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Winking Group, LLC v. Aspen American Insurance Co.

United States District Court, S.D. New York

January 18, 2018

WINKING GROUP, LLC, Plaintiff,
v.
ASPEN AMERICAN INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, UNITED STATES DISTRICT JUDGE

         Plaintiff Winking Group, LLC sues Defendant Aspen American Insurance Company (“Aspen”), alleging breach of an insurance contract. Defendant moves for summary judgment under Federal Rule of Civil Procedure 56. Defendant's motion is granted.

         I. BACKGROUND

         The facts below are drawn from the parties' Rule 56.1 Statements and other submissions on this motion, and are construed in Plaintiff's favor as the non-moving party. See Wright v. N.Y. State Dep't of Corr., 831 F.3d 64, 71-72 (2d Cir. 2016). The following facts are undisputed.

         On July 20, 2001, Plaintiff leased the premises underlying this action -- 75 East Broadway -- to Ming Dynasty, Inc., which then sub-leased it to East Market, Inc. East Market occupied the premises with Plaintiff's knowledge and consent from 2009 to early January 2015. Plaintiff admits that it “initially entrusted the subject premises to East Market Restaurant.”

         In 2014, Ming Dynasty initiated collection proceedings against East Market for nonpayment of rent. The parties agreed to a Stipulation of Settlement, whereby East Market was to vacate the premises no later than January 10, 2015. On or around January 10, 2015, the premises were “posted” (i.e., a notice of eviction was posted on the door of the premises), and East Market was evicted. After the eviction notice was posted, Plaintiff did not retrieve the keys to the property, and it did not change the locks until January 23, 2015.

         Also around January 10, 2015, the premises were vandalized. On January 15, 2015, Bruce Xi, the property manager, told the New York City Police Department that East Market caused the damage to the premises.

         On January 23, 2015, Plaintiff filed a Property Loss Notice (i.e., an insurance claim) with Aspen to recover for the damage. During Aspen's investigation of Plaintiff's claim, Plaintiff's representatives told Aspen's insurance adjuster, Todd Ballot, that East Market caused the damage to the premises. Plaintiff's representatives made similar statements under oath. Jing Shaw, the superintendent, testified that he witnessed and video recorded the damage; he further testified that he saw four men “bringing the things back and forth” and “breaking stuff.” Shaw stated, “I don't know, ” when asked whether he knew any of the four men. There were no signs of forced entry, and therefore, whoever vandalized the premises likely had a key. Xi testified that only East Market had access to the restaurant. Aspen's insurance adjuster, Todd Ballot, stated in his affidavit that, “at the time of [his] first inspection . . . the premises were secure; meaning the first-floor door adjacent to the sidewalk of the premises was closed and locked.”

         On August 12, 2016, Aspen denied Plaintiff's insurance claim based on the “entrustment exclusion” in its insurance policy. The provision states in relevant part:

         2. We will not pay for loss or damage caused by or resulting from any of the following:

h. Dishonest or criminal act by you, any of your partners, members, officers, managers, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose:
(1) Acting alone or in collusion with others; or
(2) Whether or not occurring during the hours of employment.

         This exclusion does not apply to acts of destruction by your employees (including leased employees); but theft by employees (including leased ...


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