Innovative Foods sues insurers after facility fire

EVANS — Meat processor Innovative Foods LLC is suing TrueNorth Cos. LC and Nationwide Agribusiness Insurance NAIC over their response to a 2020 fire at its Evans facility. Innovative Foods alleges that both companies misled the meat supplier about the nature of its insurance coverage, leading to damages.

The Evans-based meat-processing plant is building a new facility after the demolition of its damaged building at 4320 Industrial Parkway in Evans. According to BizWest’s DataBank, the company had 25 employees in 2021.

Innovative Foods’ plant suffered a major fire on April 17, 2020. The fire severely damaged the facility’s main building and cut off electricity to multiple outbuildings that were being used as cold-storage space. 

Innovative Foods initially filed its lawsuit against Nationwide in Weld County District Court, but the case was moved to the U.S. District Court in Denver on April 21. 

In its lawsuit, Innovative Foods alleges that Nationwide failed to cover losses incurred after cold-storage buildings lost power because of the fire. Innovative Foods had taken out a $500,000 policy covering risks of direct loss or damage to the company, with an additional $250,000 endorsement specifically covering food spoilage.

After the fire, Innovative Foods lost $187,299 worth of food to spoilage, according to court documents. Innovative Foods alleges that Nationwide denied coverage under the spoilage policy in August 2020 for reasons inconsistent with the policy. Innovative Foods’ counsel did not respond to requests for comment.

After coverage under the spoilage endorsement was denied, all expenses incurred after the fire were pooled into the main business policy, which rose well above the $500,000 limit. The initial complaint filed by Innovative Foods points to a lack of coverage caused by the denial of claims under the spoilage policy.

“By improperly allocating the entirety of the loss to business personal property coverage, Nationwide grossly understated the amount of available coverage provided under the Spoilage Coverage Endorsement for direct physical loss or damage to “perishable stock” or meat products owned by plaintiff or by others caused by power outage,” the complaint reads.

Innovative Foods is pursuing damages to compensate for its $187,000 loss in a jury trial. Nationwide was granted an extension until May 5 to respond to the complaint. Nationwide’s counsel did not respond to requests for comment ahead of press time.

In its lawsuit against TrueNorth, Innovative Foods alleges that the insurance company failed to secure business-interruption coverage for the period during which the fire took place. In documents filed in Weld County District Court, Innovative Foods specifies the dates it believed it was covered.

“Based upon the representations and actions of TrueNorth, plaintiff reasonably believed that the business was fully insured through Nov. 14, 2020, including when the fire occurred on or about April 17, 2020,” court documents say.

A case management order was filed by Weld County district court April 18, specifying rules regarding the process of litigation. TrueNorth has yet to respond to the complaint.

The U.S. District Court case, Innovative Foods Inc. v. Nationwide Agribusiness Insurance NAIC, is 2022CV030187.

The Weld County District Court case, Innovative Foods Inc. v. Truenorth Cos. LC, is 2022CV030241.

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