Starr Indem. & Liab. Co. v. Brightstar Corp.
| Decision Date | 12 July 2019 |
| Docket Number | 13 Civ. 8580 (GWG) |
| Citation | 388 F.Supp.3d 304 |
| Parties | STARR INDEMNITY & LIABILITY COMPANY, Plaintiff, v. BRIGHTSTAR CORP., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
John Anthony Vincent Nicoletti, Kevin John Byron O'Malley, Nooshin Namazi, Nicoletti Hornig & Sweeney, New York, NY, for Plaintiff.
Valerie M. Jackson, Quintairos, Prieto, Wood & Boyer, Miami, FL, Charles Paul Edwards, Barnes & Thornburg LLP, Indianapolis, ID, Dennis Joseph Nolan, John Mark Leonard, Vivian Costandy Michael, Anderson Kill P.C., New York, NY, Kara Cleary, Pro Hac Vice, Barnes & Thornburg LLP, Atlanta, GA, Mark L. Durbin, Pro Hac Vice, Barnes & Thornburg LLP, Chicago, IL, for Defendants.
TABLE OF CONTENTS
A. The Policy...312
B. Facts Relating to the Coverage of, and the Loss at, the German Warehouse...314
A. Choice of Law...324
B. The Limit of Liability Applicable to the German Warehouse...325
Plaintiff Starr Indemnity & Liability Company ("Starr") brings this action seeking a declaratory judgment that defendants Brightstar Corp. and Brightstar Germany GmbH (collectively the "defendants" or "Brightstar") are not entitled to coverage under an insurance policy (the "Policy") for the claimed loss of wireless communication devices (the "Loss") at a warehouse in Germany ("the German Warehouse") in November 2013. Defendants have counterclaimed, alleging that Starr has breached the insurance policy by refusing coverage, and seek a declaratory judgment that the insurance policy covers the Loss. Both parties move for partial summary judgment.1
Starr moves for partial summary judgment on the following issues: (1) that, to the extent there is a conflict between New York and Florida law, New York law applies to this dispute; (2) that a $3 million limit of liability applies to the German Warehouse; (3) that the Policy's Errors and Omissions Clause only applies to insured risks, and cannot be construed to add or extend coverage not already agreed to by Starr; and (4) that Starr's interpretation of terms contained in the Policy's "Misappropriation Exclusion Clause" is correct. In its motion, Brightstar seeks a ruling that the Misappropriation Exclusion Clause is inapplicable to the Loss.
For the following reasons, this Court finds that there is no conflict between New York and Florida law as to any issue in this case and thus it will apply New York law, grants plaintiff summary judgment on the question of whether the German Warehouse was an "unnamed location" with a $3 million limit of liability, and rules that the Policy's Errors and Omissions Clause only applies to already-insured risks. The Court also grants defendants' motion for partial summary judgment, ruling that the Misappropriation Exclusion Clause is inapplicable to the Loss at the German Warehouse.
The following facts are undisputed unless otherwise noted.
A. The Policy
Brightstar Corp. is incorporated in the state of Delaware and maintains its headquarters in Miami, Florida. Complaint, filed Dec. 13, 2013 (Docket # 1) ("Compl."), ¶ 3; Amended Answer, Affirmative Defenses, and Courterclaim, filed May 28, 2014 (Docket # 26) ("Am. Answer and Countercl."), Am. Answer ¶ 3. Brightstar describes itself as "the world's largest specialized wireless distributor," and has "over 200 wireless communications operators, 100 manufacturers and 30,000 retailers as global customers." Compl. ¶¶ 13-14; see Am. Answer and Countercl., Am. Answer ¶¶ 13-14. Brightstar Germany GmbH is a German subsidiary of Brightstar Corp. and operates solely in Germany. See Am. Answer and Countercl., Countercl. ¶¶ 86-87. Starr is an insurance company that is incorporated in Texas and maintains its principal place of business in New York. Compl. ¶ 2.2
Since 2002, Brightstar has been a client of Starr. See Excerpts of Videotaped Deposition of Peter Scrobe, dated Nov. 4, 2016 (annexed as Ex. 5 to Durbin Decl.) ("Scrobe Dep."), 53. In 2011, Starr issued a marine cargo insurance policy to Brightstar. See Brightstar Corporation Marine Cargo Insurance Policy, effective as of Mar. 26, 2011 (annexed as Ex. 3 to O'Malley Decl. and as Ex. 5 to Edwards Decl.) (the "Policy"), at 6, STARR 15574. Marsh USA acted as Brightstar's insurance broker in connection with the 2011 issuance of the Policy. See Declaration of Jeffrey Factor in Support of Plaintiffs' Joint Motion to Compel Defendants (annexed as Ex. 46 to O'Malley Decl.) ("Factor Decl."), ¶ 8.
The Policy provided that it was "continuous and cover[ed] all shipments of goods and/or merchandise and/or property made on/or and after 12:00 A.M. March 26, 2011 and on all goods and/or merchandise and/or property at locations on and after said time and date." Policy at 6, STARR 15574. The Policy did not contain a termination date, but was rather continuous unless cancelled. See id. Also, it contained no choice of law or forum selection clause.
The Policy contained a clause regarding the insurance of goods stored in warehouses in "Endorsement No. 2," which is annexed to the Policy and shares its March 26, 2011, effective date. Policy at 36, STARR 15604. Endorsement No. 2 covered "goods and merchandise which are owned by or held by the Assured in trust ... while temporarily detained in stores or warehouses, at any location worldwide." Id. Clause 9 of Endorsement No. 2 stated: "The stores or warehouses to which these Assurers hereby extend approval and the limits of liability at each location are as follows....." Id. at 37, STARR 15605. Following this clause was a nine-page chart listing the names and addresses of particular warehouses, with individual corresponding limits of liability. See id. at 38-47, STARR 15605-15. The German Warehouse was not included in this chart. Endorsement No. 2's Clause 11 stated "[t]he un-named location limit of $3,000,000 is provided without prior approval." Id. at 38, STARR 15606.
As to the adding of new locations, Endorsement No. 2 provided for "[a]utomatic coverage up to $25,000,000 ... for new locations upon an affirmative representation by Brightstar to Marsh of specific location minimum standards noted below," and listed those "minimum standards" in a bullet-point list. Id. at 47, STARR 15615 (emphasis omitted). Included in the "minimum standards" list was the clause: "Submission to Marsh for review and notification to This Company." Id. Endorsement No. 2 also included a requirement that stated "[u]pon notification by the Insured and/or Marsh, Starr Marine will immediately order a location loss control survey and forward resulting recommendations for compliance as soon as received." Id. at 48, STARR 15616. During the term of Endorsement No. 2, additional warehouses were added to the Policy by separate endorsements. See Endorsements Nos. 7-14, Policy at STARR 15628-35.
After Starr issued the Policy, certain of its terms and conditions were adjusted on an annual basis. See Compl. ¶ 23; Am. Ans. and Counterclaim, Am. Ans. ¶ 23. As part of this annual adjustment, new warehouse endorsements were issued, beginning one year after March 26, 2011, which was the effective date of Endorsement No. 2. See Endorsement No. 17, Policy at STARR 15638-44 ("Endorsement No. 17"); Endorsement No. 40, Policy at STARR 15701-04 ("Endorsement No. 40"). Arthur J. Gallagher ("Gallagher") replaced Marsh as Brightstar's insurance broker as of January 10, 2012, and negotiated Endorsements Nos. 17 and 40. See Def. Reply to Pl. 56.1 ¶¶ 14, 20.
Endorsement No. 17 was signed by Starr on June 15, 2012, Policy at STARR 15644, but states that it is "EFFECTIVE: MARCH 26, 2012," id. at STARR 15638. Endorsement No. 17 listed individual warehouses it insured in a schedule contained in its Clause 11. See id. at STARR 15639-43. The German Warehouse is not among them. See id. Similar to Endorsement No. 2, Endorsement No. 17 stated: "[a]utomatic coverage up to $25,000,000 ... is provided for new locations upon an affirmative representation of specific location minimum standards noted below, subject to receipt of quarterly statement of values." Id. at STARR 15643. Once again, those "minimum standards" were contained in a bullet-point list. Id. at STARR 15643-44. Warehouses added during the term of Endorsement No. 17 were listed in separate endorsements amending Clause 11 of Endorsement 17, as were warehouses whose limits were increased during the course of Endorsement No. 17. See Endorsements Nos. 22, 24, 26, 27, 2934, Policy at STARR 15653-57, 15659-62, 15665-66, 15667-70, 15677-95. Endorsement No. 17 also contained a clause stating that "[u]pon notification of any new location, Starr Marine will order a loss control survey and forward the resulting...
To continue reading
Request your trial
-
Volt Elec. NYC Corp. v. A.M.E., Inc.
...: The Court next considers the parties’ course of conduct during the contract's performance. See Starr Indem. & Liab. Co. v. Brightstar Corp. , 388 F. Supp. 3d 304, 329 (S.D.N.Y. 2019) ("[The] parties’ course of performance under the contract is considered to be the most persuasive evidence......
-
Allstate Ins. Co. v. Vitality Physicians Grp. Practice P.C.
...does not shift to the insurer where, as here, the insurer moves first for declaratory judgment." Starr Indem. & Liab. Co. v. Brightstar Corp. , 388 F. Supp. 3d 304, 323 (S.D.N.Y. 2019) (cleaned up), aff'd , 828 F. App'x 84 (2d Cir. 2020) (summary order); see Schoeps v. Museum of Modern Art ......
-
Art & Antique Dealers League of Am., Inc. v. Seggos
...on a motion for summary judgment." Porter v. Quarantillo , 722 F.3d 94, 97 (2d Cir. 2013) ; accord Starr Indem. & Liab. Co. v. Brightstar Corp. , 388 F. Supp. 3d 304, 323 (S.D.N.Y. 2019). It is the government's burden to justify its rules as consistent with the First Amendment. See Sorrell ......
-
Deutsch v. N.Y. State Bd. of Elections
...on a motion for summary judgment." Porter v. Quarantillo, 722 F.3d 94, 97 (2d Cir. 2013); accord Starr Indem. & Liab. Co. v. Brightstar Corp., 388 F. Supp. 3d 304, 323 (S.D.N.Y. 2019). 2. Challenges to State Election Laws States retain the power to regulate their own elections. See United S......
-
Drafting Effective RWI Coverage Exclusions
...Rico v. XL Specialty Ins. Co., 929 F.3d 11, 24-25 (1st Cir. 2019). 6. Id. 7. See, e.g., Starr Indem. & Liab. Co. v. Brightstar Corp., 388 F. Supp. 3d 304, 356 n.21 (S.D.N.Y. 2019), aff'd, 828 F. App'x 84 (2d Cir. 2020). 8. See, e.g., Starr Indem. & Liab. Co. v. Brightstar Corp., 388 F. Supp......