Operation Hazard, the insurance policy imposes a $5 million retained limit on each lot or batch, which the policy defines as a discrete production run lasting seven days or less. Unless and until ConAgra satisfies that heightened limit for any of its lots or batches, ConA-gra does not trigger Lexington’s coverage.
IV. CONCLUSION
We believe the text of the insurance policy is clear. Consequently, we interpret the text according to its plain meaning. In this case, ConAgra and Lexington used Endorsement # 3 to alter the general definition of Occurrence and raise the applicable retained limit in cases of bodily injury claims arising out of the Products-Completed Operation Hazard. Because the peanut butter claims are products liability claims for bodily injury, they fall within the purview of Endorsement # 3. Therefore, we believe that the policy requires ConAgra to satisfy a $5 million per seven day production run retained limit with respect to the peanut butter claims before it can trigger Lexington’s insurance cover*77age. Because we believe the text is unambiguous and yields this result, and because ConAgra has not asserted that it reached its applicable retained limit, we believe ConAgra has not yet triggered Lexington’s coverage and exposure to the tainted peanut butter claims. We would affirm the Superior Court. The majority believes otherwise, and therefore, we dissent. respectfully

. The contract generally defines “Occurrence” as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions. All such exposure to substantially the same general harmful conditions will be deemed to arise out of one Occurrence.”

. The contract defines the "Products Completed Operations Hazard,” in relevant part, as "all Bodily Injury and Property Damage occurring away from premises [ConAgra] own[s] or rent[s] and arising out of [ConA-gra’s] Product or [ConAgra’s] Work.” It explicitly excludes products still in ConAgra’s physical possession, work ConAgra has not yet completed or abandoned, and bodily injury or property damage arising out of the transportation of property or the existence of tools, uninstalled equipment, or abandoned or unused materials.

. LaPoint v. AmerisourceBergen Corp., 970 A.2d 185, 191 (Del.2009).

. Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127, 129 (Del.1997).

. Id.