Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC

NOT RECOMMENDED FOR PUBLICATION
File Name: 21a0346n.06

Case No. 20-4090

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

FILED
Jul 16, 2021
HASTINGS MUTUAL INSURANCE )
DEBORAH S. HUNT, Clerk
COMPANY, )
)
Plaintiff-Appellee,
) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR
v.
) THE NORTHERN DISTRICT OF
) OHIO
MENGEL DAIRY FARMS, LLC,
)
Defendant-Appellant. )

BEFORE: BATCHELDER, KETHLEDGE, and THAPAR, Circuit Judges.

THAPAR, Circuit Judge. Will Mengel has been a dairy farmer for the past 20 years. He

and his wife, Jennifer Mengel, manage commercial dairy farms in Pennsylvania and Ohio and care

for over 1,000 cows. In 2018, disaster struck the farms when the Mengels’ cows tragically started

to die en masse. And the cows that didn’t die began producing less milk. The Mengels spent

months searching for a possible explanation—they tested the water for contaminants, consulted a

nutritionist, and sought help from various experts. After running into a series of dead ends, the

Mengels asked an electrician to investigate.

As it turned out, a stray electric current on the Mengels’ property was electrocuting the

cows. But it also turned out that the Mengels were prepared. They had insured their cows against

a number of unlikely events—including accidental shooting, attack by wild animals, and, most

relevant here, electrocution.
Case No. 20-4090, Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC

The Mengels submitted an insurance claim for the lost cows and reduced milk production.

Their insurer, Hastings Mutual Insurance Company, paid for the loss of the cows, but it refused to

pay for the reduced milk production. So the Mengels sued.

Under the insurance policy, Hastings Mutual must compensate the Mengels for the “loss

of business income . . . due to the necessary suspension of [the Mengels’] operations.” The

Mengels argue that the reduced milk production (and the resulting loss in sales) qualifies as a

“suspension” of their dairy farms’ operations. But Hastings Mutual says that only a complete

shutdown of the farms counts as a “suspension.” The district court agreed with Hastings. It held

that a “suspension” requires a “complete cessation of business activity.” The Mengels now appeal.

We interpret the Mengels’ insurance policy according to Ohio law. See Hayes v. Equitable

Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001). The insurance policy does not define the term

“necessary suspension of [] operations,” so we give the phrase its “natural and commonly accepted

meaning.” U.S. Fid. & Guar. Co. v. Lightning Rod Mut. Ins. Co., 687 N.E.2d 717, 719 (Ohio

1997) (citation omitted).

A “suspension” is commonly understood to mean a temporary—but complete—stop in

activity. Webster’s Third New International Dictionary describes “suspension” as “the act of

suspending or the state or period of being suspended, interrupted, or abrogated.” 2303 (Phillip B.

Gove et al. eds., 2002). To “suspend,” in turn, is “to cause (as an action, process, practice, use) to

cease for a time [or] stop temporarily.” Id. In short, a “suspension of operations” occurs when

business operations are temporarily ceased.

Other courts agree. Though Ohio courts have never defined a “suspension of operations,”

several of our sister circuits read the phrase to require a complete shutdown of business operations.

See, e.g., Apartment Movers of Am., Inc. v. One Beacon Lloyds of Texas, 170 F. App’x 901 (5th

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Cir. 2006) (holding that a “slow down in business” is not “a ‘necessary suspension of []

operations’”); Am. States Ins. Co. v. Creative Walking, Inc., 175 F.3d 1023 (8th Cir. 1999)

(summarily affirming the district court’s holding that a necessary suspension “refers only to a total

cessation of business activity”); Winters v. State Farm Fire & Cas. Co., 73 F.3d 224, 228–29 (9th

Cir. 1995); see also Broad St., LLC v. Gulf Ins. Co., 37 A.D.3d 126, 130 (N.Y. 2006). But see

Maher v. Cont’l Cas. Co., 76 F.3d 535, 539 n.1 (4th Cir. 1996) (noting in dicta that “suspension”

could cover reduced operations). While not binding, we consider it additional, persuasive evidence

that other courts also understand a “suspension of operations” to require a complete shutdown of

business activity.

The Mengels raise several arguments to the contrary, but none is persuasive. First, the

Mengels claim that some courts have interpreted “suspension” to include a lull in business. They

point to two cases: Am. Med. Imaging and ICue Corp.

Start with Am. Med. Imaging. Though the Mengels cite it for support, its logic cuts against

their interpretation. The policy at issue covered business losses stemming from a “necessary or

potential suspension” of operations. Am. Med. Imaging Corp. v. St. Paul Fire & Marine Ins. Co.,

949 F.2d 690, 692 (3rd Cir. 1991). The Third Circuit accepted the business’s argument that it

suffered both a necessary and potential suspension. Id. It noted that the business experienced a

“necessary suspension” when a fire “made it impossible for [it] to continue its business.” Id. By

contrast, the business experienced a “potential suspension” while it operated at a reduced capacity.

Id. Here, it is uncontested that the Mengels’ dairy farms operated only at a reduced capacity.

(Neither party contends that it was impossible for the Mengels to continue their business.) As a

result, under Am. Med. Imaging, the Mengels’ milk reduction would qualify only as a “potential

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Case No. 20-4090, Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC

suspension.” And since the Mengels’ policy does not contain a “potential suspension” clause, their

reliance on Am. Med. Imaging is misplaced.

As for ICue Corp., it is a district court case based on a misreading of Am. Med. Imaging.

The court held that under Third Circuit precedent “the term ‘necessary suspension’ should not be

construed to require a total cessation of business operations.” ICue Corp. v. U.S. Fid. & Guar.

Co., 2008 WL 11406046, at *1 n.1 (E.D. Pa. Apr. 23, 2008). But the only Third Circuit caselaw

it cited was Am. Med. Imaging. And as discussed, Am. Med. Imaging did not give “necessary

suspension” such an expansive reading. Rather, it recognized that a “necessary suspension” occurs

when it’s temporarily “impossible for [the insured party] to continue its business.” Am. Med.

Imaging., 949 F.2d at 692. Because ICue Corp. is based only on misapplied caselaw, we decline

to give it any weight.

Second, the Mengels argue that other provisions of the insurance policy contradict our

reading of “suspension.” For example, the policy provides that Hastings Mutual can reduce any

benefits paid out for lost business income if the Mengels “can resume [] operations, in whole or in

part.” The Mengels claim this provision is proof that the term “suspension” can include a reduction

in business: Since the policy continues to provide benefits if they partially reopen, it must also

provide benefits if they only partially close. Not so. The provision establishes that benefits can

be reduced only when a business can “resume” its operations. Yet in order for a business to resume

operations, it must first stop operations. In other words, a business cannot restart something that

never ended. So the provision does not support the Mengels’ interpretation of “suspension.”

The Mengels also point to Hastings Mutual’s obligation to pay “any extra expense to avoid

or minimize the suspension of business and to continue operations.” But they offer no explanation

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Case No. 20-4090, Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC

for how this provision supports their reading of “suspension.” As a result, they’ve forfeited the

argument. See McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997).

Third, the Mengels argue that Ohio law requires courts to construe insurance policies in

favor of the insured party. See Lane v. Grange Mut. Cos., 543 N.E.2d 488, 490 (Ohio 1989). But

that rule applies only when the policy is ambiguous. See id. As discussed, the Mengels have

advanced no other plausible interpretation of “suspension.” See Potti v. Duramed Pharms., Inc.,

938 F.2d 641, 647 (6th Cir. 1991) (“Ambiguity exists only where a term cannot be determined

from the four corners of the agreement or where contract language is susceptible to two or more

reasonable interpretations.”). So the policy here is unambiguous.

Fourth, the Mengels argue that interpreting “suspension” narrowly would make the policy

illusory. They claim that if the policy protects against only a complete cessation of business

activity, it would be “virtually impossible” to qualify for coverage. And Ohio law counsels against

interpretations that “render [an insurance policy] useless.” Talbert v. Cont’l Cas. Co., 811 N.E.2d

1169, 1177 (Ohio Ct. App. 2004). But while a business rarely may be forced to entirely close

shop, the Mengels have offered no explanation for why it is impossible. Nor could they.

Unfortunately, it is all too easy for a large-scale natural disaster like a tornado or wildfire to

effectively (or literally) destroy a small business. Indeed, insurance is designed to protect against

those kinds of unlikely but devastating events. The policy is not illusory.

Finally, the Mengels argue that Hastings Mutual previously covered business losses for a

similar claimant. But it’s not our job to police extra benefits or concessions Hastings Mutual gives

to other customers. Our role is only to faithfully interpret Hastings Mutual’s obligations under the

policy before us. And that policy is unambiguous: A lull in business is not a “suspension of

operations.”

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Case No. 20-4090, Hastings Mutual Ins. Co. v. Mengel Dairy Farms, LLC

Litigation has a way of transforming common-sense questions into impenetrable legal

mazes. But in this case, for once, the issues are just as they seem. A business suspends its

operations when it temporarily stops all business activity. Though the Mengels’ cows produced

less milk, the Mengels never completely shut down their dairy farms. As a result, we affirm.

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