Carlyle Commodity Mgt. LLC v Certain Underwriters at Lloyd's London Subscribing to Policy with

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Carlyle Commodity Mgt. LLC v Certain Underwriters at Lloyd's London Subscribing to Policy with 2020 NY Slip Op 32339(U) July 17, 2020 Supreme Court, New York County Docket Number: 651151/17 Judge: O. Peter Sherwood Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 07/17/2020 05:03 PM NYSCEF DOC. NO. 743 INDEX NO. 651151/2017 RECEIVED NYSCEF: 07/17/2020 SUPREME COURT OF TI IE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION x CARLYLE COMMODITY MANAGEMENT LLC (flk/a VERMILLION ASSET MANAGEMENT, LLC), CELADON COMMODITIES LTD., CARLYLE GLOBAL MARKET STR.ATEGIES COMMODITIES FUNDING 2014-l, LTD, CARLYLE GLOBAL MARKET STRATEGIES COMMODITIES FUNDING 2015-1, LTD, VMF SPECIAL PURPOSE VEHICLE SPC, VMF QI SEGREGATED PORTFOLIO, and ANY OTHER INSUREDS AS DEFINED HEREIN, Present: Hon. 0. Peter Sherwood Part 49 Index No.: 651 151/17 Mot. Seq. 13 ORDER Plaintiff, -againstCERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY WITH UNIQUE MARKET REFERENCE 807 53PC1410840000, CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY WITH UNIQUE MARKET REFERENCE B1353DC1500748000, and CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY WITH UNIQUE MARKET REFERENCE Bl 353DC 1500837000, Defendants . ............................................................................................. x WHEREAS, on January 14, 2020, Defendant Cert n Underwriters at Lloyd's London Subscribing to Policy with Unique Market Reference B 13 3DC1500837000 ("Defendant" or "Excess Insurers") fi led a Motion for Summary Judgment an supporting papers in the captioned action [NYSCEF Doc. Nos. 544-596]; WHEREAS, on February 25, 2020, Plaintiffs Car le Commodity Management LLC (f/k/a Vermillion Asset Management, LLC), Celadon Comm ditics Ltd., Carlyle Global Market 1 of 4 [*FILED: 2] NEW YORK COUNTY CLERK 07/17/2020 05:03 PM NYSCEF DOC. NO. 743 INDEX NO. 651151/2017 RECEIVED NYSCEF: 07/17/2020 Strategies Commodities Funding 2014-1 , Ltd, Carly le Glo al Market Strategies Commodities Funding 20 15-1 , Ltd, YMF Special Purpose Vehicle SPC, nd YMF QI Segregated Portfolio (collectively, " Plajntifis" or "Carlyle") filed their Oppositi n to Excess Insurers' Motion for Summary Judgment and papers in support of said Opposition [NYSCEF Doc. Nps. 599-7 14]; WHEREAS, on April 23, 2020, Excess Insurers su milled via email Excess Insurers' Reply in Further Support of its Motion for Summary Judgme t and supporting papers, pursuant to this Court' s instruction to do so in light of the COYI0- 19 pan emic and related filing restrictions, and on May 5, 2020, Excess Insurers filed its Reply and sup orting papers [NYSCEF Doc. Nos. 7 17-722]; WHEREAS, on May 6, 2020, Carlyle filed Plaint ffs· Further Rule 19-a(b) CounterStatement in Res ponse to Defendants Statement of Addition MateriaJ facts [NYSCEF Doc. No. 723]; WHEREAS, on June 5, 2020, this Court held oral a gument on Excess Insurers ' Motion for Summary Judgme nt via Skype; WHEREAS, later on June 5, 20202. this Court held conference via Skype with the lead attorneys for Carlyle and Excess Insurers for the purpose of i suing an o ral decision, the transcript of which is e-filed at NYSCEF Doc. No. 740, wherein the c urt granted Excess Insurers ' Motion for Summary Judgment; WHER1£AS, that decision (see id., Tr. 66-76) is inc orated herein by reference; WHEREAS, in granting Excess Insurers' Motion fo r ummary Judgment, this Court made the following findings: 2 2 of 4 [*FILED: 3] NEW YORK COUNTY CLERK 07/17/2020 05:03 PM NYSCEF DOC. NO. 743 1. INDEX NO. 651151/2017 RECEIVED NYSCEF: 07/17/2020 There are no material issues of fact precluding this Court from ruling on summary judgment; 2. SAMIR was an operating oil refinery in Moro co. 3. SAMIR entered into agreements with various hird-party suppliers to purchase oil that SAMIR would use as feedstock in its refinery. 4. SAMIR entered into a Master Commodity Tra saction Agreement ("MCTA") with Carlyle, pursuant to which Carlyle would purchase some oft e oil SAMIR had contracted to buy from third-party suppliers. Under the MCTA, Carlyle ow ed the purchased oil, stored it at SAMIR's refinery at no cost at and, had put rights that w en exercised obligated SAMIR to purchase the oil from Carlyle. SAMIR could not use the oil u il SAMIR paid Carlyle for it except upon Carlyle's prior written consent. 5. In practice, SAMIR processed the oil and sold the resulting refined oil products on an ongoing basis without either payment to Carlyle or prior itten consent, and then paid Carlyle at some period of time after the oil had already been refined d sold (see id. at pp. 60-62). 6. The Moroccan government seized SAMIR's bank accounts for non-payment of taxes in August, 2015. At the time of the seizure, SAMIR ow d Carlyle for multiple shipments of oil for which Carlyle had paid. 7. Carlyle claims that the oil feed stock was stol n by SAMJR. The record before the court does not support that assertion. 8. As discussed in the transcript, theft is an insta ce of stealing (id. at 70). The word "steal" has many meanings but in the sense used here it me ns "to take or appropriate another's property or ideas without permission dishonestly or unl wfully, especially in a secret or surreptitious manner" (id). 9. SAMIR did not steal the oil by refining it i the normal course of its refining 3 3 of 4 [*FILED: 4] NEW YORK COUNTY CLERK 07/17/2020 05:03 PM NYSCEF DOC. NO. 743 INDEX NO. 651151/2017 RECEIVED NYSCEF: 07/17/2020 operations. Carlyle's losses were not due to theft by SAMIR, ecause SAMIR and Carlyle had an ongoing business relationship and Carlyle expected that the oi it purchased and that was delivered to SA MIR would be used in the refining process and eventual paid for (usually after the time for payment provided in the MCTA). Carlyle's losses were not o .casioned by the unlawful taking of the oil, but rather by SAMIR's non- payment (see. e.g.. Sutro Bros. & Co. v. lndem Ins. Co. ofN Am., 386 F.2d 798 (2d Cir. 1967); Zurich Am. Ins. v. Felipe G imherg Fine Art, 324 F. App'x 117 (2d Cir. 2009). JO. SAMIR's refining of the oil in accordan ·e with SAMIR's and Carlyle's expectations and SAMIR's inability to pay when the Morocca government seized SAMIR's bank accounts is distinguishable from those cases where there was a ''pretend purchaser" with fraudulent intent (see, e.g., Hanson v. Nat'! Sur. Co., 257 N.Y. 216 (1931); Underwood v. Global Jndem. Co., 245 N.Y. 111 (1927); Great North Jnsura ce Co. v. Dayco Corp. , 620 F.Supp. 346 (S.D.N.Y. 1985); AGCS Marine Insurance Co. v. World ~uel Services, Inc., 187 F. Supp. 3d 428 (S.D.N.Y. 2016). 11. Loss due to non-payment is not covered by th insurance policy issued to Carlyle by Excess Insurers. It is hereby ORDERED as follows: 1. Defendant Excess Insurers' Motion for Summary udgment is GRANTED. 2. Plaintiffs' Complaint is DISMISSED WITH P SO ORDERED this 17th day of July 2020. 4 4 of 4 JUDICE.

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