Clerical Apparel of New York, Inc. v. Valley Forge Insurance

209 F.R.D. 316, 2002 U.S. Dist. LEXIS 13689, 2002 WL 2022409
CourtDistrict Court, E.D. New York
DecidedJune 3, 2002
DocketNo. 00-CV-5826 (ILG)
StatusPublished
Cited by2 cases

This text of 209 F.R.D. 316 (Clerical Apparel of New York, Inc. v. Valley Forge Insurance) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clerical Apparel of New York, Inc. v. Valley Forge Insurance, 209 F.R.D. 316, 2002 U.S. Dist. LEXIS 13689, 2002 WL 2022409 (E.D.N.Y. 2002).

Opinion

MEMORANDUM AND ORDER

GLASSER, District Judge.

SUMMARY

Plaintiff Clerical Apparel of New York, Inc. (“Clerical Apparel”) brings this action against defendant Valley Forge Insurance Company (“Valley Forge”) to recover under an insurance policy for damages allegedly arising out of a burglary and fire. Valley Forge now moves for summary judgment. For the reasons that follow, the motion is granted.

BACKGROUND

-I. The Underlying Facts

The facts, which are essentially undisputed, are as follows. Clerical Apparel is a New York corporation, and sells clerical garments. (See Compl. H 1.) Valley Forge is a Pennsylvania insurance company, with its principal place of business in Chicago, Illinois. (See Not. of Removal H 3.) On or about September 23,1997, Valley Forge issued Clerical Apparel’s predecessor company, Heaven Sent Corporation of New York (“Heaven Sent”), a $1 million insurance policy numbered B175872587 for goods located at 263 West 38th Street, New York, New York 10018. (See Defs. Local Rule 56.1 Statement 111; Insurance Policy, Defs. Ex. A.) On March 5, 1998, Heaven Sent changed its name to Clerical Apparel and moved the location of its goods to 62-90 Forrest Avenue, Ridgewood, New York 11385. (See Defs. Local Rule 56.1 Statement H 7; Insurance Policy at 3.) The Valley Forge policy was amended to incorporate these changes. (Id.)

The insurance policy contains a cooperation clause, which requires, in relevant part, “in the Event of Loss or Damage,” the insured must “[gjive [the insurer] prompt notice of the loss or damage .... At [the insurer’s] request, give ... complete inventories of the damaged and undamaged property. Include quantities, costs and values and amount of loss claimed .... Cooperate with [the insurer] in the investigation or settlement of the claim.” (Insurance Policy at 5.) The policy also contains a provision regarding concealment, misrepresentation or fraud, which provides, “[w]e do not provide coverage for any insured ... who has made fraudulent statements or engaged in fraudulent conduct in connection with any loss ... or damage for which coverage is sought under this policy.” (Insurance Policy, New York Changes — Fraud.)

On August 31, 1998, an incendiary fire occurred at the Ridgewood location. (See Fire and Incident Report, Ex. 1, attached to Request for Admissions, Defs. Ex. B.) On or about January 26, 1999, Clerical Apparel filed a Proof of Loss statement with Valley Forge, claiming damages resulting from the fire and an alleged burglary in the amount of $827,921. (See Proof of Loss Statement, Defs. Ex. C.) That sum represented $413,-000.000 for damaged merchandise plus $413,700.00 for stolen merchandise, minus a $500 deductible.1 (Id.) However, these fig[318]*318ures were unsupported by invoices or other documentation. (See Defs. Local Rule 56.1 Statement H 23.)

Valley Forge investigated the fire and alleged burglary upon notification. The investigation involved hiring various experts, including a Fire Cause and Origin investigator, Certified Public Accountants (“CPA”), and an adjustor and salvor, and deposing several witnesses. The investigation revealed that plaintiff had made several mistatements on its claim form, which it could not justify.

Valley Forge deposed Marc E. Schreck, Heaven Sent’s accountant, who testified that, on December 31,1992, the cost of the ending-inventory of Heaven Sent amounted to $410,000. (See Schreck Dep. at 137, Ex. 8, attached to Defs Ex. B.) Valley Forge hired Sentry Salvage & Appraisal to conduct an inspection of the loss site. (See James R. Korbo Affidavit (“Korbo Aff.”) 114, Defs. Ex. D.) Sentry Salvage conducted a joint inventory inspection with Clerical Apparel representatives, which recovered only 16,101 damaged shirts, as opposed to plaintiffs claimed number of 23,000. (See Sentry Salvage Report at 1, Ex. 6, attached to Defs Ex. B; see also supra at n. 1.) Based on this discrepancy, James Korbo, Sentry Salvage’s principal sal-vor, concluded that plaintiffs assessment of damaged shirts was “grossly excessive.” (Korbo Aff. H 10.) However, despite Sentry Salvage’s report and Mr. Schreck’s closing count of Heaven Sent inventory valued at $410,000, Antonio Panepinto, Clerical Apparel’s principal and sole shareholder, testified that his $827,921 claim was accurate. (See A. Panepinto Dep. at 55-58, Ex. 14, attached to Defs. Ex. B.)

Valley Forge also retained the accounting services of Matson, Driscoll & Damico, which concluded that Clerical Apparel’s maximum

inventory prior to the fire, at cost, after receiving goods from Heaven Sent amounted to $361,375, as opposed to the $742,000 claimed by Clerical Apparel in its Proof of Loss statement.2 (See CPA Report at 5, Ex. 9, attached to Defs. Ex B; Richard Weso-lowski and Gerald Warshaw Affidavits, Defs. Exs. E. and F.)

On September 7, 1999, Valley Forge rejected Clerical Apparel’s claim based on in-cendiarism and for violations of several provisions of the insurance policy. (See Defs. Local Rule 56.1 Statement K 24.)

II. The Procedural History

On August 25, 2000, plaintiff filed a complaint against Valley Forge in the New York Supreme Court, Queens County for payment under the insurance policy. The action was removed to this Court based on diversity jurisdiction. (See Not. of Removal). In February 2000, Valley Forge sent plaintiff a Notice to Produce Documents, to which plaintiff never responded.3 (See Not. to Produce, Defs. Ex. G.) At his deposition, Antonio Panepinto testified that he did not have any information relating to invoices and inventory counts. (See A. Panepinto Dep., dated Feb. 4, 1999, Ex. 13 at 47-49, attached to Defs. Ex. B.) However, his son, Ignazio Pa-nepinto, testified that all inventory sheets, which included three separate inventory sets of goods formerly owned by Heaven Sent, were turned over to Antonio Panepinto. (See Ignazio Panepinto Dep., dated Jul. 26, 2001, Ex. 15 at 65, attached to Defs Ex. B.) Antonio’s other son, Rosario Panepinto, testified that his father recently “found” certain customs purchase invoices.4 (See Rosario Pa-nepinto Dep., dated Jul. 25, 2001, Ex. 12 at 12-14, attached to Defs. Ex. B.)

[319]*319On or about October 5, 2001, Valley Forge served a Second Request for the Production of Documents, a Request for Admissions (Defs.Ex. B), and Interrogatories. Plaintiff never responded to these discovery requests. (See Def s. Local Rule 56.1 Statement 1129.) Valley Forge served its discovery disclosures, as well as expert reports, and identified relevant witnesses, pursuant to Federal Rule Civil Procedure 26. (Id. 1131.) Plaintiff failed to serve any Rule 26 disclosures, despite repeated requests. (Id. H 32.)

Defendant’s Request for Admissions includes requests to admit the following:

Plaintiff submitted a fraudulent insurance claim to defendant by inflating the total number of items stolen or damaged, as well as the costs for these losses; the cost value of Heaven Sent goods transferred to Clerical Apparel could not have exceeded the amount indicated by Mr.

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209 F.R.D. 316, 2002 U.S. Dist. LEXIS 13689, 2002 WL 2022409, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clerical-apparel-of-new-york-inc-v-valley-forge-insurance-nyed-2002.