The opinion of the court was delivered by: Marvin E. Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiff Coleman Cable, Inc. ("Coleman") seeks payment from either Federal Insurance Company ("Federal") or The Travelers Indemnity Company ("Travelers") pursuant to two separate insurance agreements. Coleman's claims relate to the alleged theft of 904,470 pounds of copper wire, valued at $2,053,146.90, from its production facility in Miami Lakes, Florida. Subject to certain exclusions and limitations, Coleman's policy with Federal covers property loss due to employee theft, whereas Coleman's policy with Travelers covers property loss due to non-employee theft. Both Federal and Travelers move for summary judgment. Federal's motion is denied, and Travelers' motion is granted.
Coleman is a Delaware corporation headquartered in Illinois that produces wire and cable products. (Travelers' Statement of Undisputed Facts ("TSUF") ¶ 1.) Federal is an Indiana corporation headquartered in New Jersey that sells insurance. (Federal's Statement of Undisputed Facts ("FSUF") ¶ 2.) Travelers is a Connecticut corporation headquartered in Connecticut that also sells insurance. (TSUF ¶ 2.) In 2005, Coleman maintained separate insurance policies with Federal and Travelers covering property loss due to different types of theft. (Id. ¶ 15; FSUF ¶ 24.)
At that time, Coleman operated six production facilities around the United States, including one in Miami Lakes, Florida that produced extension cords and battery booster cables. (Coleman's Response to Federal's Statement of Undisputed Facts and Statement of Additional Facts ("R-FSUF") ¶¶ 50--51.) The primary raw material used in production at Coleman's Miami Lakes facility was copper wire. (Id. ¶ 53.) There is no dispute that Coleman had some copper wire stolen from this facility in 2005. (TSUF ¶ 23; FSUF ¶ 15.) What is disputed is whether Federal, Travelers, or neither is obligated to pay Coleman and, if so, how much.
Subject to certain exclusions, the Federal policy covers "direct loss of Money, Securities, or Property sustained by an Insured resulting from Theft or Forgery committed by an Employee acting alone or in collusion with others." (FSUF ¶ 25.) The policy further provides that the insured may "offer a comparison between [its] inventory records and actual physical count of its inventory to prove the amount of loss, only where [it] establishes wholly apart from such comparison that it has sustained a covered loss caused by an identified employee." (Id. ¶ 34.)
Subject to certain exclusions, the Travelers policy covers "direct physical loss or damage to Covered Property[.]" (TSUF ¶ 16.) It is undisputed that the copper wire used in the Miami Lakes facility is "Covered Property" within the meaning of the policy. (TSUF ¶¶ 16--19.) The policy also contains two exclusions that Travelers argues are applicable. One exclusion, the employee theft exclusion, relieves Travelers of any obligation to cover losses resulting from "dishonest or criminal act[s] by . . . employees . . . acting alone or in collusion with others[.]" (Id. ¶ 20.) Another exclusion relieves Travelers of any obligation to cover a "[s]hortage disclosed by audit or upon taking inventory or by a profit and loss statement or other instances where there is no physical evidence to show what happened to the property." (Id. ¶ 21.) Lastly, the Travelers policy also contains a $100,000 per occurrence deductible whereby Travelers is only obligated to pay "the amount of the loss or damage in excess of the specified deductible" for "any one occurrence" of a covered property loss. (Id. ¶ 22.)
Neither Federal nor Travelers disputes that Coleman was the victim of theft on September 11, 2005 and attempted theft on October 1, 2005 at its Miami Lakes facility. But Coleman also contends that these two incidents, as well as a third on September 25, 2005, were part of an ongoing scheme that predated September 11, 2005 and ultimately resulted in the loss of 904,470 pounds of copper wire. Coleman primarily relies on two types of evidence as proof of this scheme and its resulting loss: (1) surveillance videos and images of the three incidents and (2) a discrepancy between Coleman's physical and on-the-books inventory of copper wire as of September 2005. Federal and Travelers both challenge whether the surveillance evidence indicates a broader scheme predating September 11, 2005 and whether Coleman can use an inventory comparison to prove a total loss of 904,470 pounds of copper resulting from the scheme.
1. Surveillance Images and Related Testimony
During the summer of 2005, Coleman upgraded the security at its Miami Lakes facility. The interim plant manager, Mark Rogers, changed the keys to the front entrance of the facility, added a push button combination lock to the door for employees, and purchased master locks for the garage doors and accordion-style gates on the loading bay doors. (Coleman's Response to Travelers' Statement of Undisputed Facts and Statement of Additional Facts ("R-TSUF") ¶ 54.) Rogers, in conjunction with the incoming permanent plant manager, Joe Antonecchia, also replaced the facility's video surveillance system. (R-FSUF ¶ 56.) The old system consisted of six black and white cameras, which, due to their lack of infrared capability, had limited ability to capture images in the dark. (R-TSUF¶ 52.) The new system, which was installed in July, consisted of sixteen cameras with infrared capability. (R-FSUF ¶ 58; Antonecchia Dep. at 15.) The new system also utilized digital video recording ("DVR") as compared to the old system's video cassette recording ("VCR"). (Antonecchia Dep. at 15.) In their role as plant managers, Rogers and Antonecchia reviewed footage from the video surveillance systems, although the parties dispute the regularity with which these reviews were conducted prior to the installation of the new system. (FSUF ¶ 11; R-FSUF ¶¶ 57--58; R-TSUF ¶¶ 52--53.)
On September 12, 2005, while conducting a review of the previous
night's surveillance video, Antonecchia observed undisputed evidence
of theft. (R-TSUF ¶ 55; R-FSUF ¶ 60.) The video shows*fn1
an individual in Coleman's facility between roughly 9:50 p.m.
and 11:00 p.m. on
the evening of Sunday, September 11, 2005, which would have been
outside the normal hours of operation. (Resp., Ex. 11.) Although the
individual's face is obscured by a mask, he appears to be a man. (Id.,
Surveillance Camera No. 16 at 23:00.) The individual first proceeds to
the office where, according to Coleman, the keys to a forklift parked
in the facility were kept. (Id., Surveillance Camera No. 10 at 21:52;
R-TSUF ¶ 57.) After obtaining the keys and starting the forklift, the
individual uses the forklift to move less expensive materials out of
the way in order to access more valuable reels of pure copper wire.
(R-TSUF ¶ 57.) The individual then uses the forklift to move these
reels, most of which weigh between 3,000 and 4,000 pounds, to the
loading bay area. (Id. ¶ 49, 57--58.)
Meanwhile, video from another camera trained on the exterior of the facility depicts a second individual backing a flatbed truck up to one of the loading bays. (Resp., Ex. 11, Surveillance Camera No. 7 at 22:47; R-TSUF ¶ 58.) The second individual, who is not wearing a mask, then exits the vehicle and crouches near the front left tire of the truck. (Resp., Ex. 11, Surveillance Camera No. 7 at 22:50.) Back inside the facility, the first individual opens the loading bay door and accordion gate, both of which, according to Coleman, had padlocks with keys kept in a desk inside the facility. (Id., Surveillance Cameras Nos. 15--16 at 22:49--22:54; RTSUF ¶ 57.) The two individuals then load six reels of copper wire, weighing roughly 28,600 pounds and worth approximately $64,922, on to the flatbed truck. (TSUF ¶ 23.) The second individual then departs with the truck and its newly acquired cargo. (Resp., Ex. 11, Surveillance Camera No. 7 at 22:59.) The first individual remains in the facility, locks the doors that had been opened, returns some materials to their original places, and returns the forklift to its original place. (Id., Surveillance Cameras No. 10, 13, 15, 16, at 23:00--23:02; R-TSUF ¶ 58.)
After observing this video, Antonecchia reported the theft to the police and also hired a private investigator. (Id. ¶ 62.) Antonecchia did not tell any employees at the Miami Lakes facility about the theft or the investigation in order to avoid arousing suspicion by employees who might have been involved. (Id. ¶ 63.) Antonecchia also installed an additional wireless camera, the so-called bucket cam, which was concealed in a bucket and trained on the outside door to the facility's compressor room. (Id. ¶ 59.) None of the surveillance system's cameras had recorded the forklift-operating thief's point of entry on September 11, 2005. (Antonecchia Dep. at 29.) As such, Antonecchia suspected that the thief had come through the door to the compressor room, which was not in view of the new surveillance system's cameras. (Id.; RTSUF ¶ 59.)
On Sunday, September 25, 2005, exactly two weeks after the initial theft, the surveillance system's cameras again recorded after-hours activity in the Miami Lakes facility. (R-TSUF ¶ 65; Resp., Ex. 12, Surveillance Camera No. 13 at 21:50--21:58.) As in the September 11 incident, the footage shows an unknown individual using a forklift to move large reels of copper wire to the loading bay. (R-FSUF ¶ 65.) Another unknown individual then arrives in a flatbed truck bearing substantial resemblance to the truck from the prior incident. (Resp., Ex. 12, Surveillance Camera No. 15 at 22:17--22:19.) This time, however, the driver remains at the loading bay for approximately two minutes before driving away without ever loading any copper reels on to the truck. (Id.)After the truck departs, the individual operating the fork lift continues to move the reels of copper around the facility, apparently, in Coleman's view, returning them to their proper places in order to conceal an aborted theft. (R-TSUF ¶ 65; Resp., Ex. 12, Surveillance Camera No. 13 at 23:56--00:03.)
On Sunday, October 2, 2005, thieves attempted to steal 44,000 pounds of copper wire, worth approximately $99,880, from Coleman's Miami Lakes facility in circumstances similar to the September 11 theft. (TSUF ¶ 24.) As before, the surveillance cameras recorded an unknown individual in the facility after normal working hours and in the vicinity of the loading bay. (Resp., Ex. 15, Surveillance Camera No. 15 at 23:10:25--23:12:04.) The cameras also recorded what appears to be the same truck from the two prior incidents arriving at the facility, parking next to the loading bay, and then departing. (Resp., Ex. 15, Surveillance Camera Nos. 2, 6, 7, 9 15 at 00:36:43--00:48:36.)
Almost immediately after departing the facility, the driver of the truck was apprehended by the Miami police following a brief chase. (R-TSUF ¶ 61.) The driver had eight reels-or approximately 44,000 pounds-of copper wire in tow, which were ultimately returned to Coleman. (Toyos Dep. at 16--19; TSUF ¶ 24.) The driver, Luis Cruz, later pled guilty to the theft. (Resp., Ex. 19.) Months after the attempted theft, the police also arrested and charged another individual, Juniel Moreno, who is believed to have acted as a lookout. (Toyos Dep. at 22--23.) The record does not indicate what the outcome of Moreno's criminal case was. It is undisputed that Cruz and Moreno were not Coleman employees. (R-TUSF ¶ 61.) Based on the surveillance images, the Miami police sought but never apprehended the individual shown operating the forklift. (Id.)
d. Evidence of Employee Participation
Coleman says this evidence may implicate one or more of its employees in the theft and attempted theft. Much of Coleman's argument about employee involvement requires inferencesto be drawn from the surveillance images and other circumstantial evidence. Instead of setting out those proposed inferences here, we will evaluate them and their reasonableness during our application of the summary judgment standard below.
Coleman does offer direct evidence that may implicate two specific employees, however. In particular, Coleman has produced still images taken by the so-called bucket cam purporting to show Francisco Miro, the maintenance supervisor at the Miami Lakes facility in 2005, propping open the door to the compressor room on October 1, 2005, hours before one of the attempted thefts. (Antonecchia 8/5/10 Dec. ¶ 2 & Exs.) Antonecchia had ordered this door to remain closed and locked based on his suspicion that the thieves were using it as their point of entry. (Antonecchia Dep. at 60.) Coleman has also produced images purporting ...