Cargill Sues Chubb Unit Over $170M Ice Cream Contamination Loss

Cargill Inc. has filed suit in a Pennsylvania state court accusing a Chubb subsidiary of wrongfully denying insurance coverage for $170 million in losses stemming from contaminated food ingredients. The dispute centers on contaminated batches of Lygomme, a food texturizing agent used in ice cream and other products, which allegedly contained unsafe levels of ethylene oxide (EtO). The contamination, Cargill claims, triggered widespread third-party property damage claims from its customers.

In the breach of contract suit filed in Philadelphia County’s Court of Common Pleas, Cargill argues that ACE Property & Casualty Insurance Co. improperly refused coverage under an excess liability policy. While ACE may attempt to invoke a pollution exclusion clause to deny coverage, Cargill asserts that an exception within that same clause restores coverage when an underlying insurance policy—like the one issued by National Union Fire Insurance Co. of Pittsburgh, a unit of AIG—has already provided coverage for the same damage. That condition, according to Cargill, has been met.

The Contamination and the Fallout

The product at issue, Lygomme, is marketed as a thickening agent crucial for improving the consistency and texture of food products and for preventing ice crystal formation in frozen goods. According to the complaint, Cargill’s internal investigation traced the contamination to locust bean gum sourced from Turkish suppliers. This ingredient, extracted from carob tree seeds, was found to contain ethylene oxide—a sterilizing chemical recognized by the U.S. Environmental Protection Agency as a human carcinogen when inhaled over time.

By June 2021, Cargill determined that EtO in its food products exceeded the European Union’s allowable threshold, rendering the affected products unsellable. Cargill then initiated recalls and mitigation protocols, ultimately settling with various customers whose products had been tainted by the contaminated ingredient.

The company states it incurred around $170 million in customer claims and associated expenses, with other insurers contributing to settlements. However, Cargill maintains that ACE, whose policy was triggered after a $25 million limit under National Union’s umbrella coverage was exhausted, has yet to pay any portion of its $25 million excess liability limit.

The Policy Dispute

Cargill’s complaint centers on how the modified pollution exclusion is applied. The company contends that the exclusion, as written in ACE’s policy, does not apply when coverage has been triggered under listed underlying policies—specifically, National Union’s umbrella policy, which already paid out its $25 million limit.

The company further asserts that ACE was aware of National Union’s coverage decision and of Cargill’s satisfaction of a $40 million retained limit. Despite this, ACE has allegedly delayed payment for nearly four years.

Cargill also challenges ACE’s reliance on exclusions not originally briefed in the initial contract. For example, ACE raised several defenses in a 2023 reservation of rights letter, including that some of the losses may have occurred before the policy period began, or that exclusions for contractual liability, product recall, and damage to Cargill’s own products may bar coverage.

Additionally, Cargill disputes the legitimacy of ACE’s pollution exclusion in this context. The company notes that while the policy initially contained a base exclusion defining “pollutants,” an endorsement replaced it with a modified version that does not define the term. According to Cargill, ACE could have included a definition in the updated exclusion but chose not to—an omission the company suggests weighs against the insurer’s interpretation.

The Legal Landscape

Cargill’s claim rests on the assertion that coverage should be “restored” when underlying insurance applies, even if pollution is involved. The company frames the third-party claims as classic property damage losses covered under commercial liability insurance—not environmental remediation. In Cargill’s view, the damages are precisely the kind of risk ACE was obligated to insure.

For now, the insurer has neither paid nor formally denied the claim, but Cargill argues that ACE’s silence has effectively obstructed indemnification. The lawsuit seeks full coverage under the excess policy and claims that ACE’s continued delay constitutes breach of contract.

Legal Representation

Cargill is represented by Peter D. Laun and Matthew R. Divelbiss of Jones Day. ACE Property & Casualty Insurance Co. had not filed a response at the time of publication, and its counsel has not been publicly identified.

The case is Cargill Inc. v. ACE Property & Casualty Insurance Co., Case No. 250703456, in the Court of Common Pleas of Philadelphia County.