Steadfast rejected the claim for reimbursement of expenses incurred to avoid a suspension of operations, claiming that while the insurance policy does cover business losses brought on by a total shutdown, it does not cover “ex ante” (before the event) preventative measures.

A federal district court’s dismissal of Ken’s Foods’s claim for

The state’s supreme court sided with the insurer, concluding that the expenses were not related to cleanup, weren’t required to stop an impending threat to public health, welfare, or the environment, and weren’t the result of a business disruption since operations were never halted. Since there was no business interruption at all, they were also not necessary to lower the costs associated with it. The costs appear to fit under the policy’s exclusion for maintenance and process improvements, the court concluded, even if those adjustments were demanded by a government agency as a result of a cleaning.

The court stated, “In conclusion, the insurance policy’s clear wording controls, and hence, there is no basis to impose a common-law duty conflicting with the coverages and exclusions set forth in the policy.”

Wastewater entered rivers in December 2018 due to an unintentional spill at the processing factory of Ken’s Foods in Georgia. As soon as the “pollution event” occurred, Ken’s Foods took action to stop additional discharge and clean up the contamination, including by working closely with Georgia state officials. By February 2019, the source had been shut down.

One goal of Ken’s Foods’ efforts was to keep operations at one of its four facilities in Georgia from being suspended. The actual pollution event was stopped, “allowances” were negotiated with the county to accept pre-treated water that would have otherwise exceeded permitted levels, and the contaminated water was continuously processed before being released to the county for additional treatment.