VAM Check Cashing v. Federal Insurance Company
699 F.3d 727
| 2d Cir. | 2012Background
- VAM Check Cashing sued Federal Insurance for breach of a crime policy after a $120,000 loss at Pine Check Cashing in Brooklyn.
- VAM employee Vazquez handed over cash to a man who used a pre-arranged code, following a call plan to collect the money.
- The police considered the scheme a sophisticated, nationwide criminal pattern; no one was physically harmed.
- Policy defined “Robbery” as unlawful taking from an insured by violence or an overt felonious act, in the presence and cognizance of the custodian.
- The district court held the policy ambiguous and ruled for VAM; the Second Circuit affirmed, applying de novo review of contract interpretation under New York law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the policy language defining robbery ambiguous? | VAM—ambiguous; insured readings should be favored. | Federal—language clear; reading should align with common law robbery. | Ambiguous; ambiguity favors coverage. |
| Does Windfrey’s act count as an overt felonious act in the presence and cognizance of Vazquez? | Windfrey’s act was overt and felonious in effect; Vazquez was aware of the act. | Overt felonious act must be read in a way that ties to felonious character observable. | Ambiguity persists; reasonable reading favors coverage. |
| Can the phrase ‘presence and cognizance’ be interpreted to support coverage under the insured’s reading? | Yes, employee’s awareness of the act suffices. | Awareness of criminal nature required; cognizance less broad. | Yes, insured-friendly interpretation reasonable; supports coverage. |
Key Cases Cited
- Fed. Ins. Co. v. IBM, 965 N.E.2d 934 (N.Y. 2012) (an insurance-ambiguity approach; contra proferentem signaling coverage when language is unclear)
- Belt Painting Corp. v. TIG Ins. Co., 795 N.E.2d 15 (N.Y. 2003) (plain-language interpretation governs when unambiguous)
- Fieldston Prop. Owners Ass’n, Inc. v. Hermitage Ins. Co., 945 N.E.2d 1017 (N.Y. 2011) (center-of-gravity/choice-of-law principles in contract interpretation)
- Schwegmann Bros. Giant Super Mkts. v. Underwriters at Lloyd’s London, 300 So.2d 865 (La. Ct. App. 1974) (court upheld coverage where act observable but its felonious nature not at time of taking)
- Equitable Life Assurance Soc’y of U.S. v. Dyess, 109 S.W.2d 1263 (Ark. 1937) (illustrative quotation on plain-language interpretation of liability clauses)