An ammonia release at a juice cup manufacturer's plant constitutes direct physical loss of or damage to the facility under a property insurance policy with Travelers Property Casualty Co. of America, as the discharge caused the plant to be temporarily shut down, a New Jersey federal judge ruled Tuesday.

Robert D. Chesler of Anderson Kill PC, representing Gregory Packaging, said Judge Walls' ruling is a win for policyholders and could be applied in many contexts. Chesler said that the judge found that the phrase "direct physical loss of or damage to" is undefined in the policy and that the ambiguity must be construed in the policyholder's favor.

"I think an ordinary person would think that the loss of use of a building is a physical loss," Chesler said. "The physical loss language at the beginning of the policy was the gateholder. Getting that out of the way means we can now focus on other issues in the case."

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