On or about November 8, 1991, Evvtex suffered a loss of goods by theft from its premises in excess of $ 735,204.70.
London was notified of the loss, an insurance adjuster, Horizon Public Adjusters Group, Inc. ("Horizon"), was retained by Evvtex for a percentage of the settlement proceeds, and accountants prepared the necessary inventory and accounting which established the loss at over $ 830,000.
Negotiations were conducted by insurance adjusters for the parties. On March 19, 1992 a proof of loss was submitted by Evvtex for the agreed upon amount of $ 745,204.70. The Proof of Loss required "that the check in payment of claim be made payable to the assured and Horizon Public Adjusters Group, Inc." was Evvtex's insurance adjuster. It was anticipated that payment by Lloyds would be accomplished in 60 to 90 days.
On March 25, 1992, on Evvtex's letterhead, a letter was written to authorize Hartley Cooper to deduct a discount service fee for the advancement of Hartley Cooper funds to the assured in advance of Hartley Cooper's collection of the settlement monies from the underwriters. The letter stated, "Please advance payment of my claim as discussed. We agree on a discount service fee of 1 1/2%."
The typeface of this March 25, 1992 letter is different from that of the typeface found on all other letters from Evvtex, and the signature is not that of David, the principal of Evvtex. David signed his full name, "David Moussazadeh," on the proof of loss, the premium check and all other documents signed in an official capacity on behalf of Evvtex. The text of the letter is skewed and appears as though the text was haphazardly taped onto a letter previously sent on Evvtex stationery.
Evvtex did not authorize Finch to create the letter of March 25, 1992 or to transmit it to Hartley Cooper and was not informed of the letter or of the possibility of an advancement of the funds service fee. The letter, it can be inferred, was created by Finch as part of his effort to satisfy his obligation to Hartley Cooper and others. Finch faxed the March 25, 1992 letter to Hartley Cooper.
Finch sent a handwritten fax from Finch to Geoffrey Berrill ("Berrill"), who was filling in for John Evans ("Evans"), the director of Hartley Cooper most familiar with Finch and the Evvtex matter, having discussed it with David in New York prior to the settlement. Evans was skiing in the Alps. This fax was received March 31, 1992, stating that the insured was most anxious to receive the settlement proceeds as quickly as possible and had agreed to pay Hartley Cooper a 1 1/2% discount service fee in exchange for advancing the money prior to its actual receipt from Lloyds.
Hartley Cooper by an April 2, 1992 letter from Berrill requested "written confirmation from the client that we [Hartley Cooper] can deduct the outstanding premiums US $ 27,000 gross, being 3 installments." The April 2, 1992 letter also specified that the gross claim would be paid less the deduction for the service fee and outstanding premium. Payment was to be made to the Maxson Young bank account, attention Russ York, who would arrange for settlement including the loss payees. Maxson Young was Hartley Cooper's insurance adjuster. The April 2, 1992 letter requested the number of the bank account of Maxson Young for the transfer of the sums and a written confirmation of the insured of the deduction of the outstanding premiums.
On April 2, 1992 Evvtex's principal, David, was skiing in the Rockies. Abraham had come from the Texas office to manage the New York office while David was away. Abraham received a fax from Finch with a cover sheet requesting that the accompanying letter be typed on Evvtex stationery and faxed back to Finch. The letter stated, "Please telex funds to account number 310264022. This is in accordance with Hartley Cooper Associates' letter 2 April 1992." Neither Abraham nor David ever saw the Hartley Cooper April 2, 1992 letter, but Abraham was informed that the letter to be transcribed onto Evvtex letterhead was a mere formality and was necessary for the processing and receipt of Evvtex's claims monies.
Abraham complied with Finch's request and typed a letter on Evvtex stationery dated April 2, 1992 stating:
As per conversation with John Finch Associates amd [sic] in reference to my claim, please telex funds to Republic National Bank, 452 Fifth Avenue, New York, New York 10018, for the account of John Finch Associates, premium account, account number: 310264030
The final settlement between John Finch [sic] and Associates and Evvtex Company will take place immediately after confirmation of receipt.