Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc

In Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, a processor supplied almonds that were contaminated with wood splinters. The almond product was used in almond clusters in cereal. It was obvious in the case of nut clusters composed of congealed syrups and nuts contaminated by wood splinters that the product could not be "somehow deconstructed to remove the injurious splinters and then recombined for their original use." (Id. at p. 866.) The Court found that loss resulting from the physical linkage of the contaminated nut product resulted in property damage to a third party's product. (Ibid.) "While the distinction may sometimes be a fine one to draw, we see no difficulty in finding property damage where a potentially injurious material in a product causes loss to other products with which it is incorporated." (Id. at p. 865.) Thus, the wood splinters that were so integrated in the physical composition of the nut clusters caused property damage to the third party's product.