934 F. Supp. 2d 409
D. Conn.2013Background
- Plaintiff Known Litigation Holdings, LLC, successor assignee of Domestic Bank, seeks insurance proceeds under the Courier Risks Policy as loss payee.
- NECD and IMS serviced Domestic Bank’s ATMs; Courier Agreement required insurance with Domestic Bank named as loss payee.
- Loss Payment Rider designated Domestic Bank as a potential designated loss payee; Plaintiff argues third-party beneficiary status.
- Courier Risks Policy (Feb 2006) provided theft/embezzlement coverage; Loss Payment Rider (Apr 2006) and other endorsements added; 30-day discovery/notice provisions existed.
- Domestic Bank’s 2006–2010 investigation uncovered a multi-year employee scheme resulting in >$5 million in losses; Defendants issued a Reservation of Rights (Aug 2010) and rescinded the policy ab initio (Nov 2010); suit filed in 2012 and Defendants moved to dismiss, which the court denied and ordered joinder of NECD/IMS.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of loss payee under Courier Risks Policy | Loss payee intended as third-party beneficiary | Loss payee lacks direct rights against insurer | Plaintiff has standing as a third-party beneficiary |
| Timeliness under suit limitation clause | Ambiguity allows tolling until accrual or notice | Two-year limit unambiguous breach of policy terms | Clause ambiguously reads as either accrual or notice; timeliness unresolved on motion |
| Necessity of NECD and IMS under Rule 19 | NECD/IMS have interests; essential for complete relief | Not necessary if joinder disrupts jurisdiction or complete relief | NECD and IMS are necessary; joinder ordered, dismissal avoided |
| Promissory estoppel as affirmative claim | Estoppel claim valid as distinct affirmative claim | Equitable/promissory estoppel generally not an affirmative action in CT; defenses may bar","(as alleged) | Connecticut recognizes promissory estoppel as an affirmative claim under certain circumstances; Count survives |
| Failure to state a claim given standing | Standing established; claims sufficient | Lacks standing/beneficiary status | Denied; plaintiff stated a plausible third-party beneficiary claim |
Key Cases Cited
- Pavano v. Western Nat’l Ins. Co., 139 Conn. 645 (1953) (loss payee may sue insurer directly as third-party beneficiary)
- Vernon Foodliner, Inc. v. Cent. Mut. Ins. Co., 1 Conn.App. 595, 474 A.2d 468 (1984) (loss payee may have direct obligation and standing to sue)
- Grigerik v. Sharpe, 247 Conn. 293, 721 A.2d 526 (1998) (intent to create direct obligation to third party; test for third-party beneficiary)
- Tri-State Armored Serv.’s, Inc., 366 B.R. 326 (2007) (fiduciary/insurance context; allocation of rights of loss payees under policy)