Berry Plastics Corp. v. Illinois National Insurance Co.
Packgen's customer, CRI, required a new type of intermediate bulk container (IBC) for a chemical catalyst used in refining crude oil into other petroleum products. The new IBC's outer surface consisted primarily of polypropylene fabric rather than metal; it could be collapsed for storage. CRI's catalyst is self-heating and can ignite when exposed to oxygen. Packgen engaged Berry to manufacture a laminate of woven polypropylene chemically bonded to aluminum foil, to strengthen the IBC’s exterior and serve as a barrier to oxygen, ultraviolet light, and infrared radiation. By April 2008, Packgen was selling an average of 1,261 IBCs per month to CRI and was making overtures to other petroleum refiners. While CRI personnel were lifting an IBC full of catalyst, the foil layer separated from the polypropylene, exposing the interior lining. Other failures followed, some resulting in fires. Packgen determined that foil laminate obtained from Berry was defective. CRI canceled pending orders and destroyed and refused to pay for IBCs that Packgen had provided. Word reached other potential Packgen customers. Packgen sued Berry. The First Circuit affirmed an award of $7.2 million in damages. Berry unsuccessfully demanded that Illinois National indemnify it for all but the first $1 million, which Berry’s primary liability insurer agreed to cover. The Seventh Circuit affirmed summary judgment in favor of Illinois National. The policy covers damages that Berry is required to pay “because of … Property Damage.” While some portion of the lost profits award might be attributable to property damage, Berry did not attempt to make that showing. View "Berry Plastics Corp. v. Illinois National Insurance Co." on Justia Law