Hasan v. Aig Prop. Cas. Co.
935 F.3d 1092
10th Cir.2019Background
- Malik and Seeme Hasan purchased fine wine from Premier Cru (John Fox) as either in-warehouse stock or "pre-arrival" (futures) wine; they claim 2,448 bottles were paid for but not delivered and filed an unsecured bankruptcy claim for $689,176.92.
- Fox ran Premier Cru and later pleaded guilty to a federal wire-fraud/Ponzi scheme; the bankruptcy trustee inventoried 78,792 bottles in the warehouse and structured a settlement class and sale process for those bottles.
- The Hasans held a Private Collections insurance policy from AIG covering "direct physical loss or damage" to personal property they own or possess (wine coverage $2,000,000); AIG denied the Hasans' claim for $1,707,985 on the ground the Hasans never owned or possessed the undelivered bottles.
- The Hasans sued AIG for breach of contract and related claims in Colorado state court; AIG removed to federal court and moved for summary judgment arguing (1) the Hasans did not own or possess the wine and (2) there was no direct physical loss or damage.
- The district court granted summary judgment to AIG on the ground the Hasans lacked evidence of direct physical loss or damage; the Tenth Circuit affirms but on the alternative ground that the Hasans failed to provide adequate evidence they owned any specific undelivered bottles.
- The district court also denied the Hasans' post-pretrial motion to amend to add a retaliation/nonrenewal claim; the Tenth Circuit affirmed that denial for failure to meet the heightened Rule 16(e) "manifest injustice" standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Hasans owned or possessed the undelivered bottles (ownership/possession) | Hasans: payment to Premier Cru and Fox's representations established that Premier Cru purchased and allocated the 2,448 bottles to them, so they owned the wine | AIG: Hasans offer no admissible evidence that Fox actually bought or allocated the specific bottles; many customers received phantom or double-sold bottles under Fox's scheme | Held: No admissible evidence that Hasans owned or possessed the specific bottles; summary judgment affirmed on this ground |
| Whether the Policy covers the claimed loss ("direct physical loss or damage") | Hasans: bottles were purchased for them and are therefore lost/damaged when not delivered; policy language and marketing suggested immediate coverage of new acquisitions and in-transit items | AIG: Policy covers physical loss to property the insured owns/possesses; here any loss is of money/fraud, not physical loss of insured property | Held: Court affirmed summary judgment (on ownership ground); district court had also correctly concluded plaintiffs cannot show covered physical loss absent ownership |
| Admissibility / sufficiency of evidence (habit/routine, hearsay) | Hasans: Dr. Hasan's declaration and course-of-dealing show Fox routinely purchased for them and some warehouse inventory matches their orders | AIG: Declarations rely on inadmissible hearsay and Rule 406 habit evidence is insufficient (too few or remote instances; business habits changed during insolvency) | Held: Court disregarded hearsay, rejected Rule 406 inference as unsupported; plaintiffs failed to meet burden to produce admissible evidence creating a triable issue |
| Denial of leave to amend after final pretrial order (retaliatory nonrenewal claim) | Hasans: new retaliatory nonrenewal claim arose after pretrial order; request to amend should be allowed | AIG: Allowing amendment would require reopening discovery and delay; Rule 16(e) prevents changing final pretrial order absent manifest injustice | Held: Denial affirmed—plaintiffs could bring a separate action; they failed to meet the manifest-injustice standard needed to modify the final pretrial order |
Key Cases Cited
- Garrison v. Gambro, Inc., 428 F.3d 933 (10th Cir. 2005) (standard of review for summary judgment)
- Bones v. Honeywell Int'l, 366 F.3d 869 (10th Cir. 2004) (summary judgment requires evidence that would allow a reasonable jury to find for nonmoving party)
- Argo v. Blue Cross & Blue Shield of Kansas, 452 F.3d 1193 (10th Cir. 2006) (inadmissible hearsay in affidavits should be disregarded at summary judgment)
- Camfield v. City of Oklahoma City, 248 F.3d 1214 (10th Cir. 2001) (definition and application of habit evidence under Rule 406)
- Mobil Exploration & Producing U.S., Inc. v. Cajun Const. Serv., Inc., 45 F.3d 96 (5th Cir. 1995) (business routine/habit inference requires sufficient instances across substantially all similar occasions)
- Simplex, Inc. v. Diversified Energy Sys., 847 F.2d 1290 (7th Cir. 1988) (Rule 406 requires comparison of instances to non-instances to support habit inference)
- Foman v. Davis, 371 U.S. 178 (1962) (factors permitting denial of leave to amend: undue delay, prejudice, futility)
- Monfore v. Phillips, 778 F.3d 849 (10th Cir. 2015) (abuse-of-discretion review for post-pretrial motions to amend)