Warehouse Wines and Spirits v. Travelers Property Casualty Company of America
Filing
93
OPINION & ORDER re: 75 MOTION to Amend/Correct Responses to Plaintiff's July 18, 2014 Request for Admissions filed by Travelers Property Casualty Company of America, 52 MOTION for Summary Judgment filed by Trav elers Property Casualty Company of America, 46 FIRST MOTION for Summary Judgment against defendant Travelers Property Casualty Company of America filed by Warehouse Wines and Spirits. For the reasons set forth above, Travelers' m otion for summary judgment is GRANTED and Warehouse Wines' motion for summary judgment is DENIED. Travelers' motion to amend is DENIED. The Clerk of Court is directed to close the motions at ECF No. 46, 52, 75 and terminate this action. (Signed by Judge Katherine B. Forrest on 3/31/2015) (tro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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WAREHOUSE WINES & SPIRITS, INC., :
:
Plaintiff,
:
:
-v:
:
TRAVELERS PROPERTY CASUALTY
:
COMPANY OF AMERICA,
:
:
Defendant.
:
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KATHERINE B. FORREST, District Judge:
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: March 31, 2015
13 Civ. 5712 (KBF)
OPINION & ORDER
On July 23, 2013, plaintiff Warehouse Wines & Spirits, Inc. (“Warehouse
Wines”), a retail seller of wine and liquor, filed this action in the Supreme Court of
the State of New York against Travelers Property Casualty Company of America
(“Travelers”) after Travelers denied Warehouse Wines’ insurance claim for stolen
product. On August 15, 2013, the action was removed to federal court. (ECF No. 1.)
Warehouse Wines alleges that it lost over 4,000 cases of its wine and liquor when
the product was stolen by James Ceseretti, who ran the warehouse in which
Warehouse Wines stored excess inventory. On January 9, 2015, Ceseretti pled
guilty to grand larceny in the second degree for the theft of property from Steven
Goldstein, President of Warehouse Wines, in excess of one million dollars.
Warehouse Wines submitted a claim under its first party property insurance
policy with Travelers for loss of inventory. Travelers denied the claim based on,
inter alia, the “Dishonest Acts” exclusion in the policy, which precludes coverage
where a loss is caused by the dishonest acts of a person “entrusted with the
property”. The parties agree that Warehouse Wines entrusted its wine and liquor
to Ceseretti and his warehouse. As Ceseretti has already admitted guilt to the
theft, there is also no dispute as to a dishonest act occurring. However, there is an
exception to the “Dishonest Acts” exclusion for “property in the custody of a carrier
for hire”. The ultimate question before the Court is whether Ceseretti or whichever
of his two companies that operated the warehouses – Bestway Warehouse &
Transportation, Inc. or Bestway Logistics Transportation, Inc. – falls into the
“carrier for hire” exception. If the “carrier for hire” exception does not apply,
Travelers was within its contractual rights to deny Warehouse Wines’ claim under
the “Dishonest Acts” exclusion.
Before this court are the parties’ cross-motions for summary judgment. (ECF
Nos. 46, 52.) Following the submission of those motions, Travelers filed a motion to
amend its prior responses to Warehouse Wines’ request for admissions. (ECF No.
77.) 1 It seeks to amend admissions where it stated, due to supposed error by
counsel, that it is unclear which of Ceseretti’s companies operated the warehouse
and which transported property. The motion to amend, made after summary
judgment motions have been filed, is denied; but any lack of clarity by Travelers as
to the operator of the warehouse is ultimately irrelevant as the property was simply
not in the custody of a carrier for hire when stolen from the warehouse.
Warehouse Wines responded to this filing with an opposition brief (ECF No. 84) that Travelers
complained “is really an improper sur-reply in opposition to Travelers’ Motion for Summary
Judgment” (ECF No. 85.) Warehouse Wines explained that its own submission of exhibits was
primarily meant to demonstrate that Travelers lacked good cause to make its motion because the
information upon which it relies to justify amendment was in its possession prior to the submission
of its summary judgment motion. (ECF No. 86.)
1
2
Simply put: Ceseretti and his Bestway Warehouse & Transportation
company were conducting business as a warehouse – not a carrier – when the theft
occurred. Warehouse Wines had a written agreement for the warehousing of its
merchandise. There was no time limitation to their storage and the warehouse was
not used as a temporary way station while the goods waited to be transported
elsewhere. The name of Ceseretti’s company included the word “Warehouse.” If
this is not a warehousing operation, what is? Instances of confusion regarding the
similar names of Ceseretti’s two Bestway companies do not create a genuine dispute
of material fact as to the true operator of the warehouse. Warehousing and delivery
were billed separately. James Ceseretti and his mother Barbara Ceseretti, who
handled clerical tasks associated with both Bestway companies, each testified that
Bestway Warehouse & Transportation operated the warehouse while Bestway
Logistics Transportation owned the trucks. Ceseretti stole Warehouse Wines’ wine
and liquor while the goods were in storage at the warehouse – not while they were
in any stage of transport. The warehousing operation was not a carrier for hire;
accordingly, the “Dishonest Acts” exclusion precludes coverage of the loss.
I.
FACTUAL BACKGROUND
A.
The Relationship Between Warehouse Wines and Ceseretti
Plaintiff operates a wine and spirits retail store in Manhattan. Steven
Goldstein, its President, sole officer and only stockholder, employs a strategy of
making large wholesale purchases to obtain discount offers; accordingly, it utilizes
public warehouses to store excess inventory. (Warehouse Wines’ Responsive 56.1
3
Statement ¶¶ 1, 2, ECF No. 55.) In 2008, Goldstein entered into a business
relationship with James Ceseretti to warehouse merchandise at Ceseretti’s new
facility in Hauppauge, New York. Ceseretti ran two companies – Bestway Logistics
Transportation and Bestway Warehouse & Transportation – for which he handled
all operations, paid the rents, paid the employees and taxes, paid vendors and
directed. (Id. ¶ 21.) Although Ceseretti himself testified that Bestway Warehouse
& Transportation was the entity which operated the warehouse, the parties dispute
which of Ceseretti’s two corporate entities operated the warehouse. (Id. ¶¶ 5-8.)
During the course of the business relationship, a portion of inbound shipments from
distributors to the warehouse on behalf of Warehouse Wines were signed for by
James Ceseretti. (Id. ¶ 10.) Typically, Ceseretti himself and Paul Montaldo would
assemble pallets for shipment when Goldstein wanted items removed from the
warehouse to his store. (Id. ¶ 14.)
In addition to storing the product, Ceseretti would deliver product from the
warehouse to Warehouse Wines using trucks registered in the name of Bestway
Logistics Transportation. (Id. ¶ 15.) Barbara Ceseretti, James’s mother, handled
clerical tasks associated with both the warehouse function and delivery function.
(Id. ¶ 16.) Barbara Ceseretti invoiced Warehouse Wines on a monthly basis for the
storage fees on paper bearing the legend “Bestway Logistics Transportation”. (Id. ¶
19.) She invoiced the delivery services on paper bearing the legend “Bestway
Warehouse & Transportation”. (Id. ¶ 20; Sipple Decl., Ex. J.) The two Bestway
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companies share a common bank account and maintained no separate records of
their individual revenues or expenses. (Id. ¶¶ 21-22.)
B.
The Loss
Ceseretti eventually began to come up short with his deliveries to Warehouse
Wines. In February 2011, he was unable to deliver cases of Captain Morgan rum to
Warehouse Wines despite records indicating that there should have been 31 cases
in the warehouse. (Id. ¶ 24.) In November 2011, he was unable to deliver 3 cases of
Dom Perignon although the cases should have been in the warehouse. (Id. ¶ 25.)
By early December 2011, he was unable to deliver a particular Belvedere vodka
although he was supposed to have 60 cases. (Id. ¶¶ 26-27.) Warehouse Wines’
order on December 23, 2011 was short 53 of the 591 expected cases. (Id. ¶ 28.) On
December 27, 2011, Goldstein learned from Mitch Herman, the other major wine
and liquor customer of the Bestway warehouse, that Herman was missing 4,701
cases out of 9,056 for a loss of approximately $700,000. (Id. ¶¶ 30-34.) Ceseretti
assured Goldstein at a meeting the following day that all of his products were ok
except for Jack Daniels liter cases, Johnny Walker Black liter cases and Belvedere
750 ml silver. (Id. ¶ 36.) On January 3, 2012, Goldstein inspected the warehouse
and discovered a loss of approximately 4,000 cases he calculated to be worth
approximately $1,200,000. (Id. ¶ 37.)
On May 23, 2013, James Ceseretti was arrested and charged with the theft of
property belonging to Warehouse Wines and Herman from his warehouse.
Ceseretti, Bestway Logistics Transportation, and Bestway Warehouse &
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Transportation were each indicted in connection with the theft. (Id. ¶ 42.) Count
One of the indictment alleged that each of the defendants “acting in concert and
each aiding the others, on or about and between 2010 and December 22, 2011, in
Suffolk County, New York, stole property from Steven Goldstein and the value of
said property exceeded one million dollars ($1,000,000).” (ECF No. 90).
On January 9, 2015, Ceseretti pled guilty in the Supreme Court of the State
of New York County of Suffolk to grand larceny in the second degree to Count One
of the Indictment. (Id.) In exchange for Ceseretti’s guilty plea, indictments against
the two companies through which Ceseretti conducted business with Warehouse
Wines – Bestway Warehouse & Transportation, Inc. and Bestway Logistics
Transportation, Inc. – were dismissed as being “covered by [Ceseretti’s] plea.”
(Tr. at 11:9-12, ECF No. 90.)
C.
The Insurance Policy
Prior to the theft, Warehouse Wines and Travelers had agreed to a first party
property insurance policy (the “Policy”) which insured Warehouse Wines against
certain risks of direct physical loss to its property. The “Property Floater Coverage”
section of the Policy provided coverage only while the goods were in storage at the
Bestway warehouse, subject to a limit of $4 million and a $25,000 deductible. 2 The
“Transportation Coverage” section of the policy provided coverage while the goods
were in transit by a motor truck carrier, subject to a $60,000 limit and a $1,000
deductible. Both sections of the Policy contain dishonest acts exclusions which read:
In addition, the Policy provided coverage for goods stored at two warehouses unrelated to this
litigation.
2
6
2. We will not pay for a “loss” caused by or resulting from any of the
following:
*
*
*
d. Dishonest acts by you, anyone else with an interest in the property,
your or their employees or authorized representatives or anyone
entrusted with the property, whether or not acting alone or in collusion
with other persons or occurring during the hours of employment.
This exclusion does not apply to property in the custody of a carrier for
hire.
(Sipple Decl. ¶ 25, ECF No. 54.) The term “carrier for hire” is not defined in the
agreement. Black’s Law Dictionary defines “carrier” as “an individual or
organization (such as a shipowner, a railroad, or an airline) that contracts to
transport passengers or goods for a fee.” BLACK’S LAW DICTIONARY (10th ed.
2014).
On April 24, 2012, Warehouse Wines filed its Sworn Statement in Proof of
Loss, stating a loss of 4,095 cases of wine and liquor with a claimed value of
$1,155,480. (Sipple Decl., Ex. S.) The statement asserted that the amount of
insurance in force was “$4,000,000 at Location”, reflecting a claim made under the
“Property Floater Coverage” which applies only to property in storage at the
Bestway warehouse. Warehouse Wines made no claim that its loss occurred while
the property was in transit and subject to the $60,000 limit of the “Transportation
Coverage.” Travelers denied coverage and rejected the Proof in a letter dated
August 6, 2013. (Sipple Decl., Ex. X.)
II.
STANDARD OF REVIEW
Summary judgment may not be granted unless a movant shows, based on
admissible evidence in the record, “that there is no genuine dispute as to any
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material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). The moving party bears the burden of demonstrating “the absence of
a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
On summary judgment, the Court must “construe all evidence in the light most
favorable to the nonmoving party, drawing all inferences and resolving all
ambiguities in its favor.” Dickerson v. Napolitano, 604 F.3d 732, 740 (2d Cir. 2010).
Once the moving party has asserted facts showing that the nonmoving
party’s claims cannot be sustained, the opposing party must set out specific facts
showing a genuine issue of material fact for trial. Price v. Cushman & Wakefield,
Inc., 808 F. Supp. 2d 670, 685 (S.D.N.Y. 2011); see also Wright v. Goord, 554 F.3d
255, 266 (2d Cir. 2009). “[A] party may not rely on mere speculation or conjecture
as to the true nature of the facts to overcome a motion for summary judgment,”
because “[m]ere conclusory allegations or denials . . . cannot by themselves create a
genuine issue of material fact where none would otherwise exist.” Hicks v. Baines,
593 F.3d 159, 166 (2d Cir. 2010) (citations omitted); see also Price, 808 F. Supp. 2d
at 685 (“In seeking to show that there is a genuine issue of material fact for trial,
the non-moving party cannot rely on mere allegations, denials, conjectures or
conclusory statements, but must present affirmative and specific evidence showing
that there is a genuine issue for trial.”).
Only disputes relating to material facts—i.e., “facts that might affect the
outcome of the suit under the governing law”—will properly preclude the entry of
summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see
8
also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986) (stating that the nonmoving party “must do more than simply show that
there is some metaphysical doubt as to the material facts”). The Court should not
accept evidence presented by the nonmoving party that is so “blatantly contradicted
by the record . . . that no reasonable jury could believe it.” Scott v. Harris, 550 U.S.
372, 380 (2007); see also Zellner v. Summerlin, 494 F.3d 344, 371 (2d Cir. 2007)
(“Incontrovertible evidence relied on by the moving party . . . should be credited by
the court on [a summary judgment] motion if it so utterly discredits the opposing
party’s version that no reasonable juror could fail to believe the version advanced by
the moving party.”).
III.
DISCUSSION
There is no dispute as to the existence of an insurance contract wherein
Travelers agreed to “pay for ‘loss’ to Covered Property from any of the Covered
Causes of Loss.” (McGill Decl., Ex. 12.) That policy, however, contains an exclusion
covering loss resulting from the dishonest act of someone entrusted with the
insured property. There is no dispute that Ceseretti stole Warehouse Wines
property that he was entrusted to store in his own warehouse. That fact is made
clear by Ceseretti’s guilty plea. This dispute instead centers on whether the “carrier
for hire” exception to the “Dishonest Acts” exclusion in the insurance contract
between Warehouse Wines and Travelers applies.
It does not. Ceseretti separated the warehouse function and the delivery
function of his operation into two different companies sharing similar Bestway
9
names. Ceseretti billed Warehouse Wines separately for warehousing fees and
delivery services. Since companies transporting goods for a fee are considered
carriers, Warehouse Wines argues that Bestway Logistics Transportation –
Ceseretti’s company that transported goods in its delivery trucks – also operated the
warehouse. They assert that the goods stolen from the warehouse were therefore in
the custody of a carrier. Their argument fails. Warehouse Wines merely relies
upon the use of confusingly similar names to create a triable issue as to the operator
of the warehouse where none exists. James Ceseretti and Barbara Ceseretti both
identified Bestway Warehouse & Transportation as the operator of the warehouse.
That company has “warehouse” in its name and agreed with Warehouse Wines to
store its wine and liquor indefinitely. The company acted like a warehouse in all
respects. Warehouses are not carriers. James Ceseretti stole the goods while they
were in storage at the warehouse – not while they were in any stage of transport.
Accordingly, the “Dishonest Acts” exclusion precludes coverage of the loss and the
carrier for hire exception does not apply.
A.
Dishonest Act Exclusion
Once a plaintiff has established that it sustained a loss to covered property,
the burden shifts to the insurance company to prove that the claimed loss is subject
to an exclusion. See Int’l Paper Co. v. Continental Cas. Co., 35 N.Y.2d 322, 327
(1974). The “Dishonest Acts” exclusion in the contract between the parties bars
coverage where a claimed loss results from a dishonest act by, among others,
anyone entrusted with the insured property. (Sipple Decl. ¶ 25.) Although the
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parties dispute exactly which entity was the custodian of the property at the time of
the theft, it is undisputed that Warehouse Wines entrusted its property to James
Ceseretti and whichever of his companies that operated the warehouse. (See Pl.
Opp’n at 17.)
Courts in New York have held that exclusions for the dishonest acts of
persons to whom the insured entrusts its property are enforceable. See, e.g.,
Superior Steel Studs. Inc. v. Zurich N.A., Inc., 368 F. Supp. 2d 208 (E.D.N.Y. 2005)
(applying the exclusion to bar insurance coverage for theft of steel coils by officers of
the company who had been given the property for processing); Cougar Sport, Inc. v.
Hartford Ins. Co., 737 N.Y.S.2d 770, 771-72 (Sup. Ct. N.Y. Cty. 2000), aff’d, 733
N.Y.S.2d 151, 152 (1st Dep’t 2001) (applying the dishonest acts exclusion to bar
coverage for thefts committed by a warehouseman). In Cougar Sport, the plaintiff
was an importer of children’s clothing who arranged for some of its goods to be
delivered directly to one of several warehouses for storage. Id. at 771-72. When one
of the warehouses sold all of the goods without authority from the plaintiff, the
plaintiff made a claim to its insurer for the loss. The insurer denied the claim based
upon a similar exclusion for dishonest acts as exists here. That court rejected the
plaintiff’s argument that the concept of entrustment should be “limited to receipt by
one who has the power to dispose of the goods, like a consignee, or a merchant who
deals with goods of that type under Uniform Commercial Code § 2–403.” Id. at 774.
It instead found that “entrust” must be given its ordinary meaning, and that the
plaintiff’s surrender, delivery or transfer of possession of its goods to the warehouse
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with confidence that the property would be used for the purpose it intended
amounted to entrustment. Id. at 772-73. Here, the parties admit that Warehouse
Wines entrusted its property to Ceseretti when it directed its suppliers to deliver
excess inventory to his warehouse.
There is also no issue of material fact as to whether Ceseretti and the
warehouse company stole the majority of Warehouse Wines’ lost property.
Travelers presents a slew of evidence pointing to the conclusion that Ceseretti and
the company which operated the warehouse were responsible for the theft.
(Travelers’ Mem. of L. in Supp at 14-20.) Ceseretti’s theft of property from his own
warehouse is exactly the type of action covered by the “Dishonest Acts” exclusion.
Accordingly, Warehouse Wines’ loss was caused by the dishonest acts of
someone “entrusted with the property.” There can be no dispute that Travelers has
met its initial burden of showing that the “Dishonest Acts” exclusion applies to
Warehouse Wines’ claimed loss.
B.
Carrier For Hire Exception
New York law holds that “after an insurer establishes that a policy exclusion
applies, the burden shifts to the policyholder to prove that an exception to that
exclusion applies.” Ment Bros. Iron Works Co., Inc. v. Interstate Fire & Cas. Co.,
702 F.3d 118, 121 (2d Cir. 2012); see also Northville Indus. Corp. v. National Union
Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 621 (1997) (if the insurance company
sustains its burden of proving the application of an exclusion barring coverage, “the
burden shifts to the insured to demonstrate than an exception to the exclusion
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applies”). To avoid summary judgment, Warehouse Wines must demonstrate that
their loss is in fact covered by the insurance policy because its property was “in the
custody of a carrier for hire.”
Ceseretti separated the warehouse function and the delivery function of his
operation into two different companies that shared the common Bestway name and
some common bookkeeping practices. Barbara Ceseretti, the person who handled
the clerical tasks, issued two different sets of bills on two different letterheads for
storage and delivery functions. The parties agree that whichever of James
Ceseretti’s two companies operated the warehouse is, along with Ceseretti himself,
responsible for the theft of the inventory – i.e. that company committed a dishonest
act. (Pl. Opp’n at 17.) Ceseretti exercised complete dominion and control over the
two companies involved in his relationship with Warehouse Wines. He handled all
operations, paid the rent, paid employees and taxes, dealt with trade vendors and
answered to no one other than himself. (Warehouse Wines’ Responsive 56.1
Statement ¶ 21.) However, the parties disagree as to which of the Ceseretticontrolled companies operated the warehouse. The distinction becomes important if
one of the companies can be considered a carrier and the other cannot.
Travelers argues in its briefs that Bestway Warehouse & Transportation
operated the warehouse and that the company’s sole function was warehousing –
and not in transportation. According to Travelers, this function means that the
property was not in the custody of a carrier for hire. Warehouse Wines, however,
creatively asserts that it was in fact the trucking company – Bestway Logistics
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Transportation – that operated the warehouse. Bestway Logistics Transportation
employed drivers, was registered with the US Department of Transportation and
transported Warehouse Wines inventory for a fee. (McGill Decl., Ex. 3.) Its trucks
were registered as of June 30, 2011 as a “common carrier” authorized “to engage in
transportation by motor vehicle, in interstate or foreign commerce.” (McGill Decl.,
Ex. 3, 7.) As Bestway Logistics Transportation was a common carrier, Warehouse
Wines tries to connect that company’s trucking role to Ceseretti’s warehouse
operation to show that the stolen goods were in the custody of a carrier for hire,
even if they were stolen while sitting in a warehouse and not on a truck.
Warehouse Wines explains that “because the operator of the storage facility was
responsible for the custody of Warehouse Wines’ inventory from the time of its
storage until its delivery to the Plaintiff, it was operating as a carrier for hire.” (Pl.
Opp’n at 14.)
Warehouse Wines argues that – at the very least – there is a triable issue of
fact as to the true operator of the warehouse created by Travelers’ response to a
Request for Admission that “[i]t is unclear which of James Ceseretti’s companies
operated the warehouse”. (McGill Decl., Ex. 20 ¶ 42.) Warehouse Wines further
points to Travelers’ internal notes on the theft that describe the “warehouse
operated by Best Way Logistics Transportation Inc” (McGill Decl, Ex. 19) and “a
warehouse operated by Bestway logistics [sic]” (McGill Decl., Ex. 9), as well as a
statement from a Travelers employee referring to the theft “from a warehouse
operated by Best Way Logistics” (McGill Decl., Ex. 19.)
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Warehouse Wines merely relies upon the use of confusingly similar names to
create a triable issue where none exists. Any mistaken impression of Travelers as
to who operated the warehouse is irrelevant to the determination of whether the
company in custody of the property was in fact a carrier. 3 The only other fact
Warehouse Wines relies on to show a genuine dispute as to the operator of the
warehouse is that some storage invoices were issued on Bestway Logistics
Transportation letterhead. (McGill Decl., Ex. 5.) Barbara Ceseretti issued some
warehouse storage bills on the letterhead of Bestway Logistics Transportation, and
some delivery bills on the letterhead of Bestway Warehouse & Transportation.
(Sipple Decl. Ex. J and K.) However, deposition testimony makes clear that the two
company names were transposed for some reason, likely a mistake. 4 At her
deposition, Barbara Ceseretti affirmatively identified Bestway Warehouse &
Transportation as the company that ran the warehouse. 5 James Ceseretti testified
In addition, the instances cited by Warehouse Wines as examples of Travelers identifying Bestway
Logistics Transportation as the company that operated the warehouse are taken out-of-context. In
those examples, Travelers refers to the incorrect Bestway name after Steven Goldstein, President of
Warehouse Wines, gave them the incorrect Bestway name when he was reporting the loss. One note
from a Travelers adjuster, who was documenting his conversation with Goldstein on the day the loss
was first reported, reads: “[Goldstein] stated they are a wine and liquor retailer and the loss involves
cases of liquor that were at a public warehouse, Best Way Logistics Transportation, Inc.” (McGill
Decl., Ex. 19.) Warehouse Wines points to other Travelers documents which repeat the mistaken
Bestway Logistics Transportation name provided to them by Goldstein. Such references to the
incorrect Bestway name by Travelers employees without personal knowledge of which of the two
Ceseretti companies operated the warehouse do not create a genuine dispute of fact as to the
operator of the warehouse.
4 It is little surprise that people might confuse the two similar names. In fact, after soliciting
Warehouse Wines to be a customer of his new warehouse, on September 10, 2008, James Ceseretti
memorialized the new business relationship on letterhead reading a third name: “Bestway Logistics
Transportation & Warehousing”. (Warehouse Wines Responsive 56.1 ¶ 4.) When asked about that
third name, Barbara Ceseretti clarified, “I believe it is to read Bestway Warehouse Transportation,
not Bestway –”. (Sipple Decl., Ex. G at 51:19.)
5 Barbara Ceseretti testified as follows on direct examination by Travelers:
Q. And as you understood it, which company ran the warehouse?
A. Bestway Warehouse and Transportation.
3
15
to the same. 6 James Ceseretti issued checks on the account of Bestway Warehouse
& Transportation to pay rent on the warehouse. (Sipple Decl. Ex. D.) Bestway
Warehouse & Transportation is the company with the word “warehouse” in its
name. Indeed simple logic compels the conclusion that the company which owned
all the trucks (Bestway Logistics Transportation) was responsible for transportation
and the company which did not own the trucks (Bestway Warehouse &
Transportation) was responsible for storage. By arguing that the company with the
trucks also ran the warehouse, Warehouse Wines is unable to account for Bestway
Warehouse & Transportation’s role in the corporate scheme.
Q. Okay. And was it – was one of the companies also running the trucking?
A. The trucks were owned by Bestway Logistics. The name on the title and registration was
Bestway Logistics.
Q. Okay. So – so, as it – as you understood it, Bestway Warehouse and Transportation was
running the warehouse and Bestway Logistics had the trucks?
A. Correct.
(Sipple Decl., Ex. G at 30:16-31:9.)
On cross-examination by Warehouse Wines, she further testified as follows:
Q. Earlier we talked about the role of Bestway Logistics Transportation, and I believe – what
was your take as to what the role of Bestway Logistics Transportation is?
A. The only thing that Bestway Logistics did was supply Bestway Warehouse with trucking
equipment.
Q. And would it transport goods as well?
A. The trucks did. Yes.
(Sipple Decl., Ex. G at 47:23-48:13.)
James Ceseretti testified as follows on direct examination by Travelers:
Q. Okay. Now, this document is on a letterhead of Bestway Logistics Transportation and
Warehousing, Inc. Is that the company that was operating the warehouse out in Hauppauge?
A. No.
Q. Okay. Which company was actually operating the Bestway Warehouse at 100 Marcus
Boulevard in Hauppauge?
A. Bestway Warehouse.
(Sipple Decl., Ex. C at 15:10-15:21.)
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Q. Okay. Maybe I am confused and if it is, I apologize. You had this company, Bestway
Warehouse and Transportation, Inc., that was the entity. It was operating the warehouse; correct?
A. Bestway Warehouse and Transportation, correct.
(Sipple Decl., Ex. C at 31:11-31:19.)
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Warehouse Wines suggests in its briefs that even if Bestway Warehouse &
Transportation operated the warehouse, that entity too is a carrier for hire. It looks
to the federal code to show that, pursuant to 49 U.S.C. § 13102(3), the term “carrier”
means “a motor carrier, a water carrier, and a freight forwarder.” It then goes on to
say that the warehouse was a “freight forwarder” because, pursuant to 49 U.S.C. §
13102(8), the term “freight forwarder” means “a person holding itself out to the
general public . . . to provide transportation of property for compensation . . .”
Finally, it points to 49 U.S.C. § 13102(23) to define “transportation” as including
“services related to that movement, including arranging for, receipt, delivery,
elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling,
packing, unpacking, and interchange of passengers and property.” Through this
linking together of definitions, it argues that Bestway Warehouse & Transportation
was a carrier because it had a role in certain “services related to that movement” of
inventory stored at the warehouse.
Irrespective of the applicability of these definitions, Warehouse Wines’
argument is far too removed from the reality of the indisputable facts. Warehouse
Wines’ frequent amalgamation of the storage and transportation roles of Ceseretti’s
companies in its briefs do not reflect the reality of two companies which billed
Warehouse Wines for two different functions. After soliciting Warehouse Wines to
be a customer of his new warehouse, Ceseretti drew up a letter on the letterhead of
Bestway Logistics Transportation & Warehousing (see footnote 3 for the discussion
on this third name) which read: “It is understood that Bestway Logistics
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Transportation & Warehousing will be warehousing your merchandise at our
facility located at 100 Marcus Boulevard, Hauppauge, NY 11788. For this service
Bestway will be compensated at the agreed rate of .15 per case, and a .10 in/out
charge.” (Sipple Decl., Ex. E.) In other words, the agreement between those parties
was for warehousing. Furthermore, it was an agreement for indefinite storage – not
short-term storage at a way station between transports. A warehouser is not
typically a carrier. See, e.g., Nippon Fire & Marine Ins. Co., Ltd. v. Skyway Freight
Systems, Inc., 45 F.Supp.2d 288, 292 (S.D.N.Y. 1999) (distinguishing between a
warehouseman and a common carrier by finding that the defendant did not convert
from a common carrier to a warehouseman when it decided to suspend delivery and
hold goods in storage incidental to carriage).
In addition, the fact that Ceseretti also transported goods for Warehouse
Wines under another entity does not negate the undisputed fact that he stole the
property when it was secured in his warehouse. The property must be “in the
custody of a carrier for hire” at the time it is lost in order for the exception to apply.
Determining who had custody necessarily includes a temporal element. At the time
of the theft, the wine and liquor was in storage at the warehouse and was not in
transit. Warehouse Wines argues that the insurance language does not limit the
exclusion to property transported by a carrier for hire, but applies to property in the
custody of a carrier for hire. (Pl. Opp’n at 18.) Thus, it argues that the exception is
broader than the period of time the property is in transit. While true that the
exception could apply to a carrier when goods are not in transport (e.g. when UPS is
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processing a shipment in its store), it does not apply to a company whose job was to
store goods.
There is no dispute of material fact that James Ceseretti operated the
warehouse from which he stole over one million dollars of wine and liquor goods
under the name Bestway Warehouse & Transportation. That entity, unlike
Bestway Logistics Transportation, did not own trucks. It was responsible for
warehousing the goods and cannot be construed to be a carrier for hire.
IV.
CONCLUSION
For the reasons set forth above, Travelers’ motion for summary judgment is
GRANTED and Warehouse Wines’ motion for summary judgment is DENIED.
Travelers’ motion to amend is DENIED.
The Clerk of Court is directed to close the motions at ECF No. 46, 52, 75 and
terminate this action.
SO ORDERED.
Dated:
New York, New York
March 31, 2015
_________________________________________
KATHERINE B. FORREST
United States District Judge
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