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Fresh Express Inc. v. Beazley Syndicate 2623/623 at Lloyd's

Court of Appeal of California, Sixth Appellate District

September 8, 2011, Filed



 [**131]  MIHARA, J.—In September 2006, the United States Food and Drug Administration (the FDA) issued an “alert” advising that “consumers not eat bagged fresh spinach” due to “an outbreak of E. coli 0157:H7” that was possibly linked to consumption of bagged fresh spinach. The FDA advisory disclosed that there had already been reports of 50 “cases of illness” and “one death.” The FDA withdrew its advisory two weeks later after the source of the outbreak had been identified.

Plaintiff Fresh Express Incorporated (Fresh Express), which markets bagged fresh spinach and other leafy greens, was not the source of the E. coli outbreak, but it suffered a significant loss of business in the wake of the FDA advisory. Fresh Express sought to recover these losses under its “TotalRecall+” insurance policy issued by defendants Beazley Syndicate 2623/623 at Lloyd's and QBE Insurance (Europe) Limited (collectively Beazley). Beazley denied Fresh Express's claim, and Fresh Express  [***2] filed a breach of contract action against Beazley. Fresh Express prevailed at trial and recovered the $12 million policy limit.

Beazley appeals and claims that, because the trial court erroneously defined the “Insured Event” under the policy as “the E. coli outbreak,” the court awarded Fresh Express damages for losses that did not come within the policy's coverage for losses that were the “direct result” of an “Insured Event” of “Accidental Contamination.” Beazley also contends that the trial court's alternative theory that Fresh Express's losses arose from “Accidental  [*1041]  Contamination” is not supported by substantial evidence. Fresh Express cross-appeals from the trial court's denial of its request for prejudgment interest. We agree with Beazley that the trial court erred in defining the “Insured Event.” We also conclude  [**132]  that the trial court's alternative theory lacks substantial evidentiary support. Therefore, we reverse the judgment and dismiss Fresh Express's cross-appeal as moot.

I. Factual Background

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199 Cal. App. 4th 1038 *; 131 Cal. Rptr. 3d 129 **; 2011 Cal. App. LEXIS 1265 ***

FRESH EXPRESS INCORPORATED, Plaintiff and Appellant, v. BEAZLEY SYNDICATE 2623/623 AT LLOYD'S et al., Defendants and Appellants.

Subsequent History:  [***1] The Publication Status of this Document has been Changed by the Court from Unpublished to Published October 4, 2011.

Time for Granting or Denying Review Extended Fresh Express, Inc. v. Beazley Syndicate 2623/623 at Lloyd's, 2011 Cal. LEXIS 13308 (Cal., Dec. 28, 2011)

Review denied by Fresh Express v. Beazley Syndicate 2623/623 at Lloyd's, 2012 Cal. LEXIS 881 (Cal., Jan. 11, 2012)

Prior History: Superior Court of Monterey County No. M88545, Susan M Dauphiné, Judge.

Disposition: The court reversed the judgment and remanded the matter with directions that the trial court enter a judgment of dismissal.


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Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Claim, Contract & Practice Issues, Exclusions, Plain Language, Reasonable Expectations, General Overview, Entire Contract, Question of Law, Civil Procedure, Standards of Review, Substantial Evidence