Warehouse Wines & Spirits, Inc. v. Travelers Property Casualty Co. of America

101 F. Supp. 3d 299, 2015 U.S. Dist. LEXIS 42848, 2015 WL 1454883
CourtDistrict Court, S.D. New York
DecidedMarch 31, 2015
DocketNo. 13 Civ. 5712(KBF)
StatusPublished
Cited by1 cases

This text of 101 F. Supp. 3d 299 (Warehouse Wines & Spirits, Inc. v. Travelers Property Casualty Co. of America) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Warehouse Wines & Spirits, Inc. v. Travelers Property Casualty Co. of America, 101 F. Supp. 3d 299, 2015 U.S. Dist. LEXIS 42848, 2015 WL 1454883 (S.D.N.Y. 2015).

Opinion

OPINION & ORDER

KATHERINE B. FORREST, District Judge:

On July 23, 2013, plaintiff Warehouse Wines & Spirits, Inc. (‘Warehouse Wines”), a retail seller of wine and liquor, filed this action in the Supreme Court of the State of New York against Travelers Property Casualty Company of America (“Travelers”) after Travelers denied Warehouse Wines’ insurance claim for stolen product. On August 15, 2013, the action was removed to federal court. (ECF No. 1.) Warehouse Wines alleges that it lost over 4,000 cases of its wine and liquor when the product was stolen by James Ceseretti, who ran the warehouse in which Warehouse Wines stored excess inventory. On January 9, 2015, Ceseretti pled guilty to grand larceny in the second degree for the theft of property from Steven Gold-stein, President of Warehouse Wines, in excess of one million dollars.

Warehouse Wines submitted a claim under its first party property insurance policy with Travelers for loss of inventory. Travelers denied the claim based on, inter alia, the “Dishonest Acts” exclusion in the policy, which precludes coverage where a loss is caused by the dishonest acts of a person “entrusted with the property”. The parties agree that Warehouse Wines entrusted its wine and liquor to Ceseretti and his warehouse. As Ceseretti has already admitted guilt to the theft, there is also no dispute as to a dishonest act occurring. However, there is an exception to the “Dishonest Acts” exclusion for “property in the custody of a carrier for hire”. The ultimate question before the Court is whether Ceseretti or whichever of his two companies that operated the warehouses— Bestway Warehouse & Transportation, Inc. or Bestway Logistics Transportation, Inc. — falls into the “carrier for hire” exception. If the “carrier for hire” exception does not apply, Travelers was within its contractual rights to deny Warehouse Wines’ claim under the “Dishonest Acts” exclusion.

Before this court are the parties’ cross-motions for summary judgment. (ECF Nos. 46, 52.) Following the submission of those motions, Travelers filed a motion to amend its prior responses to Warehouse Wines’ request for admissions. (ECF No. 77.)1 It seeks to amend admissions where it stated, due to supposed error by counsel, that it is unclear which of Ceseretti’s companies operated the warehouse and which transported property. The motion to amend, made after summary judgment motions have been filed, is denied; but any lack of clarity by Travelers as to the operator of the warehouse is ultimately irrelevant as the property was simply not in the custody of a carrier for hire when stolen from the warehouse.

Simply put: Ceseretti and his Bestway Warehouse & Transportation company were conducting business as a warehouse — not a carrier — when the theft occurred. Warehouse'Wines had a written agreement for the warehousing of its merchandise. There was no time limitation to their storage and the warehouse was not used as a temporary way station while the [302]*302goods waited to be transported elsewhere. The name of Ceseretti’s company included the word “Warehouse.” If this is not a warehousing operation, what is? Instances of confusion regarding the similar names of Ceseretti’s two Bestway companies do not create a genuine dispute of material fact as to the true operator of the warehouse. Warehousing and delivery were billed separately. James Ceseretti and his mother Barbara Ceseretti, who handled clerical tasks associated with both Bestway companies, each testified that Bestway Warehouse & Transportation operated the warehouse while Bestway Logistics Transportation owned the trucks. Ceseretti stole Warehouse Wines’ wine and liquor while the goods were in storage at the warehouse — not while they were in any stage of transport. The warehousing operation was not a carrier for hire; accordingly, the “Dishonest Acts” exclusion precludes coverage of the loss.

I. FACTUAL BACKGROUND

A. The Relationship Between Warehouse Wines and Ceseretti

Plaintiff operates a wine and spirits retail store in Manhattan. Steven Goldstein, its President, sole officer and only stockholder, employs a strategy of making large wholesale purchases to obtain discount offers; accordingly, it utilizes public warehouses to store excess inventory. (Warehouse Wines’ Responsive 56.1 Statement ¶¶ 1, 2, ECF No. 55.) In 2008, Goldstein entered into a business relationship with James Ceseretti to warehouse merchandise at Ceseretti’s new facility in Hauppauge, New York. Ceseretti ran two companies — Bestway Logistics Transportation and Bestway Warehouse & Transportation — for which he handled all operations, paid the rents, paid the employees and taxes, paid vendors and directed. (Id. ¶ 21.) Although Ceseretti himself testified that Bestway Warehouse & Transportation was the entity which operated the warehouse, the parties dispute which of Ceseretti’s two corporate entities operated the warehouse. (Id. ¶¶ 5-8.) During the course of the business relationship, a portion of inbound shipments from distributors to the warehouse on behalf of Warehouse Wines were signed for by James Ceseretti. (Id. ¶ 10.) Typically, Ceseretti himself and Paul Montaldo would assemble pallets for shipment when Goldstein wanted items removed from the warehouse to his store. (Id. ¶ 14.)

In addition to storing the product, Ceseretti would deliver product from the warehouse to Warehouse Wines using trucks registered in the name of Bestway Logistics Transportation. (Id. ¶ 15.) Barbara Ceseretti, James’s mother, handled clerical tasks associated with both the warehouse function and delivery function. (Id. ¶ 16.) Barbara Ceseretti invoiced Warehouse Wines on a monthly basis for the storage fees on paper bearing the legend “Bestway Logistics Transportation”. (Id. ¶ 19.) She invoiced the delivery services on paper bearing the legend “Bestway Warehouse & Transportation”. (Id. ¶ 20; Sipple Deck, Ex. J.) The two Best-way companies share a common bank account and maintained no separate records of their individual revenues or expenses. (Id. ¶¶ 21-22.)

B. The Loss

Ceseretti eventually began to come up short with his deliveries to Warehouse Wines. In February 2011, he was unable to deliver cases of Captain Morgan rum to Warehouse Wines despite records indicating that there should have been 31 cases in the warehouse. (Id. ¶ 24.) In November 2011, he was unable to deliver 3 cases of Dom Perignon although the cases should have been in the warehouse. (Id. ¶ 25.) By early December 2011, he was unable to [303]*303deliver a particular Belvedere vodka although he was supposed to have 60 cases. (Id. ¶¶ 26-27.) Warehouse Wines’ order on December 23, 2011 was short 53 of the 591 expected cases. (Id. ¶ 28.) On December 27, 2011, Goldstein learned from Mitch Herman, the other major wine and liquor customer of the Bestway warehouse, that Herman was missing 4,701 cases out of 9,056 for a loss of approximately $700,000. (Id. ¶¶ 30-34.) Ceseretti assured Goldstein at a meeting the following day that all of his products were ok except for Jack Daniels liter cases, Johnny Walker Black liter cases and Belvedere 750 ml silver. (Id. ¶ 36.) On January 3, 2012, Goldstein inspected the warehouse and discovered a loss of approximately 4,000 cases he calculated to be worth approximately $1,200,000. (Id. ¶ 37.)

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Cite This Page — Counsel Stack

Bluebook (online)
101 F. Supp. 3d 299, 2015 U.S. Dist. LEXIS 42848, 2015 WL 1454883, Counsel Stack Legal Research, https://law.counselstack.com/opinion/warehouse-wines-spirits-inc-v-travelers-property-casualty-co-of-nysd-2015.