By a MetNews Staff Writer
The First District Court of Appeal declared yesterday that ConAgra—a holding company with assets of $16.4 billion which has acquired a spate of major food brands—cannot recover from its insurers the $1.02 million it became obliged to pay into an abatement fund based on sales of paint containing lead by W. P. Fuller & Co., assets and liabilities of which it acquired in 1990.
Former Presiding Justice J. Anthony Kline wrote the opinion for Div. Two, sitting on assignment. The opinion upholds a summary judgment granted by San Francisco Superior Court Judge Richard B. Ulmer Jr. in favor of ConAgra’s insurers.
The ruling was based on Insurance Code §533 which provides:
“An insurer is not liable for a loss caused by the wilful act of the insured….”
“The underlying litigation established that Fuller—the corporate entity—had actual knowledge of the harms associated with lead paint when it promoted lead paint for interior residential use….[T]his actual knowledge finding necessarily means Fuller acted with knowledge that lead paint was ‘substantially certain’ or ‘highly likely’ to result in the hazard found to exist in the underlying litigation, and therefore established the willful act required to trigger section 533 prohibition against insurance coverage.”
“ConAgra’s argument that the knowledge required for application of section 533 required proof of what knowledge was held by specific individuals within the company is in effect a challenge to factual determinations made in the underlying litigation that are now final and binding….[A]n insurer’s duty to indemnify is determined by the actual basis of liability imposed on the insured….Since the findings establishing that liability also establish the willful act required for application of section 533, ConAgra’s position is untenable.”
Public Nuisance Suit
The litigation was instituted in 2000 by the County of Santa Clara, which alleged a public nuisance. Joining in the action were the counties of Los Angeles, Alameda, Monterey, San Mateo, Solano, and Ventura and the cities of Oakland, San Diego, and San Francisco.
In 2013, ConAgra, along with NL Industries, Inc. and Sherwin-Williams Company, were held to be jointly and severally liable and a fund was established with assets to be devoted to abatement of lead paint in pre-1978 homes in the 10 jurisdictions that had maintained the action. Under a July 10, 2019 settlement, each of the companies was to pay $101,666,666.
ConAgra became liable for Fuller’s conduct when it acquired Beatrice Company in 1990.
Given that it had no role in marketing paint with lead in it, ConAgra argued, it should not be penalized. Kline responded:
“As successor to Fuller through a series of mergers, ConAgra became liable for the public nuisance created by Fuller’s conduct and, therefore, stands in Fuller’s shoes for purposes of section 533.”
The case is Certain Underwriters at Lloyds London v. Conagra Grocery Products Company, A160548.
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