Prendergast v. Pacific Ins. Co.
| Decision Date | 28 March 2012 |
| Docket Number | 09-CV-6248P |
| Parties | GREGORY PRENDERGAST, Plaintiff, v. PACIFIC INSURANCE COMPANY, LIMITED, Defendant. |
| Court | U.S. District Court — Western District of New York |
Plaintiff Gregory Prendergast ("Prendergast") seeks a declaratory judgment that his sports card insurance policy issued by Pacific Insurance Company ("Pacific") was in effect at the time that his collection was stolen and that he complied with all policy conditions required to maintain full coverage. (Docket # 1, Complaint). Pursuant to 28 U.S.C. § 636(c), the parties have consented to have a United States magistrate judge conduct all further proceedings in this case, including the entry of final judgment. (Docket # 10).
Currently pending before this Court is Pacific's motion for summary judgment. (Docket # 34).1 Because the issues raised by Pacific involve disputes of material fact, the motion is denied.
The following is a summary of the undisputed facts in this matter, except where otherwise noted.2
Prior to 2006, Prendergast insured a sports card collection through Lloyd's of London. (Docket ## 34-29 at ¶ 1; 40-24 at ¶ 2). In May of 2006, Prendergast obtained a new insurance policy from Pacific, which provided coverage for his collection in the amount of $200,000. (Docket ## 34, Ex. B; 40-24 at ¶ 3). To obtain the coverage, Prendergast was required to estimate the replacement value of "each major type collectible," although he was not required to submit a professional appraisal of the collection's value. .
Prendergast based his estimate on an appraisal prepared by Yankee Clipper House of Cards in 2005. (Docket ## 34, Ex. C; 34-29 at ¶ 4). The appraisal contained an eight-page handwritten inventory of the cards, which listed the type and number of cards, as well as an associated "value." (Docket # 34, Ex. C). The appraiser did not inspect the collection, but accepted Prendergast's representation as to its contents; in estimating value, the appraiser used the Beckett Book3 and accepted Prendergast's representation that all of the cards were in "[near mint] to mint condition." (Id.).
According to Prendergast, in March or April of 2007, a man who introduced himself as "Robert" came to his house and offered to sell him a sizable sports card collection. (Docket # 34, Ex. N at 82-84). Without inspecting the collection, Prendergast agreed to buy the collection of approximately nine million sports cards4 for $450,000 in cash.5 (Id. at 83-85). Prendergast never learned "Robert's" last name or how to contact him and never obtained a receipt for the purchase. (Id. at 84-86). After Prendergast agreed to buy the collection sight-unseen, he leased a facility in a commercial building located at 1149 Culver Road in Rochester, New York, for the purpose of storing the new collection. (Docket ## 34, Ex. E; 34-29 at ¶ 6). Sometime between April 15, 2007 and May 15, 2007, Robert delivered 385 boxes, each containing 25,000 cards, to Prendergast at the storage facility. (Docket ## 40, Exs. D, F; 34, Ex. N at 88-89, 92). Prendergast also moved his original collection to the facility. (Docket # 34, Ex. J at 68-69).
On May 15, 2007, Prendergast applied to Pacific to increase his coverage from $200,000 to $4,000,000 based upon his purchase of Robert's collection. (Docket # 34, Ex. D). According to Prendergast, his estimate that the collection was worth that amount was based upon a "price structure" provided by Robert, as well as Prendergast's sampling of the cards in each box and his review of the Beckett Book. (Docket # 34, Ex. J at 40, 44). Specifically, Prendergast testified that each box that Robert delivered contained information about its contents written on the box lid. (Id. at 39-40, 42). The lid noted the type and number of cards in eachbox, as well as a price range. (Id. at 44, 46). Prendergast testified that he opened each box to verify that its contents corresponded to the notations on the lid and to ensure that the cards were in excellent condition. (Id. at 41-42). He admitted that he did not look at every single card. (Id.). Prendergast then compared the box's "price structure" to the Beckett Book, considering the types of cards and their condition, to arrive at the estimated value of $4 million. (Id. at 44-46). Prendergast recorded his work through a series of hash marks on a separate box lid. (Docket # 34, Ex. O).
In order to obtain the increased coverage for theft, Pacific required Prendergast to install a central alarm system. (Docket ## 34-29 at ¶ 7; 34-20 at ¶ 7; 40-24 at ¶ 7). Prendergast contracted with ADT to do so. (Docket # 34-29 at ¶ 7). The system that ADT installed consisted of an alarm on the front door and a motion detector, but did not include an alarm on the back door of the storage space.6 (Docket ## 34, Ex. J at 56-60; 34-29 at ¶ 10). Prendergast did not disclose to Pacific the fact that the back door was not alarmed. (Docket # 34, Ex. J at 60). After receiving ADT's paperwork reflecting the alarm's installation, defendant issued a change endorsement increasing to $4 million the limit of coverage for burglary and theft. (Docket ## 34, Ex. G; 34-29 at ¶ 9). Pacific has submitted an affidavit from one of its underwriters asserting that it would not have increased the coverage had it been aware that the back door was not alarmed. (Docket # 34-20 at ¶ 9).
On September 14, 2007, Prendergast reported to the Rochester Police Department that his storage facility had been burglarized and his sports card collection had been stolen. (Docket ## 34-29 at ¶ 14; 34, Ex. H; 40-24 at ¶¶ 10-11). According to the police report, Prendergast reported that the burglary had occurred sometime between September 9th and 14th and that the burglar must have entered through the back door to his facility because the front door was alarmed. (Docket # 34, Ex. H).
Prendergast subsequently notified Pacific of the theft and submitted a Proof of Loss form to the company, which estimated the total value of the loss at $4 million. (Docket # 34, Ex. I). The Proof of Loss included an inventory consisting of a brief list of six items. The handwritten inventory reads in full:
(Docket # 34-1, Ex. I).
By letter dated February 26, 2008, Pacific denied coverage on the grounds that Prendergast failed to satisfy the policy's protective safeguard condition, failed to document the value of loss and made material misrepresentations concerning both. (Docket # 34, Ex. K). C. Prendergast's Policy
The policy at issue contained the following relevant terms:
(Docket # 34, Ex. G). The policy defined protective safeguard as a "central station alarm" or "an alarm which sounds at a location which is continually monitored to provide a response and is away from the designated premises." (Id. at § E(4)(c)).
The policy contained the following terms governing Pacific's obligation to pay Prendergast in the event of "a covered loss":
Finally, the policy provided:
D. Pacific's Expert Report
In support of its motion for summary judgment, Pacific has submitted an affidavit from its retained expert, Derek Grady ("Grady"). (Docket # 34-19). According to Grady, "it is impossible to assign an accurate value to the cards . . . without a more detailed list of the cards [Prendergast] possessed at the time of the loss." (Id. at ¶ 3). Grady has opined, however, "[b]ased upon my experience I can state with a reasonable degree of certainty that the plaintiff's entire collection is worth approximately $20,000-$25,000." (Id. at ¶ 6). His assessment is based"upon the assumption that the collection is as the plaintiff described in his application, proof of loss and deposition testimony." (Id.). Grady has further affirmed that he has never seen a box containing 25,000 cards - most boxes hold 5,000 cards...
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