U.S. District Judge, Arthur Schwab, denied Starr Surplus Lines Insurance Co.’s (Starr) request for summary judgment against H.J. Heinz Co. regarding an insurance payment dispute.
According to Law360, the lawsuit arose because Starr, as alleged by Heinz Co., “breached its contract in a $25 million-per-occurrence product contamination by refusing to pay for damages after China’s food control agency found high levels of lead in high-protein dry baby cereal sold in China.” Starr filed a counterclaim, alleging that Heinz misrepresented material facts pertaining to previous contamination incidents, therefore rendering the contract null. This case is being decided under New York law and coverage cannot be denied to Heinz unless it is found that the misrepresentation by Heinz is material. Starr claims if they had known about these previous incidents, they would not have extended the policy to Heinz Co. If Starr is able to establish this, the facts will be considered material. Heinz argued that any omission of the facts was because Starr failed to ask for it.
Schwab found there were still issues of fact that needed to be resolved which made summary judgment inappropriate. According to the legalintelligencer, the specific issue that needs to be determined is whether the misrepresentations by Heinz Co., if there were any, were material and should be determined before a jury.