SHERMAN — Colony Insurance Co. filed a lawsuit seeking a court ruling that any judgment resulting from claims brought against one of its policyholders can't be covered by insurance.

The Virginia-based insurance company filed a complaint Jan. 28, 2016, in U.S. District Court for the Eastern District of Texas in Sherman against policyholder Custom Ag Commodities, a Texas limited liability company, and Diversified Ingredients, Inc., a Missouri corporation, which brought insurance claims against Custom Ag. Colony Insurances alleges Custom Ag's claims are excluded from its insurance policy.

According to the complaint, between April 20, 2012, and April 20, 2016, the plaintiff allegedly provided insurance policies to Custom Ag Commodities, which is involved in an ongoing lawsuit brought by Diversified Ingredients over claims that Custom Ag conspired with a third party to defraud Diversified by selling inferior pet food ingredients at premium prices. The plaintiff claims it has no duty to defend its policyholder because claims brought by Diversified Ingredients aren't covered by Custom Ag's general liability insurance policies, which cover damages from bodily injury or property damage.

The plaintiff seeks a declaration that it has no duty to defend Custom Ag in the claims brought by Diversified Ingredients, Inc. The company is represented by John C. Tollefson and Stephen A. Melendi of Tollefson Bradley Mitchell & Melendi in Dallas.

U.S. District Court for the Eastern District of Texas Case Number 4:16-cv-00083-ALM-CAN

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