The opinion of the court was delivered by: Marian W. Payson United States Magistrate Judge
Plaintiff Gregory Prendergast ("Prendergast") seeks a declaratory judgment that his sports card insurance policy issued by Pacific Insurance Company ("Pacific") was in effect at the time that his collection was stolen and that he complied with all policy conditions required to maintain full coverage. (Docket # 1, Complaint). Pursuant to 28 U.S.C. § 636(c), the parties have consented to have a United States magistrate judge conduct all further proceedings in this case, including the entry of final judgment. (Docket # 10).
Currently pending before this Court is Pacific's motion for summary judgment. (Docket # 34).*fn1 Because the issues raised by Pacific involve disputes of material fact, the motion is denied.
The following is a summary of the undisputed facts in this matter, except where otherwise noted.*fn2
A. Insurance of Prendergast's Sports Card Collection
Prior to 2006, Prendergast insured a sports card collection through Lloyd's of London. (Docket ## 34-29 at ¶ 1; 40-24 at ¶ 2). In May of 2006, Prendergast obtained a new insurance policy from Pacific, which provided coverage for his collection in the amount of $200,000. (Docket ## 34, Ex. B; 40-24 at ¶ 3). To obtain the coverage, Prendergast was required to estimate the replacement value of "each major type collectible," although he was not required to submit a professional appraisal of the collection's value. (Docket # 40-24, Ex. A).
Prendergast based his estimate on an appraisal prepared by Yankee Clipper House of Cards in 2005. (Docket ## 34, Ex. C; 34-29 at ¶ 4). The appraisal contained an eight-page handwritten inventory of the cards, which listed the type and number of cards, as well as an associated "value." (Docket # 34, Ex. C). The appraiser did not inspect the collection, but accepted Prendergast's representation as to its contents; in estimating value, the appraiser used the Beckett Book*fn3 and accepted Prendergast's representation that all of the cards were in "[near mint] to mint condition." (Id.).
According to Prendergast, in March or April of 2007, a man who
introduced himself as "Robert" came to his house and offered to sell
him a sizable sports card collection. (Docket # 34, Ex. N at 82-84).
Without inspecting the collection, Prendergast agreed to buy the
collection of approximately nine million sports cards*fn4
for $450,000 in cash.*fn5 (Id. at 83-85).
Prendergast never learned "Robert's" last name or how to contact him
and never obtained a receipt for the purchase. (Id. at 84-86). After
Prendergast agreed to buy the collection sight-unseen, he leased a
facility in a commercial building located at 1149 Culver Road in
Rochester, New York, for the purpose of storing the new collection.
(Docket ## 34, Ex. E; 34-29 at ¶ 6). Sometime between April 15, 2007
and May 15, 2007, Robert delivered 385 boxes, each containing 25,000
cards, to Prendergast at the storage facility. (Docket ## 40, Exs. D,
F; 34, Ex. N at 88-89, 92). Prendergast also moved his original
collection to the facility. (Docket # 34, Ex. J at 68-69).
On May 15, 2007, Prendergast applied to Pacific to increase his coverage from $200,000 to $4,000,000 based upon his purchase of Robert's collection. (Docket # 34, Ex. D). According to Prendergast, his estimate that the collection was worth that amount was based upon a "price structure" provided by Robert, as well as Prendergast's sampling of the cards in each box and his review of the Beckett Book. (Docket # 34, Ex. J at 40, 44). Specifically, Prendergast testified that each box that Robert delivered contained information about its contents written on the box lid. (Id. at 39-40, 42). The lid noted the type and number of cards in each box, as well as a price range. (Id. at 44, 46). Prendergast testified that he opened each box to verify that its contents corresponded to the notations on the lid and to ensure that the cards were in excellent condition. (Id. at 41-42). He admitted that he did not look at every single card. (Id.). Prendergast then compared the box's "price structure" to the Beckett Book, considering the types of cards and their condition, to arrive at the estimated value of $4 million. (Id. at 44-46). Prendergast recorded his work through a series of hash marks on a separate box lid. (Docket # 34, Ex. O).
In order to obtain the increased coverage for theft, Pacific required
Prendergast to install a central alarm system. (Docket ## 34-29 at ¶
7; 34-20 at ¶ 7; 40-24 at ¶ 7). Prendergast contracted with ADT to do
so. (Docket # 34-29 at ¶ 7). The system that ADT installed consisted
of an alarm on the front door and a motion detector, but did not
include an alarm on the back door of the storage space.*fn6
(Docket ## 34, Ex. J at 56-60; 34-29 at ¶ 10). Prendergast
did not disclose to Pacific the fact that the back door was not
alarmed. (Docket # 34, Ex. J at 60). After receiving ADT's paperwork
reflecting the alarm's installation, defendant issued a change
endorsement increasing to $4 million the limit of coverage for
burglary and theft. (Docket ## 34, Ex. G; 34-29 at ¶ 9). Pacific has
submitted an affidavit from one of its underwriters asserting that it
would not have increased the coverage had it been aware that the back
door was not alarmed. (Docket # 34-20 at ¶ 9).
B. The Reported Burglary and Theft of Prendergast's Collection and Pacific's Denial of Coverage
On September 14, 2007, Prendergast reported to the Rochester Police Department that his storage facility had been burglarized and his sports card collection had been stolen. (Docket ## 34-29 at ¶ 14; 34, Ex. H; 40-24 at ¶¶ 10-11). According to the police report, Prendergast reported that the burglary had occurred sometime between September 9th and 14th and that the burglar must have entered through the back door to his facility because the front door was alarmed. (Docket # 34, Ex. H).
Prendergast subsequently notified Pacific of the theft and submitted a Proof of Loss form to the company, which estimated the total value of the loss at $4 million. (Docket # 34, Ex. I). The Proof of Loss included an inventory consisting of a brief list of six items. The handwritten inventory reads in full: baseball, basketball, football some hockey mostly Topps years 1965-03 200 boxes 25,000 154 baseball 20 basketbal[l] 17 football 9 hockey range 1ó to 34ó 5 million cards ave 20ó 1 million 120 boxes 25,000 75 baseball 25 basketbal[l] 13 football 7 hockey range 35ó to 74ó 3 mill[i]on cards ave 54ó 1,620,000 40 boxes 25,000 28 baseball 7 basketball 3 football 2 hockey 75ó - [$]5 ave $1 doll[a]r card 1 million plus 25 boxes 25,000 625,000 400 book 25-50 pa[ck] 500 ca[rds] or put together 10 boxes 12 50 ave rookies or special ca[ ] 92-93 classic draft pick Fleer McDonald com[m]ons. (Docket # 34-1, Ex. I).
By letter dated February 26, 2008, Pacific denied coverage on the grounds that Prendergast failed to satisfy the policy's protective safeguard condition, failed to document the value of loss and made material misrepresentations concerning both. (Docket # 34, Ex. K).
The policy at issue contained the following relevant terms:
1. Protective Safeguard Required When we issued this policy, we determined the premium based on information you gave us about the burglary and theft safeguards that you maintain, and which is stated in the Protective Safeguards Schedule section of the Declaration of this policy. As a condition of this insurance, you are required to ...