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Vam Check Cashing Corp v. Federal Insurance Company

November 7, 2012

VAM CHECK CASHING CORP., PLAINTIFF-APPELLEE,
v.
FEDERAL INSURANCE COMPANY, DEFENDANT-APPELLANT.



The opinion of the court was delivered by: Gerard E. Lynch, Circuit Judge:

11-2644-cv

VAM Check Cashing v. Federal Insurance Company

Argued: August 23, 2012

Before: KATZMANN, WESLEY, and LYNCH, Circuit Judges.

Plaintiff insured contends that a criminal scheme perpetrated at its store constituted "robbery" within the meaning of its crime insurance policy which the defendant insurer issued. The district court (Jack B. Weinstein, J.) correctly ruled that the policy's definition of "robbery" is ambiguous, that the insured offered a reasonable interpretation of the policy permitting coverage, and that the insurer was therefore liable for the loss.

AFFIRMED.

This case requires us to decide whether a particular criminal act constituted "robbery" within the meaning of a crime insurance policy. Because we agree with the district court that the policy is ambiguous and that the insured offers a reasonable interpretation of the policy permitting coverage, we conclude that the insurer is liable under the policy and therefore affirm the district court's grant of summary judgment to the insured.

BACKGROUND

Plaintiff-appellee VAM Check Cashing Corp. ("VAM" or "the insured") operates a number of check cashing stores in the New York City area, including Pine Check Cashing in Brooklyn, New York. VAM purchased a crime insurance policy ("Policy") from defendant-appellant Federal Insurance Company ("Federal" or "the insurer"). During the pendency of the Policy, a group of criminals successfully tricked a Pine Check Cashing employee, Romanita Vazquez, into turning over $120,000 in cash to them. The parties do not dispute the facts of the scheme, which are detailed principally in Vazquez's three-page statement prepared after the crime.

Some time before noon on September 2, 2009, Vazquez received a phone call from a woman claiming to be the wife of VAM's owner. Over the course of a wide-ranging chat, the caller told Vazquez that her husband was opening three new check cashing stores, including one in Manhattan that very day. During this call, Vazquez received a second call from another woman who identified herself as the manager of the newly opened Manhattan store. The second caller said that a government official had arrived at the new store to collect a tax bill, but because the store had just opened, it had insufficient cash on hand to pay the bill. Vazquez relayed this information to the original caller, who told Vazquez that a man named Windfrey would come to Pine to collect the $100,000, and that she would be able to identify him by his use of a code number. Later, the original caller increased the amount to $120,000, and Vazquez placed that amount in a box.

Eventually, a man who identified himself as Windfrey came into the store. He offered the pre-arranged code number, and Vazquez buzzed him into the back of the store. She then handed him a box containing the $120,000 in cash, and he left. As noted by the district court, Vazquez testified at her deposition that she "never felt threatened by Mr. Windfrey," and at the time, "she did not believe he was dangerous or a thief." Vam Check Cashing Corp. v. Fed. Ins. Co., 787 F. Supp. 2d 264, 267 (E.D.N.Y. 2011).*fn1

Over the course of the afternoon, Vazquez did not hear anything further from the owner. She gradually grew suspicious and eventually called the police that evening. The police never caught the perpetrators or recovered the money; they advised VAM that the scheme was the work of a sophisticated group of criminals that had perpetrated similar scams across the country.

After the loss, VAM made a claim under the Policy, asserting that the crime was covered under the Policy's definition of "robbery." In January 2010, however, Federal gave final notice that it denied the claim. Further negotiations between the parties to settle the claim were unsuccessful, and VAM then sued in the United States District Court for the Eastern District of New York (Jack B. Weinstein, District Judge) for breach of contract, claiming damages of $112,500 (the $120,000 loss less the Policy's $7500 deductible). The facts being essentially undisputed, the parties filed cross motions ...


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