Navigators Insurance Company v. Goyard, Inc.

Background

Goyard, Inc. insured its marine cargo with Navigators Insurance Company. The policy covered specified goods, including luxury bags and other leather goods, while they were being shipped and while held at listed locations, including Goyard’s East 63rd Street location. The policy valued covered goods at the invoice amount plus ten percent.

The parties added a storage-coverage endorsement effective January 1, 2020. Goyard paid a substantially higher premium for that coverage. The endorsement covered insured goods while held at approved locations but excluded risks excluded by the policy’s fire, casualty, and strikes, riots, and civil commotion warranties.

After an overnight break-in during civil rioting following George Floyd’s murder, Goyard reported the theft of $684,855 in merchandise on June 2, 2020. Navigators denied coverage, asserting that the policy did not extend to retail-storage losses caused by strikes, riots, or civil commotion. Both parties sought declarations about the meaning of the insurance contract. Goyard also sought payment for the loss, attorneys’ fees, punitive damages, and damages for breach of contract.

After discovery, the parties filed cross-motions for summary judgment. Goyard separately moved to strike portions of Navigators’ supporting declarations and affidavits as hearsay and improper expert testimony.

Insurance Coverage Ruling

The court treated the dispute as one of contract interpretation rather than a factual dispute. It concluded that the policy’s strikes, riots, and civil commotion endorsement added coverage for losses caused by riots. The relevant subsection covered vandalism, sabotage, or malicious acts and did not require the goods to be in the ordinary course of transit. The court noted that Navigators did not dispute that the loss arose from a riot or that this endorsement took precedence over the general strikes, riots, and civil commotion warranty.

The court rejected Navigators’ argument that the storage-coverage endorsement excluded the loss. Reading the policy as a whole, the court held that the storage endorsement’s reference to risks excluded by the general warranty did not cancel the separate endorsement that restored coverage for riot losses. The court also relied on evidence that Goyard’s broker sought broad retail-inventory and strikes, riots, and civil commotion coverage, that Navigators described the updated quote as removing an exclusion for goods at a retail store, and that Goyard paid a much higher premium. The court further stated that any remaining ambiguity would be read against the insurer.

The parties agreed that the stolen goods were worth $684,855. Applying the policy’s ten-percent addition, the court calculated Goyard’s recovery at $753,340.50. Because the contract did not specify when payment was due, prejudgment interest began 30 days after demand, on July 2, 2020, at nine percent per year.

Attorneys’ Fees and Punitive Damages

The court granted Navigators’ motion for summary judgment denying Goyard’s claim for attorneys’ fees and punitive damages. It explained that an insured generally cannot recover legal expenses incurred in a coverage dispute with its insurer. The court also found no basis for punitive damages because it did not view Navigators’ denial of coverage and filing of the action as bad faith.

Motion to Strike and Disposition

The court denied Goyard’s motion to strike as academic. It observed that some challenged filings contained Navigators employees’ opinions about what the policy meant, but interpreting the policy was the court’s responsibility.

Judge Alvin K. Hellerstein granted Goyard’s motion to recover the value of its lost goods and directed entry of judgment for $753,340.50, plus nine-percent annual prejudgment interest from July 2, 2020, and costs as taxed by the Clerk. The court granted Navigators’ motion to dismiss Goyard’s claims for attorneys’ fees and punitive damages, denied Goyard’s motion to strike, directed the Clerk to terminate the open motions, and closed the case.