Warehouse Wines & Spirits v. Travelers Property Casualty Co. of America
711 F. App'x 654
2d Cir.2017Background
- Warehouse Wines sued its insurer, Travelers, after 4,095 cases of alcohol were stolen while in the custody of companies controlled by James Ceseretti (Bestway entities).
- Travelers denied coverage invoking the policy’s "dishonest acts" exclusion; Warehouse Wines invoked the carrier-for-hire exception to that exclusion.
- The district court granted summary judgment for Warehouse Wines on liability (holding the carrier-for-hire exception applied), then held a bench trial to determine damages and prejudgment interest.
- The district court found Ceseretti admitted to stealing $1,115,479.54 in property and credited Warehouse Wines’ inventory and shipping records to find 4,095 cases stolen.
- For valuation, the court discounted January 2012 prices by 13% to approximate December 2011 values and awarded prejudgment interest from May 24, 2012 (30 days after Warehouse Wines’ sworn proof of loss submitted April 24, 2012).
- Travelers appealed, arguing (1) the carrier-for-hire exception did not apply because the goods were stored by a warehousing affiliate, (2) the number and value of stolen cases were not proven, and (3) prejudgment interest should run from the date the insurer’s requested examinations and record review were completed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the carrier-for-hire exception to the dishonest-acts exclusion applies | Bestway (via Ceseretti) was contracted to transport Warehouse Wines’ goods and was registered as a carrier; the primary relationship made it a carrier-for-hire despite concurrent warehousing services | The goods were in custody of Bestway’s warehousing subsidiary at loss time, so carrier-for-hire exception does not apply | Held: Exception applies — courts look to the primary purpose/relationship; alter-ego/continuity of operations and registration supported carrier status |
| Whether the district court clearly erred in finding 4,095 cases stolen | Warehouse Wines relied on Ceseretti’s allocution, pre- and post-loss inventory records, bills of lading, a partial inventory, and witness testimony | Travelers pointed to alleged discrepancies between shipped and received records and argued uncertainty in counts | Held: No clear error — district court’s factual finding supported by multiple records and explanation for discrepancy |
| Whether the valuation method (13% discount from Jan 2012 prices) was reasonable | Where December 2011 prices were incomplete, the court used price changes for 11 products to derive a 13% discount and applied it to the rest as a reasonable estimate | Travelers argued damages must be valued at December 2011 prices and that the 13% discount was speculative | Held: Method was reasonable and grounded in the record; Travelers failed to rebut it |
| Proper start date for prejudgment interest under N.Y. C.P.L.R. § 5001(b) | Prejudgment interest runs from 30 days after insured submitted sworn proof of loss (April 24, 2012 → interest from May 24, 2012) | Travelers argued interest should start 30 days after full cooperation/examination complete (April 28, 2013) | Held: Interest accrues from 30 days after the sworn proof of loss; insurer cannot delay by investigation while denying coverage |
Key Cases Cited
- McBride v. BIC Consumer Prods. Mfg. Co., 583 F.3d 92 (2d Cir.) (summary judgment standard)
- World Trade Ctr. Props., L.L.C. v. Hartford Fire Ins. Co., 345 F.3d 154 (2d Cir.) (insurance contract interpretation principles)
- Morgan Stanley Grp. Inc. v. New England Ins. Co., 225 F.3d 270 (2d Cir.) (give effect to parties’ intent and clear contract language)
- LaSalle Bank Nat’l Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195 (2d Cir.) (contract construction to give full meaning to provisions)
- Tractebel Energy Mktg., Inc. v. AEP Power Marketing, Inc., 487 F.3d 89 (2d Cir.) (reasonable estimate suffices for damages when exactitude is impracticable)
- NML Capital v. Republic of Argentina, 952 N.E.2d 482 (N.Y.) (prejudgment interest under N.Y. C.P.L.R. § 5001(b))