Vam Check Cashing Corp.. v. Fed. Ins. Co.
| Decision Date | 25 May 2011 |
| Docket Number | No. 10–CV–1529.,10–CV–1529. |
| Parties | VAM CHECK CASHING CORP., Plaintiffv.FEDERAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
OPINION TEXT STARTS HERE
Clayman & Rosenberg by Paul Scott Hugel, New York, NY, for Plaintiff.Frenkel Lambert by Arthur N. Lambert, Diane Duszal, New York, NY, for Defendant.
I. Introduction
Vam Check Cashing Corporation (“Plaintiff” or “VAM”) sued Federal Insurance Company (“Defendant” or “Federal”) for failure to provide insurance coverage on a loss of $120,000 after imposters defrauded the company. Federal denied coverage, claiming the loss did not come under the policy's “On Premises” clause because the incident did not constitute a “Robbery.” Both parties filed motions for summary judgment.
At issue is the meaning of “Robbery” as used in the insurance contract. The case illustrates why insurance companies should use plain English. Reliance on the legalisms “overt” and “cognizant of” created an ambiguity supporting a decision in favor of the insured. Cf. David v. Heckler, 591 F.Supp. 1033, 1043 (E.D.N.Y.1984) ().
For the reasons stated below, VAM's motion is granted and defendant's motion is denied.
II. Facts
VAM operates a check cashing business in Brooklyn. It is one of three such enterprises owned by the same person. Plaintiff's Memorandum of Law, 1, n. 1, March 25, 2011 (“Pl's Mem.”). Pine Check Cashing, one of the establishments, is where the incident occurred. All three locations are insured under the same insurance policy. Id. Federal's policy insured against losses due to “Robbery” within plaintiff's premises. See Pl's Ex. C at 1.2(B)(2) (Insurance Policy).
Plaintiff contends that a defined robbery occurred at its business when imposters tricked a cashier into handing over $120,000. Compl. at ¶ 9–10. Because she was not aware that a fraud or crime was taking place, defendant contends the incident does not constitute a “Robbery” under the policy. Defendant's Memorandum of Law, 16–18, March 25, 2011 (“Def. Mem.”).
The cashier was working at Pine Check Cashing with a co-worker. She received a call from a woman (“First Unknown Female”) who falsely identified herself as the wife of VAM's owner. The cashier had never met or spoken with the owner's wife. The First Unknown Female informed the cashier that she and the owner were on their way to the Pine Check Cashing Corp. store; that the owner was planning a meeting to announce the opening of three new stores, including one in Manhattan that same morning; and that he wanted to make the cashier manager of a new store, with an increased salary and benefits. Def. Ex. 5; Pl. Ex. H.
The cashier placed the First Unknown Female on hold to take a call on another line from a second woman (“Second Unknown Female”), who identified herself as the manager of the new Manhattan store. The Second Unknown Female asserted that her store needed cash to pay a representative of New York State who was on her premises to collect a property tax. The cashier put the new caller on hold to relay this message to the First Unknown Female, who instructed her to tell the Second Unknown Female to send a man to the Pine Check Cashing Corp. store to pick up the money. The cashier complied, and the Second Unknown Female hung up. Pl. Ex. H.
The First Unknown Female remained on the line instructing the cashier that “some guy named Mr. Windfrey was going to come by to collect $100,000 that
[the
owner] has to give him and that [the owner] would replace it when he gets here because Mr. Windfrey can't wait for him.” She went on to explain that “Mr. Windfrey” would provide the code “2810;” that she, the “wife,” would stay on the phone until he arrived; that the cashier was to put the money in a box and tape it; and that the owner would give the cashier a $500 bonus. At one point the First Unknown Female pretended to ask her “husband” the amount again, and someone with a “low voice” said $120,000. Id.
The cashier described handing over the money as follows:
So before “Mr. Windfrey” came in the store two guys came in the front, looked in, then “Mr. Windfrey” came in straight to the door. I had a customer at the time so he went to [the coworker's] window, asked for the manager and [the coworker] looked at me and I told her to send him to my window. My customer left[;] then the [con man] came to my window. I asked for the code and he said 2810 so I buzzed him in, [with] the [first unknown] female still on the phone. I went to shake his hand when he held back a little, positioned his hand slightly. At the time I was unaware of what was really going on I just thought maybe he was crippled. The box was not ready so I went to tape it and gave it to him. I ask[ed] “do we get some kind of receipt” and he said “that's all.” The woman on the phone told me not to keep him waiting so he left and then she said she will see me soon and finally got off the phone.
Pl. Ex. H.
The cashier did not discover that these events constituted a scam until hours later when she called the actual owner. He told her that she had been communicating with imposters. Id. She then contacted the police.
The cashier never felt threatened by Mr. Windfrey, “the messenger;” she did not believe he was dangerous or a thief. Def. Ex. 6, 47–49; Def. Mem. 5–7.
Federal issued a “Crime Insurance Policy for Check Cashers,” No. 8077–9716 (the “Policy”). It had a $150,000 coverage limit and a $7,500 Deductible. Def. Ex. 3. The Policy provides in pertinent part:
1.2 The Company shall be liable for direct losses:
B. Within the Premises of Money ... only when such loss is caused by:
(2) Robbery or attempt thereat.
Pursuant to Policy Section 6. “Policy Definitions,”
“Robbery” means the unlawful taking of insured property from an Insured, a partner, an Employee or any other person authorized by the Insured to have custody of the property by violence, threat of violence or other overt felonious act committed in the presence and cognizance of such person ....
Id. (emphasis added).C. Federal's Denial
Federal denied VAM's claim on the ground that there was no coverage because the fraud did not meet the Policy definition of “Robbery.” Def. Ex. 14. VAM sued. See Complaint, Apr. 7, 2010.
III. LawA. Summary Judgment
Interpretation of an insurance policy presents a question of law appropriately decided on a motion for summary judgment. See McGinniss v. Employers Reinsurance Corp., 648 F.Supp. 1263, 1266 (S.D.N.Y.1986). See also, e.g., Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
B. New York Law Governs
A federal action based upon diversity jurisdiction, brought to recover under an insurance policy, is governed by state law. See, e.g., Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Brocklesby Transport v. Eastern States Escort, 904 F.2d 131, 133 (2d Cir.1990). New York law applies. See Pl. Mem. 7; Def. Mem. 10–11.
Under New York law, “[a]n insurance policy is a contract ... [to] be construed to effectuate the parties' intent as expressed by their words and purposes.” American Home Products Corp. v. Liberty Mut. Ins. Corp. [ AHP ], 565 F.Supp. 1485, 1492 (D.C.N.Y.1983). In the case of an ambiguity, the court will construe uncertainty against the insurer. Breed v. Insurance Co. of North America, 46 N.Y.2d 351, 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280 (1978); see also, e.g., Uniroyal, Inc. v. Home Ins. Co., 707 F.Supp. 1368, 1376 (E.D.N.Y.1988) () (citations and internal quotation marks omitted).
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