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Hampton Foods, Inc. v. Aetna Casualty & Surety Co.

United States Court of Appeals for the Eighth Circuit

November 11, 1985, Submitted ; March 24, 1986

Nos. 85-1155, 85-1192 -EM

Opinion

 [*351]  HEANEY, Circuit Judge.

The Aetna Casualty and Surety Company appeals from an order of the district court which held that Aetna's "all-risks" insurance policy with Hampton Foods, Inc., provided coverage for loss suffered by Hampton when it was forced to vacate its building due to danger of the building's collapse. Hampton appeals from the order of the district court, which denied recovery for prejudgment interest, accrued interest on alleged corporate indebtedness, recovery of lost profits and penalties for vexatious refusal to pay. We affirm the finding of coverage and the denial of liability for lost profits, prejudgment interest and penalties for vexatious refusal to pay, and reverse and remand with respect to Aetna's liability for accrued interest on alleged corporate indebtedness.

I. BACKGROUND.

Hampton commenced operation [**2]  of a grocery store in August, 1979. On June 1, 1980, Aetna issued an insurance policy insuring Hampton's personal property against "loss or damage * * * resulting from all risks of direct physical loss" and covering loss of certain earnings and expenses under what is generally known as business interruption coverage. Aetna did not insure the building in which Hampton conducted its business and Hampton did not own the building. On June 13, 1980, plaster fell from the ceiling of the building and the building evidenced other signs that it was in imminent danger of collapse. On June 17, the building's owner told Hampton that the building could collapse at any time and that Hampton must vacate the premises. On July 3, the City Building Commissioner informed Hampton that it would not be permitted back in the building after July 8, 1980, unless the building was repaired. Over the July 4th weekend, Hampton removed its property and inventory from the building; the items were sold at salvage for $22,683.58. Hampton and Aetna later stipulated that the value of Hampton's inventory at the time of the salvage sale was $92,651.61 retail and $76,185.52 wholesale. Hampton also owned business equipment [**3]  worth $10,221.00, which was lost when the building was demolished, without notice to Hampton, in August, 1980.

Aetna denied coverage for Hampton's losses, Hampton sued, and the district court granted summary judgment for Hampton on the issue of coverage. After further proceedings on damages, the district court, in an amended order, denied recovery for lost profits, prejudgment interest, interest expenses on alleged corporate indebtedness and damages for vexatious refusal to pay, and granted recovery for Hampton's continuing business expenses in the amount of $9,100.00 and for loss of business personal property in the amount of $68,447.08, for a total of $77,547.08. Both parties appeal.

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787 F.2d 349 *; 1986 U.S. App. LEXIS 23235 **

Hampton Foods, Inc., Appellant/Cross-Appellee, v. The Aetna Casualty and Surety Company, Appellee/Cross-Appellant

Subsequent History:  [**1]   Rehearing Denied May 16, 1986.

Prior History: Appeal and Cross-Appeal from the United States District Court for the Eastern District of Missouri.

CORE TERMS

expenses, district court, damages, insured, physical loss, coverage, prejudgment interest, collapse, losses, trial court, restoration, business interruption, refuse to pay, evacuation, ambiguous

Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, General Overview, Healthcare Law, Payment Systems, Insurance Coverage, Claim, Contract & Practice Issues, Ordinary & Usual Meanings, Exclusions, Reasonable Expectations, Noncommercial Insureds, Property Insurance, Coverage, Hurricanes & Tornadoes, Exclusions, Civil Procedure, Pleadings, Counterclaims, Contracts Law, Types of Damages, Compensatory Damages, Remedies, Judgment Interest, Prejudgment Interest, Business Insurance, Business Interruption Insurance, Technical Constructions & Meanings