Ohio Security Insurance Company and the Ohio Casualty Insurance Company argued in a Motion for Summary Judgment on Tuesday in the District of Oregon that it should not be required to defend or provide insurance based on hard cider company Forbidden Fruit Ciderhouse’s separate class-action misrepresentation lawsuit since the lawsuit did not relate to any bodily injury from consumers and the alleged injury is not the result of an accidental occurrence.
Forbidden Fruit Ciderhouse, which does business as 2 Towns Ciderhouse, filed a lawsuit claiming that the insurance companies representing it, under the liability coverage agreement, should pay the costs incurred by the plaintiff in the class-action suit where it was accused of false advertising. The plaintiff was accused of falsely labeling that its products had “no artificial flavors” when they contained DL-Malic Acid, which the putative class action plaintiffs claimed the Ciderhouse knew was artificial. The class sought damages for money lost and for being deprived of knowing which ingredients they digested.
The insurance companies, however, said the class in the separate lawsuit, which began in March 2020, did not allege injuries from ingesting DL-Malic Acid or that the substance has harmful effects on human health, but rather asserted economic charges which are not covered by the insurance. The Ciderhouse reported the putative class action claims to their insurance company later in March. Later, when it was informed the insurance coverage was not triggered by the lawsuit, it filed the present lawsuit. The plaintiffs have reached a settlement in their class-action lawsuit, whereby the Southern District of California reportedly entered an order approving the preliminary settlement in September.
Ohio Security and Ohio Casualty asked for the court to dismiss Forbidden Fruit’s claims against it, saying that it did not have the responsibility to defend it under the parties’ insurance contract because the policy “clearly and unambiguously requires, among other things, ‘physical injury, sickness or disease,’ to fit the bodily injury coverage.
The defendants further explained that it was not liable under the parties’ commercial umbrella policy, because the scope is limited to seven distinct categories which purportedly do not apply in this circumstance. The insurance companies said, “because the allegations within the four corners of the underlying complaint demonstrate that there is no coverage under the relevant coverages of either the Ohio Security or Ohio Casualty Policies, Ohio properly declined to defend Forbidden Fruit in the underlying action.” They asked for the complaint against it to be dismissed by the District of Oregon.