Arbre Farms Corp. v. Great American E&S Ins. Co.
21-1091
| 6th Cir. | Nov 2, 2021Background
- Arbre Farms discovered in early 2019 that product shipments were contaminated after accidental mixing with a 229‑lb lot of green beans that had tested positive for Listeria monocytogenes (LM) in 2017; it notified FDA and recalled product; MDARD ordered widespread destruction.
- Arbre sought coverage under a Great American product‑recall policy effective Oct. 1, 2018–Oct. 1, 2019, which required that the insured "first discovers the INSURED EVENT during the policy period."
- Exclusion G barred coverage for "an INSURED EVENT or any circumstance that could give rise to an INSURED EVENT that is discovered, known by or should reasonably have been known by the INSURED prior to the inception of the Policy Period."
- Great American denied coverage, arguing (1) the insured event was first discovered outside the policy period and (2) Exclusion G applied because Arbre knew of the 2017 LM‑positive test and quarantine; it moved to dismiss and attached investigative and government documents.
- Arbre responded by disputing the district court’s consideration of outside exhibits and arguing the initial contamination was not an insured event; it did not contest the meaning or application of Exclusion G below.
- The district court dismissed with prejudice based on Exclusion G; the Sixth Circuit affirmed, holding Arbre forfeited its contract‑interpretation challenge and that the court’s consideration of materials outside the complaint (or any effective conversion to summary judgment) was not reversible error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preservation of contract‑interpretation challenge (ambiguity of Exclusion G) | Arbre now argues Exclusion G is ambiguous and should be construed against insurer | Great American: Arbre failed to raise that argument below; therefore forfeited/waived | Forfeited — Arbre did not meaningfully dispute Exclusion G in district court; appellate argument forfeited |
| Whether Exclusion G bars coverage given pre‑policy LM test and quarantine | The initial 2017 contamination/quarantine did not trigger Exclusion G or constitute an insured event | Exclusion G excludes coverage because Arbre knew (or should have known) of a circumstance that could give rise to a recall before policy inception | Court applied Exclusion G and found coverage excluded |
| Whether district court erred by considering materials outside the complaint without converting to summary judgment | Arbre argued the court could not rely on outside exhibits absent Rule 56 conversion and notice | Great American relied on exhibits to show the pre‑policy LM event; court treated materials as either integral to complaint or Arbre had chance to respond | No reversible error — if conversion occurred, Arbre had adequate opportunity and raised summary‑judgment arguments and exhibits |
| Cross‑appeal by insurer | n/a | Great American sought broader relief via cross‑appeal | Denied — no timely notice of cross‑appeal filed, so court declined to hear it |
Key Cases Cited
- Ohio State Univ. v. Redbubble, Inc., 989 F.3d 435 (6th Cir. 2021) (distinguishing forfeiture and waiver principles)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (appellate courts generally do not consider arguments raised first on appeal)
- Max Arnold & Sons, LLC v. W.L. Hailey & Co., 452 F.3d 494 (6th Cir. 2006) (Rule 12(d) requires notice and opportunity when converting a motion to dismiss into summary judgment)
- Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426 (6th Cir. 2008) (courts may consider documents attached to a motion to dismiss when they are referenced in the complaint and central to the claims)
- Northville Downs v. Granholm, 622 F.3d 579 (6th Cir. 2010) (failure to exclude extraneous materials is not reversible where parties had opportunity to respond)