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Fleet Global v. Republic Western

United States District Court,

M.D. Florida.

FLEET GLOBAL SERVICES, INC., Plaintiff,

v.

REPUBLIC WESTERN INSURANCE CO., Defendant/Third-Party Plaintiff,

v.

TRANSPORTATION INSURANCE SPECIALISTS, INC., Aon Risk Services, Inc. of

Arkansas, Third-Party Defendants.

 

Nov. 7, 2006.

 

 

ORDER

 

SHARP, Senior J.

 

THIS CAUSE comes before the Court upon Defendant/Third-Party Plaintiff’s Motion for Summary Judgment (Doc. 97-1, filed May 1, 2006), to which Plaintiff responded in opposition. (Doc. 115, filed May 31, 2006.) Plaintiff Fleet Global Services, Inc. (“Fleet”) brings this action against Defendant/Third-Party Plaintiff Republic Western Insurance Company (“Republic Western”) alleging one count of fraud in the inducement based on a shipping insurance contract between the two parties. Republic Western thereafter filed suit against Third-Party Defendants Transportation Insurance Specialists, Inc. (“TIS”) and Aon Risk Services, Inc. of Arkansas (“AON”) seeking contribution against both TIS and AON, pursuant to Fla. Stat. §  768.31. Florida’s Uniform Contribution Among Tortfeasors Act (“UCATA”), and contractual indemnification against TIS. After reviewing the motions and memoranda provided by each party, the Court denies summary judgment to Republic Western.

 

Summary judgment motions have also been filed, individually, by both AON and TIS, and have been dealt with by this Court in separate orders.

 

I. BACKGROUND

This action arises from Fleet’s purchase of a trucking liability policy issued by Republic Western, effective May 15, 2003. Fleet is, for all relevant times in this lawsuit, a long-haul trucking company licensed to operate as a trucking motor carrier in the United States. As a trucking company. Fleet is required to maintain truckers’ liability insurance. Republic Western is, for all relevant times in this lawsuit, a casualty insurance company, in the business of providing liability insurance for trucking companies such as Fleet. All licensed insurance companies, such as Republic Western, are rated by A.M. Best Company, Inc. (“A.M.Best”). [] The communications regarding the purchase of the liability policy were conducted between AON. Fleet’s agent, and TIS, Republic Western’s agent.

 

A.M. Best is one of five organizations designated as a Nationally Recognized Statistical Rating Organization by the United States Securities and Exchange Commission. A.M. Best issues financial strength ratings that measure an insurance company’s ability to pay claims.

 

Fleet alleges that it relied on Republic Western’s A.M. Best rating when purchasing the liability policy, and that Republic Western failed to disclose to Fleet that its A.M. Best rating would probably be lowered shortly after the purchase of the policy. Fleet claims that the initial A.M. Best rating of “B7” was sufficient for Fleet to conduct its normal business activities, but that the subsequent lowering of the A.M. Best rating to “C” caused Fleet to lose most of its customers. Republic Western’s A.M. Best rating was downgraded to a C rating on May 21, 2003. Fleet alleges that Republic Western knew it was under investigation by the State of Arizona Department of Insurance (“AzDOI”) due to financial dealings of Republic Western’s parent holding company, AMERCO. According to Republic Western, the focus of AzDOI’s investigation was large deductible policies issued by Republic Western to AMERCO subsidiaries, primarily U-Haul. Fleet alleges that Republic Western knew that its A.M. Best rating was likely to be lowered as a result of this investigation. Fleet alleges that if it had known that Republic Western was soon to lose its B7 rating, and be lowered to a C rating, it would never have placed insurance coverage with Republic Western.

 

Fleet alleges that Republic Western’s A.M. Best rating of B7 was an affirmative representation of the financial condition of Republic Western upon which Fleet relied when making its decision on an insurance policy. Fleet alleges that it was in a class of persons who Republic Western knew would rely on the A.M. Best rating, and therefore Republic Western had a duty to inform Fleet of the probable lowering to a C rating. In support of its allegations, Fleet chronicles a series of communications between the various parties involved in this action. (See Doc. 115 at 6-14.) Highlights of these communications are as follows:

2. October 18, 2002 Letter from Richard Amoroso, President and CEO of [Republic Western] to Dave Tooley, President of TIS: Amoroso assures his Managing General Agent, Tooley, that [Republic Western] had received assurances from A.M. Best that as the restructuring of [AMERCO] moved forward they would return [Republic Western] to a B+ rating.

4. April 3, 2003 Letter from [AzDOI] to Amoroso: By this letter, the Department of Insurance is precluding any transactions from occurring between [Republic Western] and any affiliate of [AMERCO].

6. April 17, 2003 Letter from [AzDOI] to Amoroso: The Department is informing Amoroso that it violated the previous order dated April 3, 2003 regarding affiliated insurance contracts.

7. April 18, 2003 Letter from Ray Sillari, Underwriting V.P. of [Republic Western] to Tooley: This very important letter states that:

At the present time we are rated B by A.M. Best. With the refinancing of our parent company, [AMERCO] taking longer than expected, we do not see in the foreseeable future returning to our B+ rating and we may in fact suspend our rating from A.M. Best[ ] while our parent works through their refinancing. During this anticipated lengthy period of suspended rating we will be reducing the amount of business written by Republic Western.

Accordingly, we will be terminating your agent contract with Republic Western effective July 1, 2003 for all commercial lines with the exception of transportation which is terminated effective November 1, 2003.

8. Deposition Excerpt of Ray Sillari dated March 2, 2006: Sillari testified that the [AzDOI] wanted [Republic Western] to stop writing certain lines of insurance and that [Republic Western] ceased writing all lines.

9. April 25, 2003 Press Release: [AMERCO] created this press release to state that [Republic Western] was exiting all non-U-Haul lines of business.

12. May 5, 2003 Letter from Amoroso to [AzDOI]: Amoroso notes that the meeting between he and the Department of Insurance on May 1, 2003, concluded that “Republic Western Insurance Company’s financial condition rendered the continuance of its business as hazardous to the public or to holders of its policies or certificates of insurance.”

14. May 7, 2003 Offer of Insurance from TIS to AON RISK SERVICES

15. May 12, 2003 Letter from Cunningham [of AON] to Watson, TIS: A letter from AON requesting that coverage be bound on the trucker’s auto liability policy for [Fleet] effective 5/15/03.

(Doc. 115 at 6-10.) Fleet continues to cite to documents that show that the downgrade to a C rating, in sum, “had a deleterious impact on the operations and profitability of [Fleet] and that many shippers have ceased doing business solely because of the C rating.” (Id. at 12.)

 

II. DISCUSSION

A. Summary Judgment Standard

A court will grant summary judgment if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); see, e.g., Stachel v. City of Cape Canaveral, 51 F.Supp.2d 1326, 1329 (M.D.Fla.1999). Material facts are those that may affect the outcome of the case under the applicable substantive law. Disputed issues of material fact preclude the entry of summary judgment, but factual disputes that are irrelevant or unnecessary do not. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

 

The moving party bears the initial burden of proving that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether the moving party has satisfied its burden, the Court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion and resolves all reasonable doubts against the moving party. Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party may rely solely on the pleadings to satisfy its burden. Celotex, 477 U.S. at 323-24. A non-moving party bearing the burden of proof, however, must go beyond the pleadings and submit affidavits, depositions, answers to interrogatories, or admissions that designate specific facts indicating there is a genuine issue for trial. Id. at 324. If the evidence offered by the non-moving party is merely colorable, or is not significantly probative, the Court may grant summary judgment. Anderson, 477 U.S. at 249-50. Similarly, summary judgment is mandated against a party who fails to prove an essential element of its case. Celotex, 477 U.S. at 322.

 

B. Fraud in the Inducement

Under Florida law, a plaintiff seeking to establish fraud in the inducement must prove the following:

(1) a misrepresentation of a material fact; (2) that [the] maker of the misrepresentation knew or should have known of the statement’s falsities; (3) intent by the maker of the statement that the representation induce another to rely and act on it; and (4) resulting injury to the party acting in justifiable reliance on the representation.

Palumbo v. Moore, 777 So.2d 1177, 1179 (Fla. 5th DCA 2001); see also  Phila. Indem. Ins. Co. v. Kohne, 294 F.Supp.2d 1319, 1328 (M.D.Fla.2003). At this summary judgment stage, Fleet has clearly met the requirements of showing fraud in the inducement. First, Fleet has alleged that Republic Western misrepresented material facts in the negotiations which resulted in Fleet’s purchase of liability insurance from Republic Western. These material facts centered around the financial stability of Republic Western, and its ability to maintain an A.M. Best rating of B or higher. Satisfying the second prong, Fleet alleges that Republic Western knew that it was under investigation by the AzDOI, and was aware of a potential downgrade in its A.M. Best rating, yet failed to alert either AON (Fleet’s representative) or Fleet itself of this information. Third, Fleet alleges, and supports this allegation with evidence, that the sole purpose in the lack of information exchange by Republic Western regarding their investigation by AzDOI and their potential downgraded A.M. Best rating was to earn Fleet’s business. Finally, Fleet has alleged that it suffered an injury; namely, Fleet lost present and future clients because of the C rating.

 

Fleet’s claim is not merely one for fraud based on a third-party representation (Republic Western’s representations to A.M. Best upon which Fleet relied). Fleet’s claim also does not require a “detailed road map” in order to be clearly understood, as Republic Western has claimed. (Doc. 97-1 at 9.) Fleet is not attempting to hold Republic Western liable for A.M. Best’s rating system, but is instead attempting to hold Republic Western liable for a lack of full disclosure, leading to a complete misrepresentation, of its financial well-being when it entered into an insurance contract with Fleet.

 

Having sufficiently stated a claim for fraud in the inducement, Fleet’s claim will survive the summary judgment stage. Republic Western briefly addresses several other points in its Motion for Summary Judgment which it believes precludes any successful claim on the part of Fleet. The Court will address each of these in brief.

 

i. Waiver

 

“The universal general rule is that when a party claiming to have been defrauded enters, after discovery of the fraud, into new arrangements concerning the subject matter of the contract to which the fraud applies, he is deemed to have waived any claim on account of the fraud….” Price v. Airlift Int’l, Inc., 181 So.2d 549, 550 (Fla. 3d DCA 1966) (citations omitted). Fleet asserts that it did not learn the facts of the alleged fraud until after discovery was conducted in the present case. Therefore. Fleet has not waived its claim despite applying for a second policy with Republic Western after learning of their C rating.

 

ii. False Statement of Fact Concerning Past or Existing Fact

 

As both parties state, a general rule of fraud is that “a false statement of fact, to be a ground for fraud, must be of a past or existing fact, not a promise to do something in the future.” Wadlington v. Cont’l Med. Servs., Inc., 907 So.2d 631, 632 (Fla. 4th DCA 2005); Virkler v. Herbert Enters., 403 F.Supp.2d 1141, 1150 (M.D.Fla.2005) (internal quotation marks omitted). Fleet alleges that Republic Western has misrepresented its financial state from the past and present (at the time of the representation), which led to a future downgrading of its A.M. Best rating. Fleet has not claimed that there was a future promise on the part of Republic Western.

 

iii. Opinion Versus Fact

 

Republic Western acknowledges that “[w]hether a statement is one of fact or opinion depends on the circumstances in each case.” Tres-AAA-Exxon v. City First Mortg., Inc., 870 So.2d 905. 907 (Fla. 4th DCA 2004). Fleet alleges that it was relying on the expertise of Republic Western’s knowledge of its own financial situation, thereby placing the representations in this case to be one of fact and not opinion.

 

iv. Economic Loss Rule

 

“The economic loss rule is a judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses.” Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So.2d 532, 536 (Fla.2004). A recognized exception to the economic loss rule, however, is when the tort was committed independently of the contract breach, which includes fraud in the inducement claims. Id. at 537. “[W]hen the fraud occurs in the connection with misrepresentations, statements or omissions which cause the complaining party to enter into a transaction, then such fraud is fraud in the inducement and survives as an independent tort.” D & M Jupiter, Inc. v. Friedopfer, 853 So.2d 485, 487-88 (4th DCA Fla.2003) (internal quotation marks omitted). Fleet’s action falls within these circumstances, and therefore the fraud in the inducement claim is not barred by the economic loss rule.

 

v. Damages

 

There are quite clearly, in the opinion of this Court, issues of material fact as to damages suffered by Fleet as a result of Republic Western’s alleged fraud. This is a question of fact, and therefore it is within a jury’s province to determine the legitimacy of the lost profits and revenues that Fleet has put forward.

 

III. CONCLUSION

For the foregoing reasons, Republic Western’s Motion for Summary Judgment is DENIED.

North American Foreign Trading v. Mitsui Sumitomo

United States District Court,

S.D. New York.

NORTH AMERICAN FOREIGN TRADING CORP., Plaintiff,

v.

MITSUI SUMITOMO INSURANCE USA, INC., f/k/a Mitsui Marine and Fire Insurance

Company of America and MSI Claims (USA), Inc., Defendants.

 

 

OPINION AND ORDER

 

SCHEINDLIN, J.

 

I. INTRODUCTION

 

North American Foreign Trading Corp. (“NAFT”) brings this action against Mitsui Sumitomo Insurance USA, Inc., formerly known as Mitsui Marine and Fire Insurance Company of America, and MSI Claims (USA), Inc. (collectively, “Mitsui”) for breach of a marine insurance policy issued by Mitsui to NAFT. Mitsui now moves for summary judgment arguing that NAFT’s claim is time-barred under the policy. For the following reasons, Mitsui’s motion for summary judgment is denied. []

 

This action was formally consolidated on February 17, 2006 with a prior action brought by NAFT, No. 05 Civ. 4807. See 2/17/06 Stipulation and Order of Consolidation. The first action involves a claim for breach of the same policy at issue in this action, but pertains to a different loss sustained by NAFT. See North American Foreign Trading Corp. v. Mitsui Sumitomo Ins. USA, Inc., 413 F.Supp.2d 295, 297-99 (S.D.N.Y.2006). In the first action, I granted summary judgment for NAFT on the ground that Mitusi’s policy covered NAFT’s lost goods and denied summary judgment for Mitsui on the ground that Mitsui failed to show NAFT’s claim was time-barred under the policy. See id. at 302, 304. I also held that Mitsui was entitled to assert a limitations defense because it did not lull NAFT into waiting to file suit. See id. at 306-07.

 

II. FACTS

 

NAFT is an importer of consumer electronic goods manufactured in Asia. Mitsui issued a marine insurance policy to NAFT covering shipments from Asia, effective March 1, 2001 (the “Policy”). [] The parties entered into an endorsement extending coverage under the Policy to goods temporarily stored in certain warehouses (the “Warehouse Endorsement”), including a facility owned by Lionda Technology Co., Ltd. (“Lionda”) in Baoan, Shenzhen, China (the “Lionda Warehouse”). []

 

See Mitsui Marine and Fire Insurance Company of America Open Cargo Policy No. OCMM 01000, Ex. D to Affidavit of Francis A. Montbach, Counsel to Mitsui, in Support of Defendants’ Motion for Summary Judgment (“Montbach Aff.”).

 

See Special Warehouse Coverage Endorsement to Policy No. OCMM 01000, Ex. D to Montbach Aff.

 

Between 2001 and 2004, NAFT purchased newly manufactured cordless telephones from Lionda in China, and returned certain of those telephones, known as “customer returned units” or “CRUs”, to Lionda for refurbishment at the Lionda Warehouse. [] In early 2004, NAFT determined that many of its CRUs that had been shipped to Lionda were never returned to NAFT. [] NAFT ultimately determined that approximately 297,778 CRUs valued at $7,245,345 had been shipped to the Lionda Warehouse but were never returned to NAFT. [] On March 8, 2004, NAFT wrote to Lionda claiming that Lionda was attempting to misappropriate NAFT’s goods and that Lionda was violating its contractual obligations with NAFT by holding and not returning NAFT’s CRUs. [] On April 20, 2004, Lionda informed NAFT that all of NAFT’s CRUs were secured in the Lionda Warehouse. [] On the same day, Lionda e-mailed photographs to NAFT that purported to show NAFT’s merchandise inside Lionda’s facility.  []

 

See Complaint (“Compl.”) ¶ ¶  12-13; Statement of Claim, North American Foreign Trading Corp. v. Shenzhen Lionda Group Corp., Index No. 50 181 T 00251 04 (Am. Arbitration Ass’n, Nov. 15, 2004) (“Arbitration Claim”), Ex. F to Montbach Aff. ¶ ¶  15, 20.

 

See Compl. ¶  13.

 

See id. ¶ ¶  16-17, 27.

 

See 3/8/04 Letter from Robert Schweitzer of NAFT, to Mr. Chairman Lee of Lionda, demanding return of NAFT’s merchandise, Ex. M to Montbach Aff.

 

See 4/20/04 Letter from Ge Wei Ming, Chairman of Lionda, to Andrew Lowinger, President of NAFT, responding to NAFT’s concern about its CRUs, Ex. 4 to Affidavit of Daniel A. Lebersfeld, Counsel to NAFT, in Support to Plaintiff’s Memorandum of Law in Opposition to Defendants’ Motion for Summary Judgment (“Lebersfeld Aff.”).

 

See 4/20/04 E-Mail to Robert Schweitzer, attaching photos of the Lionda Warehouse, Ex. 5 to Lebersfeld Aff.

 

On April 30, 2004, due to a separate dispute between Lionda and its creditors, the Shenzhen Intermediate People’s Court, Guangdong Province, sealed the Lionda Warehouse. [0] On May 10, 2004, NAFT filed a Demand for Arbitration for “[b]reach of contract” against Lionda because of Lionda’s “failure to repair or replace customer returned units.”  [1] Around this time, NAFT hired counsel in China, Anderson & Anderson LLP, to investigate whether NAFT’s CRUs were still located in the Lionda Warehouse. [2] In June 2004, Anderson & Anderson initially suspected that NAFT’s CRUs were stolen because Anderson & Anderson investigators observed a “gaping hole” in the wall of the Lionda Warehouse. [3] However, Anderson & Anderson did not confirm that NAFT’s CRUs were actually removed from the Lionda Warehouse until July 26, 2004.  [4] At that time, one of Anderson & Anderson’s employees, Wei Zhijun, learned that Lionda was repairing and selling NAFT’s CRUs at its Wan Cheng Warehouse in the Futian Customs Zone (“Wan Cheng Warehouse”), which was not covered by the Policy. [5] Zhijun “estimated that there were several hundred thousand boxes … containing NAFT’s CRUs” at the Wan Cheng Warehouse.  [6] Anderson & Anderson was unable to gain access to the Lionda Warehouse until shortly after it was unsealed in December 2004. [7] On December 31, 2004, Zhijun visited the Lionda Warehouse and reported that “[t]here were no NAFT’s [sic] CRUs in the warehouse that [she] could see.”  [8]

 

0. See 6/21/06 Translation of Shenzhen Intermediate People’s Court, Guandong Province, Seal-Up Notice (2004) No. 97, Shen Zhong Fa Li Cai Zi, April 30, 2004, Ex. O to Montbach Aff.; see also Shenzhen Intermediate People’s Court, Guandong Province, Seal-Up Notice (2004) No. 97, Shen Zhong Fa Li Cai Zi, April 30, 2004, Ex. N to Montbach Aff.

 

1. 5/10/04 Demand for Arbitration Against Shenzhen Lionda Group Corp. (“Arbitration Demand”), Ex. E to Montbach Aff.

 

2. See Compl. ¶  13.

 

3. 6/23/04 Letter from David C. Buxbaum, Chinese counsel to NAFT, to Schweitzer (“Buxbaum Letter”), Ex. A to Montbach Aff. at 2.

 

4. See 1/14/05 Affidavit of Wei Zhijun, North American Foreign Trading Corp. v. Shenzhen Lionda Group Corp., Index No. 50 181 T 00251 04 (Am. Arbitration Ass’n, Nov. 15, 2004) (“Zhijun Aff.”), Ex. L to Montbach Aff. ¶  6.

 

5. See id.

 

6. Id.

 

7. See 2/2/05 Affidavit of Wei Zhijun North American Foreign Trading Corp. v. Shenzhen Lionda Group Corp., Index No. 50 181 T 00251 04 (Am. Arbitration Ass’n, Nov. 15, 2004), Ex. K to Montbach Aff. ¶ ¶  7-12.

 

8. Visit to Lionda Technology’s Offices, Warehouse and Factory on 31st December 2004, Ex. E to Zhijun Aff.

 

On June 25, 2004, NAFT advised its insurance broker, Roanoke Trade Services, Inc. (“Roanoke”), of Anderson & Anderson’s findings as of that time and requested that Roanoke notify Mitsui about NAFT’s problem regarding the CRUs. [9] NAFT further stated that “it appears that there are large gaps in the inventory that should have been held in the Lionda warehouse.”  [0] On June 29, Roanoke forwarded NAFT’s correspondence to Mitsui.  [1]

 

9. See 6/25/04 Letter from G. James Zerka of NAFT to Greg Taylor of Roanoke Trade Services, Inc., Ex. A to Montbach Aff.

 

0. Id.

 

1. See 6/29/04 Facsimile from Taylor to Marvin Margolies, Vice President and Marine Claims Manager, MSI Claims USA Inc., Ex. A to Montbach Aff.

 

Mitsui retained forensic accountants, Meaden & Moore, LLP to investigate NAFT’s claim. [2] Between June 2004 and May 2005, Meaden & Moore met with NAFT’s Chief Financial Officer on several occasions, reviewed documentation regarding NAFT’s shipments to Lionda and supporting letters of credit, and visited NAFT’s office to discuss questions and concerns. [3]

 

2. See Affidavit of Mavin J. Margolies in Support of Defendants’ Motion for Summary Judgment (“Margolies Aff.”) ¶  3.

 

3. See 5/25/05 Letter from Meaden & Moore, LLP to Montbach regarding NAFT’s stock loss at Lionda (“Meaden & Moore May 25 Report”), Ex. 3 to Lebersfeld Aff. at 2-4.

 

In response to an inquiry from NAFT regarding the status of the claim, Marvin Margolies, a Vice President and Marine Claims Manager for Mitsui, wrote in November 2004 that “due to the nature of this claim, the amount involved and the status of Meaden & Moore’s review,” Mistusi was “currently not in a position to respond affirmatively to your request.”  [4] Margolies informed NAFT that Mitsui would respond “[a]s soon as [it was] in a position to … do so.”  [5] On April 29, 2005, Meaden & Moore sent a draft of its report to Margolies, which stated that Meaden & Moore had “found no material difference between the $7,245,345 claimed as goods returned to Lionda for repair and never received and the documentation supporting the actual shipment to Lionda as well as the valuation of these goods at cost.”  [6] Margolies forwarded the report to Mitsui’s counsel so that Mitsui’s counsel could render a coverage opinion. [7]

 

4. 11/2/04 Letter from Margolies to Taylor (“Margolies Letter”), Ex. 11 to Lebersfeld Aff.

 

5. Id.

 

6. 4/29/05 Draft Letter from Meaden & Moore, LLP to Margolies regarding NAFT’s stock loss at Lionda (“Meaden & Moore April 29 Report”), Ex. 12 to Lebersfeld Aff. at 4.

 

7. See 4/24/05 Letter from Montbach to Margolies, providing coverage opinion for NAFT’s claim (“Montbach Letter”), Ex. A to 10/24/06 Letter from Joseph Donley, counsel to NAFT, to the Court; see also Margolies Aff. ¶  5.

 

On May 24, 2005, Mitsui’s counsel provided its opinion to Mitsui that the Policy did not provide coverage for NAFT’s claim and attached a draft declination letter addressed to NAFT for Mitsui’s review. [8] On May 25, 2005, in response to a telephone message inquiring about the status of NAFT’s claim, Margolies sent an e-mail to NAFT’s broker stating that Margolies had “requested and [was] awaiting Meaden & Moore’s report, and [would] update [him] hopefully next week.”  [9] On the same day, Meaden & Moore forwarded its final report to Mitsui’s counsel, which stated the same conclusion as that in Meaden & Moore’s April 29 report. [0] NAFT did not review Meaden & Moore’s report at that time. [1] On May 26, 2005, Margolies forwarded the opinion of Mitsui’s counsel and the proposed declination letter to his superior “requesting authority to issue the letter of declination.”  [2]

 

8. See Montbach Letter.

 

9. 5/25/05 E-Mail from Margolies to Taylor (“Margolies-Taylor E-Mail”), Ex. 14 to Lebersfeld Aff.

 

0. See Meaden & Moore May 25 Report at 4.

 

1. See Memorandum of North American Foreign Trading Corp. in Opposition to Defendants’ Motion for Summary Judgment (“Opp.Mem.”) at 24. In fact, NAFT claims Mitsui did not furnish Meaden & Moore’s report to NAFT until after the commencement of this action. See id.

 

2. 5/26/05 E-Mail from Margolies to Lowden, Vice President, Claims Technical Manager at Mistui (“Margolies-Lowden E-Mail”), Ex. 10 to Lebersfeld Aff.; see also Margolies Aff. ¶ ¶  3, 7.

 

Under the Policy, Mitsui was required to make payment to NAFT “within thirty  (30) days after proof of loss, proof of interest and adjustment.”  [3] In a letter dated June 16, 2005, Mitsui denied coverage for NAFT’s claim, stating that the “loss was not due to any insured peril” and quoting paragraphs 1, 7(a), 7(b), and 13 of the Warehouse Endorsement, and paragraph 25 of the Policy, pertaining to the scope of coverage for goods on shore. [4]

 

3. Policy ¶  46.

 

4. 6/15/05 Letter from Margolies to Taylor (“Declination Letter”), Ex. 15 to Lebersfeld Aff. at 1-3.

 

NAFT filed this action on June 23, 2005. Mitsui claims that the action is time-barred because the Policy provides for a one-year limitations period from the date of loss in which to file suit. NAFT argues that Mitsui has not carried its burden of proving NAFT’s loss occurred before June 23, 2004, or alternatively that Mitsui should be equitably estopped from asserting a limitations defense because Mitsui lulled NAFT into withholding suit.

 

III. LEGAL STANDARD

 

A. Summary Judgment

 

Summary judgment is appropriate if the record “show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  [5] “An issue of fact is genuine ‘if the evidence is such that a jury could return a verdict for the nonmoving party.” ‘  [6] A fact is material when “it ‘might affect the outcome of the suit under the governing law.” ‘  [7] The movant has the burden of demonstrating that no genuine issue of material fact exists. [8]

 

5. Fed.R.Civ.P. 56(c).

 

6. Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir.2005) (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)).

 

7. Id. (quoting Anderson, 477 U.S. at 248).

 

8. See, e.g., Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir.2004) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)).

 

In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, it must do more than show that there is a ” ‘metaphysical doubt as to the material facts,” ‘  [9] and it ” ‘may not rely on conclusory allegations or unsubstantiated speculation.” ‘  [0] In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in that party’s favor. [1]

 

9. Woodman v. WWOR-TV, Inc., 411 F.3d 69, 75 (2d Cir.2005) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).

 

0. Jeffreys, 426 F.3d at 554 (quoting Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 428 (2d Cir.2002)).

 

1. See, e.g., Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 201 (2d Cir.2004).

 

B. Time Bar

 

Under New York law, parties to a contract may designate a reasonable period of limitations within which a claim arising out of the contract is to be commenced, even if that period is shorter than the statutory period. [2] New York courts have held that a one-year time limitation to bring suit for breach of an insurance contract is reasonable and enforceable. [3] The defendant has the initial burden of establishing that the limitations period in the policy expired prior to the commencement of the action. [4]

 

2. See N.Y. Civ. Prac. L. & R. §  201. Here, the parties assume that New York law controls this dispute and their implied consent “is sufficient to establish choice of law.” Santalucia v.. Sebright Transp., Inc., 232 F.3d 293, 296 (2d Cir.2000).

 

3. See, e.g., Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y . 2d 966, 967 (1988).

 

4. See Neary v. Nationwide Mut. Fire Ins. Co., 791 N.Y.S.2d 840 (2d Dep’t 2005) (citing Minichello v. Northern Assurance Co. of Am., 758 N.Y.S.2d 669, 670-71 (2d Dep’t 2003)).

 

Once the defendant has met its burden, the plaintiff has the burden “to aver evidentiary facts establishing that the case at hand falls within an exception to the limitations period,” such as waiver or estoppel. [5] In order to establish waiver, “plaintiff must present evidence from which the defendant’s intent to relinquish the protection of the contractual limitations period can be reasonably inferred.”  [6] Waiver “should not be lightly presumed.”  [7] To establish estoppel, “plaintiff must offer evidence that it was misled or lulled by the defendant into failing to bring its claim in a timely manner.”  [8] Such conduct must occur within the limitations period.  [9]

 

5. Id. (citing Minichello, 758 N.Y.S.2d at 670-71).

 

6. Enterprise Eng’g, Inc. v. Hartford Fire Ins. Co., No. 04 Civ. 5018, 2004 WL 2997857, at(S.D.N.Y. Dec. 23, 2004). Accord Gilbert Frank Corp., 70 N.Y.2d at 968.

 

7. Gilbert Frank Corp., 70 N.Y.2d at 968.

 

8. Enterprise Eng’g, Inc., 2004 WL 2997857, at(citing Gilbert Frank Corp., 70 N.Y.2d at 968; Simcuski v. Saili, 44 N.Y.2d 442, 449 (1978)). Accord Phillips v. Dweck, 750 N.Y.S.2d 910, 911 (3d Dep’t 2002) (to show waiver, plaintiffs must show that defendants “engaged in a course of conduct which lulled them into inactivity in the belief that their claim would ultimately be processed, or that they were induced by fraud, misrepresentation or deception to refrain from commencing a timely action”) (quotation marks and citation omitted).

 

9. See Gardner-Denver Co. v. DIC-Underhill Constr. Co., 416 F.Supp. 934, 937 n. 8 (S.D.N.Y.1976) (“In general, to operate as a waiver by the company of, or an estoppel to assert, a condition in the policy limiting the time in which suit shall be brought after the loss, the act or declaration relied upon must be done or made during the running of the period of limitation, or at least commenced during such period, since acts taking place entirely after the expiration period cannot be said to have induced the insured not to bring action within the period.”) (quotation marks and citation omitted).

 

“In contrast to when an insured is ‘promised repeatedly by agents for the insurer that the loss would be adjusted without litigation,’ steps taken by an insurer to investigate a claim do not constitute waiver or estoppel.”  [0] Failure to “respond to inquiries posed by plaintiff’s counsel regarding the status of the investigation” does not “suggest that defendant misrepresented the status of the investigation or otherwise lulled plaintiff into inaction.”  [1] An insurer has no duty to advise an insured of the limitations period. [2] “Evidence of communications or settlement negotiations between an insured and its insurer either before or after expiration of a limitations period contained in a policy is not, without more, sufficient to prove waiver or estoppel.”  [3]

 

0. Enterprise Eng’g, Inc., 2004 WL 2997857, at(quoting Satyam Imports, Inc. v. Underwriters at Lloyd’s Via Marsh, S.A., No. 03 Civ. 4387, 2003 WL 22349668, at(S.D.N.Y. Oct. 14, 2002). Accord Minichello, 758 N.Y.S.2d at 670-71 (quoting Brown v. Royal Ins. Co. of Am., 620 N.Y.S.2d 399, 399 (2d Dep’t 1994)) (” ‘Delay by the insurance carrier in completing its investigation of the claim does not excuse the plaintiff from timely commencing an action, since he or she is bound by the terms of the contract to either commence an action prior to the expiration of the limitations period or obtain a waiver or extension of such provision.” ‘).

 

1. Phillips, 750 N.Y.S.2d at 911.

 

2. See Compis Servs., Inc. v. Hartford Steam Boiler Inspection and Ins. Co., 708 N.Y.S.2d 770, 772 (4th Dep’t 2000).

 

3. Id. at 771-72 (citing Gilbert Frank Corp., 70 N.Y.2d at 968).

 

IV. DISCUSSION

 

A. Time-Bar

 

Mitsui argues that NAFT’s claim is barred by paragraph 49 of the Policy, which provides that “[n]o suit, action or proceeding against this Company for the recovery of any claim shall be sustainable unless commenced within one year from the date of the happening of the accident out of which the claim arises.”  [4] NAFT argues that the loss of the CRUs occurred less than one year prior to the commencement of this suit, or alternatively, that Mitsui lulled NAFT into failing to file suit with its year-long investigation. [5] Mitsui has not carried its burden of demonstrating that the loss of the CRUs occurred over a year before NAFT filed suit.

 

4. Policy ¶  49.

 

5. See Opp. Mem. at 1-2.

 

First, Mitsui argues that because the Lionda Warehouse was sealed on April 30, 2004 and did not contain any of NAFT’s CRUs when it was unsealed in December 2004, NAFT’s CRUs must have been removed from the Lionda Warehouse before it was sealed. [6] Mitsui’s argument relies on the assumption that the seal on the Lionda Warehouse remained airtight until December 2004. On June 23, 2004, Anderson & Anderson reported that there was a “gaping hole” in the wall of the Lionda Warehouse. [7] Even if the hole in the Lionda Warehouse wall existed prior to June 23, 2004, Mitsui has not submitted evidence that proves NAFT’s CRUs were removed from the warehouse prior to that date. The earliest date that Mitsui has shown NAFT’s CRUs appeared outside of the Lionda Warehouse was on July 26, 2004, when Zhijun reported that NAFT’s CRUs were housed at Lionda’s Wan Cheng Warehouse. [8] Interpreting this evidence in the light most favorable to NAFT, this evidence does not prove NAFT’s loss occurred prior to June 23, 2004, it only shows that NAFT’s loss occurred prior to July 26, 2004, which is within the limitations period.

 

6. See Memorandum of Mitsui Sumitomo Ins. USA, Inc. For Its Motion for Summary Judgment (“Def.Mem.”) at 13; Reply Memorandum of Mitsui Sumitomo Ins. USA, Inc. For Its Motion for Summary Judgment (“Reply Mem.”) at 9.

 

7. Buxbaum Letter at 2.

 

8. See Report of Investigation of Shenzhen Lionda Group Corp. Offices and Wan Cheng Warehouse on 26th July 2004, Ex. B to Zhijun Aff.

 

Second, Mitsui argues that NAFT’s CRUs must have been removed from the Lionda Warehouse prior to June 23, 2004 because prior to that date, NAFT alleged to Chinese authorities that NAFT’s CRUs were removed from the Lionda Warehouse and Anderson & Anderson speculated that NAFT’s CRUs were missing. For example, NAFT signed a letter addressed to the Baoan Public Security Bureau on May 17, 2004 (the “May 17 Letter”) alleging that “before the warehouses were sealed,” Lionda stole NAFT’s merchandise and moved it “to another public warehouse.”  [9] Mitsui cites an Anderson & Anderson report as evidence that the May 17 Letter was submitted to the Economic Crime Investigation Brigade of the Baoan District Public Security Bureau on May 19, 2004. [0] NAFT argues that the May 17 Letter was only a draft exchanged between NAFT and Anderson & Anderson, that there is no evidence the letter was submitted to the Chinese authorities, and that the Anderson & Anderson Report describes a different letter from NAFT to the Baoan Public Security Bureau “requesting the prevention of [Lionda] from stealing NAFT’s property.”  [1] In addition, the Anderson & Anderson Report states that on May 18, 2004, Anderson & Anderson investigators learned from the Shenzhen Intermediate People’s Court that the “Lionda Company was sealed and closed down at the request of its major creditors” and recommended that NAFT “need[ed] to apply to preserve [its] goods” so the CRUs would not “be detained by the court when the case is over.”  [2] The Anderson & Anderson Report further states that on May 19, 2004, Anderson & Anderson investigators entered the Lionda premises and confirmed with Lionda personnel that the warehouse that had been sealed and closed down was “the one where NAFT merchandise was placed.”  [3]

 

9. Translation of 5/17/04 Letter from Schweitzer to Baoan Public Security Bureau on behalf of NAFT, Ex. R to Montbach Aff.; see also 5/17/04 E-Mail from Marco Chin of Anderson & Anderson to Schweitzer enclosing Letter from Schweitzer to Baoan Public Security Bureau on behalf of NAFT, Ex. Q to Montbach Aff.

 

0. See Def. Mem. at 6 (citing Report on Investigation and Report to Police of Shenzhen Lionda Technology Co. Ltd. Case (“Anderson & Anderson Report”), Ex. S to Montbach Aff. at 1).

 

1. Anderson & Anderson Report at 1.

 

2. Id. at 6.

 

3. Id. at 4.

 

On these facts, it is unclear what allegation NAFT actually made to the Chinese authorities. The Anderson & Anderson Report suggests that at the time the report was written, Anderson & Anderson investigators believed the CRUs were sealed inside the Lionda Warehouse, which would explain why NAFT’s May 19 letter to the Chinese authorities referenced in the Anderson & Anderson Report was concerned with preventing the theft of the CRUs. However, even if NAFT did in fact allege that the CRUs were removed by Lionda before the Lionda Warehouse was sealed, it is only an allegation–it is not proof of loss. [4] Mitsui’s only evidence that the CRUs were removed from the Lionda Warehouse prior to when it was sealed was that the Lionda Warehouse did not contain the CRUs when it was unsealed, which as discussed above, is not sufficient to grant Mitsui’s motion. NAFT’s allegation to the Chinese authorities, without more, is also not sufficient to grant Mitsui’s motion. “[T]he year-for-suit clause is triggered by the date of the loss,” not when NAFT became suspicious that a loss occurred. [5]

 

4. Mitsui has neither submitted evidence supporting NAFT’s alleged statement nor has it shown that the alleged statement was true.

 

5. Reply Mem. at 5 (emphasis in original). Mitsui also cites a May 13, 2004 letter written by Schweitzer to Lionda as evidence that NAFT’s suit is time-barred. See Def. Mem. at 5-6. In his letter, Schweitzer accuses Lionda of “conspiring to and moving merchandise out of the factory.” 5/13/04 Letter from Schweitzer to Lionda, Ex. P to Montbach Aff. NAFT argues that Schweitzer later testified that his May 13 letter does not refer to NAFT’s CRUs, it refers to newly manufactured merchandise not at issue in this litigation and that Schweitzer testified his accusation was based on “rumor” and “conjecture.” See Opp. Mem. at 5-6; Schweitzer Deposition Transcript, Ex. 1 to Lebersfeld Aff. at 63-66. Mitsui replies that the Court should not believe Scheweitzer’s testimony. See Reply Mem. at 3. These arguments raise questions of fact as to what specific merchandise Schweitzer referred to in his May 13 letter and the credibility of Schweitzer’s deposition testimony, which cannot be resolved on this motion.

 

Mitsui also cites Anderson & Anderson’s June 17 report to NAFT as evidence that NAFT’s CRUs were removed from the Lionda Warehouse prior to June 23, 2004.  [6] The report stated that Anderson & Anderson had “been informed by others [that] large quantities of NAFT’s CRUs have been removed from [the Lionda] warehouse and are missing.”  [7] Anderson & Anderson’s statement only describes second-hand information supplied by unidentified witnesses and does not prove that the CRUs were removed from the Lionda Warehouse prior to June 23, 2004. In any event, even if Anderson & Anderson’s statement proves NAFT’s loss occurred prior to June 23, 2004, the statement does not prove that NAFT’s loss occurred prior to May 25, 2004. As discussed below, Mitsui is estopped as a matter of law from asserting a limitations defense if the trier of fact determines that NAFT’s loss occurred after May 25, 2004. [8]

 

6. See Def. Mem. at 7-8.

 

7. 6/17/04 Letter from Buxbaum to Schweitzer, Ex. V to Montbach Aff.

 

8. See infra Part IV.B. Mitsui also relies on a NAFT Bill of Complaint dated June 23, 2004 that asks the Shenzhen People’s Intermediate Court to direct Lionda to “cease and desist from hiding and transferring” NAFT’s CRUs. Bill of Complaint, Ex. X to Montbach Aff. at 1. As NAFT’s Bill of Complaint is dated exactly one year from the date NAFT filed this case, it is not relevant to Mitsui’s motion.

 

Finally, Mitsui argues that because NAFT filed a demand for arbitration on May 10, 2004 against Lionda, the loss of the CRUs must have occurred prior to that date. [9] However, NAFT commenced an arbitration for “[b]reach of contract” against Lionda because of Lionda’s “failure to repair or replace customer returned units.”  [0] NAFT’s arbitration demand does not assert or provide any evidence that the CRUs were removed from the Lionda Warehouse. In fact, during the arbitration proceedings that took place after June 23, 2004, NAFT claimed that Lionda still possessed the CRUs. [1] NAFT’s arbitration demand only demonstrates that NAFT sought relief in arbitration because Lionda had not returned NAFT’s CRUs.

 

9. See Def. Mem. at 4-5.

 

0. Arbitration Demand.

 

1. See Arbitration Claim ¶  33 (“The Respondents have in their possession NAFT’s property (the CRUs) and have refused to return them to NAFT.”).

 

Mitsui only has established that NAFT’s loss occurred at some point prior to July 26, 2004. Because Mitsui has failed to carry its burden of proving that the loss must have occurred prior to June 23, 2004, Mitsui’s summary judgment motion based on time-bar is denied. Of course, the trier of fact may very well conclude based on a review of all the evidence that NAFT’s claim is indeed time-barred.

 

B. Waiver and Estoppel

 

Depending on when the trier of fact determines NAFT’s loss occurred, Mitsui may be estopped as a matter of law from asserting a limitations defense at trial. Although NAFT failed to preserve its rights under the Policy by entering into a standstill agreement or by filing an action prior to June 23, 2005, Mitsui misrepresented to NAFT the status of NAFT’s claim on May 25, 2005, which lulled NAFT into delaying the filing of its suit. Therefore, if the trier of fact determines NAFT’s loss occurred after May 25, 2004, Mitsui is estopped from asserting a limitations defense.

 

On May 25, 2005, in response to an inquiry from NAFT’s broker regarding the status of its claim, Margolies stated that he “requested and [is] presently awaiting Meaden & Moore’s report, and will update [NAFT] hopefully next week.”  [2] NAFT has shown that Margolies’s statement was a misrepresentation of fact. Not only had Margolies already received a draft report from Meaden & Moore dated April 29, 2005, but he forwarded that report to Mitsui’s counsel so that Mitsui’s counsel could render a coverage opinion regarding NAFT’s claim.  [3] In addition, on May 24, 2005, one day prior to Margolies’s statement to NAFT, Mitsui’s counsel rendered its opinion to Margolies that Mitsui should deny coverage for NAFT’s claim and proposed a draft declination letter that Mitsui could use for denying coverage. [4] On May 26, one day after the inquiry from NAFT’s broker, Margolies forwarded the May 24 letter from Mitsui’s counsel, together with the proposed declination letter to his superior and requested the authority to deny NAFT’s claim. [5] In fact, Margolies knew on May 24 that he would request such authority because he testified that he “certainly would not have made a recommendation to [his superior] and senior management which was contrary to coverage counsel’s legal opinion.”  [6] Therefore, Margolies’s statement to NAFT on May 25, 2005 was misleading at best and very possibly false. At the very least, Margolies should have informed NAFT that although Mitsui had not yet reached a final decision, he was requesting authority to deny NAFT’s claim and in all likelihood, Mitsui would deny NAFT’s claim.

 

2. Margolies-Taylor E-mail.

 

3. See Meaden & Moore April 29 Report; Montbach Letter at 1; see also Margolies Aff. ¶  5.

 

4. See Montbach Letter.

 

5. See Margolies-Lowden E-Mail.

 

6. Margolies Aff. ¶  4.

 

Mitsui argues that “the final Meaden & Moore report of May 25, 2005 was addressed to counsel and would not have been received by counsel until after May 25, 2005 and Mr. Margolies after that. As such Mr. Margolies’ e-mail to NAFT’s broker was entirely truthful.”  [7] Mitsui’s argument is disingenuous. Not only was the Meaden & Moore April 29 Report addressed to Margolies, but on May 25, Margolies had already received the May 24 letter from Mitsui’s counsel recommending that Mitsui deny coverage. It is unclear why Meaden & Moore did not send its final report to Mitsui’s counsel until May 25, 2005, but it is also irrelevant to Mitsui’s argument. NAFT has shown that Margolies’s statement to NAFT’s broker on May 25, 2005 regarding the status of NAFT’s claim was misleading if not false. Thus, if the trier of fact determines that NAFT’s loss occurred after May 25, 2004, Mitsui is estopped as a matter of law from asserting a limitations defense at trial. [8]

 

7. 10/24/06 Letter from Montbach to the Court.

 

8. The holding here differs from that reached in the first action brought by NAFT, No. 05 Civ. 4807, where, on the basis of different facts, I held that Mitsui was not estopped from asserting a limitations defense. See North American Foreign Trading Corp., 413 F.Supp.2d at 306. In the first action, NAFT inquired into the status of its claim before Mitsui finished analyzing NAFT’s claim and Mitsui truthfully informed NAFT that it would respond to NAFT when its analysis was complete. See id. Here, Margolies lulled NAFT into delaying the filing of this litigation by misrepresenting to NAFT the status of NAFT’s claim.

 

V. CONCLUSION

 

For the foregoing reasons, Mitsui’s motion for summary judgment is denied. The Clerk of the Court is directed to close this motion [# 37 on the Docket]. A conference is scheduled for November 22, 2006 at 4:30 p.m.

SO ORDERED:

 

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