Consigned Goods Not Covered Property
Talisman Services, Inc. v. Hermitage Ins. Co., 2018 WL 3859692 (N.Y.Sup.), 2018 N.Y. Slip Op. 31955(U) (New York Co. Sup. Ct., Aug 14, 2018)
Talisman involved a first-party property insurance dispute where the insured claimed coverage for water damage following a pipe break. The damage at issue was to property the insured held on consignment at its thrift shop. Although Hermitage paid the $2,500 policy limit for “personal property of others,” the insured, in an attempt to access coverage under a much higher limit, obtained ownership of the consigned property after the loss and made a claim for the property as its own “business personal property.” The insured also claimed that it was forced to close its business as a result of Hermitage’s refusal to pay the entire claim and, accordingly, claimed consequential damages in addition to damages for breach of contract.
In its motion for summary judgment, the insured argued that the term “business personal property” was ambiguous, and claimed that it expected that consigned property would fall within that term because the term was not prefaced with the word “your” in the policy’s declarations, where the limit of coverage is found. The court found that such an interpretation would render meaningless the separate section of coverage for “personal property of others.” The court also concluded that the insured’s interpretation was not supported by the plain language of the policy, which defined “covered property” as three separate types: “building,” “your business personal property,” and “personal property of others.” The court, after affirming the principal that the policy must be interpreted as the facts exist at the time of loss, concluded that the only “covered property” was “business personal property,” not “personal property of others.” Accordingly, Hermitage’s motion for summary judgment was granted.
On re-argument, the court held: “it is clear that the consigned goods were not owned by plaintiff at the time of the loss but were, by her own admission ‘given to her to be prepared for sale within the shop,’ and thus, do not fall within the definition of Covered Property as set forth in the Policy.”
This decision was reported in the September 11, 2018 edition of the New York Law Journal as a Decision of Interest; the Mealey’s Litigation Report: Insurance in the August 22, 2018 issue; and in the August 22, 2018 edition of PLRB Frontlines.