Opinion
97 Civ. 6324 (DFE).
March 6, 2001
OPINION AND ORDER
When Magistrate Judge Grubin left the bench in February 2000, this case was reassigned to me. On August 23, 2000, I heard oral argument on Defendant's voluminous motion for summary judgment. Both sides agreed that any trial would be before me without a jury. Plaintiffs stated that, at a trial, they would call only four live witnesses, each of whom has submitted a detailed Statement ("St.") under penalty of perjury. (Pl. Exhs. A, B, C, D.) On September 8 and 15, the parties made post-argument submissions. For the reasons set forth below, I grant Defendant's motion for summary judgment.
FACTUAL BACKGROUND
This marine cargo case comes to our Court under both our admiralty jurisdiction and our diversity jurisdiction. The Plaintiffs are a Delaware corporation and an Illinois corporation, both having their principal place of business in Iowa. They used an Iowa insurance broker (Mark Schwab) to negotiate with Defendant, a New York insurance company.
In January 1992, Schwab sent Defendant an application on behalf of Plaintiffs seeking an ocean cargo insurance policy. See Pl. Exhs. B-2, B-3. In March 1992, Defendant issued an Ocean Marine Open Cargo Policy. See Pl. Exh. B-6, which included the following pertinent Clauses (with my emphasis):
7. Shipments are insured while in transit by metal self-propelled vessels and connecting conveyances . . . .
13. This insurance attaches from the time the goods leave the Warehouse and/or Store at the place named in the policy for the commencement of the transit and continues during the ordinary course of transit, including customary transhipment, if any, until the goods are discharged overside from the overseas vessel at the final port. Thereafter the insurance continues whilst the goods are in transit and/or awaiting transit until delivered to final warehouse at the destination named in the policy or until the expiry of 15 days (or 30 days if the destination to which the goods are insured is outside the limits of the port) whichever shall first occur . . . .
40. (a) It is a condition of this insurance that the Assured is bound to declare to [its broker] for transmission to underwriters as soon as practicable after it is known to the Assured, each and every shipment coming within the terms hereof, whether arrived or not, underwriters being bound to accept same. . . . [Elsewhere, in an endorsement, the parties agreed that the reports would be made monthly.] It is also agreed that this insurance shall not be prejudiced by any unintentional delay or omission in reporting hereunder or any unintentional error in the amount or the description of the interest, vessel or voyages, if prompt notice is given to these underwriters as soon as said delay and/or omission and/or error becomes known to the assured. Should the Assured wilfully fail to report shipments covered by this policy, then the policy as to all subsequent shipments shall, at the underwriter's option become null and void. (b) Underwriters are entitled to premiums, at rates as agreed, on all risks covered herein whether reported or not. (c) Underwriters shall have the privilege, at any time during business hours, to inspect the records of the Assured as respects shipments coming within the terms of this policy. This privilege shall prevail as long as this policy shall remain in force and for twelve (12) months thereafter.
There were two annual renewals of this policy; the rate per shipment remained the same, but the Annual Minimum and Deposit Premium was increased yearly, from $1,000 to $2,000 to $5,000, as the number of declared shipments increased. See Strulowitz St. ¶ ¶ 29, 31. The 1994 renewal policy (effective for the year beginning 1/13/94) is Exh. A to the Complaint.
Plaintiffs entered into a five-year contract with Severonickel, a Russian company that reprocessed scrap metal into pure metals such as cobalt or nickel. The contract was known as the Tolling Agreement, presumably because Severonickel was charging a toll for its services in reprocessing the metal. The original version of the Tolling Agreement was "made the 8th day of April, 1992 commencing May 1, 1992." This is Pl. Exh. B-1 (4 pages long). A more detailed version was "dated as of November 1, 1993." This is Def. Exh. 3 (13 pages long). Pursuant to both versions, Plaintiffs shipped scrap metal from the United States to Murmansk CIF, and Severonickel shipped pure metal from Russia to Rotterdam CIF. The more detailed contract clarified that, from the time Severonickel received the scrap metal until it delivered the pure metal to Rotterdam, (a) all risk of loss, theft or destruction of the metal would be on Severonickel, and (b) Severonickel "shall, at its expense, keep all [of the metal] insured . . . against all reasonably insurable risks which can be insured against at standard rates." (Def. Exh. 3 at § § 7.1, 7.2.) It is undisputed that Severonickel did procure and keep such insurance.
It is also undisputed that, as a general practice, Plaintiffs would keep the pure metal in Rotterdam until they could find one or more buyers for it. (Schwab Depo. at 42.) The buyers were sometimes in Europe, sometimes in Japan, and many times in the United States. (Boelen St. ¶ ¶ 5, 19, 21-24.)
Defendant's Exhibit 8 shows all of the declarations made by Plaintiffs pursuant to Clause 40(a) concerning shipments covered by the policy issued by Defendant. The exhibit is 48 pages long, although 11 pages are duplicates. It shows well over 100 separate marine voyages that carried cargo for Plaintiffs. Page 1 declares a shipment in February 1992. Page 40 declares several shipments in May and June 1994, including the two involved in the case at bar. Page 48 declares several shipments in December 1994. Many of the declared shipments are from the United States to Monchegorsk, Russia, the location of Severonickel. Many of them are from Rotterdam to the United States. But not a single declaration mentions a shipment from Russia to Rotterdam (or from Russia to anywhere). Yet it is undisputed that there were 15 shipments of pure metal from October 1992 to March 1994 from Russia to Rotterdam, made by Severonickel pursuant to its Tolling Agreement with Plaintiffs.
When the pure metal was cobalt, Severonickel made it into ingots weighing about 30 pounds each. The ingots "would be shipped in wooden Russian built boxes, with steel corners and hinges and on steel pallets, which weighed about 700 to 800 pounds empty. The cobalt would be inserted into the boxes so that a total weight of approximately 3500 kilos or 7800 pounds of cobalt ingots would be in each box. Those boxes would then be welded shut and secured with seals on the box, put on by Severonickel. . . ." (Strulowitz St. ¶ 32.) The Russians would put their banding around the box so that its flip lid would be secured with the banding and a seal made of lead. (Strulowitz Depo. at 29-32, 51.)
These large boxes were not themselves containerized during the voyages from Russia to Rotterdam. Plaintiffs concede that, on one of the earlier of those voyages, "some ingots of cobalt . . . which amounted to a few hundred pounds" were missing "as a result of damage to the boxes in the hold." (Strulowitz St. ¶ 30.) Plaintiffs do not say whether the Russian seals broke on that occasion. Apparently Severonickel gave Plaintiffs a credit for those missing ingots, and Plaintiffs did not notify Defendant about the incident.
The fifteenth Russia-to-Rotterdam shipment is involved in the present lawsuit. In March 1994, Severonickel shipped 13 wooden boxes from Monchegorsk to Rotterdam. Each box was supposed to contain ingots of pure cobalt. Vitaly Tikhomirov was an employee of Severonickel. His Statement says as follows. Severonickel loaded each wooden box, weighed each box, and welded each box shut. In addition, there was "a seal put on by the Russian customs authority." (St., ¶ 6.) Severonickel transported the 13 boxes on tractor trailers, under armed guard, 50 miles to the Port of Murmansk, where the 13 boxes were immediately loaded into the hold of a Russian-flag vessel. He concedes that "It was not my custom and practice to accompany the shipments on every occasion to Murmansk, but I am fully familiar with the method . . . ." (St. ¶ 10.)
After a 9-day voyage, the Russian ship arrived in Rotterdam on March 28, 1994. At the time, Peter Boelen was an employee of International Shipping and Distribution Spijkenisse B.V. ("ISD"). Boelen's Statement says as follows, especially at ¶ ¶ 27-28. The 13 boxes were immediately transferred by truck from the Russian ship to the ISD warehouse in Rotterdam. None of the 13 boxes was weighed in Rotterdam, but their seals were intact, and they showed no signs of tampering.
The 13 boxes remained in the IDS warehouse for almost two months, while Plaintiffs determined which customers needed cobalt, and in what quantities. Plaintiffs then determined that 12 of the boxes would go to Howmet Corporation in Dover, New Jersey, a customer that had an annual contract with Plaintiffs. On May 26, ISD loaded ¶ boxes into a container, sealed it, and delivered it by truck to the ocean carrier PACIFIC. On June 6, ISD loaded ¶ more boxes into a second container, sealed it and delivered it to the ocean carrier CHO YANG MOSCOW.
The two different ships then transported the two containers to the Port of Newark, where they were delivered (about two weeks apart) to the Global Terminal warehouse. Plaintiffs were upset and annoyed that Global Terminal held each of the containers for several days before releasing it. (Strulowitz St. ¶ ¶ 39, 41-42.) The first container was held at Global from June 10 to June 16, when Hart Transportation trucked it from Newark to Howmet's plant in Dover, New Jersey. The ISD seal on the container remained intact from the Rotterdam warehouse to Howmet's plant. (Pl. Mem. at p. 6.) The next morning, Howmet opened the sealed container; inside, each of the ¶ boxes was in its original sealed condition, with no apparent tampering. (Pl. Exh. B-24.) But one of the boxes was much lighter than it was supposed to be (too light by 1151 kilograms). Howmet reported this discovery to Plaintiffs on that day, June 17, 1994.
The second container was held at Global Terminal from June second container, drove it a short distance to a weighing station, and determined that its weight was also light. Hart then proceeded to deliver it to Howmet. Also on July 5, Howmet advised Plaintiffs that the second container had the exact same problem as the first. Once again, the ISD seal on the container remained intact from the Rotterdam warehouse to Howmet's plant. (Pl. Mem. at p. 7.) Inside the sealed container were six sealed boxes and, again, one of the boxes was too light (this time by some 2, 862 kilograms). Plaintiffs advised Howmet to keep this box unopened. (Strulowitz St. ¶ ¶ 41-44, and Pl. Exh. B-24.)
At this point, the Plaintiffs were operating under the assumption that the two light boxes actually contained cobalt. On that assumption, the first loss would be about $50,000 and the second loss would be about $150,000.
Soon after the discovery of the first loss, Plaintiffs "were seriously considering" not reporting it to Defendant, because "I was really very concerned about the possibility of losing the insurance program of [Defendant] Marine, which had offered broader coverage than we had been able to find anywhere else, such as inland coverage in Russia and in warehouses in Rotterdam for no specific identifiable [extra] premium." (Strulowitz St. ¶ 40.)
After the discovery of the second loss, at a time when Plaintiffs assumed the combined loss was about $200,000, their principal, Mr. Strulowitz, had their original broker write to their new broker as follows on July 11, 1994:
[T]he insured wants us to put Mutual Marine on notice that he may be submitting a claim to them. However, he doubts he will need to do so because he indicated to me there are two others who appear to have primary responsibility for these shortages and he anticipates being made whole by one or both of them.
(Pl. Exh. B-28, emphasis in original.)
One of the "two others" was Severonickel. About two weeks later, Plaintiffs discovered information that pointed even more strongly to Severonickel: the first of the two "light" boxes contained no cobalt whatsoever, and instead roughly one ton of scrap iron. (Pl. Exh. B-25.) The same proved to be true of the second "light" box; it was opened in November 1994 in the presence of a representative of Defendant, and it contained roughly one ton of scrap iron. (Strulowitz St. ¶ 44.) Since the two boxes contained no cobalt at all, the losses were approximately $97,000 on the first shipment and $187,000 on the second shipment.
Pursuant to the Tolling Agreement, § § 7.1 and 7.2, Severonickel was responsible for "all risk of loss, theft or destruction of the metal" from the time it received the scrap at the Port of Murmansk, and throughout the period when it reprocessed the scrap into pure metal, and until the Russian ship delivered the pure metal to Rotterdam. The evidence overwhelmingly suggests that the theft occurred at the Severonickel plant. First. The seals, with Severonickel's name on them, were unbroken on each of the wooden boxes when they arrived at Howmet in Dover, New Jersey. (Pl. Exhs. B-24, B-27.) Second. The two "light" boxes were each filled with roughly a ton of scrap iron. Plaintiffs rely on Mr. Tikhomirov's Statement, at ¶ 14: "I have had the opportunity of looking at some of the uniform scrap pieces and can state that this type of uniform industrial scrap is not available in this Arctic Region." Yet it seems to be undisputed that the Severonickel plant was continually receiving huge amounts of scrap metal from other countries. In the same paragraph, Mr. Tikhomirov says that "if organized crime wanted and could steal this [cobalt], they would never have bothered to substitute iron for cobalt." On the other hand, if employees of Severonickel wanted to embezzle the cobalt, and get it out of the plant, they would have a strong motive to substitute with cheaper metal, so that the shortage of cobalt would not be noticed for many days.
As will be discussed later in more detail, Plaintiffs did not arrange for any weighing in Rotterdam of the 13 boxes which arrived there in March 1994, and did not arrange for any inspection of their contents in Rotterdam. This weakened Plaintiffs' otherwise strong case against Severonickel, because it created some doubt, a slight possibility that the theft occurred in Rotterdam, or at a later point. On the other hand, the lack of inspection and weighing hopelessly weakened any case against the Rotterdam warehouse, because Plaintiffs could not prove that the boxes entered Rotterdam carrying the cobalt in the quantities stated by Severonickel.
In any event, Plaintiffs say they got no satisfaction from Severonickel or its insurance company. They continued to do business with Severonickel for about two more years, but they now made sure that there was an inspection and weighing in Rotterdam. This revealed some later shortages, and Severonickel gave Plaintiffs a credit for those. (Strulowitz St. ¶ 33.)
LEGAL DISCUSSION
It is undisputed that the policy sued on is an all-risk, open marine cargo policy, covering ocean transit. It is also undisputed that the policy is a maritime contract within our Court's admiralty jurisdiction, and that admiralty law is applicable to the determination of the issues presented. See Kossick v. United Fruit Co., 365 U.S. 731, 735-36, 81 S.Ct. 886, 890 (1961).
"An open policy of ocean marine insurance . . . is intended to cover the business merchandise in general of the insured while in transit during the term of the policy and depends on declarations from the insured to notify the insurer of the shipments arising thereunder." John Jovino Co., Inc. v. Fireman's Fund Ins. Co., 1993 A.M.C. 53, 63 (S.D.N Y 1992) (emphasis added), aff'd, 990 F.2d 624 (2d Cir. 1993) (table) Plaintiffs' brief, at p. 16, says that this "quotation is nothing more than a general statement of law concerning the concept of an open policy of ocean insurance, which concept is not in dispute." Plaintiffs rely on the following portion of the policy's Clause 40(a):
. . . It is also agreed that this insurance shall not be prejudiced by any unintentional delay or omission in reporting hereunder or any unintentional error in the amount or the description of the interest, vessel or voyage, if prompt notice is given to these underwriters . . . .
Plaintiffs have not clearly shown the date or contents of any such notice. They concede that none was made until after they discovered the loss. That by itself would not be determinative, but what is breathtaking is the scope of the allegedly "unintentional error[s]," stretching back for two years before the loss. Even today, Plaintiffs cannot seem to decide what amended declarations they would like to make; instead, they offer two alternative arguments, which I shall now discuss.
Alternative #1. Plaintiffs argue that what they intended to declare were several huge "round trips." Their brief, at p. 16, says, "Defendant's underwriters . . . clearly knew that the shipments were to be from the United States to Russia and back from Russia to the United States."
This breezy generalization does not accurately describe the shipments. The following can be seen by analyzing Plaintiffs' declarations (Def. Exh. 8), the bills of lading (Def. Exh. 9), and the Boelen St. (Pl. Exh. D at ¶ ¶ 14-27). In June, August and September 1992, Plaintiffs made their first shipments of scrap metal to Monchegorsk, on seven different ships leaving from the United States and Canada. Once the scrap metal arrived in Monchegorsk, it was no longer "in transit." The risk of loss passed to Severonickel. The title to the metal remained with Plaintiffs, but Severonickel exercised dominion and control over the metal, and drastically changed the nature of the "goods" by reprocessing them, recovering pure metal. At that point, the title to the tailings passed to Severonickel. (Def. Exh. 3, the Tolling Agreement, § 7.1.) I will assume that, as soon as the pure metal was formed into ingots, all of the ingots were then loaded onto the next available Russian ship and shipped out to Rotterdam.
The first Russia-to-Rotterdam shipment was in October 1992, and carried six boxes of cobalt. (Boelen St. ¶ 14.) Do Plaintiffs contend that this shipment was a continuation of one and only one of the seven shipments from North America to Monchegorsk? or a "continuation" of all seven? Plaintiffs have not made any such showing. In any event, each Russia-to-Rotterdam shipment was separate and distinct from any of the shipments from North America to Monchegorsk. The nature of the goods was different, and so was the value.
When the pure metal ingots were delivered to Rotterdam, they were no longer "in transit." At this point, the risk of loss passed back to Plaintiffs. They exercised dominion and control over the ingots. And a significant number of the ingots did not go on any further ocean shipment. For example, in June 1993, 10 boxes of cobalt were delivered to Rotterdam, and Plaintiffs sold them there to a London customer named Wogen Resources. In September 1993, 13 boxes of cobalt were delivered to Rotterdam, and Plaintiffs sold ¶ of them there to a Rotterdam customer named JEWO Metal Company. On December 1, 1993, 15 boxes of cobalt were delivered to Rotterdam, and Plaintiffs sold ¶ of them there to Wogen Resources. On December 3, 1993, 14 boxes of cobalt were delivered to Rotterdam; at Plaintiffs' direction, these ingots were cut into various shapes, repacked into drums, and "kept until Sovereign [Plaintiffs] indicated where they were to be sent." (Boelen St. ¶ ¶ 19, 21-23.)
As previously mentioned, the fifteenth Russia-to-Rotterdam shipment arrived in March 1994. It included pure nickel, which Plaintiffs sold in Rotterdam to JEWO Metal Company. It also included 13 boxes of cobalt. One of those was apparently sold to JEWO or another European customer. The other 12 were shipped to Howmet, but on two different vessels. It would seem that Plaintiffs assert that, somehow, both of those vessels were on the third leg of a single "round trip" that began months earlier in the United States.
I find that the "round trip" theory simply does not fit the undisputed facts. It is the only theory that would have Defendant's insurance policy cover a theft occurring in the Monchegorsk plant (on the notion that the metal was still "in transit" even while it was being reprocessed from scrap to pure ingots). Obviously this is why Plaintiffs are pressing the "round trip" theory. But plaintiffs cite no precedent for reading an open marine cargo policy in this "round trip" fashion, let alone doing so by amending the declarations retroactively for two years.
Alternative # 2. As an alternative to the "round trip" theory, Plaintiffs argue that they intended to declare each of the shipments from Russia to Rotterdam. They could have made such declarations; those shipments had primary coverage from insurance obtained by Severonickel, and therefore Plaintiffs could have paid the contingency rate (which would have worked out to about $500 per shipment). The problem is that the case at bar involves the 15th such shipment, and Plaintiffs did not declare a single one of them, even though these 15 shipments occurred over a period of time from October 1992 to March 1994, during which the Defendant twice renewed the policy. In these circumstances, it would be utterly unjust to hold that these 15 omissions could constitute an "unintentional error" within the meaning of Clause 40(a). Plaintiffs cite no precedent for such a holding. I reject Alternative #2. I note that, if such a declaration had been made, the insurance would not attach prior to "the time the goods leave the Warehouse and/or Store" in Monchegorsk. (Clause 13.) Accordingly, Alternative #2 would not give coverage for any theft or embezzlement of the ingots prior to that time.
Having rejected both of Plaintiffs' theories for amending their declarations, I turn now to what was actually declared, namely, insurance coverage for two shipments from the time they left the warehouse in Rotterdam.
When suing on an all-risk marine cargo policy, a plaintiff has the burden to show a prima facie case:
. . . [T]he burden was on the insured to show that some loss occurred during the period of coverage, i.e., that the goods unloaded were not in the same condition or quantity as those loaded onto the vessel.
. . . Banco Nacional [the insured], in effect, argues that all it need show as part of its prima facie case is that it lost [some of the goods] at some unspecified time, not necessarily during the voyage or discharge. [Under the insured's theory,] [p]roof that the loss occurred outside the policy period would be an exception to coverage . . . and thus the burden . . . would be on [the insurance company]
We reject this argument. The plaintiff in a suit under an all-risks insurance policy must show a relevant loss in order to invoke the policy, and proof that the loss occurred within the policy period is part and parcel of that showing of a loss.Banco Nacional v. Argonaut Ins. Co., 681 F.2d 1337, 1340 (11th Cir. 1982) (emphasis added).
In the case at bar, Plaintiffs have failed to show such a prima facie case on either of the two shipments from the Rotterdam warehouse to Howmet. Plaintiffs have shown the condition and quantity of the goods delivered to Howmet, but they have not shown that these goods "were not in the same condition or quantity as those loaded onto the vessel[s]," or as those which left the Rotterdam warehouse. The reason for the Plaintiffs' lack of evidence is that they made a deliberate decision not to have any of the 13 boxes inspected or weighed in Rotterdam.
When the 13 boxes arrived in Rotterdam, Plaintiffs exercised dominion and control over them and put them into a warehouse for almost two months, while Plaintiffs determined which customers needed cobalt, and in what quantities. While the boxes of ingots were in the warehouse, they were not "in transit" and thus were not covered by Clause 7 of the policy. Jomark Testiles, Inc. v. International Fire and Marine Ins. Co., Ltd., 771 F. Supp. 577, 580 (S.D.N.Y. 1989) (Walker, J.). On the other hand, the policy included a four-page endorsement entitled Warehouse Coverage, which stated in pertinent part:
1. In consideration of premiums to be paid or rates agreed, this policy is extended to cover property while, warehoused, subject to the following terms and conditions.
8. Locations and Limits of Liability:
LOCATIONS LIMIT OF LIABILITY RATE PER MONTH London Metal Exchange $1,500,000.00 Included in Warehouse-Rotterdam Marine rate for ninety (90) days coverage. Extensions beyond ninety (90) days subject to an additional rate to be agreed. The only warehouse in Rotterdam that carried the approval of the London Metal Exchange ("LME") was the Steinweg warehouse. The ISD warehouse was not an LME warehouse. Plaintiffs knew this, and tried, without success, to persuade Defendant to expand the Warehouse Coverage to include the ISD warehouse. (Def. Exh. 4, Strulowitz Depo. Tr. 43, 225, 229, 231.)The LME's Regulations required an inspection and weighing of semi-precious metals stored in an LME warehouse. (Aff. of Douglas Cox ¶ 46 and its Exh. D at § § D(b) and F(b).) Plaintiffs' principal, Steven Strulowitz, testified how such inspection and weighing was performed at the Steinweg warehouse: The ingots would be unloaded from the Russian box and put into another Russian box with a pre-established tare weight. Steinweg would then weigh the newly loaded box, and put new seals on it. (Def. Exh. 4, Tr. 45-49.) At Tr. 55, Mr. Strulowitz also testified, "I do know when you put material in an LME warehouse, it is weighed and certified by the LME warehouse."
However, with respect to the 13 boxes that arrived in Rotterdam in March 1998, Mr. Strulowitz decided to use the IDS warehouse rather than the Steinweg warehouse, because he "felt the Steinweg personnel were not close mouthed enough" and might tip off his competitors. (Strulowitz St. ¶ 33.) He also decided not to have the 13 boxes opened and weighed, because he had found this to be "quite expensive." (Id.) No rational fact finder could credit Mr. Strulowitz's assertion that he believed that Defendant's policy would cover the 13 boxes while they were in the non-LME warehouse. Indeed, on this one occasion, he arranged for the 13 boxes to undergo a paper transfer of title into JEWO Metal, in order to take advantage of JEWO's insurance while the boxes were in the IDS warehouse. (Id. ¶ 36.)
Because of Plaintiffs' decision not to have the 13 boxes opened and weighed, Plaintiffs are unable to show what the contents were at any time during the boxes' two-month stay in Rotterdam. They are unable to show what the contents were in March 1994, when they entered the IDS warehouse, and that is why Plaintiffs were unsuccessful with their claim against JEWO's insurance. (See Pl. Exh. B-27, where JEWO wrote to Plaintiffs: "It looks like you were cheated by your supplier.") Moreover, they are unable to show (a) what the contents were in May 1994, when IDS put ¶ of the boxes into a sealed container and shipped them out of the warehouse, or (b) what the contents were in June 1994. when IDS put another ¶ of the boxes into a sealed container and shipped them out of the warehouse. Accordingly, as to each of the two shipments to Howmet, Plaintiffs are unable to make a prima facie case.
Finally, I discuss one belated argument. On July 5, 1994, Mr. Strulowitz sent a telefax to Severonickel (Pl. Exh. B-24) after the second delivery to Howmet:
RE: SHORTAGE ON SHIPMENT OF 16-3-94 VIA TOLYA KOMAR
WE HAVE RECEIVED LOT 34 AND 46 IN THE USA AND HAVE FOUND A SIGNIFICANT SHORTAGE. MATERIALS ARE STILL IN ORIGINAL SEALED BOXES WITH NO APPAR[E]NT TAMPERING.
Mr. Strulowitz said the same thing to JEWO, who wrote to him on July 14, 1994: "You told us that the seals were completely intact when the cases arrived at your place."
Four months later, in November 1994, one of Defendant's adjusters visited Howmet, inspected those two boxes, and wrote a report (Pl. Exh. E-1). The second box was not opened until the adjuster was present. As to this box, he wrote, "there was evidence of recent welds on the top cover, as not all welds were rusted." But he does not mention whether he observed a banding around the box and a leaden seal with Severonickel's name on it. It is undisputed that Howmet, a regular customer of Plaintiffs, reported on June 17 and July 5 that the two short-weight boxes were in the same condition as the other 10 boxes, with no apparent tampering. (Pl. Exh. B-24.) In late July, a Howmet employee mistakenly opened the first short-weight box. It may be that, at that time or during the next four months, he also removed the sealed banding around the second box. Accordingly, it is hard to assess the strength of the adjuster's opinion, which said: "Somewhere between plant in Russia and arrival at Howmet, it is presumed that top cover was cut open and substitution made. . . . Presumption is that loss occurred enroute. It may have actually occurred at the Russian plant and made to look like it occurred at later date. But this is only theory."
Plaintiffs did not call attention to the adjuster's report in their brief or during the oral argument. The report was buried in the voluminous papers in opposition to summary judgment; it was merely the first of 15 deposition exhibits annexed at the end of the transcript of the deposition of Joseph Cataneo (Pl. Exh. E, followed by E-1 through E-15). Accordingly, it was unfair for Plaintiffs to point to this report for the first time on September 15, 2000. In any event, the adjuster's opinion does not change the fact that Plaintiffs have failed to make a prima facie case. The adjuster opined that the loss occurred somewhere between the plant in Russia and the arrival at Howmet. But, as set forth in Banco Nacional, quoted earlier, "the burden was on the insured to show that some loss occurred during the period of coverage" (in our case, after the goods left the Rotterdam warehouse); it is not enough to show that some of the goods were lost "at some unspecified time," including a time stretching back more than two months before the coverage attached. Banco Nacional, 681 F.2d at 1340.
For the reasons stated above, I grant Defendant's motion for summary judgment.