Court: Appellate Division of the Supreme Court of the State of New York; May 6, 2014; New York; State Appellate Court
Judgment from the Supreme Court of New York County, issued by Justice Ira Gammerman on March 7, 2013, affirmed the lower court's decision in favor of the plaintiff, a money transfer service provider, with costs awarded. The plaintiff had a contract with Armored Money Services (AMS) starting in March 2009, for AMS to collect funds and deposit them at Wells Fargo Bank. Between February 5 and 9, 2010, AMS collected over $2 million but failed to deposit it as per their usual agreement.
On February 8, 2010, FBI arrests of AMS officers revealed misconduct, specifically "playing the float," where incoming funds were improperly used to cover operational costs and repay other debts. Subsequently, on February 11, 2010, the FBI seized approximately $19 million from AMS's vaults, leaving around $68 million owed to customers unaccounted for.
The insurance policy from the defendant covered losses of money held by an armored vehicle company due to theft, disappearance, or destruction. The court found that the plaintiff's loss constituted disappearance, which, while not explicitly defined in the policy, is interpreted in the context of theft to imply an unexplained absence suggesting theft. The policy's definition of theft includes unlawful conversion of property, establishing that AMS did not deposit the funds but retained them for its own use.
The court rejected the defendant's argument that the loss fell under an exclusion for governmental seizure, clarifying that the theft occurred prior to the FBI's seizure, as AMS had failed to deposit the funds. The ruling was supported by precedents cited, affirming the plaintiff's position. The decision was concurred by Justices Gonzalez, Mazzarelli, Sweeny, Manzanet-Daniels, and Clark.
