Hartford Fire Insurance Company is seeking a judicial declaration that it does not have to give Sabra Dipping Co. more than the $32.5 million it has already paid to the White Plains company for a water leak at its hummus factory in Virginia.
“Sabra contends that Hartford still owes money because its hummus production and income have not returned to 2021 levels,” the insurer states in a March 2 complaint filed in U.S. District Court, White Plains.
“In effect, Sabra’s position is that Hartford must pretend that the water leak is the only thing that happened to Sabra. But the facts say otherwise.”
Media representatives for PepsiCo, Sabra’s corporate owner, did not reply to an email asking for their responses to the allegations.
Sabra reported the leak to Hartford last April, according to the complaint, and Hartford covered the costs of repairs and damages at the Colonial Heights, Virginia factory.
But for the leak, Sabra allegedly contends, production and sales last year would have been the same as in 2021, for which it also should be compensated.
But Hartford cites a variety of problems before and after the leak was detected that allegedly suppressed sales last year.
In December 2021, for instance, the U.S. Food and Drug Administration warned Sabra about unsanitary conditions at the plant. When production resumed in January 2022, new cleaning and testing protocols created bottlenecks that limited production. For instance, cleaning cycles were doubled to every 60 hours instead of 120 hours.
Then in March 2002, Sabra discovered a contaminated product and shut down the plant for a deep cleaning, according to the complaint.
The leaky pipe was discovered on April 1, the complaint states, and while repairs were being made Sabra elected to make other upgrades that extended the project completion by 40 days.
One day after the plant reopened at full capacity last August, Sabra received notice of another contamination problem and the facility was shut down for another deep cleaning.
Hartford argues that the shutdowns resulted in lost business because grocery stores shifted to competitors’ products and store brands, to keep their shelves stocked.
The insurer claims that it does not owe coverage for production stoppages or slowdowns that were not caused by the leak.
But Sabra, the complaint states, contends that Hartford still owes payments.
The insurer is asking the court to declare that it has fully covered the costs of all repairs, physical losses and damages to the plant and that it has overpaid Sabra.
Hartford is represented by Manhattan attorney John M. Hintz and by Maynard Cooper & Gale P.C. of Birmingham, Alabama.
