CHICAGO (CN) – Multiple insurers have to cover the multimillion settlements for a shipment of E. coli-tainted hamburger meat that sent one man to the hospital and killed his granddaughter, a federal judge ruled.
Valley Meats manufactures beef and pork products, including hamburgers, which it distributes to restaurants and other food-service outlets.
In April 2009, John Strike was infected with E. coli after eating Valley Meat ground beef for lunch at a Veterans of Foreign Wars dining hall. Strike was admitted to the hospital for two weeks and spent the rest of the spring recuperating in a nursing home.
In May, Strike’s 7-year-old granddaughter, Abigail Fenstermaker, contracted the infection from her grandfather. She was diagnosed with acute renal failure caused by E. coli and died of a stroke one week later. Strike died the next year.
Valley Meats has a primary general liability insurance policy with Travelers Property Casualty Co. with limits of $1 million per occurrence and $2 million in the aggregate. RSUI Indemnity Co. issued Valley Meats a secondary policy with limits of $10 million per occurrence.
“To protect Valley Meat’s interests, when the opportunity arose to settle Strike’s claim for $500,000 and Fenstermaker’s claim for $2.5 million, Travelers agreed to pay an additional $500,000 above its per occurrence limited, subject to its right to recoup that amount from RSUI if the court determines that the Strike and Fenstermaker claims involved a single occurrence,” according to the 7th Circuit.
Both insurance companies filed cross-motions for summary judgment.
U.S. District Judge Robert Gettleman agreed with Travelers that the facts lead “to the inescapable conclusion that there is but one cause of the claimants injuries, and thus one occurrence under the policies.”
“Because it is undisputed that 23 days elapsed between Strike’s onset of symptoms and Fenstermaker’s onset of symptoms, RSUI argues that it is not possible to conclude that the two claims are so closely linked in time that an average person would consider them one event,” Gettleman summarized.
But the court took a different view. “As Travelers correctly argues, the negligence asserted against Valley Meats is a discreet act – the production of a single batch of tainted meat,” Gettleman wrote. “There were no intervening acts of negligence by Valley Meats that occurred between the time Strike and Fenstermaker became ill. Because the damages for which coverage is sought result from the manufacture and sale of a defective product, ‘the loss emanates from a single cause and there is but one occurrence.'”