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Midway Truck Parts, Inc v. Federated Insurance Company

February 4, 2013

MIDWAY TRUCK PARTS, INC., PLAINTIFF,
v.
FEDERATED INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER

Plaintiff Midway Truck Parts, Inc. alleges that Defendant Federated Mutual Insurance Co.*fn1 must indemnify Midway, under its employee theft insurance policy, for an employee theft that Midway discovered after the Federated Policy expired.*fn2 Federated moves for summary judgment on all counts [R. 25]. For the following reasons, Federated's motion is granted.

I.

In deciding this summary judgment motion, the Court views the evidence in the light most favorable to the non-movant, Midway. Federated issued Midway a commercial lines insurance policy that was effective from October 6, 2008 to October 6, 2009. R. 27, Def.'s Stmt. of Facts (DSOF) ¶ 5. The Federated Policy contained a Crime and Fidelity Coverage Part with a limit of $250,000 per occurrence for employee theft. Id. ¶ 6. The Crime and Fidelity Coverage Part actually permits coverage for an employee theft that is discovered after the insurance's cancellation, but this extended time period is limited:

E. Conditions

The following Conditions apply in addition to the Common Policy Conditions:

1. Conditions Applicable to All Insuring Agreements

g. Extended Period To Discover Loss

We will pay for loss that you sustained prior to the effective date of cancellation of this insurance, which is "discovered" by you:

(1) No later than 1 year from the date of that cancellation. However, thisextended period to "discover" loss terminates immediately upon the effective date of any other insurance obtained by you, whether from us or another insurer, replacing in whole or in part the coverage afforded under this insurance, whether or not such other insurance provides coverage for loss sustained prior to its effective date.

R. 27-1, Def.'s Exh. A, Commercial Crime Coverage Form ¶ E.1.g(1).

With October 6, 2009 approaching-the date the Federated Policy Period ended-Midway purchased an insurance policy from Travelers Casualty and Surety Company of America, which was effective from October 6, 2009 to October 6, 2010.*fn3 DSOF ¶ 12. The Travelers Policy provided employee theft coverage with a limit of $500,000. Id. On September 30, 2010, Midway discovered that a former employee had stolen around $1 million from Midway, so Midway notified both Federated and Travelers. Id. ¶¶ 9-11, 13. Travelers paid Midway its policy limit of $500,000. Id. ¶ 13. Federated declined to pay the claim, advising Midway that its "coverage terminated on October 6, 2009." R. 27-4, Def.'s Exh. D; see also DSOF ¶ 14.

II.

Summary judgment is required "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). All facts, and any inferences to be ...


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