By Pat Healy

InsuranceTimes

BOSTON-One might say an Interstate Gourmet Coffee Roasters employee had a hand in Seaco Insurance Company’s recent loss in Appeals Court.

    Seaco took Interstate to court this spring to contest a 1997 claim for $69,504 filed after the aforementioned Interstate employee caught his fingers in a coffee grinding machine and ruined an enormous batch of coffee that was almost ready for sale.

     Seaco argued that the Superior Court judgment was a gross miscalculation of damages at actual cash value. The company alleged that either the judge erred or abused his discretion in determining that the actual cash value of the destroyed coffee was Interstate’s selling price, but without packaging and delivery costs, which were never incurred because the company had to destroy the coffee that was "mishandled" (sorry, couldn't resist). Seaco claimed that by awarding Interstate this amount, Interstate was receiving lost profits as a windfall gain.

     After the severed part of the employee’s hand entered the machinery, approximately 16,064 pounds of blended Kenyan and Colombian coffee beans had to be destroyed because of contamination. Interstate had paid $24,936 for the coffee, which consisted of $15,417 for the raw Colombian coffee and $9,518 for the raw Kenyan coffee.

     Interstate then used its own employees to help remove the contaminated coffee and disassemble the machinery in preparation for cleaning and sanitation, which took up 130 labor hours, or $8,734. Then Interstate hired a sanitizing contractor to clean the equipment for $2,167. Debris removal expenses, which included the use of a dumpster for $1,325, totaled out at $12,226.

     Although Interstate had received orders for the coffee, the judge determined that, because it had not yet been packaged, the destroyed coffee could not fairly be treated as stock that was "sold but not delivered," but Seaco argued that this approach was inconsistent with the court’s ‘top down’ approach, where the damages are assessed starting with the selling price. Seaco further insisted that the actual cash value of the destroyed coffee was only Interstate’s cost of buying the raw beans plus its costs of roasting, blending and grinding the coffee.

     The judge, however, found that by processing the coffee to the point at which it was contaminated, Interstate had added considerable value to it.

    "We consider Seaco’s argument without merit," said the judge in his decision.