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Source Food Tech., Inc. v. United States Fid. & Guar. Co.

United States Court of Appeals for the Eighth Circuit

October 5, 2006, Submitted ; October 13, 2006, Filed

No. 06-1166

Opinion

 [*834]  GRUENDER, Circuit Judge.

Source Food Technology, Inc. ("Source Food") appeals the order of the district court 2 granting summary judgment to  [*835]  United States Fidelity and Guaranty Company ("USF & G") on Source Food's claim for breach of contract for denial of insurance coverage based on "direct physical loss to" its property. For the reasons discussed below, we affirm the judgment of the district court.

 [**2] I. BACKGROUND

Source Food is a Minnesota company that sells cooking oil and shortening containing beef tallow from which the cholesterol has been removed ("beef product"). The United States Department of Agriculture ("USDA") prohibited the importation of ruminants or ruminant products from Canada on May 20, 2003, after a cow in Canada tested positive for bovine spongiform encephalopathy, commonly known as "mad cow disease." At the time the border was closed to the importation of beef, Source Food's sole supplier of beef product was Hubbert's Industries in Ontario, Canada. Hubbert's Industries manufactured and packaged the beef product in Canada using Source Food's patented manufacturing process for removing cholesterol from beef tallow. Just prior to the embargo, Source Food placed an order for beef product with Hubbert's Industries. The beef product was manufactured, packaged and loaded onto a truck for shipping to Source Food but was not shipped due to the USDA's order. Although the parties dispute whether at this point Source Food owned the beef product, we assume, as did the district court, that the beef product inside the truck in Canada was the property of Source [**3]  Food. 3 The parties agree that there is no evidence that the beef product was contaminated by mad cow disease.

When the border was closed to the importation of beef products, Source Food was unable to fill orders and was forced to find a new supplier of beef product. Source Food's best customer, Casey's General Store, Inc., terminated its contract with Source Food seven months early because Source Food was unable to deliver the required one or two truckloads of beef product per week after May 20, 2003.

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465 F.3d 834 *; 2006 U.S. App. LEXIS 25525 **

Source Food Technology, Inc., Appellant, v. United States Fidelity and Guaranty Company, Appellee.

Subsequent History: Rehearing denied by, Rehearing, en banc, denied by Source Food Tech., Inc. v. United States Fid., 2006 U.S. App. LEXIS 29355 (8th Cir., Nov. 29, 2006)

Prior History:  [**1]  Appeal from the United States District Court for the District of Minnesota.

Source Food Tech., Inc. v. United States Fid. & Guar. Co., 2005 U.S. Dist. LEXIS 32438 (D. Minn., Dec. 7, 2005)

CORE TERMS

Food, beef, physical loss, contamination, insurance policy, district court, coverage, products, manufacturing, border, summary judgment, supplier, truck, package, cases, smoke, oats

Civil Procedure, Appeals, Summary Judgment Review, Standards of Review, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Judicial Review