This is the case of Fresca Holding Co. LLC v. Citizens Insurance Company of America,  in the U.S. District Court for the District of Colorado.

Fresca Foods accuses a Hanover Insurance Group unit of wrongfully denying its business interruption claims related to the destructive Marshall Fire in a lawsuit that has since been removed to Colorado federal court.

The Marshall Fire was a fire that started on December 30, 2021, as a grass fire in Boulder County, Colorado. In terms of structures lost, it is the most devastating fire in Colorado's history.

In its complaint, Fresca accused Citizens Insurance Co. of America, of refusing to pay the loss claims it put forth in violation of its policy.

Fresca Foods, a food manufacturer headquartered in Colorado, was forced to close its business for several days during and after the Marshall Fire due to non-potable water that was used to put out the blaze.

The complaint alleges that Fresco did show the insurer evidence that its factories were "rendered unsafe," even without physical damage to the premises or any structural damage as a result of the fire.

The complaint contends that the insurer forced Fresca to demonstrate that it suffered a direct physical loss or damage, and Fresca says in the suit that it did so.

In its complaint, the company said "The introduction of nonpotable water into the city of Louisville's water supply system, of which the Fresca facilities are a part … constituted either (if not both) direct physical loss or damage to the Fresca facilities."

The two Fresca Foods production facilities in Louisville, Colorado, were ordered to evacuate on Dec. 30, 2021, after the Marshall Fire ignited and quickly spread into the surrounding cities.

In an effort to help the neighboring city of Superior, Colorado, and to assist in maintaining adequate water line pressure and supplies for firefighters, Louisville officials began to use a second water treatment plant and ran non-potable water through it, which resulted in the city issuing a “Boil Water Order” that was in effect until Jan. 6, 2022, according to Fresca’s complaint.

Fresca Foods said its local facilities had to remain closed until the boil order was lifted, and it could drain all its water systems and conduct tests to ensure that the water was safe in order to resume its food production. Fresca claims that it notified its insurance broker on Dec. 31, 2021, that it would be submitting claims for losses suffered from the fire.

According to Fresca’s complaint, Citizens Insurance responded that it would extend business interruption coverage for the evacuation of the two facilities for a period of time between 2:24 p.m. on Dec. 31, 2021, and 1 p.m. on Jan. 1, 2022.

The insurer subsequently informed Fresca Foods that there would be no business interruption coverage under its utility service coverage because it alleges neither of the water treatment plants sustained direct physical damage from the wildfire.

Fresca Holding Co. LLC is represented by Bradley A. Levin and Jeremy A. Sitcoff of Levin Sitcoff Waneka PC.

Attorneys for Fresca argue that, while its policy excludes coverage for loss or damage caused by utility services, it does however include a broader endorsement that does provide coverage for loss or damages related to an interruption of utility services.

Fresca's attorneys also allege that the insurer failed to consider that the presence of non-potable water in the system made the Fresca Food facilities unsafe.

Jeremy Sitcoff, attorney for Fresca Foods said "We think it qualifies as a loss under their business loss coverage."

Fresca’s lawsuit accuses Citizens Insurance of breach of contract, unreasonable delay or denial of payment of claims, and bad faith breach.