The opinion of the court was delivered by: Shirr A. Scheindlin, U.S.D.J.
North American Foreign Trading Corp. ("NAFT") brings this action against Mitsui Sumitomo Insurance USA, Inc., formerly known as Mitsui Marine and Fire Insurance Company of America, and MSI Claims (USA), Inc. (collectively, "Mitsui") for breach of a marine insurance policy issued by Mitsui to NAFT. Mitsui now moves for summary judgment arguing that NAFT's claim is time-barred under the policy. For the following reasons, Mitsui's motion for summary judgment is denied.*fn1
NAFT is an importer of consumer electronic goods manufactured in Asia. Mitsui issued a marine insurance policy to NAFT covering shipments from Asia, effective March 1, 2001 (the "Policy").*fn2 The parties entered into an endorsement extending coverage under the Policy to goods temporarily stored in certain warehouses (the "Warehouse Endorsement"), including a facility owned by Lionda Technology Co., Ltd. ("Lionda") in Baoan, Shenzhen, China (the "Lionda Warehouse").*fn3
Between 2001 and 2004, NAFT purchased newly manufactured cordless telephones from Lionda in China, and returned certain of those telephones, known as "customer returned units" or "CRUs", to Lionda for refurbishment at the Lionda Warehouse.*fn4 In early 2004, NAFT determined that many of its CRUs that had been shipped to Lionda were never returned to NAFT.*fn5 NAFT ultimately determined that approximately 297,778 CRUs valued at $7,245,345 had been shipped to the Lionda Warehouse but were never returned to NAFT.*fn6 On March 8, 2005, NAFT wrote to Lionda claiming that Lionda was attempting to misappropriate NAFT's goods and that Lionda was violating its contractual obligations with NAFT by holding and not returning NAFT's CRUs.*fn7 On April 20, 2004, Lionda informed NAFT that all of NAFT's CRUs were secured in the Lionda Warehouse.*fn8 On the same day, Lionda e-mailed photographs to NAFT that purported to show NAFT's merchandise inside Lionda's facility.*fn9
On April 30, 2004, due to a separate dispute between Lionda and its creditors, the Shenzhen Intermediate People's Court, Guangdong Province, sealed the Lionda Warehouse.*fn10 On May 10, 2004, NAFT filed a Demand for Arbitration for "[b]reach of contract" against Lionda because of Lionda's "failure to repair or replace customer returned units."*fn11 Around this time, NAFT hired counsel in China, Anderson & Anderson LLP, to investigate whether NAFT's CRUs were still located in the Lionda Warehouse.*fn12 In June 2004, Anderson & Anderson initially suspected that NAFT's CRUs were stolen because Anderson & Anderson investigators observed a "gaping hole" in the wall of the Lionda Warehouse.*fn13 However, Anderson & Anderson did not confirm that NAFT's CRUs were actually removed from the Lionda Warehouse until July 26, 2004*fn14 At that time, one of Anderson & Anderson's employees, Wei Zhijun, learned that Lionda was repairing and selling NAFT's CRUs at its Wan Cheng Warehouse in the Futian Customs Zone ("Wan Cheng Warehouse"), which was not covered by the Policy.*fn15 Zhijun "estimated that there were several hundred thousand boxes . . . containing NAFT's CRUs" at the Wan Cheng Warehouse.*fn16 Anderson & Anderson was unable to gain access to the Lionda Warehouse until shortly after it was unsealed in December 2004.*fn17 On December 31, 2004, Zhijun visited the Lionda Warehouse and reported that "[t]here were no NAFT's [sic] CRUs in the warehouse that [she] could see."*fn18
On June 25, 2004, NAFT advised its insurance broker, Roanoke Trade Services, Inc. ("Roanoke"), of Anderson & Anderson's findings as of that time and requested that Roanoke notify Mitsui about NAFT's problem regarding the CRUs.*fn19 NAFT further stated that "it appears that there are large gaps in the inventory that should have been held in the Lionda warehouse."*fn20 On June 29, Roanoke forwarded NAFT's correspondence to Mitsui.*fn21
Mitsui retained forensic accountants, Meaden & Moore, LLP to investigate NAFT's claim.*fn22 Between June 2004 and May 2005, Meaden & Moore met with NAFT's Chief Financial Officer on several occasions, reviewed documentation regarding NAFT's shipments to Lionda and supporting letters of credit, and visited NAFT's office to discuss questions and concerns.*fn23
In response to an inquiry from NAFT regarding the status of the claim, Marvin Margolies, a Vice President and Marine Claims Manager for Mitsui, wrote in November 2004 that "due to the nature of this claim, the amount involved and the status of Meaden & Moore's review," Mistusi was "currently not in a position to respond affirmatively to your request."*fn24 Margolies informed NAFT that Mitsui would respond "[a]s soon as [it was] in a position to . . . do so."*fn25 On April 29, 2005, Meaden & Moore sent a draft of its report to Margolies, which stated that Meaden & Moore had "found no material difference between the $7,245,345 claimed as goods returned to Lionda for repair and never received and the documentation supporting the actual shipment to Lionda as well as the valuation of these goods at cost."*fn26 Margolies forwarded the report to Mitsui's counsel so that Mitsui's counsel could render a coverage opinion.*fn27
On May 24, 2005, Mitsui's counsel provided its opinion to Mitsui that the Policy did not provide coverage for NAFT's claim and attached a draft declination letter addressed to NAFT for Mitsui's review.*fn28 On May 25, 2005, in response to a telephone message inquiring about the status of NAFT's claim, Margolies sent an e-mail to NAFT's broker stating that Margolies had "requested and [was] awaiting Meaden & Moore's report, and [would] update [him] hopefully next week."*fn29 On the same day, Meaden & Moore forwarded its final report to Mitsui's counsel, which stated the same conclusion as that in Meaden & Moore's April 29 report.*fn30 NAFT did not review Meaden & Moore's report at that time.*fn31 On May 26, 2005, Margolies forwarded the opinion of Mitsui's counsel and the proposed declination letter to his superior "requesting authority to issue the letter of declination."*fn32
Under the Policy, Mitsui was required to make payment to NAFT "within thirty (30) days after proof of loss, proof of interest and adjustment."*fn33 In a letter dated June 16, 2005, Mitsui denied coverage for NAFT's claim, stating that the "loss was not due to any insured peril" and quoting paragraphs 1, 7(a), 7(b), and 13 of the Warehouse Endorsement, and paragraph 25 of the Policy, pertaining to the scope of coverage for goods on shore.*fn34
NAFT filed this action on June 23, 2005. Mitsui claims that the action is time-barred because the Policy provides for a one-year limitations period from the date of loss in which to file suit. NAFT argues that Mitsui has not carried its burden of proving NAFT's loss occurred before June 23, 2004, or alternatively that Mitsui should be equitably ...