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Cargo Insurer Must Cover Stolen Shipment, Skincare Co. Says

A skincare company said a Travelers unit must cover its losses for goods that were stolen while stationed at a loading dock, telling a New Jersey federal court that its policy was expressly designed to insure cargo along the entire transportation chain.

Global Beauty Care Inc. said Friday that Travelers Property & Casualty Co. of America is relying on an “entangled,” overly technical interpretation of a marine cargo policy to deny coverage for stolen goods that were on a loading dock but not yet unloaded into a warehouse.

Travelers’ coverage position goes against New Jersey’s reasonable expectations doctrine, GBC said, because the insurer represented its policy as one that covers cargo shipments “throughout the entirety of their transportation.”

“The insured had no reasonable expectation that a gap in coverage would somehow exist between arrival of the intermodal container to its loading dock and actual unloading of that container into the warehouse,” GBC wrote in a motion for summary judgment it filed Friday but has since agreed to withdraw without prejudice and file at a later date.

Michael A. Gorokhovich of Gorokhovich Insurance & Commercial Litigation LLC, counsel for GBC, told Law360 the substance of his side’s brief won’t change upon refiling, but that the sides had agreed to exchange briefs in private first. Gorokhovich said he expects his side to file in around 60 days.

GBC sued Travelers for breach of contract in New Jersey state court in May 2021, saying the insurer refused to cover it for the theft incident that occurred at its loading dock in February of that year. The sparsely detailed complaint was removed to federal court the next month.

In its motion for summary judgment Friday, GBC went into greater detail about the incident and its policy with Travelers. The skincare company pointed to policy endorsements that were designed to add “overland transportation” and “processing/warehouse” coverage for its cargo shipments.

The existence of those coverage sections would lead any reasonable policyholder to think it was covered for losses that occurred during any point of a cargo shipment’s journey, including when it’s docked but not yet unloaded, GBC said.

New Jersey’s reasonable expectations doctrine holds that when an insurer’s “entangled and professional interpretation” goes against an average policyholder’s reasonable interpretation of coverage, the latter view prevails, according to GBC.

If Travelers wanted to ensure a “peculiar singular scenario” like cargo being temporarily stored on loading docks was exempted from coverage, it should’ve included an exclusion to that effect, GBC said.

“The carrier, however, chose not to say so directly, and instead used language exalting every possible permutation of how the product is covered at every step,” the skincare company said.

The processing/warehouse endorsement specifically extends coverage to cargo that’s temporarily detained in “processing locations,” GBC noted, citing policy language. That term was left undefined in the policy, GBC said. The skincare company said it’s “simply unfathomable” that a reasonable insured wouldn’t expect its loading docks to be included as a covered “processing location.”

The term’s dictionary definition and its common usage in the transportation industry both lend support to GBC’s interpretation, the skincare company argued.

“If ‘receiving,’ ‘counting,’ ‘checking,’ ‘unloading’ are all commonly understood parts of the warehouse ‘processing’ of the products which arrive to the warehouse loading dock, the loading dock where all this occurs is a clear and unambiguous ‘processing location,’ which is equally clearly and unambiguously covered by the policy,” GBC said.

Representatives of Travelers declined to comment on GBC’s motion.

Global Beauty Care is represented by Michael A. Gorokhovich of Gorokhovich Insurance & Commercial Litigation LLC and by Harry A. Cummins of Wilkofsky Friedman Karel & Cummins LLP.

Travelers is represented by Rachel R. Hager and Brendan M. Wengerter of Finazzo Cossolini O’Leary Meola & Hager LLC.

The case is GBC Care Inc.v. Travelers Property Casualty Company of America, case number 2:21-cv-13097, in the US District Court for the District of New Jersey.

–Editing by Nick Petruncio.

Update: This story has been updated to include comments from GBC’s counsel explaining the company’s decision to withdraw and refile its motion.

For a reprint of this article, please contact reprints@law360.com.

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