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Linda Wendell Hsu and Mark Inbody Secure Ninth Circuit Victory in Upholding Summary Judgment For Insurer Under "Contamination" Policy

Selman Breitman's insurer client issued a product contamination policy to the insured frozen food manufacturer. The FDA issued a protective recall of the insured's product because one of its supplier's facilities tested positive for salmonella bacteria, but there was no evidence that the tainted ingredient was incorporated into the insured's product.

After the insurer denied the request for first party coverage, the insured sued for "bad faith" denial of the claim. As a matter of first impression under California law, the Eastern District of California granted summary judgment to the insurer because there was no evidence of actual contamination of the insured's product. The court agreed with the insurer's position that because the policy was a contamination policy and not a recall policy, proof of actual contamination was required to trigger coverage.

After briefing and oral argument by Ms. Hsu, the Ninth Circuit Court of Appeals agreed with Selman Breitman's position that there was no coverage under the product contamination policy, because the mere risk of contamination did not trigger the policy's coverage for "accidental or unintentional contamination, impairment or mislabelling of an Insured product(s)..." Neither the recall of the insured's product nor the economic effect of the recall was an "impairment" of the insured's product under the policy. Because the insurer's denial was proper, it did not breach the duty of good faith and fair dealing as a matter of law.

The Ninth Circuit's decision is another good example of Selman Breitman's experience and ability to defend bad faith cases involving unique coverage issues. Congratulations to Linda Wendell Hsu and Mark Inbody on another well-deserved appellate victory on behalf of Selman Breitman's client.

Linda Hsu is the Managing Partner of Selman Breitman's San Francisco office. Mark Inbody is a Partner in the San Francisco office coverage group. Both attorneys are licensed in California and Washington. Please do not hesitate to contact Linda or Mark directly for any of your coverage needs.


Selman Breitman provides this information for educational purposes. Case results depend upon a variety of factors unique to each case. Case results do not guarantee or predict a similar result in any future case. This information should not be construed or relied on as legal advice or to create a lawyer-client relationship.