Starr Indem. & Liab. Co. v. Brightstar Corp.

Citation: 388 F. Supp. 3d 304Docket: 13 Civ. 8580 (GWG)

Court: District Court, S.D. Illinois; July 12, 2019; Federal District Court

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Starr Indemnity Liability Company (Starr) is seeking a declaratory judgment to confirm that Brightstar Corp. and Brightstar Germany GmbH (collectively, Brightstar) are not entitled to insurance coverage for the loss of wireless communication devices at a German warehouse in November 2013. In response, Brightstar counterclaims, asserting that Starr breached the insurance policy by denying coverage and requests a declaratory judgment affirming coverage for the loss. Both parties have filed motions for partial summary judgment on several issues.

Starr's motion includes arguments that: (1) New York law governs due to lack of conflict with Florida law; (2) a $3 million liability limit applies to the German Warehouse; (3) the Policy's Errors and Omissions Clause applies only to insured risks; and (4) Starr's interpretation of the Misappropriation Exclusion Clause is correct. Conversely, Brightstar contends that the Misappropriation Exclusion Clause does not apply to the loss.

The Court finds no conflict between New York and Florida law and applies New York law. It grants Starr summary judgment on the $3 million limit of liability for the unnamed German Warehouse and affirms that the Errors and Omissions Clause applies only to risks already insured. Additionally, the Court grants Brightstar's motion for partial summary judgment, ruling that the Misappropriation Exclusion Clause does not apply to the loss in question.

The background indicates that Brightstar Corp. is incorporated in Delaware and headquartered in Miami, Florida, identifying itself as the largest specialized wireless distributor globally, serving numerous operators, manufacturers, and retailers.

Brightstar Germany GmbH is a German subsidiary of Brightstar Corp., operating solely in Germany, while Starr is a Texas-incorporated insurance company with its principal place of business in New York. Brightstar has been a client of Starr since 2002, and in 2011, Starr issued a continuous marine cargo insurance policy to Brightstar, effective March 26, 2011. Marsh USA acted as Brightstar's insurance broker for this policy.

The policy covers all shipments and goods from the effective date onward and does not specify a termination date. It includes an "Endorsement No. 2," which extends coverage to goods stored in warehouses worldwide but does not list the German Warehouse among the approved locations. This endorsement features a clause allowing for a $3,000,000 limit for unlisted locations and provides automatic coverage of up to $25,000,000 for new locations, contingent upon Brightstar's representation of compliance with specified minimum standards. Additionally, it requires Starr Marine to conduct a location loss control survey upon notification of new locations.

Further endorsements, issued annually following the policy's effective date, adjusted terms and conditions, including the addition of insured warehouses. Endorsement No. 17, signed on June 15, 2012, but effective from March 26, 2012, also does not include the German Warehouse. Like Endorsement No. 2, it offers automatic coverage for new locations with the same compliance stipulations.

Minimum standards for warehouses were outlined in a bullet-point list in the legal documentation. Warehouses added or with increased limits during Endorsement No. 17 were documented in separate endorsements amending Clause 11. Endorsement No. 17 included a provision requiring Starr Marine to conduct a loss control survey upon notification of any new location and to provide recommendations for compliance. Endorsement No. 40, effective March 26, 2013, stated a $25 million limit per occurrence for all insured locations, based on a schedule maintained with underwriters and contingent on a Quarterly Statement of Values Report. For new locations, it allowed a $25 million limit for up to 90 days, provided they met minimum standards. Both Endorsements No. 17 and No. 40 contained clauses for loss control surveys upon notification of new locations. All three endorsements (No. 2, No. 17, and No. 40) stipulated that unnamed or unscheduled locations would be insured for up to $3 million. 

Brightstar held two excess insurance policies for losses exceeding the $25 million limit for named locations, issued by various insurers. A pivotal issue in the case is whether Brightstar secured $25 million coverage for the German Warehouse under the Policy or if it was classified as an unnamed location, which would only qualify for $3 million. Starr contends that the German Warehouse was not covered under either endorsement, while Brightstar argues it could be found to have secured full coverage through various theories. The German Warehouse was first referenced in communications during the term of Endorsement No. 17.

O'Brien confirmed in an email that a site survey for the German Warehouse would need to be scheduled, highlighting the urgency to begin operations by the end of February. He provided the warehouse's address and identified Klaus Freese as the point of contact. Scrobe subsequently forwarded O'Brien's email to underwriter Jeffrey Factor at Starr, marking its importance as high, and requested that Maria Roman arrange the survey. Despite this, there was no written follow-up, and Factor did not arrange the survey. No further communication occurred between Starr and Brightstar regarding the warehouse during that time, although Brightstar and its broker, Gallagher, communicated about it shortly after.

On February 25, 2013, O'Brien informed Gallagher's Lisa Rodriguez about his upcoming visit to the German site, offering to relay any questions. Gallagher's Robin Thompson later requested missing information from O'Brien regarding property and casualty details. Brightstar began storing devices at the German Warehouse around March 1, 2013, and O'Brien, along with Freese and another employee, conducted a security assessment there on March 7, 2013, without any Starr representatives present. Brightstar produced a report of the assessment but did not provide it to Starr or Gallagher.

Prior to the German Warehouse discussions, Factor was negotiating an annual policy adjustment with Gallagher, aiming to simplify the process of insuring warehouses. Previously, coverage was based on the value stored, requiring formal endorsements for changes. Factor proposed a new approach to insure each warehouse for a limit of $25 or $50 million, with quarterly reporting to reflect current storage values, aiming for efficiency given Brightstar's growth and changing warehouse needs.

Factor recalls a discussion about a new approach with Gallagher, specifically mentioning Lisa Rodriguez's involvement. He planned to call Rodriguez, as indicated in an email to Matthew Davis, Vice President at Starr. On February 11, 2013, Robin Thompson from Gallagher sent Factor an email with Brightstar's "Master Exposure Spreadsheet," which contained renewal information based on Factor's prior conversation with Rodriguez. The spreadsheet, approximately 44 pages long, detailed numerous locations and included extensive categories of information relevant to insurance risk evaluation, including ownership, age, alarm systems, and "Watchmen" details, under the COPE framework. Notably, the spreadsheet omitted the German Warehouse, which became pertinent following a later email exchange on February 20, 2013.

On the same day, Jose Fernandez from Gallagher sent Factor the latest Statement of Values for Brightstar, which also excluded the German Warehouse. Subsequent communication on March 19, 2013, involved Factor emailing Rodriguez about agreeing to a flat warehouse premium and confirming the coverage limits for listed locations, but again omitting the German Warehouse despite the earlier correspondence regarding it. Rodriguez forwarded Factor's email to Brightstar's CEO, Oscar Fumagali, for further action. Mauricio Cabello from Brightstar was tasked with ensuring all locations were accounted for as per Factor’s request.

On March 21, 2013, Factor sent a revised quote to Rodriguez and Thompson, requesting confirmation on whether to bind coverage and which optional coverages to include. Two days later, Enrique Rodriguez from Brightstar communicated updated inventory values in light of a new agreement with a major customer, instructing Gallagher to adjust the information accordingly.

Klaus Freese's forwarded email included new COPE information for the German Warehouse, indicating changes by Brightstar to the maximum and average stock per month. Freese instructed Brightstar employees to adjust insurance accordingly. However, there is no evidence that Gallagher communicated this updated information to Starr before the loss at the German Warehouse. On March 25, 2013, Gallagher's Thompson responded to Factor's email by confirming coverage binding without mentioning the German Warehouse. Shortly after, Factor confirmed the binding and noted he would issue the binder upon receiving further details from Gallagher. The following day, Thompson requested the insurance binder to be sent promptly. The binder, titled "Cargo Binder," outlined coverage limits per occurrence for various locations but did not list specific warehouses. Gallagher later sent quarterly Statements of Values (SOV) to Starr, neither of which included the German Warehouse. On October 24, 2013, after identifying missing locations, Brightstar's Cabello sent a revised report that still had omissions. Thompson subsequently notified Cabello of remaining errors, leading to a corrected report on November 5, 2013. However, the final quarterly SOV lacked COPE details, such as security features and physical specifications of the warehouses, despite including other relevant information.

In late October 2013, Brightstar employees grew increasingly concerned about the operations of the German Warehouse, managed by getgoods.de Vertriebs GmbH AG, which was responsible for storing and fulfilling orders for Brightstar's goods. Arturo Osorio, a Brightstar employee, raised suspicions regarding getgoods' financial stability due to persistent delays in inventory stock takes and concerns that getgoods might be misusing Brightstar's inventory as collateral. Additionally, getgoods frequently canceled Brightstar's requests for inventory inspections, further heightening concerns.

On October 30, 2013, Brightstar representatives attempted to inspect the inventory at the German Warehouse but were informed that a full count could not be conducted due to a legal holiday. They were only able to observe pallets of wireless devices, confirming the presence of the cartons without opening them. A full inspection was planned for the following week.

On November 6, 2013, getgoods' CEO reported that 193,000 of Brightstar's wireless devices were missing from the warehouse, with Brightstar's CEO, Oscar Fumagali, being informed the next day. The loss allegedly occurred between the observation on October 30 and the notification on November 7. Brightstar reported the loss to Gallagher on November 8, who then informed Starr and the Excess Insurers.

Following this, on November 11, 2013, Factor from Starr inquired about the inclusion of the German Warehouse in Brightstar’s insurance policies, confirming it was added during renewal discussions. Subsequently, on November 19, Starr communicated to Brightstar and Gallagher that the claim regarding the loss was under investigation with a full Reservation of Rights.

Lisa Rodriguez communicated with Jeffrey Factor on November 20, 2013, addressing his inquiry about the addition of the German Warehouse to the insurance policy. She provided the Client's Master Spreadsheet containing pertinent COPE information and confirmed the exposure amount of $93,674,253.00 for Brightstar Inventory Balance as correct. Rodriguez requested details on the additional premium for this location since the policy's inception. Factor acknowledged the receipt of her email on November 26, indicating that the premium could not be quoted or accepted due to an ongoing investigation into a significant claim related to the German location, which was under a reservation of rights.

Subsequently, on December 2, 2013, Thomas Connelly, Starr's Vice President of Claims, emailed Rodriguez to formally reserve Starr's rights regarding the claimed loss, indicating potential exclusions from policy coverage. The following day, Starr initiated legal action seeking a declaratory judgment on the non-coverage of the loss under the policy. Additionally, it was noted that the CEO of getgoods faced indictment for misappropriation by German authorities.

The excerpt also details the standard for summary judgment motions under Rule 56(a) of the Federal Rules of Civil Procedure, stating that summary judgment is warranted when there is no genuine dispute over material facts, thus entitling the movant to judgment as a matter of law. It emphasizes that evidence must be admissible and that the non-movant's evidence should be believed, with all reasonable inferences drawn in their favor.

The moving party must demonstrate that there are no genuine material facts in dispute and that they are entitled to judgment as a matter of law. In response, the nonmoving party has the burden to present specific facts indicating a genuine issue for trial, as established in Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp. This party cannot rely on vague allegations or speculation but must provide concrete evidence that a reasonable juror could use to support their case. Summary judgment is appropriate if no rational fact-finder could decide in favor of the nonmoving party due to insufficient evidence.

Under New York law, a policyholder carries the burden of proving that an insurance policy covers their loss. This burden remains with the policyholder even when the insurer files for declaratory judgment, as noted in Morgan Stanley Grp. Inc. v. New England Ins. Co. The declaratory judgment serves merely as a procedural tool for resolving disputes before traditional litigation begins, and the party asserting a right retains the same burdens as if they were pursuing coercive relief.

The parties are also in dispute over whether New York or Florida law applies in the case of a conflict. Federal courts apply the choice-of-law rules of the forum state, which, in New York, requires issue-by-issue analysis. A court does not need to perform a choice-of-law analysis unless there is an actual conflict between the laws of the jurisdictions involved.

Laws from different jurisdictions can conflict when they provide differing substantive rules. In cases where there are no substantive differences, New York courts may forego choice of law analysis, freely applying New York law when it's relevant. Both New York and Florida law dictate that unambiguous terms in insurance contracts are interpreted based on their plain and ordinary meaning. Courts address the interpretation of such provisions as a matter of law. There is no dispute between the parties regarding the interpretation of unambiguous contract provisions under New York and Florida law. However, Brightstar identifies a potential conflict concerning the use of extrinsic evidence in interpreting insurance policy language. Brightstar argues that Florida law mandates construing ambiguous policies in favor of coverage without considering extrinsic evidence, while New York law allows for the consideration of such evidence to determine intent before applying rules of construction. Despite these differing approaches, no ambiguity is found in the insurance policy at issue, leading to the conclusion that a choice-of-law analysis is unnecessary, and New York law governs the interpretation of the policy.

Unambiguous provisions in insurance contracts are to be interpreted according to their plain meaning, with interpretation being a legal question for the court. Ambiguity arises when a contract lacks clarity regarding its purpose or the parties' intent when read as a whole, or when its terms can have multiple reasonable interpretations. An ambiguity exists if a contract's terms suggest more than one meaning to a reasonably intelligent person familiar with relevant customs and practices. When a court finds an insurance provision ambiguous, it can consider extrinsic evidence to determine the parties' intended meaning. If such evidence does not clarify the ambiguity, the court may apply rules of contract construction like contra proferentem, which favors the insured in cases of ambiguity. If extrinsic evidence resolves the ambiguity, the contra proferentem rule is unnecessary. When an insurance policy is deemed ambiguous, the burden shifts to the insurer to demonstrate the correctness of its interpretation. If extrinsic evidence is inconclusive, the burden shifts during trial; in its absence, it shifts at the summary judgment stage.

In relation to Endorsement No. 17, Starr seeks summary judgment on the basis that it did not automatically cover the German Warehouse for up to $25,000,000 because there is no evidence that the Warehouse met minimum standards or that Brightstar made the necessary affirmative representation to Starr or Gallagher regarding compliance. Starr further contends that it did not agree to extend coverage to the German Warehouse during the period of Endorsement No. 17, classifying it as an "unnamed location" under that endorsement.

During Kevin O'Brien's March 7, 2013, security assessment, he concluded that the German Warehouse met the minimum standards of the Policy. Brightstar cites expert opinions suggesting that a reasonable jury could find the warehouse was covered under Endorsement No. 17, including an informal "held coverage agreement." Clause 12 of Endorsement No. 17 provides automatic coverage up to $25,000,000 for new locations, contingent upon an affirmative representation of compliance with specified minimum standards, such as having a central station alarm and 24/7 guard protection. Although Brightstar conducted a security assessment, there is no evidence that the findings were communicated to Starr. The requirement for automatic coverage under Clause 12 hinges on an affirmative representation of compliance, a condition precedent that must occur for coverage to be effective. Brightstar does not claim that such a representation was made, instead asserting that it independently determined compliance with the minimum standards.

Starr cannot deny coverage for the German Warehouse based on minimum standards due to principles of waiver and estoppel. Endorsement No. 17's language requires an affirmative representation of compliance, which is absent in the record, precluding a jury from finding the German Warehouse covered under this provision without applying another legal doctrine. Starr contends that Brightstar must prove that the policy was modified to extend coverage to the German Warehouse, highlighting that it was not listed in Clause 11 or as a separate endorsement during the term of Endorsement No. 17. Starr states that particular information was needed to add a new warehouse, including its full name, address, COPE details, required limits, and inventory value, and claims it communicated this requirement to Gallagher in July 2012. Although this procedure wasn't documented in the Policy, Starr argues that the parties' communications supplemented the Policy's requirements. Brightstar counters that a reasonable jury could find the German Warehouse covered under the schedule "on file" per Endorsement No. 40 and asserts that industry standards imply coverage under the 2012 Starr Policy. Brightstar also references an informal "held coverage" arrangement that allegedly applied to all warehouses not listed in formal endorsements. Both parties acknowledge that the German Warehouse was uninsured at the commencement of Endorsement No. 17 and that there was no outlined method for adding new warehouses, while also agreeing that some warehouses were added during the endorsement's term.

To establish whether a reasonable jury could conclude that the German Warehouse was included in the Policy during the term of Endorsement No. 17, the court must ascertain the parties' agreement regarding how new warehouses were added. In situations where essential terms are not explicitly defined in a contract, courts may supply a reasonable term based on the circumstances, as outlined in the Restatement (Second) of Contracts. This principle is supported by various case law, including De Graff v. McKesson, which illustrates how courts can determine reasonable fees based on implied terms.

Absent an express term regarding contract duration, courts may infer intent from the surrounding circumstances. The search for implied terms often reflects what the parties would have agreed upon had the issue been addressed. A "course of dealing," defined as a sequence of conduct between the parties, can help interpret the agreement and guide courts in filling in omitted terms, as indicated in Schmidt v. Magnetic Head Corp. and other cases. 

Under New York law, an omission does not imply ambiguity, allowing for evidence of the course of dealing to be introduced. Additionally, a "course of performance" under the contract can also serve to clarify gaps. The parties’ conduct over time is significant in determining their agreed intentions, with prior interpretations of the contract being influential.

In this case, both parties recognize that Endorsement No. 17 lacks a provision for adding new warehouses; however, they had an established practice for doing so. According to Starr, the process involved Brightstar supplying necessary information to Gallagher, who would then present it to Starr's underwriters for approval. The required details included the warehouse's name, address, COPE details, coverage limits, and inventory value. Starr would confirm the addition by issuing an endorsement to amend Clause 11 in Endorsement No. 17.

Gallagher was obligated to provide Starr with specific information, including "COPE Details," before insuring additional warehouse locations under the informal "held coverage" arrangement. Evidence from the parties' actions under Endorsement No. 17 supports Starr's claim. An email from Jeffrey Factor at Starr to Robin Thompson at Gallagher on July 23, 2012, explicitly requested this information. Gallagher also communicated similar requirements to Brightstar, as shown in a January 21, 2013, email from Lisa Rodriguez, which reiterated the need for standard underwriting information for new retail locations. Historical emails indicate Brightstar's previous broker, Marsh, had similar requirements for adding warehouse locations. There is no evidence that any location was added to the policy without the necessary COPE or security information being provided. Requests for changes in coverage were made by Gallagher rather than Brightstar, with no direct requests from Brightstar documented. Lisa Rodriguez confirmed that any coverage changes were discussed with Starr, and emails from her included a disclaimer stating that coverage would not be finalized until written confirmation was received.

An email from Lisa Rodriguez to Michael J. Mahoney and others dated October 18, 2013, indicates that coverage cannot be bound, altered, or cancelled via email, and must be confirmed in writing by the carrier. Brightstar references a deposition by Factor regarding "held coverage," suggesting confusion over whether coverage existed before formal endorsement, but fails to provide additional evidence clarifying this arrangement. The record shows Gallagher informed Brightstar that specific underwriting information was necessary, which Brightstar provided for the German Warehouse. However, Gallagher did not forward this information to Starr. Brightstar does not demonstrate any prior agreement or conduct that would allow it to obtain coverage for new warehouses without providing COPE details. Consequently, there is no evidence supporting Brightstar's claim that Starr agreed to insure warehouses without prior knowledge of them. Brightstar contrasts the list of warehouses in the 2012 endorsement with an earlier quote from Starr, yet Starr notes that a revised schedule of locations was sent shortly after the initial email.

Originally filed under seal as Exhibit 76 to the O'Malley Reply Declaration, a list of warehouse locations was included in Endorsement No. 17, excluding those with values under $500,000. Although Endorsement No. 17 was issued in July 2013, Starr had prior notice of the warehouses listed in Clause 11, effective from March 26, 2012. Brightstar failed to present evidence of a course of performance or dealings that would imply an agreement for coverage extension simply through an email notification to Starr. Brightstar's argument relies heavily on expert Michael Fitzgerald's assertion that the Frankfurt warehouse was insured under the 2012 Starr Policy based on industry standards and expectations. However, Fitzgerald's conclusions lack a basis in established industry standards and do not address the contractual obligations between the parties. He suggested the court should imply a term into the policy, stating Starr would be liable for losses at a location if it did not conduct a loss control survey after receiving notification of that location. This claim, however, is unsupported by any evidence of a recognized industry practice regarding such failures. Case law indicates that evidence of industry custom is only relevant if both parties were aware of it, and Fitzgerald did not provide proof of a well-established custom concerning the failure to conduct a loss control survey. His perspective is thus seen more as an opinion on how the court should interpret the parties' dealings rather than a substantiated claim of industry practice.

Evidence indicates that to add a warehouse to the insurance Policy under Endorsement No. 17, Gallagher was required to send COPE and other necessary information from Brightstar to Starr. There is no record of obtaining coverage for a new warehouse merely by notifying Starr via email, as such an interpretation would undermine the "un-named location" clause of Endorsement No. 17, which allows $3 million coverage for any Brightstar location without prior approval. Under New York law, interpretations that make contractual clauses superfluous are disfavored. Additionally, for a modification of an insurance contract to be binding, all essential elements of a contract must be agreed upon before any loss occurs. Brightstar attempted to comply with the process related to the German Warehouse, but Gallagher failed to forward the necessary information to Starr. Consequently, there is no evidence that COPE and other required details were sent to Starr during Endorsement No. 17, nor that Starr agreed to cover the German Warehouse during that period, leading to the conclusion that the German Warehouse remained an "unnamed" location. Regarding Endorsement No. 40, Starr seeks summary judgment, arguing the German Warehouse did not qualify for automatic coverage as it did not meet two minimum standards and was not included in the schedule on file with Starr, thus not entitled to $25 million in coverage. Brightstar counters, asserting there is a factual dispute over whether the German Warehouse met the minimum standards based on a security assessment conducted by Kevin O'Brien.

Brightstar contends that, despite the German Warehouse possibly not meeting minimum standards, the Florida "anti-technical" statute should allow for coverage since the failure to meet those standards did not heighten the risk of loss. Brightstar also asserts that a reasonable jury could determine that the German Warehouse was "on file" with Starr at the time of the loss, thereby qualifying for coverage of up to $25 million. Furthermore, Brightstar argues that even if the Warehouse did not meet the standards or was not officially "on file," Starr should be considered to have waived these requirements or be estopped from denying coverage, as Starr did not conduct a survey or include the Warehouse in its schedule despite receiving a relevant email on February 20, 2013.

Endorsement No. 40, effective March 26, 2013, states that the insurer agrees to pay claims under specified limits, including $25 million for newly reported locations that meet minimum standards, with a maximum reporting period of 90 days. Automatic coverage under this endorsement does not require an affirmative representation; it only mandates reporting of the location within the specified timeframe. Starr argues that the German Warehouse failed to meet two critical minimum standards: being equipped with a Central Station Alarm connected to local police and having 24/7 guard protection with hourly check-ins. Starr claims that meeting these standards is a condition precedent for coverage, and since these conditions were not fulfilled, coverage cannot exist. Conditions precedent must occur unless their non-performance is excused, and express conditions must be strictly adhered to. Courts typically interpret ambiguous language as indicative of a promise rather than an express condition.

Interpretive preferences cannot be applied when contractual language is clear, particularly when terms like "if" or "unless and until" indicate a condition. Non-occurrence of a condition may be excused by waiver, breach, or forfeiture under the Restatement, particularly to avoid disproportionate forfeiture, unless the condition's occurrence is a material part of the exchange. Endorsement No. 40 specifies that automatic coverage up to $25 million for new locations is conditioned upon meeting minimum standards. Brightstar argues that deposition testimony from Jeffrey Factor suggests compliance with these standards is not mandatory for coverage; however, the quoted testimony does not address minimum standards and instead refers to "standards of care," which are merely recommendations and do not affect coverage. Brightstar must provide evidence that the German Warehouse met the disputed minimum standards to counter Starr's motion for summary judgment. Starr asserts there is no evidence of compliance with specific minimum standards related to security systems and 24/7 guard presence. Brightstar counters with a security assessment report and depositions indicating compliance, particularly referencing O'Brien's testimony that a functioning alarm system meets the first minimum standard.

Brightstar fails to provide evidence from O'Brien's deposition or the Security Assessment indicating that a security system was in place at the German Warehouse. While the Security Assessment confirms the presence of a 24/7 onsite security guard operation with external alarm monitoring, it does not support the claim that guards had hourly call-in times to a central station, a requirement of the minimum standards. Brightstar relies on Oscar Fumagali's deposition, where he states that O'Brien determined during a March 2013 visit that the German Warehouse met minimum standards in specific endorsements. Fumagali claims Brightstar's assessment was based on the security evaluation conducted by O'Brien and their familiarity with C.V. Starr's security requirements. However, he does not confirm whether O'Brien checked each standard against the policy. O'Brien's testimony indicates he did not use formal "insurance binders" for security practices but was responsible for ensuring compliance with the minimum standards through warehouse inspections. Ultimately, Brightstar has not demonstrated that the disputed minimum standards were satisfied, lacking evidence that the alarm system was connected to law enforcement or that guards adhered to the required call-in procedure.

O'Brien's testimony indicates his understanding of a "direct line to a police station," yet lacks evidence of awareness regarding such a system at the German Warehouse. Fumagali's unsupported assertions about the German Warehouse meeting minimum standards are inadequate for a jury to conclude that those standards were met. Consequently, without proof that the conditions for coverage were fulfilled, a reasonable jury cannot determine that coverage applies under the automatic coverage provision of Endorsement No. 40 unless these conditions are considered excused. The potential for excusing the nonoccurrence of conditions exists through waiver, breach, or forfeiture.

Brightstar contends that even if minimum standards were unmet, Florida's "anti-technical" statute prevents Starr from denying coverage for the Frankfurt warehouse, citing three reasons, with one focusing on minimum standards compliance. The Florida statute, Fla. Stat. 627.409(2), states that breaches of conditions in wet marine or transportation insurance policies do not void coverage unless they increase the risk controlled by the insured. However, the statute is limited to "wet marine" and "transportation" insurance, which Brightstar fails to substantiate as applicable to the Policy.

Endorsement No. 40 establishes a $25 million limit per occurrence for locations listed in the schedule on file with underwriters, contingent upon a Quarterly Statement of Values Report detailing actual values stored at each location. Starr argues that no reasonable jury could conclude the German Warehouse was included in the "schedule on file" at the time of the Loss, categorizing it instead as an "unnamed location" with a coverage limit of $3 million for Brightstar.

Starr asserts that the "schedule on file with underwriters" mentioned in Endorsement No. 40 refers specifically to a spreadsheet linked to Jeffrey Factor's March 19, 2013, email to Gallagher. This spreadsheet could have been updated with additional locations valued over $3 million, accompanied by necessary COPE information. Starr claims this spreadsheet was incorporated by reference into the insurance policy. Since the German Warehouse was not included in the March 19, 2013, email and Gallagher did not provide the necessary information or confirm coverage prior to the loss, Starr contends that the German Warehouse was not part of the "schedule on file" at that time.

In contrast, Brightstar presents several arguments to establish that the German Warehouse should be considered "on file" with Starr. First, Brightstar notes that Starr’s modifications in Endorsement No. 40 eliminated the requirement for Brightstar's "master spreadsheet," thus covering all warehouses "on file" without requiring Starr's prior approval for new additions. The premium charged to Brightstar was based on sales, including those from the German Warehouse, which did not necessitate an additional premium.

Second, Brightstar cites expert reports claiming that an email from O'Brien to Scrobe could amend the schedule based on industry customs and the expectations of insured parties. Third, Brightstar argues that Gallagher, as Starr's agent, allows for the imputation of notice to Starr from Gallagher. Finally, Brightstar contends that an updated quarterly SOV received by Starr on November 5, 2013, which included the German Warehouse, effectively added it to the schedule on file.

Brightstar also disputes Starr's position on whether the German Warehouse qualifies as an unnamed location, claiming that no rational fact-finder could conclude it was unnamed. The document then turns to analyze the meaning of "schedule on file with underwriters," suggesting that consistent interpretations of the term across the policy are essential for clarity in contract interpretation.

Ambiguity in legal documents is assessed solely from the text within the document itself, as established in Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011). The policy consistently refers to lists of warehouse locations as "schedules," specifically in Endorsements No. 2 and No. 17, and throughout various other endorsements (Nos. 7, 8, 9, 10, 11, 13, 14, 17, 29, 30, 31, 32, 33, and 34). These endorsements clarify that the "schedule on file with underwriters" constitutes a comprehensive list of all insured warehouse locations qualifying for a $25 million coverage limit per occurrence.

Brightstar claims that "schedule on file with underwriters" refers to every location known by Starr, regardless of its inclusion in an official list. Brightstar suggests that the transition from insuring specific warehouses to all warehouses on file is reflected in Endorsement 40. However, this interpretation is challenged by the explicit language of Endorsement 40, which indicates that coverage applies only to those locations listed in the "schedule on file." The repeated emphasis on the term "schedule" throughout the policy underscores that it refers to a definitive list. Brightstar's argument, which overlooks the term "schedule," indicates an acknowledgment that its reasoning fails if the coverage is indeed tied to a specific list of warehouse locations. Additionally, the $25 million limit applies to all locations as per the schedule on file, contingent on a Quarterly Statement of Values Report detailing actual values stored at each location.

Endorsement No. 40 lacks a "schedule," unlike Endorsement Nos. 2 and 17, and no schedule is attached to the Policy. Starr contends that Endorsement No. 40 incorporates a spreadsheet from an email by Jeffrey Factor to Gallagher dated March 19, 2013. Under New York law, documents can be incorporated by reference if they are clearly described in the written instrument, allowing them to be identified without doubt. The court notes that Endorsement No. 40 indicates a clear intent to incorporate a schedule detailing all locations eligible for the $25 million limit, similar to schedules in prior endorsements. Brightstar has not provided a comprehensive list qualifying as the "schedule on file," while Starr has presented the only relevant document—the spreadsheet from Factor’s email. There are no competing documents for this reference. The court concludes that this spreadsheet is the "schedule on file" referenced in Endorsement No. 40. Furthermore, since the German Warehouse is not listed in this spreadsheet, it cannot be covered under the $25 million clause unless Brightstar can demonstrate that it was added later in an agreed manner. Endorsement No. 40 does not specify a process for adding new locations.

Two clauses in the document outline the procedure for adding new locations under a $25,000,000 limit per occurrence, requiring a maximum of 90 days to report if they meet minimum standards. Upon notification of a new location, Starr Marine is tasked with ordering a loss control survey and forwarding compliance recommendations. The text examines whether the German Warehouse was added to the Policy according to the agreed mechanism under Endorsement No. 40. Evidence indicates that after the Cargo Binder was issued in March 2013, Brightstar sought to add locations by providing necessary "COPE" information to Gallagher, who relayed it to Starr for approval and premium adjustment. 

This process mirrored previous periods, but no new endorsement was created under Endorsement No. 40. Emails demonstrate that several warehouses in Sri Lanka were successfully added while the endorsement was in effect, starting with Brightstar sending an Excel file with required details to Gallagher, who then forwarded it to Starr. Brightstar later submitted an updated spreadsheet and additional contact information to facilitate inspections. Factor from Starr confirmed the addition of a Sri Lankan location with a flat premium of $2,034, subject to policy terms, and requested confirmation to bind coverage. 

Further correspondence clarified that for warehouse additions, no new endorsement was needed, and an agreed rate for new locations was established, allowing them to receive the policy limit. Records show this same procedure was followed for warehouses in Argentina, South Africa, and Dubai during the Endorsement No. 40 period.

An email dated August 13, 2013, from Robin Thompson to Jeffrey Factor details the forwarding of COPE and other information regarding new warehouse locations in Argentina to be added to an insurance policy effective that day. A subsequent email from Jessica Azucena to Factor on October 11, 2013, discusses an additional premium charged by Starr for a warehouse in Dubai, as its storage value exceeded $3 million. In another instance in October 2013, Brightstar provided a spreadsheet with COPE information for new warehouses in South Africa, which Gallagher forwarded to Factor. 

On September 30, 2013, Factor inquired about the locations, and Gallagher responded, leading to a discussion about inspecting a warehouse, with Factor indicating he would order the inspection after confirming coverage could be bound with an additional premium of $2,330. The established practice for adding new warehouse locations involved Brightstar supplying necessary information to Gallagher, who would then relay it to Starr, confirming coverage binding with an additional premium. 

Brightstar does not demonstrate that this process was followed for the German Warehouse during the Endorsement No. 40 period. Starr did not communicate any additional premium for the German Warehouse nor confirmed coverage binding. Brightstar argues that the shift to insuring all locations "as per schedule on file with underwriters" constituted a significant change, suggesting that all locations with prior notice were included as scheduled. Brightstar claims the German Warehouse was "on file" due to a reference in an earlier email. However, Brightstar’s argument lacks reference to the specific language of Endorsement No. 40, which pertains to a "schedule on file," instead relying on the vague notion of the warehouse being "on file," which is ultimately deemed irrelevant.

Brightstar presents various types of extrinsic evidence to support its claim regarding the German Warehouse being included in the documentation with Starr. Brightstar cites a deposition where Factor mentions that Starr maintained hard copies and electronic files for client accounts, which included emails and relevant documents. However, Factor clarifies that his filing method did not imply inclusion of specific emails in the official client files. As such, this testimony does not substantiate Brightstar's assertion that the O'Brien February 20, 2013, email was part of the "schedule on file" with underwriters.

Brightstar also counters evidence about the procedure for adding new locations to the Policy under Endorsement 40 by arguing that an email from Gallagher to Starr regarding Sri Lankan warehouses indicates notification alone suffices to bind coverage. Brightstar highlights that Gallagher's email mentioned an "endorsement/invoice," yet no formal endorsement for Sri Lanka was made. Furthermore, Brightstar references Factor's email stating that no endorsement was necessary, suggesting the new locations should be included in the next quarterly Statement of Values (SOV). Despite these points, the email chain includes crucial information such as COPE data for the new locations, a quoted premium for coverage, and requests for Starr's confirmation to bind coverage. Factor's statement about no need for formal endorsement merely reiterates that Endorsement No. 40 did not require one. Overall, the evidence indicates that Starr's approval remained necessary for new locations, contrary to Brightstar's arguments. Brightstar also claims that premium payments for the German Warehouse support its inclusion in the documentation with Starr.

Brightstar references deposition testimony from Gallagher's Lisa Rodriguez, who indicated that the premium for insurance was set at 100% based on sales, including those from the Frankfurt Warehouse in Germany for 2013. There is ambiguity regarding how Brightstar's total sales influenced the premium during the 2013 renewal. Rodriguez elaborated that traditionally, the policy was rated based on sales rather than risks associated with warehouses. Prior to the 2013 adjustment, Starr had maintained the original rate since the policy's inception but adjusted it to establish a flat premium for warehouses. This aligns with testimony from Jeffrey Factor and expert Jeffrey Posner, who asserted that the 2013 premium was primarily determined by Brightstar's willingness to pay, rather than specific statements of value.

Factor's communications reveal an agreement on a flat warehouse premium of $1,750,000, which did not account for the German Warehouse. Brightstar has not presented evidence suggesting that excluding the German Warehouse's sales would have reduced the premium. Furthermore, even if German sales were included, it would not contradict the coverage of that warehouse under the policy. Additionally, premiums were consistently charged for new locations added during the policy period, a fact acknowledged by Rodriguez and reflected in Factor's communications. Gallagher's request for retroactive premium adjustment for the German Warehouse after a loss underscores their awareness of these terms.

Brightstar argues that the German Warehouse was included in the insurance schedule before the loss, supported by expert reports, including those of Douglas D. Parks and Michael Fitzgerald. However, expert testimony regarding contract interpretation is generally inadmissible, as established in legal precedents. The reports by Parks and Fitzgerald primarily express their interpretations of the contract, which do not aid in resolving the case's factual issues. Parks claims that a notification from Brightstar updated the warehouse schedule, while Fitzgerald asserts that the German warehouse was part of the schedule under a specific endorsement, but neither provides sufficient contractual analysis. Under New York law, evidence of industry customs must demonstrate that the term in question has a consistent usage and that the parties were aware of this custom. Only Jeffrey M. Posner's report addresses the meaning of "schedule on file" in the insurance context, explaining its common usage but failing to establish it as having a fixed meaning or being widely recognized in the industry.

The discussion centers on the interpretation of the phrase "schedule on file" in relation to insurance policy terms. Posner's analysis is deemed inadequate for establishing that this phrase necessitates ignoring evidence concerning its meaning in Endorsement No. 40. His references to "custom, practices, and/or standards" of the insurance industry lack specificity regarding their application and prevalence. Posner suggests that policyholders may notify underwriters of changes through informal means, such as emails containing essential information about new locations, rather than altering the initial statement of values.

Posner does not substantiate Brightstar's claim that "schedule on file" encompasses every warehouse known to the insurer, instead indicating it typically represents an updated list based on required information provided by the insured. He fails to address whether customary practices apply when the insurer mandates verification of the schedule's completeness before coverage is bound, or in cases where a consistent performance pattern for adding new locations exists. 

Consequently, a reasonable jury could not interpret Posner's report to mean that the "schedule on file" includes all warehouses with which Starr had notice. Additionally, Brightstar asserts that Gallagher, as Starr's agent, should have relayed information regarding the German Warehouse, which Brightstar provided in March 2013. However, Gallagher did not transmit this information to Starr. Brightstar cites authority indicating that an insurance broker can serve as both the insured's broker and the insurer's agent under New York law.

Principals are generally bound by the notice or knowledge of their agents regarding matters within the scope of agency, even if such information was not directly communicated to them. However, an insurance broker typically acts as the agent of the insured, meaning that notice given to the broker does not equate to notice to the insurance carrier unless the broker is proven to be acting as the carrier’s agent. To establish that a broker is acting on behalf of the insurer, there must be evidence of actions by the insurer or facts indicating a general authority for the broker to represent the insurer.

In the case at hand, Brightstar failed to provide evidence that Gallagher acted as Starr’s agent. Brightstar argued that the issue of agency could be a question of fact in complex cases, yet it did not present specific facts to demonstrate a genuine trial issue, as required to oppose a motion for summary judgment. The court emphasized that reliance on vague allegations or speculation is insufficient. 

Brightstar also contended that an email sent to Gallagher prior to a loss indicated that a new warehouse was added to the insurance schedule. However, Brightstar did not provide evidence to show that the parties agreed to update the schedule without necessary prerequisites, such as providing security or paying additional premiums. The court noted that the term "schedule on file with underwriters" cannot imply that all warehouses noted by the insurer are automatically covered without explicit approval, as this interpretation would undermine specific contractual provisions. Furthermore, silence from the insurer’s agent regarding an insured's request does not imply an intention to modify the insurance policy terms, particularly when further discussions were anticipated.

The term "schedule on file with underwriters" specifically includes warehouses listed in a spreadsheet attached to Factor's March 19, 2013, email, along with any additional warehouses insured by Starr after receiving the necessary information from Gallagher and charging an additional premium. The established course of performance under Endorsement No. 40 demonstrates a consistent practice of adding new warehouses, a process not applied to the German Warehouse. Consequently, summary judgment is granted to Starr, confirming that the German Warehouse is excluded from the "schedule on file" under Endorsement No. 40.

Starr argues that since the German Warehouse was not listed on the "schedule on file," it qualifies as an unnamed location with a $3 million liability limit, subject to exclusions under Endorsement No. 40. Brightstar contends that a reasonable finder of fact could not determine the Frankfurt location was unnamed, referencing O'Brien’s notice to Starr in a February 20, 2013, email. However, prior rulings indicated that this email did not incorporate the German Warehouse into the "schedule on file." Brightstar fails to assert that any location not included on the "schedule" could be considered anything other than unnamed, leading to the granting of Starr's motion on this matter.

Brightstar claims Starr should be estopped from denying coverage for the Frankfurt warehouse due to its non-inclusion on the "schedule" or non-compliance with minimum standards in the Starr Policy. Brightstar's argument includes the notion that Factor's silence in response to O'Brien’s email might support claims of waiver, estoppel, or agreement to insure the warehouse. Brightstar posits that Factor's inaction in ordering a survey or addressing the February 20 email should waive the requirement for the warehouse to be on the "schedule on file" or meet minimum standards, thereby preventing Starr from denying full coverage. Brightstar emphasizes that Scrobe's email indicated an expectation of coverage by providing the warehouse address for Starr's site survey. Brightstar asserts that since Factor did not order a survey, Starr waived any objections regarding the warehouse's compliance with policy standards.

In New York insurance law, waiver and estoppel are distinct concepts, with waiver defined as the voluntary and intentional relinquishment of a known right.

In Inc. v. Flack, the court emphasized that issues related to insurance coverage, particularly the existence or nonexistence of coverage based on the insuring clause and exclusions, are not subject to the doctrine of waiver. For an insured to expand coverage beyond what was originally agreed upon, a supplemental contract would be necessary, as waiver involves the voluntary relinquishment of a known right. The dispute involves a provision in Endorsement No. 40, which Brightstar argues required Factor to order a loss control survey of the German Warehouse following an email notification on February 20, 2013. Brightstar claims the failure to conduct this survey constituted a waiver, while Starr Marine contends it lacked adequate information to perform the survey. Regardless of any obligation to conduct the survey, the court held that failure to comply cannot be considered a waiver of policy requirements under New York law. Factor's inaction in response to the email does not equate to a relinquishment of Starr's rights concerning the German Warehouse's compliance or underwriting review before extending coverage. The cited cases by Brightstar do not substantiate its waiver argument, as they dealt with different circumstances, such as an insurer's failure to timely disclaim coverage despite having sufficient information, and a situation where a letter from an insurer extended coverage beyond the original policy terms.

An insurance company's conduct that leads an insured to believe a premium payment extension has been granted and that coverage will not be forfeited constitutes a waiver of conflicting contract provisions, preventing the insurer from asserting those provisions. In this case, unlike Reddick, where affirmative representations were made to the insured regarding coverage, Brightstar could not demonstrate that Starr's actions led to a reasonable belief that the German warehouse was covered. Brightstar claims that Starr should be estopped from denying coverage, as it relied on Starr to survey the warehouse and notify of any issues. Despite communication indicating a planned operation start, Starr did not conduct the survey or include the warehouse in its records. Thus, Brightstar argues that Starr should be estopped from denying $25 million in coverage for warehouses on file or automatic coverage for warehouses meeting policy standards. The doctrine of equitable estoppel can prevent an insurer from asserting valid defenses if its conduct induced the insured to reasonably and detrimentally rely on a belief that such defenses would not be claimed. This principle is rooted in fairness, ensuring that no party benefits from its wrongful conduct, particularly when the other party has acted based on a misleading belief fostered by that conduct. Unlike waiver, equitable estoppel can apply even where no coverage existed initially, provided the insured's reliance on the insurer's actions or omissions prejudices its position.

Principles of equitable estoppel may apply when an insurer, despite lacking an obligation to provide coverage, engages in the defense of a case without asserting policy defenses. This can lead to the insured experiencing a loss of control over their defense, which may prevent the insurer from later claiming that coverage does not exist. Under New York law, estoppel necessitates proof that the insured suffered prejudice due to the insurer's actions. Furthermore, the party invoking estoppel must demonstrate that their reliance on any misrepresentation was reasonable under the circumstances. 

In evaluating Brightstar's estoppel argument regarding O'Brien's email about arranging a site survey, it must be assessed whether Brightstar’s expectations concerning coverage for the German Warehouse were reasonable. Despite any initial reasonable belief of coverage after O'Brien's email, Brightstar could not reasonably rely on Starr's silence, especially after receiving a subsequent email listing warehouses to be verified. This communication indicated that the German Warehouse was not included in the coverage, thus negating any earlier assumption of its inclusion. Additionally, Starr's request for confirmation of all locations emphasized the need for clarity on coverage, and the established procedure required prior information submission before a survey could be ordered. The overall context and course of performance between the parties suggest that it was unreasonable for Brightstar to assume coverage without the necessary verification steps being followed.

Numerous emails from Jeffrey Factor to Robin Thompson and others reveal a consistent process for adding new locations to the insurance policy during the terms of Endorsements Nos. 17 and 40. These emails outline requirements for adding locations, the need for surveys, and contact details. Specifically, an email dated July 23, 2012, requests information to add a location, while another from May 1, 2012, confirms that a location can be added, contingent upon a survey and compliance within thirty days. An October 3, 2013, email discusses adding a warehouse and indicates that once confirmation is received, a survey will be ordered. Despite these communications, Brightstar lacks evidence that Starr had previously ordered surveys solely based on notice of a new warehouse. Additionally, records indicate that surveys were unnecessary for locations under a certain value, contradicting Brightstar's claims. Kevin O'Brien noted that locations could store up to $3 million without requiring a survey. The absence of evidence showing that parties initiated the addition of a warehouse under the discussed terms leads to the conclusion that it was unreasonable for Brightstar to assume coverage was established for the German Warehouse based solely on Starr's non-response to an email. The legal precedents cited by Brightstar regarding insurer silence are distinguishable, as there was no failure to notify similar to those cases.

The Fifth Circuit ruled that the insurer's actions contradicted its claim of nonliability due to a known breach of warranty, as the Assured was induced by the insurer's conduct to act detrimentally, encapsulating the essence of estoppel. However, this reasoning does not apply in this case since Starr did not induce Brightstar to believe that the German Warehouse was covered, nor did it prompt any substantial action. The case of Calisi v. CNA Ins. Co., which involved an insurer waiving its right to a trial by acquiescing to arbitration rules, is deemed irrelevant because Brightstar fails to connect the insurer's attorney's silence during arbitration to the silence at issue here. Consequently, Brightstar's arguments regarding waiver and estoppel are deemed meritless.

Starr seeks clarification on the scope of the Policy's "Errors and Omissions" clause, asserting it cannot extend coverage beyond what was originally agreed. Brightstar, while arguing that the clause prevents forfeiture of coverage, has not filed for summary judgment to define its meaning or scope. The clause states that the policy remains valid despite unintentional delays or errors in necessary declarations, provided they are communicated promptly. Brightstar's brief focuses on the assertion that the German Warehouse was already insured, rather than addressing whether the clause can extend coverage. Courts have consistently held that such clauses cannot retroactively extend coverage after a loss for properties not initially insured. The reasoning of these courts is persuasive, emphasizing that allowing an insured to rectify a failure to insure by paying a premium post-loss is inappropriate.

The insured is incentivized to insure properties selectively, paying premiums only after a loss occurs, which reduces overall insurance costs. Starr is granted summary judgment regarding this practice. The Misappropriation Exclusion Clause (Clause No. 40) specifically excludes coverage for losses due to misappropriation or dishonest acts involving the insured or their agents while goods are stored in warehouses they own, lease, or control. Brightstar seeks summary judgment to deny coverage for a loss at the German Warehouse based on this clause, while Starr requests clarification on the terms "other party of interest" and "controlled by." Under New York law, an insurer must clearly establish that an exclusion applies; ambiguity favors the insured. The insurer bears the burden of proving that a loss falls within an exclusion. Here, Starr has not demonstrated that the exclusion applies, and therefore Brightstar is entitled to summary judgment dismissing Starr's claim. The parties agree that the loss resulted from dishonest acts and that Brightstar neither owned nor leased the German Warehouse. For the exclusion to apply, it must be shown that Brightstar "controlled" the warehouse and that getgoods was an "other party of interest." The term "controlled" is debated: Starr contends it refers to influence over the warehouse, while Brightstar argues it signifies dominion over the entire warehouse, not just the goods stored within.

Brightstar's relationship with the German Warehouse was established through its contractual agreements with getgoods, primarily governed by two documents: the "Master Agreement for Performance of Logistics Services" and Brightstar's "Standard Operating Procedure for 3PL Warehousing." The Master Agreement stipulates that getgoods will provide logistics services for Brightstar, with specific provisions for warehousing outlined in Annex A. This annex requires Brightstar to give getgoods detailed instructions for the handling of its goods and specifies that getgoods will perform order picking and storage based on Brightstar’s written directives.

Brightstar is entitled to inspect the warehouse with prior notice and in the presence of a getgoods employee, and it has rights to verify the accuracy of recorded goods during inbound storage. However, the Master Agreement limits Brightstar's authority, allowing it to direct the handling of its own goods only, without the right to manage the warehouse or dictate the handling of goods belonging to other clients. The SOP further emphasizes Brightstar's oversight role in overseeing the handling of its goods by getgoods, referred to as the "Third Party Logistics Provider." Overall, while Brightstar retains significant control over its goods, it must comply with the operational protocols set by getgoods.

The document outlines the Standard Operating Procedures (SOP) required by Brightstar from the Third Party Logistics Provider (3PL), Getgoods, for their warehouse operations and logistics services. Key responsibilities of Getgoods include providing efficient logistics in line with specified minimum service levels, which encompass secure warehousing, onsite security measures (including CCTV with a one-month recording retention), and proper handling of shipments. Upon the arrival of shipments at the German Warehouse, Getgoods must check the quantity of cartons or pallets, report any discrepancies to Brightstar immediately, and coordinate with Brightstar representatives regarding the acceptance or rejection of shipments with any loss or damage.

The SOP also stipulates procedures for receiving and storing goods, including the requirement that all stock be adequately wrapped or strapped and prohibits double stacking of pallets. Security measures mandated by Brightstar include continuous onsite security, site audits with prior notification, and the separation of Brightstar's inventory from other goods in the 3PL operation, with restricted access.

Starr argues that the language in the Master Agreement and SOP indicates that Brightstar "controlled" the German Warehouse, suggesting that Brightstar had authority over Getgoods' employees. However, the document clarifies that while Brightstar had rights to dictate how Getgoods handled its goods, it did not extend to managing the warehouse operations themselves. The SOP's security obligations do not equate to control over the warehouse. Furthermore, the Misappropriation Exclusion Clause in the insurance policy specifically addresses control over "warehouses" rather than "goods and merchandise," reinforcing that the relevant control pertains to the warehouse itself, not the handling of Brightstar's inventory.

Starr argues that the term "control" in the Misappropriation Exclusion Clause should encompass both the power to influence and the management of a warehouse. However, the discussion clarifies that the clause specifically refers to control over warehouses rather than the goods within them. Definitions cited from Black's Law Dictionary and the Cambridge Dictionary emphasize that "control" implies the ability to influence actions or behaviors, which does not logically apply to a warehouse. While Brightstar had contractual rights regarding the handling of its products, this does not equate to controlling the warehouse itself. Starr's assertion that "legal control" is established through contractual relationships is contested, as the cited cases do not substantiate that Brightstar's rights equate to legal control over the warehouse. The referenced case law illustrates that legal control involves rights granting possession and physical control, which Brightstar lacked regarding the warehouse in question.

Control over a car can be established through "physical dominion," regardless of a legitimate right to use it. However, in this case, there was no arrangement granting Brightstar physical control over the entire German Warehouse. Although Starr claims Brightstar admitted control by marking "yes" in an insurance schedule, this notation does not equate to the contractual definition of control needed to invoke coverage under the Misappropriation Exclusion Clause. Brightstar's CEO, Oscar Fumagali, indicated that the schedule was preliminary and could not be assumed to be complete or accurate, further weakening Starr's argument. The ambiguity in the term "control" does not support a finding that Brightstar controlled the German Warehouse as required by the policy. Therefore, the Misappropriation Exclusion Clause is deemed inapplicable as a matter of law. Even if Starr's interpretation of control were valid, multiple reasonable readings exist, which preclude exclusion from coverage. Consequently, Brightstar is entitled to a ruling that the Misappropriation Exclusion Clause does not apply to the loss. The court grants in part and denies in part the plaintiff's motion for partial summary judgment and grants the defendant's motion for partial summary judgment.

The German Warehouse is classified as an "unnamed/unscheduled" location under Endorsement No. 40. The Errors and Omissions Clause in Endorsement No. 40 does not provide coverage for locations not already insured under the policy. Additionally, the Misappropriation Exclusion Clause does not pertain to the loss in question, resulting in the dismissal of Starr's Second Cause of Action. The document references multiple motions and declarations filed by both parties regarding the dispute, including notices for partial summary judgment and various supporting materials filed on May 25, 2018, and subsequent dates.

Brightstar denies that Starr's principal place of business is New York, asserting it is located in Dallas, Texas, but does not incorporate this claim in its choice of law briefing, deeming it irrelevant to the decision. An email mentions prior discussions about a German Warehouse, although Scrobe could not recall the conversation in his deposition. Jeffrey Factor's deposition excerpts indicate that the schedule referenced was derived from Gallagher's "SOV," with the last communication to Starr dated February 11, 2013. Starr's claims regarding concerns starting in "late August 2013" appear to contain a typographical error. Various depositions, including those of Oscar Fumagali, Arturo Osorio, and Lisabet Rodriguez, are referenced, highlighting Factor's testimony on coverage periods and underwriting rights related to warehouse locations. Specific minimum standards for warehouse coverage were outlined, including requirements for building age, construction materials, fire safety measures, and security protocols, alongside adherence to established ISO, NFPA, and TAPA standards for facility security.

Access control, security systems, and procedures are mandated for the facility, which is to be guarded 24/7 by armed personnel where legally permissible, with hourly check-ins to a central station. If the Brightstar product cannot be secured in a designated area, armed guards will be employed to monitor the goods continuously. The policy specifies that neither party has addressed whether Brightstar adequately reported the German Warehouse or notified Starr as required for AJ Gallagher's review. Depositional testimony from Starr is included as exhibits in various declarations. The term "schedule" is utilized to refer to lists of covered items and vehicle requirements, with definitions cited from recognized dictionaries. The legal framework for incorporation by reference in Florida aligns with that in New York, specifying that a document must clearly refer to and describe the incorporated document for it to be valid. The phrase "schedule on file with underwriters" is deemed unambiguous, incorporating a referenced spreadsheet without the need for extrinsic evidence.

The Factor March 19, 2013, email and Gallagher's follow-up communications support the conclusion that the attached spreadsheet is a schedule of all locations with a $25M limit, covered by a previously agreed flat warehouse premium. Brightstar's argument regarding a prior email from January 2013, which indicated that a master schedule with COPE information was "NOT what we are looking for," is clarified in context; it pertains to the format for a quarterly statement and does not imply a lack of information for the German Warehouse. Brightstar's references to the Florida anti-technical statute and the case Morrisania, which have been addressed in previous sections, do not strengthen their position. The court finds Brightstar's waiver and estoppel claims unmeritorious, rendering Starr's arguments about the adequacy of notice moot. 

The Second Circuit's interpretation of New York law emphasizes that exclusions must be clearly articulated, and the consideration of extrinsic evidence is required before applying contra proferentem. Neither party presented extrinsic evidence regarding the intent behind ambiguous terms. Starr claims that Brightstar's prior broker drafted the clause, but Brightstar's rebuttal indicates Starr has not substantiated this claim. Ultimately, even without applying the Westview rule, the court concludes that Brightstar did not "control" the German Warehouse under the policy's terms. Starr's argument relying on the principle of noscitur a sociis, which suggests that the meaning of words can be clarified by associated terms, is applicable only to ambiguous language. If the term "controlled" is deemed ambiguous, New York law dictates that it cannot be used against Brightstar.

To invalidate coverage based on an exclusion, an insurer must demonstrate that the exclusion is articulated in clear, unmistakable language, has no reasonable alternative interpretations, and is applicable to the specific situation. Brightstar highlighted that the prior year's schedule inquired about ownership or control of Brightstar Germany GmbH, not the warehouse itself, suggesting the "yes" response was likely a clerical error due to a column title change that went unupdated. Additionally, an email from January 31, 2014, indicated that the German Warehouse had been removed from the Policy, providing Starr with no grounds to consider the Frankfurt Warehouse information relevant. The court found Starr's other arguments regarding the Misappropriation Exclusion Clause to be unconvincing.