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VENATOR GROUP v. VOYAGER EXPRESS

March 21, 2003

VENATOR GROUP, INC., PLAINTIFF, AGAINST VOYAGER EXPRESS, INC., DEFENDANT.


The opinion of the court was delivered by: Ronald L. Ellis, United States Magistrate Judge

REPORT AND RECOMMENDATION

I. INTRODUCTION

On February 14, 2001, plaintiff Venator Group, Inc. ("Venator") filed this action against defendant and third-party plaintiff Voyager Express, Inc. ("Voyager"), for loss of a cargo of footwear transported by Voyager in interstate commerce. On April 26, 2001, Voyager filed a third-party complaint against Lexington Insurance Company ("Lexington") alleging breach of contract, bad faith, equitable indemnification and unfair competition/trade practices. In an opinion dated October 31, 2001, The Honorable Richard M. Berman granted Lexington's motion to dismiss the claims of bad faith and unfair competition/trade practices, applying Colorado law. By stipulation of the parties, the Court entered a judgment on January 25. 2002, against Voyager and in favor of Venator in the amount of $125,000, which Venator shall forebear from executing until the resolution of the third-party claims against Lexington.

Now before the Court is a motion for summary judgment filed by Voyager on June 7, 2002. In opposition, Lexington asserts that the Court should enter summary judgment sua sponte in its favor. For the reasons which follow, I recommend that Voyager's motion be DENIED and that summary judgment be entered in favor of Lexington.

II. BACKGROUND

A. The Undisputed Facts

On June 11, 1999, Venator hired Voyager to transport a shipment of footwear from Downey. California, to Junction City, Kansas. Rule 56.1 Statement of Third Party Plaintiff Voyager ("Pl. Stmt.") at ¶ 1-2; Third-Party Defendant Lexington's Counter-Statement of Undisputed Facts ("Def. Stmt.") at ¶ 1. The shipment of 732 cases of footwear was loaded at the Hudd Distribution Center in Downey, California. Pl. Stmt. at ¶ 3. Voyager's driver, Curtis Johnson ("Johnson"), was told that the pick-up was for Venator. Def. Stmt. at ¶ 3. According to the bill of lading, the shipper was Converse/Hudd Distribution Center, and the shipment was consigned to and destined for Foot Locker and Woolworth (Venator). See Declaration of Barry N. Gutterman ("Gutterman Decl."), attached to Voyager's Notice of Motion, at Exh. M; Pl. Stmt. at ¶ 17. Voyager billed Venator for the freight charges. Def. Stmt. at ¶ 5.

On June 11, 1999, between 5:30 p.m. and 6:30 p.m., Johnson parked the tractor-trailer with the shipment in Voyager's storage yard in Wheatridge, Colorado. Pl. Stmt. at ¶ 4. Voyager's storage yard was fenced and lighted, and after Johnson parked the vehicle, he closed and locked the gate. Id. at ¶¶ 26-28; Def. Stmt. at ¶ 8. He returned at approximately 8:00 a.m. on June 14, 1999. Pl. Stmt. at ¶ 4. That morning, it was discovered that the trailer portion of the tractor-trailer containing the shipment had been stolen from Voyager's storage yard. Def. Stmt. at ¶ 7.

At all relevant times, Voyager was insured by Lexington through policy number 8799421 ("the Policy"). Pl. Stmt. at ¶ 6-7. Following the disappearance of the trailer, Voyager put Lexington on notice of the theft. Id. at ¶ 8. On August 27, 1999, Lexington sent a Proof of Loss form, which Voyager signed on August 31, 1999. Id. at ¶ 9; Gutterman Decl. at Exh. H. On September 1, 1999, Lexington notified Voyager that it was rescinding the Proof of Loss. Gutterman Decl. at Exh. I; Pl. Stmt. at ¶ 10. Following Judge Berman's October 31, 2001 order granting Lexington's motion to dismiss, Voyager seeks summary judgment on its remaining claims for breach of contract, duty to indemnify and defend, and judgment for defense expenditures.

B. The Policy

The Policy provides that Lexington will pay for loss to covered property from any of the covered causes of loss. See Gutterman Decl. at Exh. G. Specifically it states, in part:

1. Covered Property, as used in this Coverage Form, means property of others under a tariff, bill of lading, contract of carriage or other shipping receipt while:
a. In your care, custody or control; and

b. In the due course of transit, including while:

(3) In or at a terminal or storage location, depot or garage;
See Id. The Policy also includes a Protective Warranties ...

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