Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC
20-4090
| 6th Cir. | Jul 16, 2021Background
- Will and Jennifer Mengel operate commercial dairy farms; in 2018 many cows died or produced less milk due to stray electric current on their property.
- The Mengels' insurance policy covered livestock losses (including electrocution) and business "loss of business income . . . due to the necessary suspension of [the Mengels'] operations."
- Hastings Mutual paid for the dead cows but denied coverage for lost milk production/business income, arguing the policy covers only a complete shutdown.
- The Mengels sued; the district court held a "suspension" requires a complete cessation of business activity.
- On appeal under Ohio law, the Sixth Circuit interpreted "suspension of operations" by its ordinary meaning and concluded it means a temporary but complete stop of operations.
- Because the Mengels continued operating at reduced capacity (no complete shutdown), the court affirmed the denial of business-income coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a "necessary suspension of operations" includes reduced/partial operations (loss of milk production) | Mengel: reduced output and sales is a suspension covered by the policy | Hastings: "suspension" requires total, temporary cessation of all business activity | Court: "suspension" means a temporary but complete stop; reduced operations do not qualify |
Key Cases Cited
- Hayes v. Equitable Energy Res. Co., 266 F.3d 560 (6th Cir. 2001) (authorizes applying Ohio law for policy interpretation)
- U.S. Fid. & Guar. Co. v. Lightning Rod Mut. Ins. Co., 687 N.E.2d 717 (Ohio 1997) (uses ordinary meaning to interpret insurance policy language)
- Am. Med. Imaging Corp. v. St. Paul Fire & Marine Ins. Co., 949 F.2d 690 (3d Cir. 1991) (distinguishes "necessary" suspension from "potential" suspension)
- Am. States Ins. Co. v. Creative Walking, Inc., 175 F.3d 1023 (8th Cir. 1999) (treats "suspension" as total cessation)
- Winters v. State Farm Fire & Cas. Co., 73 F.3d 224 (9th Cir. 1995) (construing "suspension" to require complete shutdown)
- Lane v. Grange Mut. Cos., 543 N.E.2d 488 (Ohio 1989) (ambiguity rule favors insured but only when policy ambiguous)