Star Diamond v. Underwriters at Lloyd's, London

• Decision Date: 21 May 1997
• Docket Number: Civil Action No. 96-1159-A.
• Citation: 965 F.Supp. 763
• Parties: STAR DIAMOND, INC., Plaintiff, v. UNDERWRITERS AT LLOYD'S, LONDON, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

Page 763

965 F.Supp. 763

STAR DIAMOND, INC., Plaintiff, v. UNDERWRITERS AT LLOYD'S, LONDON, Defendant.

Civil Action No. 96-1159-A.

United States District Court, E.D. Virginia, Alexandria Division.

May 21, 1997.

Robert James Beagan, Flinn & Beagan, Vienna, VA, for Plaintiff.

Mark White Byrum, Jr., Cunningham & Associates, Alexandria, VA, for defendant.

MEMORANDUM OPINION

HILTON, District Judge.

This matter comes before the Court on defendant's motion for summary judgment pursuant to Rule 56, Fed.R.Civ.P. Plaintiff Star Diamond, Inc. ("Star") commenced this breach of contract action after defendant Underwriters at Lloyd's London ("Lloyd's") denied Star's claim under an insurance policy with Lloyd's for the loss Star sustained when its stock of approximately $100,000 worth of diamonds disappeared from an automobile driven by Star's president, Nitin K. Parikh ("Parikh").

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332. Star is a corporation organized under the laws of the Commonwealth of Virginia with its principal place of business in Chantilly, Virginia. Lloyd's is a syndicate of underwriters operating pursuant to an agreement entered under the laws of Great Britain.

The material facts underlying the loss are not in dispute. Star is engaged in business as a supplier of diamonds and precious stones to jewelry stores. For the sum of $6,300.00, Star purchased the "jewelers' block" insurance policy at issue from Lloyd's on or about December 7, 1995. The policy insured against all risks of loss or damage to the jewelry with certain exceptions and was in effect at the time of the loss. On the afternoon of April 9, 1996, Parikh left his home in Chantilly, Virginia to call upon one of his customers in Washington, D.C. Accompanying Parikh on this day was his brother-in-law, Dipak Shah. Parikh kept his stock of diamonds in a small box which he carried in a black knapsack. After meeting with the customer, Parikh returned to the car and placed the knapsack on the floor behind the front seat of the car. Parikh and Shah then began their return trip to Chantilly. Parikh recalls asking Shah to check the rear of the automobile to confirm the presence of the knapsack during the course of their trip on Interstate 66. Shah responded that the knapsack was present. The two men continued to a shopping center in Hermdon, Virginia. Upon arriving at the center, Parikh dropped Shah off in front of a photo store and Shah exited the car without the knapsack.

After Shah exited the car, Parikh continued to a nearby gas station. The station was crowded and Parikh had to wait behind several vehicles before a pump was available for his use. While he was waiting, Parikh did not exit his car. Once a pump was free, Parikh parked his car, turned off the engine, exited his car and walked to the rear of the driver's side of his car where the pump was located. As he approached to the pump, he bumped into his car several times and that at no time was he more than nine inches from his car. When Parikh reached the pump, he inserted a credit card into the pump several times in an attempt to authorize his purchase electronically. During this time, Parikh had his back turned toward his car. Ultimately, the pump indicated that Parikh should "see attendant." Parikh estimated that from the time he exited his car until the point at which he saw the "see attendant" message, approximately three to five minutes had elapsed. After he saw the message, Parikh turned back to his car and opened the rear driver's side door to retrieve his knapsack before walking to the attendant's booth. When he opened the door, Parikh discovered that his knapsack was missing. Upon making this discovery, Parikh went to the attendant, informed him that his knapsack was missing and asked the attendant to call the police. Neither Parikh nor anyone in the vicinity of his car saw anyone approach his car or remove anything from the car between the time Parikh exited his car and the time he discovered the knapsack missing.

On April 10, 1996, Star's insurance broker submitted a claim to Lloyd's for the loss. Subsequently, Parikh was examined under oath by counsel for Lloyd's concerning the events that formed the basis of his claim. On July 26, 1996, Lloyd's issued a letter to Star denying coverage for the April 9, 1996 loss pursuant to two separate exclusion clauses in its policy. The clauses provide in pertinent part:

A. This Insurance does not insure against loss or damage directly or indirectly caused by or resulting from:

iii) unexplained or mysterious loss.

B. This Insurance does not insure loss of or damage to property:

I) while in or upon any automobile, motorcycle or any other vehicle unless, at the time the loss or damage occurs, there is actually in or upon such vehicle, the Assured, or a permanent employee of the Assured, or a person whose sole duty it is to attend the vehicle.

On August 23, 1996, Star commenced this lawsuit in United States District Court alleging that it had complied with all the terms and conditions under the policy and that Lloyd's refusal to pay Star's claim was a breach of the insurance contract.

Summary judgment is appropriate when there is no genuine issue as to any material fact. Fed.R.Civ.P. 56(c). A material fact in dispute appears when its existence or nonexistence could lead a jury to different outcomes. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A genuine issue exists when there is sufficient evidence on which a reasonable jury could return a verdict in favor of the nonmoving party. Id. at 248, 106 S.Ct. at 2510. Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). The opposing party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Unsupported speculation is not enough to withstand a motion for summary judgment. Ash v. United Parcel Service, Inc., 800 F.2d 409, 411-412 (4th Cir. 1986). Both parties have thoroughly briefed and argued this matter. There are no genuine disputes as to any material facts and this case is ripe for summary judgment.

The jewelers' block policy that Star purchased from Lloyds has been available to sellers of precious stones since about the turn of the century. Woods Patchogue Corp. v. Franklin National Ins., 5 N.Y.2d 479, 186 N.Y.S.2d 42, 158 N.E.2d 710 (1959). Jewelers' block insurance is different from most other traditional forms of property insurance which are considered "named-peril" insurance policies. Under named-peril policies, an insurer agrees to indemnify its insured for losses resulting from certain risks of loss or damage which are specifically enumerated within the provisions of the policy. In contrast, under a jewelers' block policy all risks of loss or damage to jewelry may be insured, subject to certain exceptions.

In construing insurance policies, the Court follows the established rule that where language of the policy is susceptible to two constructions, it is to be construed liberally in favor of the insured and strictly against the insurer. White Tire Dist. v. Pennsylvania Nat'l Mut., 235 Va. 439, 441, 367 S.E.2d 518, 519 (1988)(quoting Central Surety & Ins. Corp. v. Elder, 204 Va. 192, 197, 129 S.E.2d 651, 655 (1963)). However, where the language of an insurance policy is unambiguous, the Court gives the words their ordinary meaning and enforces the policy as written. Atlas Underwriters, Ltd. v. Meredith-Burda, Inc., 231 Va. 255, 259, 343 S.E.2d 65, 68 (1986). Moreover, as with all "written contracts, every part of the writing must be made, if possible, to take effect, and every word must be made to operate in some shape or other." Tate v. Tate's Executor, 75 Va. 522, 527 (1881).

Although jewelers' block insurance has been in existence for many years, no reported authority in Virginia has considered a jewelers' block policy or the two exclusions at issue here: (1) the "unattended automobile" exclusion and (2) the "unexplained loss or mysterious disappearance" exclusion. Other jurisdictions, however, have considered unattended automobile exclusion clauses with identical language.

In Wideband Jewelry Corp. v. Sun Ins. Co. of New York, 210 A.D.2d 220, 619 N.Y.S.2d 339 (1994), the insured's jewelry samples were covered under a jewelers' block policy. While the insured's employee was standing approximately six feet from his vehicle, thieves opened the trunk and stole over $250,000 worth of jewelry samples. The policy excluded coverage for a loss sustained by "theft from any vehicle unless you, an employee, or other person whose duty is to attend the vehicle are actually in or upon such vehicle at the time of the theft." Id. Given the distance between the insured's employee and the vehicle, the Court concluded that coverage was properly denied because the insured was not "actually in or upon" the vehicle at the time of the theft.

Similarly, in Jerome I. Silverman, Inc. v. Lloyd's Underwriters, 422 F.Supp. 89 (S.D.N.Y.1976), the insured had in the trunk of his car jewelry samples that were covered under a jewelers' block policy. The insured asked a parking attendant to watch his vehicle while he called upon customers in the area. After leaving his car for several minutes, the insured returned to find his samples missing. The insured argued that his car was in his sight when he visited his customers. The court rejected the insured's constructive possession argument in light of the policy's requirement that the insured or his representative be "actually in or upon" the vehicle at the time of the loss.

In Revesz v. Excess Ins. Co., 30 Cal.App.3d 125, 106 Cal.Rptr. 166 (1973), plaintiff, a jewelry salesman, insured his samples under a jewelers' block...