Sokol and Co. v. Atlantic Mutual Insurance Co.
United States Court of Appeals for the Seventh Circuit
430 F.3d 417 (2005)
- Written by Rich Walter, JD
Facts
Sokol and Company (plaintiff) supplied packets of its peanut butter to Continental Mills (Continental). Continental included these packets in boxes of its cookie mixes. When Continental discovered that some of Sokol’s peanut butter had turned rancid, Continental recalled its mixes from retailers. Continental replaced the spoiled packets before they could contaminate Continental’s mixes or reach consumers. Continental billed Sokol for its recall and replacement costs. Sokol tendered these bills to its insurer, Atlantic Mutual Insurance Company (Atlantic) (defendant). When Atlantic refused to cover Continental’s claims, Sokol paid those claims itself and then sued Atlantic for indemnification. A federal district court ruled that the property-impairment and product-recall business-risk exclusions in Sokol’s commercial general liability (CGL) policy precluded coverage and entered judgment for Atlantic. Sokol appealed to the Seventh Circuit.
Rule of Law
Issue
Holding and Reasoning (Sykes, J.)
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