Transportation Insurance Company denied a claim filed by its client, Nu-Pak. Transportation based their decision on the assertion that their CGL policy was only applicable to direct causes of loss. Nu-Pak’s problems started with their handling of an agreement with Wine Specialties International ,Inc. (Specialties). The latter company sued Nu-Pak for damages from the way it handled "Freeze and Squeeze," an alcoholic beverage to be served in a freezable pouch. Specialties and Nu-Pak agreed that Nu-Pak would be responsible for mixing the ingredients according to Specialties’ instructions and then packaging the product.

After the packaged product was delivered to Specialties, Nu-Pak began legal action for payment for their work. Specialties sued both Nu-Pak and Transportation, claiming that Nu-Pak botched the mixing, allowing the product to be contaminated by bacteria. Specialties also alleged that Nu-Pak failed to properly train and supervise their employees during their work on "Freeze and Squeeze." Finally, the company claimed that Nu-Pak presented itself as having the expertise to properly mix and package "Freeze and Squeeze" and that turned out to be false. Specialties damages included the loss of sales contracts (that were contingent upon Nu-Pak’s performance) with a number of wholesale and retail liquor distributors, expense to recall contaminated product, loss of future sales and damage to their reputation.

Transportation asked for a summary judgment that it had no obligation to respond to damages that were not covered by the CGL policy it issued to Nu-Pak. A circuit court granted Transportation’s request, agreeing that the damages were not eligible for CGL coverage. Specialties (which did receive a settlement directly from Nu-Pak) appealed.

Upon the appeal, the higher court focused on the CGL’s insuring agreement and to the policy’s exclusion of damage related to contractual liability, property damage related to an insured’s work and damage to an insured’s own product. The court, while considering the policy language, also reviewed several relevant court cases for guidance. After reviewing the policy language, the court found it to inapplicable to Specialties’ claims. The court held the CGL to be unambiguous, excluding the cause of loss involving Nu-Pak’s work, work practices and contractual obligations. It also held that the intangible losses alleged by Specialties were ineligible for coverage under the CGL. The lower court’s decision in favor of Transportation was affirmed.

Nu-Pak, Incorporated, Plaintiff, v. Wine Specialties International, Limited, Defendant. WisCTApp. No. 01-1314. Filed March 28, 2002. 2002 Wisc. App. LEXIS 396. Affirmed. CCH Fire and Casualty Cases Paragraph 7410