Vintage Wine Estates smoke-taint insurance lawsuit scheduled for trial; Could set precedent

After nine months of legal jousting and pandemic delays, the Vintage Wine Estates (VWE) smoke-taint lawsuit against its insurance company is scheduled for a jury trial sometime in early 2022 in San Francisco U.S. District Court for the Northern District of California. Judge Maxine M. Chesney has set jury selection for Feb. 14, 2022, with the trial to begin when empaneling is complete.

 

A number of legal experts have privately said to Wine Industry Insight that — depending on the outcome —  the case could set a significant precedent for other wineries in smoke taint disputes.

Lawsuit arose as result of 2017 Sonoma County fires

The case began in August 2019 when Vintage Wine Estates (VWE) and Kunde Enterprises, filed a joint lawsuit in Sonoma County Superior Court seeking to compel nine insurance companies to reimburse them for approximately $20 million in smoke-taint damages resulting from the 2017 October 2017 wildfires in Northern California. Kunde and Vintage Wine Estates have common shareholders with VWE CEO Pat Roney and the Leslie Rudd Trust having ownership in both. Roney is also the president of Kunde.

Case moved from Sonoma to federal court

The insurance companies involved argued successfully to have the case removed to federal court because none of them had a physical presence in the Sonoma Court’s jurisdiction. Those insurers include:

 

• National Surety Corporation (Allianz),
• Certain Underwriters At Lloyd’s, London – Royal & Sun Alliance Insurance PLC which consists of:

• Rsa Insurance Group,
• Liberty Specialty Markets Insurance Group,
• Navigators Underwriting Agency Limited,
• Brit Global Specialty,
• Travelers Marine Cargo.

 

Accordingly, both VWE and Kunde filed separate individual complaints against the insurers in San Francisco Federal Court.

 

The Kunde case will be heard separately in U.S. District Court for the Northern District of California in the Oakland courtroom of Judge Jeffrey S. White. Jury Selection has been scheduled for Jan. 5, 2020. Wine Industry Insight will cover that in a separate article.

Crux of the issue: When were the grapes damaged?

According to court documents, the main issue in both cases is when the grapes were tainted. As is standard in most winery insurance contracts, grapes damaged while still on the vine are not covered. However, once harvested, grapes are considered “in production” and are covered.

 

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Court documents filed by the insurers did not reveal the results of the Houston, TX-based 3D Marine lab tests, or sensory evaluations. The court filings also had no information on the qualifications of the sensory evaluators nor any certifications of the laboratory.

 

Court documents indicated that 3D Marine investigators interviewed the two VWE winemakers who had determined the grapes in question had no defects. The results of the interviews, according to insurer filings, were inconclusive.

 

According to the insurers’ court filings, 3D Marine made an additional series of requests for other data including weight tags and work orders that they say were not forthcoming — a charge that VWE disputes in its response filing.

Previous Coverage

• Kunde, Vintage Wine Estates Continue Smoke Taint Insurance complaints as individual cases in Federal court
• Kunde, VWE sue insurance carriers over failure to pay for 2017 smoke taint fire damage.

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Full Court Documents for Premium Wine Executive News Subscribers

• VWE Kunde SmokeTaint/VWE v RoyalSunAlliance ECF39 VWE ANSWER TO ROYAL SUN AMENDED SUPPLEMENTAL COUNTERCLAIM 092320
• VWE Kunde SmokeTaint/VWE v Royal SunAlliance ECF38 AMENDED SUPPLEMENTAL ANSWER AND COUNTERCLAIM BY ROYAL SUN 090920
• VWE Kunde SmokeTaint/VWE v RoyalSunAlliance ECF34 ANSWER to COUNTERCLAIM 060920
• VWE Kunde SmokeTaint/VWE v Royal Sun Alliance ECF26 ANSWER AND COUNTERCLAIM – 051920
• VWE Kunde SmokeTaint/Kunde JOINT CASE MANAGEMENT STATEMENT AND PROPOSED ORDER – 01/24/20
• VWE Kunde SmokeTaint/VWE Complaint In Federal Court 010320
• VWE Kunde SmokeTaint/ORDER GRANTING MOTION TO SEVER 121819
• VWE Kunde SmokeTaint/DECLARATION OF PAT RONEY IN SUPPORT OF PLAINTIFFS OPPOSITION TO DEFENDANT NATIONAL SURETY CORPORATION MOTION – 11/15/19
• VWE Kunde SmokeTaint/Kunde Allianz Notice of Removal 101619
• Allianz National Surety Motion To Drop or sever 101619

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