Exquisite Apparel Corp. v National Liab. & Fire Ins. Co.

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Exquisite Apparel Corp. v National Liab. & Fire Ins. Co. 2013 NY Slip Op 30556(U) March 19, 2013 Supreme Court, New York County Docket Number: 116432/09 Judge: Debra A. James Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. I [* 1] ZANNED ON 312212013 SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY [* 2] b e g r a n t e d summary judgment. on i t s c a u s e s o f a c t i o n s e e k i n g reimbursement under t h e p o l i c y . D e f e n d a n t a r g u e s that b a s e d upon t h e facts a d d u c e d here t h e p l a i n t i f f i s n o t e n t i t l e d t o coverage u n d e r t h e r e l e v a n t t e r m s o f t h e Warehouse C o v e r a g e E n d o r s e m e n t t o t h e pol i c y . That endorsement: r e a d s i n p e r t i - n e n t p a r t t h a t N o t w i t h s t a n d i n g a n y t h i n g contained e l s e w h e r e h e r e i n t o the c o n t r a r y , t h i s p o l i c y s h a l . 1 n o t p a y for l o s s of o r damage t o t h e g o o d s a n d m e r c h a n d i s e w h i l e c o v e r e d u n d e r t h i s e n d o r s e m e n t caused b y o f resulting from: a U n e x p l a i n e d or m y s t e r i o u s d i s a p p e a r a n c e , o r l o s s o r s h o r t a g e d i s c l o s e d upon t a k i n g i n v e n t o r y where t h e r e iis n o e v i d e n c e t h a t the loss was o c c a s i o n e d by p e r i l s specifically insured against. I Defendant: argues t h a t p l a i n t i f f s c1.aim i s b a r r e d b y t h e m y s t e r i o u s d i s a p p e a r a n c e c l a u s e o f t h e p o l i c y because p l a i n t i f f has f a i l e d t o a d d u c e f a c t s t h a t would allow a fact f i n d e r t o c o n c l u d e t h a t p l a i n t i f f s g o o d s were s t o l e n a s p l a i n t i f f d l l e g e s . T h e C o u r t o f Appeals ha3 c o n s i d e r e d t h e i n t e r p r e t a t i o n of t h e m y s t e r i o u s disappearance clause i n an i n s u r a n c e c o n t r a c t . I n M a u r i c e Goldmarl & S o n s , Tnc. v Hanover I n s . Co. ( 8 0 NY2d 986, 9 8 7 [1992]), plaintiff s p r e s i d e n t w h i l e on a b u s i n e s s t r i . p n o t i c e d t h a t a b a g c o n t a i n i n g j e w e l r y was m i s s i n g f r o m h i s p e r s o n a l e f f e c t s b u t he was u n a b l e t o s a y how o r where the loss occurred. Plaintiff t h e r e a f t e r submitted a c l a i m t o defendants a n d t h e y d i s c l d i m e d l i a b i l i t y for t h e l o s s , r e l y i n g on t h e clauses i n their p o l i cies t h a t excluded f r o m c o v e r a g e -2- [* 3] [ u Jricxpl aincd loss, m y s t e r i o u s d i s a p p e a r a n c e o r 1 o s s o r shortage d i s c ] - o s e d on t a k i n g i n v e n t o r y + Id. - The Court h e l d t h a t Where t h e p r o v i s i o n s o f a n i n s u r a n c e c o n t r a c t a r e c l e a r and u n a m b i g u o u s , t h e c o u r t s shoulcl n o t s t r a i n t o s u p e r i m p o s e an u i n n a t u r a l or u n r e a s o n a b l e c o n s t r u c t i o n . C o n t r a r y t o p l a i n t i f f s argumcnl:, t h e c l a u s e i n i s s u e h e r e i s s u s c e p t i b l e o f o n l y o n e i n t e r p r e t a t i o n . Each o f t h e e n u m e r a t e d c a s u a l t i e s , i . e . , [ u ] n e x p l a i n e d loss, mysterious disappearance, arid l o s s 0.r s h o r t a g e on taking inventory, is plainly an discovered independent b a s i s f o r exclusion. There i s nothing i n t h e grammar o r s y n t a x o f t h e e x c l u s i o n a r y clause t o s u g g e s t t h a t t h e p h r a s e d i s c o v e r e d on t a k i n g i n v e n t o r y was i n t e n d e d t o m o d i f y e a c h o n e . To t h e e x t e n t t h a t t h e c o u r t r e a c h e d a c o n t r a r y c o n c l . u s i o n i n M c C o r m i c k & C o . v Empire Ins. Group C o . ( 8 7 8 F2d 27), i t s h o l d i n g is a n i n a c c u r a t e i n t e r p r e t a t i o n o f N e w York S t a t e l a w . E q u a l l y u n p e r s u a s i v e i s p l a i n t i f f s argument t h a t t h e r u l . i n g o f t h e courts below i m p r o p e r l y s h i f t e d t h e b u r d e n o f p r o o f f r o m t h e i n s u r e r to t h e i n s u r e d . W h i l e i t i s t r u e t h a t a n i n s u r e r g e n e r a l l y has t h e burden of p r o v i n g t h a t a l o s s i s w i t h i n t h e scope of a p o l i c y exclusion, d e f e n d a n t s s a t i s f i e d t h a t b u r d e n h e r e b y s i m p l y showing .that p l a i - n t i f f I s claim concededly involved an u n e x p l a i n e d loss or mys-Lerious d i s a p p e a r a n c e . & a t 987 -988 (citations omitted). A number o f c a s e s i.n the F i r s t D e p a r t m e n t h a v e c l a r i f i e d t h e l e g a l s t a n d a r d t o he applied t o summary j u d g m e n t m o t i o n s b a s e d upon a p o l i c y s m y s t e r i o u s d i s a p p e a r a n c e c l a u s e , Rros., I n c . v H a n o v e r I n s . Co. plaintiff-insureds In G u r f c i n ( 2 4 8 AD2d 2 2 7 [ l S Dept 1998]), t sales r e p r e s e n t a t i v e surmised t h a t t h e diamonds i n h i s p o s s e s s i o n h a d been s t o l e n when h e p u l l e d o v e r t o change a F l a t t i r e , Defendant i n s u r e r , having disclaimed c o v e r a g e , moved t o d i s m i s s p l a i n t i f f s c o m p l a i n t s e e k i n g reimbursement under t h e p o l i c y 011 -3- t h e g r o u n d s of t h e m y s t e r i o u s [* 4] disappearance clause. D e f e n d a n t argued t h a t s i n c e [ t h e r e p r e s e n t a t i v e ] c o u l d n o t s p e c i f y e x a c t l y when o r w h e r e h e had s t o p p e d a n d h a d n o t s e e n or h e a r d the d i a m o n d s b e i n g s t o l e n , p l a i n t i f f s cl.aim t h a t a theft h a d o c c u r r e d was mere speculation. I .a t d 228. The Court h e l d t h a t [TIh e m o t i o n c o u r t g r a n t e d sumrnary j u d g m e n t t o d e f e n d a n t s b e c a u s e t h e record was d e v o i d o f p r o o f as t o the e x a c t i n which p l a i n t i f f s goods were l o s t o r manner disappeared. W agree with p l a i n t i f ¬ s t h a t t h i s ruling e i m p e r m i s s i b l y s h i f t e d t h e b u r d e n o n t o t h e m t o p r o v e that t h e e x c l u s i o n d i d n o t appl.y, a n d t h a t c o n t e s t e d f a c t u a l i s s u e s do i n d e e d p r e c l u d e a g r a n t o f summary j u d g m e n t . Id, at: 2 2 9 . I _ The Court, a n a l y z i n g t h e p r e c e d e n t s i n t e r p r e t i n g t h e p o l i c y p r o v i s i o n concluded t h a t I n t h e c a s e a t bar, b y c o n t r a s t , p l - a i n t i f f s h a v e offered an e x p l a n a t i o n , s u p p o r t e d by c i r c u m s t a n t i a l e v i d e n c e f r o m several s o u r c e s , w h i c h i f b e l i e v e d b y t h e t r i e r o f f a c t c o u l d r e a s o n a b l y s u p p o r t a n i n f e r e n c e o f t h e f t . From t h e e v i d e n c e p r e s e n t e d b y p l a i n t i f f s , t h e trier of fact c o u l d i n f e r t h e a p p r o x i m a t e t i m e and p l a c e of t h e t h e f t a s w e l l a s t h e m e t h o d s a n d p o s s i b l e i d e n t i t y o f t h e thieves. D e f e n d a n t ha s f a i l e d t o s h o w t h a t t h i s v e r s i o n o f e v e n t s i s s o i l l o g i c a l , i m p l a u s i b l e or s p e c u l a t i v e a s t o w a r r a n t summary j u d g m e n t for t h e i n s u r e r . The c o m p l a i n t s h o u l d t h e r e f o r e be r e i n s t a t e d . I3 a t r. 231. See S. B e 1 l a r . a Diamond Corp. v F i r s t Specialty I n s . Corn., 2 8 7 AD2d 3 6 8 , 3 6 9 (P Dept 2 0 0 1 ) (summary j u d g m e n t d e n i e d t o i n s u r e r where i n s u r e d s u r m i s e d t h a t h e a c c i d e n t a l l y t h r e w t h e p a p e r parcel o f d i a m o n d s i n t o t h e g a r b a g e a s h e hurriedly c l e a n e d o f ¬ h i s desk b e f o r e g o i n g t o I.unch a s t h i s e x p l a n a t i o n , s u p p o r t e d b y c i r c u m s t a n t i a l e v i d e n c e , i f b e l i e v e d b y t h e t r i e r of f a c t , -4- [* 5] could reasonably support an inference that the d i a m o n d s were accidentally thrown away) . In another case involving di.amonds alleged to have been lost, the Court denied srimmary judgment to the plaintiff-insured finding there are issues of fact precluding a determination, at this juncture, whether the mysterious disappearance exclusion is applicable. There are a number of explanations p r o f f e r e d by plaintiff for the disappearance of the small leather pouch of diamonds. . . B e c a u s e questions as to the plausibility of plaintiff s explanatj ons cannot be resolved on the existirig record, we affirm t h e detcrminakion of the motion court to deny plaintiff s motion for sumnmcy judgment . v Hanover Ins. Nussbaum Diamonds, LLC Co., 64 AD3d 488, 493-494 ( 1 Dept 2009). In this case, plaintiff asserts that the mere fact that goods valued at over one million dollars went missing in the time that the inventory was shifted f r o m one warehouse to another warehouse is suffici.ent to establish t h a t the loss was due to theft. However, as defendant argues, the cited precedents require some evidence t h a l l the plaintiff s proffered explanation for the loss set was not merely speculative. That is, in the absence of facts upon which a fact finder c0ul.d determine that there is some explanation for the loss beyond the ¬act that inventory is unaccounted for, the exclusion w o u l d apply to the benefit of t h e insurer. -5- [* 6] In t h i s c a s e h o w e v e r , B e n i t o H e r n a n d e z who worked a t t h e w a r e h o u s e w h e r e p l a i n t i f f s g o o d s were o r i g i n a l l y s t o r e d t - e s t i f i e d at h i u s d e p o s i t i o n t h a t t h e manager o f s u c h w a r e h o u s e g a v e h i m a s h e e t o f p a p e r a n d i n s t r u c t e d him t o o p e n p l a i n t i f f s boxes a n d remove s a m p l e s t h e r e f r o m . plaintiff s vice president, C h r i . s Van H u l s e , stated i n an a f f i d a v i t t h a t p l a i n t i f f d i d n o t r e q u e s t a n y o n e at: such w a r e h o u s e t o open t h e i r b o x e s t o remove s a m p l e s . H e r n a n d e z i n d i c a t e d t h a t h e d i d n o t know what happened t o t h e boxes a f t e r h e o p e n e d t h e m , removed t h e s a m p l e s and gave t h e s a m p l e s t o h i s manager a s d i r e c t e d . This testimony, supported by t h e c i r c u m s t a n t i a l evidence t h a t p l a i n t l i f f s goods were m i s s i n g p r i o r t o t h e t r a n s f e r t o t h e new warehouse, s u c h a s t h e d i . s c o v e r y o f some of p l a i n t i f f s i t e m s in unmarked b o x e s t h a t were s t o r e d i n a w a r e h o u s e n e v e r u s e d b y plaintiff, i s s u f f i c i e n t i f b e l i e v e d t o a l l o w t h e trier o f f a c t t o r e a s o n a b l y c o n c l u d e t h e p l a i n t i f f s g o o d s were s t o l e n . Gurfcin Bros., I n c . v Hanover I n s . C o . , See supra, 2 4 8 A D 2 d at 2 3 1 . This i s b e c a u s e t h e e x c l u s i o n f r o m c o v e r a g e o n l y a p p l i e s w h e r e t h e c a u s e o f t h e l o s s i s w h o l l y unknown a n d w i t h o u t e x p l . a n a t i o n . I n t h i s c a s e , i f t h e p l a i n t i f f s e v i d e n c e is b e l i e v e d t h e loss i s n o t w i t h o u t e x p l a n a t i o n a n d i s covered u n d e r t h e terms of t h e policy. T h e r e f o r e , t h e p a r t i e s r e s p e c t i v e m o t i o n s f o r summary judgment s h a l . 1 be d e n i e d . -6- [* 7] Accordingly, i t is ORDERED that defendant s motion for summary judgment is DENIED; a n d it is f u r t h e r ORDERED that the partics a r e directed to a p p e a r at a p r e - trial conference in IAS P a r t 59, Room 103, 71 Thomas S t r e e t , New York, NY 1001.3 on May 7, 2013, at 2:30 P . M . to set a date for trial of this action. T h i s i-s the d e c i s i o n and order of the c o u r t . Dated: March 19, 201.3 ENTER: -7-

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