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Elaborate Mob Theft Excluded From Coverage (NY)

March 20, 2020

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<p style="text-align: justify;">The firm recently notched an important summary judgment victory in the matter of <em>Crown Jewels Estate Jewelry v. Underwriters</em>, a case involving the Italian mob, Jennifer Lopez, and diamond necklaces.  James Sabatino, a Gambino crime syndicate member, was already incarcerated in federal prison when he managed to bribe his guards to provide him with an iPhone.  Phone in hand, he coordinated with co-conspirators to pose as a record executive with Sony Music to defraud a variety of jewelry stores nationwide of millions of dollars of jewelry.</p>
<p style="text-align: justify;">For Crown Jewels in New York, Sabatino posed as “Paul Castellana” and duped the insured jeweler into loaning diamond jewelry to his associates, purportedly production assistants for a music video shoot with J-Lo in Miami.  This included spoofing a phone number to pose as a vice president at an insurance brokerage and creating fake certificates of insurance.</p>
<p style="text-align: justify;">When the goods were inevitably stolen, Crown turned to their insurer for the loss on their all-risk policy held by several Lloyd’s subscribers.  However, the Crown policy contained an exclusion barring coverage for losses arising from the dishonest acts of any individual to whom insured property had been entrusted “for any reason whatsoever.”  The insured pressed their claim aggressively, arguing the individuals who collected the jewelry may not have been involved with Sabatino, inventing a “bright line” rule for “imposter cases” to escape New York’s long-standing enforcement of this exclusion, and invoking law from California and North Carolina, where the exclusion is interpreted differently.</p>
<p style="text-align: justify;">Ultimately, the parties both moved for summary judgment and appeared for oral argument before Judge Barry Ostrager—a revered insurance law scholar and author of multi-volume treatises on the subject. Once Judge Ostrager had plaintiff stipulate the goods were stolen by Sabatino, Dennis invoked a Fifth Circuit decision which deftly explains the two differing schools of interpretation of the exclusion, concluding New York’s interpretation—our position—was inevitably the correct one.</p>
<p style="text-align: justify;">The Judge ruled immediately from the bench in our favor, dismissing the complaint.  And, although it may be destined for appellate practice, we now have an order consistent with New York law issued by an extremely distinguished jurist in our pocket and a hard-fought victory to our name.</p>
Thank you to Nicholas Schaefer for his contribution to this post.  If you have any questions or comments, please contact <a href="mailto:dwade@wcmlaw.com">Dennis Wade</a>.

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