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Commercial Property |
Selling Price |
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Actual Cash Value |
Debris Removal |
Interstate Gourmet Coffee
Roasters (Interstate) brought an action to recover damages and cleanup costs
when more than 16,000 pounds of coffee at its coffee roasting plant became
contaminated after being roasted but before packaging. Seaco, the insurance
company, disagreed with the methodology the lower court used to calculate
damages.
The sole issue on appeal was
calculating damages at actual cash value. The lower court calculated the
damages as Interstate's intended selling price (estimated at $5.56 per pound)
reduced by certain unincurred packaging and delivery expenses. Seaco asserted
that the actual cash value of the destroyed coffee was Interstate's cost of
buying the raw beans plus its costs of roasting, blending, and grinding the
coffee.
The court of appeals
concluded that the lower court's calculation of damages was correct. Since the
coffee beans had already been roasted and blended before becoming contaminated,
they had a peculiar value to Interstate. This unique flavor blend was not
freely obtainable in the market and could not be readily replaced. As a result,
it was proper for the lower court judge to consider Interstate's intended
selling price less the costs it would have incurred to package and deliver the
coffee if it was not contaminated.
The court of appeals also
ruled that Interstate was entitled to cleanup costs of $69,504 under the policy's
debris removal provision. It affirmed the decision of the lower court.
Interstate Gourmet Coffee
Roasters v. Seaco - No. 01-P-1548 - Appeals Court of Massachusetts--August 26,
2003-794 North Eastern Reporter 2d 607