Houston Harbaugh Directors Henry Sneath and Brandon McCullough Secure Federal Appellate Victory in Insurance Coverage and Bad Faith Dispute

September 6, 2023
Florists' Mutual
Pictured from left to right: Directors Henry Sneath and Brandon McCullough

Houston Harbaugh is pleased to announce that Directors Henry M. Sneath and R. Brandon McCullough secured an appellate victory for their clients, Florists’ Mutual Insurance Company and The Hartford Steam Boiler Inspection and Insurance Company, in a complex insurance coverage and bad faith dispute. The case, Three Rivers Hydroponics LLC v. Florists Mutual Insurance Co. et al., was decided by the U.S. Court of Appeals for the Third Circuit.

The dispute revolved around a property insurance claim brought by Three Rivers Hydroponics LLC, the owner of a commercial hydroponic greenhouse. The company sought coverage for equipment damage and crop loss resulting from an alleged explosion and fire involving an ozone-based water sterilization system. Three Rivers Hydroponics LLC alleged that its insurer, Florists’ Mutual Insurance Co., breached the insurance contract and acted in bad faith by denying coverage for replacement of the complete ozone sterilization system and the alleged crop loss. Three Rivers also asserted direct claims against Florists’ Mutual’s equipment breakdown reinsurer, The Hartford Steam Boiler Inspection and Insurance Company.

The Third Circuit affirmed the district court’s grant of summary judgment in favor of Florists’ Mutual on all counts. In an unpublished opinion, the court found that Three Rivers failed to provide sufficient evidence that a covered mechanical breakdown caused the crop loss. In doing so, the Third Circuit held that the district court did not abuse its discretion in excluding the testimony of Three Rivers’ equipment expert witness and a lay witness purporting to offer expert testimony. The court further recognized that Three Rivers fell “woefully short” of meeting its burden of proof to establish bad faith, finding that “the record supports a finding that Florists conducted a thorough investigation.” Additionally, the court affirmed the dismissal of claims against Florists’ reinsurer, Hartford Steam Boiler, on the grounds that Three Rivers was not a third-party beneficiary to the reinsurance contract.

Houston Harbaugh’s Insurance Coverage and Bad Faith practice represented Florists’ Mutual and Hartford Steam Boiler and played a pivotal role in achieving this favorable outcome. Houston Harbaugh Of Counsel, Robert H.C. Ralston, also assisted with the appellate briefing.

To read the full court opinion, click here.

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