HM&B Partner Wins Summary Final Judgment in Favor of Lloyds’ Syndicates in Disputed $1.5 Million Cargo Claim

HM&B Senior Partner, Krista Fowler Acuña, secured summary final judgment in favor of Newline and other Lloyd’s Syndicates in a coverage dispute involving a $1.5 million cargo loss in Puerto Rico following Hurricane Maria. In the months following Hurricane Maria, the Plaintiff-Insured, a business primarily engaged in the distribution of household appliances to wholesale retailers, filed a claim with Underwriters for losses to stored inventory that was damaged from the hurricane. Underwriters acknowledge coverage and paid approximately $1.5 million for the damaged appliance inventory. But a coverage dispute subsequently arose over an additional $1.5 million in claims presented. The first portion of the disputed claims stemmed from inventory losses of an Additional Insured (an affiliated entity engaged in the sale of bottled water who was not a party to the lawsuit), for loss of plastic bottles, caps, labels, and drinkable water stored in 3 locations. The second disputed claim was for “extra expenses,” i.e. fees and payments allegedly incurred in relation to demurrage and post-hurricane cargo hauling and storage. To support both, the Insureds submitted spreadsheets of the expenses and retail sale value of the water bottle inventory and materials- which were created after the hurricane. During the 2-year claims process, the underlying documentation from which the spreadsheets were allegedly created were never provided, leading to a disclaimer of coverage. On March 30 the Court granted Underwriters’ Motion for Summary Judgment and entered final judgment in its favor, on the basis that the Insureds failed to support an essential element of its claim- damages- because (1) the spreadsheets were inadmissible under Fed.R.Civ. 1006 as the underlying documents upon which they were based were never produced, and the Insureds failed to rebut this issue; (2) the Insureds relied upon their own pleadings, and an otherwise inadmissible affidavit of a company representative, to try and create disputed material facts; (3) the Insureds failed to present expert opinion to dispute Underwriters’ forensic accountant, who opined that the 600 pages of documents from the Insureds failed to corroborate any aspect of the spreadsheets; and (4) the Insureds’ only alleged evidence was a 600-page document dump that did not relate to any entry of the spreadsheet. Holding that the Insureds had failed to present even a scintilla of admissible evidence in support of damages, the Court determined it was unnecessary to rule upon the additional arguments raised- that the Insured did not have an insurable interest in the water bottle claim, and Underwriters’ failure to cooperate defense.