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AJC Int'l, Inc. v. Triple-S Propiedad

United States Court of Appeals, First Circuit

June 12, 2015

AJC INTERNATIONAL, INC.; AJC LOGISTICS, LLC, Plaintiffs, Appellants,
v.
TRIPLE-S PROPIEDAD, Defendant, Appellee, UNDERWRITERS LLOYDS OF LONDON, Plaintiff,

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Francisco A. Besosa, U.S. District Judge.

Manolo T. Rodríguez-Bird, with whom JimĂ©nez Graffam & Lausell was on brief, for appellants.

William A. Schneider, with whom Morrison Mahoney LLP was on brief, for appellee.

Before Thompson, Lipez, and Barron, Circuit Judges.

OPINION

Page 2

THOMPSON, Circuit Judge.

This is an insurance case grounded on diversity. The parties agree that the policy in question provides coverage for a particular loss of perishable foodstuffs. So that's the easy part. What the parties need us to decide is exactly how much coverage there is -- $500,000 or $25,000? For the reasons below, we agree with the district court's answer: $25,000.

I. BACKGROUND

The underlying facts are undisputed and not particularly numerous. Based in Puerto Rico, Economy International Systems, Inc. (" Economy" ) provides cold-storage for its clients' food products until they are ready for distribution to customers.

During the summer of 2010, Economy was keeping more than a million dollars worth of foodstuffs -- things like seafood, beef, and chicken -- on ice for appellants AJC International, Inc. and AJC Logistics, LLC.[1] Unfortunately, the walk-in freezers in which AJC's products were stored malfunctioned on a few different days, and the problem didn't come to light until Economy noticed the temperature in its freezers was off. Economy discovered a strong odor emanating from product boxes, a pretty clear indication that the food inside had gone bad.

The United States Department of Agriculture stepped in and ordered the destruction

Page 3

of the beef and chicken products. AJC worked with the U.S. Food and Drug Administration to come up with any way to salvage the seafood, but it, too, ended up being tossed.

Having suffered a loss in excess of one million dollars, AJC sought recovery under Economy's insurance policy issued by appellee Triple-S Propiedad, Inc. (" Triple-S" ). The parties agree that the nature of the loss was in the manner of food spoilage, and that the spoilage was caused by a mechanical breakdown of Economy's freezers. And they both agree that the Triple-S policy provides coverage for AJC's loss as " personal property of others." Though they agree on this much, the parties couldn't reach an accord as to the amount ...


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