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Potter Anderson & Corroon Successful in ConAgra Foods Appeal

May 2, 2011

Potter Anderson & Corroon LLP successfully represented ConAgra Foods, Inc. in its insurance coverage action against Lexington Insurance Company on appeal to the Delaware Supreme Court.  Partner John E. James represented ConAgra in the original case as well as in the appeal. 

ConAgra’s appeal related to the alleged contamination in 2007 of certain Peter Pan® and Great Value® peanut butter products manufactured by ConAgra in its Sylvester, Georgia plant. ConAgra was subsequently sued by consumers who may have purchased the products produced at that plant.  ConAgra had purchased an insurance policy from Lexington to insure itself against personal injury claims arising from contamination of its products. When ConAgra sought coverage under that policy, Lexington denied coverage and ConAgra then filed suit in the Superior Court of the State of Delaware.  On cross-motions for summary judgment concerning a “batch” clause in the Lexington policy, the Superior Court ruled in favor of Lexington.  It held that  the “batch” clause was clear and unambiguous, which had the effect of denying all recovery for defense and indemnity to ConAgra on the $25 million Lexington policy.  The Supreme Court, sitting en banc, disagreed, finding the “batch” clause to be ambiguous, and ordered Lexington to pay ConAgra’s defense costs.  The Supreme Court remanded the case to the trial court to review extrinsic evidence to determine whether Lexington also has a duty to indemnify ConAgra for any settlements and judgments subject to the application of the “batch” clause.