An Experienced Adjuster Would Have Recognized That Jeweler's Inventory Exists to be Sold: Diminution in Value of Stock of Jeweler is a Direct Physical Loss Personal Property Not Damaged is Fraud.

• Author: Zalma, Barry
• Position: ON MY RADAR

* Before the court was a Motion for Partial Summary Judgment filed by defendant Great American Insurance Company of New York ("Great American") seeking dismissal of plaintiff's claims of insurance coverage for consequential loss. In Nederland Jewelers LLC v. Great American Insurance Co Of New York, No. 2:21-CV-01431, United States District Court, W.D. Louisiana, Lake Charles Division (January 11, 2022) the question was whether Rolex watches recovered from thieves lost value because they could not be sold as new Rolex watches.

FACTUAL BACKGROUND

Nederland claimed against a property and inland marine insurance policy issued by defendant Great American. Nederland owns and operates a jewelry store in Lake Charles, Louisiana. An armed robbery occurred at the store on June 3, 2020, in which the four suspects smashed display cases and took several Rolex watches, among other items.

Law enforcement arrested the suspects soon after the robbery, recovering all but two of the watches. Nederland then filed a claim under its policy with Great American, seeking to recover for the missing watches and for the loss of value to the Rolex watches that had been returned as well as those that had remained in the display case. Great American made partial payment but claimed insufficient information to determine coverage for some of the amounts.

Nederland then filed suit in Louisiana raising claims for breach of insurance contract and bad faith under Louisiana law. Relevant to this motion, Nederland alleges that "[a]s a result of this robbery, the damaged watches can no longer be sold as Rolex products and have lost their original value due to damages sustained."

It sought damage for "loss of use" and "depreciation." Great American moved for partial summary judgment on Nederland's entitlement to coverage for consequential damages, asserting that such losses are not covered under the policy

APPLICATION OF LAW

Louisiana law provides that an insurance policy is a contract and that its provisions are construed using the general rules of contract interpretation in the Louisiana Civil Code. The words of the policy must be given their generally prevailing meaning and interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.

While the insured must show that a claim falls within a policy's terms, the insurer bears the burden of showing that an exclusion applies. Ambiguities in the policy, including within an...