Personal Injury Law

Legal Maneuvering In The Georgia Peanut Salmonella Case

It was announced last week that The Peanut Corporation of America has decided to file for bankruptcy. Under bankruptcy law, one may not sue a company that has filed for bankruptcy protection. Accordingly, with respect to the wrongful death actions and serious injury claims that are likely to be brought as a result of the widely reported salmonella contamination at the Company?s Blakely, Georgia plant, the corporation has cleverly maneuvered into bankruptcy court to prevent the filing of these lawsuits. This will buy the corporation some time. Additionally, and more troubling from a victim?s standpoint, is a separate lawsuit filed by the liability insurance company for The Peanut Corporation of America (The Hartford Casualty Company) in which the insurance company is seeking to be relieved of any obligation to provide coverage for the acts and omissions at issue allegedly because the insured company committed criminal acts thereby allegedly voiding the insurance coverage which provided protection for negligent acts.

The described legal maneuvering should be very concerning for all victims and their families. On the one hand we have an insurance company (The Hartford) that is seeking to be relieved of any obligation to provide coverage for the acts and omissions of The Peanut Corporation of America. On the other hand, The Peanut Corporation of America has filed bankruptcy seeking to prevent individuals with valid claims from filing lawsuits against it. What this means is that the individual is going to have to file claims in bankruptcy Court as ?unsecured creditors? with no judgments and that they may be in a long line of creditors with no ability to collect for their damages. Obviously, this makes the insurance company?s Petition for Declaratory Judgment even more important from the victims? standpoint.

It is not yet clear whether the insurance company for The Peanut Company of America will be successful in its attempts to have a court declare that it has no obligation to provide coverage for the Salmonella contamination. The argument is that the client was insured for negligent acts, not for criminal acts, and since the client allegedly sent out contaminated peanuts with full knowledge of the contamination that this criminal act voided the coverage. Obviously, this will depend upon an analysis of the language in the policy and the facts involved. Nonetheless, both the bankruptcy filing and the separate Declaratory Judgment action filed by the insurance company are two troubling developments for innocent victims of the salmonella outbreak. The legal maneuvering by both the Corporation and its insurance company is just that. Legal maneuvering designed to protect their legal interests, not the rights of innocent victims. All such victims should associate legal council to protect their interests as neither the Corporation or its insurer will act to do so.

Full post as published by Georgia Injury Lawyer Blog on February 22, 2009 (boomark / email).