See’s Candies Inc. has dropped its lawsuit against two insurance companies that the company accused of refusing to provide compensation for tens of millions of dollars lost when See’s was temporarily forced to close its stores and destroy large amounts of unused goods during the coronavirus epidemic.
The Los Angeles Superior Court lawsuit named as defendants Swiss Re Corporate Solutions America Insurance Corp. and Lloyd’s of London. Along with unspecified damages, the suit sought a court order directing the insurers to pay the money they allegedly owed under the policies.
Swiss Re was See’s primary insurer and Lloyd’s its excess insurer, according to the suit. But in court papers filed Friday with Judge Christopher Lui, See’s attorneys asked that their client’s case be dismissed “with prejudice,” meaning it cannot be refiled.
The court papers do not state if a settlement was reached or if See’s is not pursuing the case for other reasons.
See’s Candies notified Swiss Re of its claims in April 2020 and the insurer waited more than eight months to issue its denial, while Lloyd’s has failed to take a position about the candy maker’s entitlement to coverage, according to the suit.
Founded in Pasadena in 1921 and now headquartered in South San Francisco, See’s Candies manufactures and distributes candies and makes more than 26 million pounds of confectionaries each year while operating nearly 250 retail shops and another 130 seasonal stores, the suit stated.
See’s offerings are different from other national candy makers’ products because its sweets are made with fresh ingredients, including fresh milk, cream, fruit purees and nuts, and many of its items are handmade, the suit states. The candies have a shelf life of only a few months because See’s Candies adds no preservatives, according to the suit filed Jan. 19.
To protect its perishable inventory, See’s Candies purchased a “stock throughput policy” because the plaintiff’s inventory carries a unique risk due to its perishable nature and limited time window for sales, the suit stated. Taken together, the Swiss Re and Lloyd’s policies “provide extensive coverage for See’s Candies’ products,” according to the suit.
But when the pandemic commenced in March 2020, See’s Candies — according to a quote from its CEO, Pat Egan, cited in the lawsuit — “went from full retail operation to no retail operation.”
The government shutdowns cost See’s Candies tens of millions of dollars at a time when the company was manufacturing candy and stocking up for two of its most profitable holidays, Easter and Mother’s Day, according to the suit.
“Given the government orders that delayed See’s Candies’ ability to sell its products before they expired, See’s Candies had no choice but to destroy or to donate large quantities of goods that had deteriorated over time and were no longer salable,” the suit stated.
The Swiss Re policy provides that if goods, merchandise or property must be destroyed, any expenses incurred in connection with such destruction shall be borne by Swiss Re, the suit alleged.
The Lloyd’s policy provides coverage for losses to goods located at two of See’s Candies’ warehouses when those losses exceed the primary liability of $10 million per facility, which happened in this case, the suit stated.