ConAgra Foods, Inc. v. Lexington Insurance, 2011 Del. LEXIS 226

ConAgra manufactured peanut butter tainted by salmonella and recalled nationwide after CDC indicated a link to the product.
ConAgra held a comprehensive umbrella liability policy from Lexington, including products-completed operations coverage with a Lot or Batch Provision and a Retained Limits Endorsement.
Endorsement #3 (Lot or Batch) defines a lot as a single production run not to exceed 7 days and treats all bodily injury arising from one lot as one Occurrence, with a higher retained limit for lot/batch claims.
Endorsement #10 increases the retained limit for lot/batch occurrences to $5 million, while general liability occurrences retain a $3 million retention.
ConAgra argued the Lot or Batch Provision expands coverage or, at minimum, should not disaggregate a single occurrence; Lexington argued it limits coverage by splitting into multiple seven-day lots.
Superior Court granted Lexington summary judgment; the Delaware Supreme Court reversed, finding ambiguity and remanding to resolve extrinsic evidence of the parties' intent.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the Lot or Batch Provision ambiguous on its face?	ConAgra: provision can be read to expand coverage or at least not disaggregate a single occurrence.	Lexington: provision clearly limits or disaggregates occurrences by seven-day lots.	Ambiguity exists; multiple reasonable interpretations.
Does Lot or Batch apply to continuous production exceeding seven days?	ConAgra: continuous production should aggregate into one occurrence under policy.	Lexington: Lot or Batch applies regardless of production schedule, per endorsement terms.	Ambiguity allows extrinsic evidence; not definitively limited to seven days on its face.
Has Lexington waived or estopped itself from asserting Lot or Batch as a coverage defense?	ConAgra: Lexington repeatedly referenced Lot or Batch and engaged in coverage discussions, implying waiver/estoppel.	Lexington: no waiver or estoppel; reserved rights and later position kept flexible.	Not dispositive at this stage; remand to consider extrinsic evidence.
Did the Peanut Butter claims trigger Lexington's duty to defend?	ConAgra: Lot or Batch interpretation could trigger defense duties once Retained Limit for General Liability is reached.	Lexington: Lot or Batch would delay or limit defense duties until $5M retained limit per lot/batch is exceeded.	Under the ambiguous reading expanding coverage, defense duty could be triggered when the General Liability Retained Limit was exceeded.

London Market Insurers v. Superior Court, 146 Cal.App.4th 648 (Cal. Ct. App. 2007) (similar batch/lot clause interpreted to avoid stacking deductions; ambiguous but tends to expand coverage)
Diamond Shamrock Chemicals Co. v. Aetna Casualty & Surety Co., 258 N.J. Super. 167, 609 A.2d 440 (App. Div. 1992) (batch clause intended to apply to manufacturing defects, not design defects; favors broader interpretation)
Nationwide Mutual Insurance Co. v. Lafarge Corp., Civ. Nos. H-90-2390, H-93-4173, Bench Op. (D. Md. 1995) (batch clauses generally limit occurrences rather than expand them)
Rhone-Poulenc Basic Chem. Co. v. American Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) (insurance contract interpretation and ambiguity approach in Delaware)
Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127 (Del. 1997) (insurance contract interpretation: plain meaning and ambiguity principles)
Axis Reinsurance Co. v. HLTH Corp., 993 A.2d 1057 (Del. 2010) (Delaware contract interpretation standards in insurance context)
LaPoint ex rel. LaPoint v. AmerisourceBergen Corp., 970 A.2d 185 (Del. 2009) (extrinsic evidence and contract interpretation considerations)
O'Brien v. Progressive N. Ins. Co., 785 A.2d 281 (Del. 2001) (ambiguity and plain meaning in insurance contracts)
Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742 (Del. 1997) (Delaware insurance contract interpretation and ambiguity rule)