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ONE BEACON INSURANCE CO. v. OLD WILLIAMSBURG CANDLE CORP.

June 30, 2005.

ONE BEACON INSURANCE COMPANY, Plaintiff,
v.
OLD WILLIAMSBURG CANDLE CORPORATION, et al., Defendants.



The opinion of the court was delivered by: LEWIS KAPLAN, District Judge

MEMORANDUM OPINION

Plaintiff moves for summary judgment declaring an insurance policy void. The question is whether the policy, notwithstanding a clause barring assignment, was in effect at the date of a loss that followed the sale of the covered business. As a reasonable juror could find that the insurer's agent knew of the sale of the business and that the insurer nevertheless "renewed" the policy and continued to accept premium payments, the motion is denied.

  Facts

  In 1995, Meir Ackerman and Eugene Loevinger formed Old Williamsburg Candle Corp. ("OWC NY"), a Brooklyn based candle company incorporated in New York.*fn1 In 2001, OWC NY sought to acquire a marine insurance policy from One Beacon Insurance Company ("One Beacon") to cover the transport and storage of its inventory.*fn2 Loevinger discussed the matter with Yechiel Bromberg, the principal of Elite Insurance Agency ("Elite"), an insurance brokerage and agency that is party to two agency agreements with One Beacon.*fn3 Ultimately, One Beacon issued a marine insurance policy (the "Policy") as of April 29, 2001.*fn4 Underwriter Emanuel Palmieri executed the Policy on One Beacon's behalf. By its terms, the Policy is "continuous" and "in force until cancelled by either party giving the other (30) days written notice."*fn5 The Policy provides further that it "shall be void if assigned or transferred without the written consent of [One Beacon]."*fn6 At the time the Policy was issued, its warehouse endorsement covered inventory in two Brooklyn warehouses, one at 300 Liberty Avenue and the other at 143 Alabama Avenue.*fn7

  On March 19, 2001, OWC NY executed an Asset Purchase Agreement ("APA" or "Agreement") pursuant to which OWC NY agreed to sell to New Williamsburg Candle Corp., a Delaware corporation ("OWC DE") "certain of the assets and [OWC NY's] candle business, as a going concern,"*fn8 including "all rights of [OWC NY] under leases, contracts, plans, commitments, licences, policies and permits."*fn9 The next day, OWC DE changed its name to Old Williamsburg Candle Corp.*fn10 Ackerman and Loevinger signed six-month employment contracts with OWC DE to assist in the transition.*fn11

  While the Policy did not expire by its terms, it came up for "renewal" around this time. One Beacon "renews" the Policy on its anniversary date by issuing a new endorsement if necessary to adjust premiums. In a letter dated March 28, 2002, Palmieri enlisted Bromberg's help to "review with the assured their coverage to determine if any changes are required for th[e] policy's renewal" in anticipation of the anniversary date, April 29, 2002.*fn12 Bromberg assisted One Beacon, but he never advised Palmieri that any changes were necessary*fn13 even though he ordinarily tells the insurer of changes in management or ownership as soon as such information is received.*fn14

  The extent of Bromberg's knowledge during this period concerning the sale of the candle business is uncertain. Loevinger says that he told Bromberg prior to the Policy's renewal that he was selling the business via a sale of assets and "that a new group of corporate officers were taking over the management and ownership of Old Williamsburg Candle Corp."*fn15 Bromberg equivocated substantially in his deposition.*fn16 He admitted, however, that he met OWC DE's comptroller, Yaniv Mazor, before the renewal date.*fn17 Mazor was introduced to him "[a]s a controller [sic] for the Israeli operations [sic] that was buying the business or merging with [Loevinger] for the business."*fn18 Prior to the closing of the APA on March 19, 2002, Mazor and Bromberg apparently discussed OWC DE's insurance needs over the telephone.*fn19 Furthermore, Bromberg apparently "brief[ed] [Mazor] onto what the renewal premiums and coverages [would be]" and Mazor signed "a finance contract" for Bromberg even though Bromberg previously had dealt exclusively with Loevinger.*fn20 Saliently, Bromberg acknowledged that he specifically asked Loevinger, presumably around this time, whether the name of the company was staying the same; Loevinger answered that it was.*fn21

  One Beacon issued a new endorsement effective April 29, 2002.*fn22 One Beacon subsequently continued to accept premium payments, albeit from OWC DE rather than OWC NY. On December 22 or 23, 2002, Mazor and Bromberg discussed "[m]oving one million dollars of inventory [coverage from one warehouse] to a different [and new] location"*fn23 because OWC DE "needed more space" for storage.*fn24 In an endorsement effective December 23, 2002 and executed by Palmieri, the Policy was amended to move one million dollars of liability coverage from the warehouse at 300 Liberty Avenue to that at 315 Liberty Avenue, across the street.*fn25 Three days later, on December 26, 2002, OWC DE suffered serious loss to the inventory located in two adjacent warehouses due to "[e]xtensive fire."*fn26 The next day, OWC DE submitted a claim under the Policy to One Beacon through Elite.*fn27

  One Beacon subsequently brought this action against OWC NY and OWC DE, seeking a declaration that it has no obligation to indemnify under the Policy.*fn28 One Beacon now moves for summary judgment against OWC DE.

  Discussion

  A. Summary Judgment Standard

  "[T]he plain language of Rule 56(c) 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."*fn29 In deciding such a motion, a district court must resolve all ambiguities and make all reasonable inferences in favor of the nonmoving party.*fn30 At the same time, "conclusory statements, conjecture, or speculation by the party resisting the motion will not defeat summary judgment."*fn31

  B. The Merits*fn32

  The Policy provides that "[t]his policy shall be void if assigned or transferred without the written consent of the Company."*fn33 One Beacon argues that the Policy was voided by its assignment to OWC DE and moves for summary judgment on that basis. Plaintiff urges that OWC DE is not covered because (1) the assignment clause unambiguously required written consent to the Policy's assignment and is enforceable, (2) OWC NY and OWC DE are distinct legal entities,*fn34 (3) OWC NY assigned the Policy to OWC DE,*fn3 ...


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