Trailer is Not a Warehouse
September 11, 2017
Recently the United States Court of Appeals for the Second Circuit upheld a lower court's ruling that a trailer is not a warehouse covered by a Marine Open Cargo insurance policy. The Second Circuit handed down this decision in a case revolving around a coverage dispute with a computer wholesaler over a theft. The case is Laptop Plaza, Inc. v. Starr Indem & Liab. Co. 2017 U.S. App. Lexis 16841.
On an afternoon in December of 2013, two women approached a security guard at a warehouse and asked for assistance with their car. LaptopPlaza, Inc. had hired the security guard to watch LaptopPlaza's warehouse property in Miami. The guard was in charge of guarding a warehouse building and three storage trailers that LaptopPlaza had leased for less than a week to hold inventory while a project inside the warehouse was finished. While the guard was helping the women, a thief stole a tractor cab from an adjacent building, connected one of the trailers containing LaptopPlaza merchandise to the tractor cab, and drove away.
The Miami-Dade Police Department worked very hard on this case and eventually recovered the tractor cab. The police have never found the trailer or the stolen goods, which amounted to over $710,000. LaptopPlaza's predecessor had a Marine Open Cargo policy from Starr Indemnity and Liability Co. (Starr) in 2009, and in November of 2013 an endorsement was added to cover “goods and merchandise which are owned by or held by Assured (LaptopPlaza) . . . while temporarily detained in warehouses.” Starr denied coverage for the claim of theft, and LaptopPlaza filed suit against Starr, charging that Starr had breached the policy. The court ruled in Starr's favor in August 2016.
LaptopPlaza appealed in front of a three-judge panel and first argued that goods in a storage trailer were covered by language in an endorsement to the applicable policy that encompassed “goods and merchandise . . . while temporarily detained in warehouses”. Because the trailer in this case abutted the warehouse, but was not permanently affixed to the warehouse, the court found that the trailer fit neither the Webster Dictionary definition, nor the Black's Law Dictionary definition of the word “warehouse”, and this argument failed.
LaptopPlaza next argued that the trailer and its contents were covered under an endorsement to the policy that added coverage for goods located in “unnamed locations”. Unfortunately for LaptopPlaza, the trailer had been parked on LaptopPlaza's property, adjacent to the warehouse. Because the trailer was on the same property as the warehouse, it was not located at an “unnamed location”, so this argument also failed.
The three-judge panel for the appellate court found all of LaptopPlaza's arguments were without merit. The panel determined that “a trailer is designed for transportation, and not the storage, of merchandise”.
Editor's Note: Generally, in contract law, if a term is unambiguous, the court will assign the term its plain and general meaning. In order to determine the plain and general meaning, a court will look to a dictionary definition of the word. Because an insurance policy is a contract between the insurer and the insured, the same plain meaning rule will apply. Since the term “warehouse” was unambiguous, the court looked to two different dictionary definitions to determine if the term might include a separate storage trailer. Neither definition included the storage trailer as a part of the warehouse for the theft purposes. The three-judge appellate panel properly affirmed the ruling of the district court.