U.S. Specialty Ins. Co. v. Catalent

MCWG Decisions, 2017

MCWG client wins declaratory judgment in a $10 million lawsuit OVER coverage for Extortion Property Damage.
U.S. Specialty Ins. Co. v. Catalent, Inc., No. 16cv4414 (DLC)

The insured sought coverage for business interruption losses in excess of $10 million allegedly sustained during a five-month government-mandated shutdown of its manufacturing operations after the discovery of "out-of-place" softgel capsules in several product batches at the insured's manufacturing facility.  The insured sought coverage for "Extortion Property Damage" under a Special Coverages Policy under the theory that the incidents must have been the result of malicious acts.  There was no evidence, however, that the insured received a "threat, communicated directly or indirectly . . .to cause physical damage or loss to PROPERTY," or a written or oral demand for money (i.e. a ransom) related to the misplaced softgel capsules.  The insurer denied coverage on the