Smithfield says insurance companies breached contract regarding nuisance lawsuits

Smithfield Foods has sued several insurance companies in a dispute over obligations to defend and indemnify property damage and bodily injury claims from people living near hog farms in the eastern part of North Carolina.

The largest hog and pork producer in the world, Smithfield is owned by WH Group of Luohe, Henan, China. Smithfield is the managing member of the other named plaintiff, Murphy-Brown LLC of Warsaw, North Carolina, in the action filed March 5 in Wake County Superior Court.

Earlier this month, a jury awarded 10 plaintiffs a total of $420,000 in punitive and compensatory damages in a hog nuisance trial in Duplin County. Murphy-Brown has already lost five cases over nuisance allegations it faced in federal district court with total damages exceeding $550 million, although the net payout eventually will be closer to $97.2 million due to a state cap on punitive charges, according to an NC Policy Watch blog post.

Murphy-Brown and Smithfield want a court to declare the insurance providers are obligated to defend the company or reimburse defense costs under primary, umbrella and excess commercial general liability and business automobile liability policies.

The companies also levied breach of contract claims against ACE American Insurance Co. and Old Republic Insurance Co., and treble damages and legal fees against ACE Property & Casualty Insurance Co., American Guarantee & Liability Insurance Co., Catlin Underwriting Syndicate 2003, Endurance Risk Solutions Assurance Co., Great American Insurance Co. of New York, St. Paul Fire & Marine Insurance Co., XL Insurance America and XL Specialty Insurance Co., for allegedly unfair claim settlement and deceptive business practices.

According to the complaint, the litigation the companies face all comes from plaintiffs asserting “causes of action for recurring, temporary, abatable, private nuisance.” They detailed the insurance policies purchased dating back to April 20, 2010, and said all the lawsuits the company faces should be covered.

The companies seek a jury trial for eight separate causes of action, asking the court to force the insurers to provide for defense or reimburse the companies for those expenses, and to force insurers to pay damages for failing to make full policy limits available to settle federal lawsuits.

On March 15, a few days after the filing, WH Group called for an end to the US-China trade war. According to South China Morning Post, the conglomerate said higher tariffs on U.S. exports to China are hurting its core business, noting bet profit for 2018 was down 4 percent to $1.05 billion. However, revenue was up 1 percent to $22.51 billion, according to the Morning Post, which said that slightly beat a consensus estimate of Bloomberg analysts.

Representing Murphy-Brown and Smithfield in the matter are Middlebrooks Law PLLC of Charlotte and Reed Smith LLP of Chicago.

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