Reduction Measures

The document also covers Ken’s Foods’ obligations with respect to mitigation. In the case that business operations are halted, the insured is required to take reasonable steps to reduce any actual loss of revenue, “diligently execute” a clean-up, and restart business as soon as is practical.

Because there is no evidence that Massachusetts common law gives Ken’s Foods the right to recover “costs expended to avoid a suspension of operations [that] are not covered by the appropriate insurance policy,” a federal district court awarded summary judgement to Steadfast.

In order to compel Steadfast to pay for its preventative costs, Ken’s Foods solely relied on a common law responsibility, but it could find no Massachusetts cases that recognised such a requirement. According to Ken’s Foods, the obligation would be recognised by the Massachusetts Supreme Judicial Court since it “is profoundly founded in the common law.” But that concept has now been rejected by the court.

In addition to disputing that it had a common law duty, Steadfast argued that Massachusetts has flatly rejected imposing any common-law duty that would require insurers to take actions outside of what is expressly stated in the policy. However, the federal court stated that it did not concur that Massachusetts had already reached a conclusion on the topic and that there were no rulings by the Massachusetts Supreme Court.