Largest pork producer claims insurance companies failed to indemnify

A Chinese-owned American pork producer is suing insurance companies over what it says are failed obligations to defend and indemnify property damage and bodily injury claims from people living near hog farms in the eastern part of North Carolina.

Smithfield Foods, the largest hog and pork producer in the world, is owned by WH Group, of Luohe, Henan, China. In May 2018, Bloomberg reported annual compensation for Wan Long, WH Group’s chairman and CEO, was $291 million in salary and stock payments in 2017. Bloomberg also said Wan received at least $759 million in salary and stock between 2013 and 2017, citing company filings.

Smithfield is the managing member of the other named plaintiff, Murphy-Brown LLC, of Warsaw, N.C., 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, N.C. 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 that 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 Company and Old Republic Insurance Company, and treble damages and legal fees against ACE Property & Casualty Insurance Company, American Guarantee & Liability Insurance Company, Catlin Underwriting Syndicate 2003, Endurance Risk Solutions Assurance Company, Great American Insurance Company of New York, St. Paul Fire & Marine Insurance Company, XL Insurance America, and XL Specialty Insurance Company, for allegedly unfair claim settlement and deceptive business practices.

According to the complaint, federal litigation that 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.

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

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Smithfield Foods, Inc. Wake County Superior Court

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