The Custom Companies, Inc., et al. v. North River Insurance Co., 2013 WL 441170 (N.D. Ill. 2013)

Freight broker CDN Logistics purchased a policy from insurer Crum & Forster that included contingent cargo liability (CCL) and motor truck cargo (MTC) coverage. It brokered a load of Nike athletic shoes that vanished during an interstate haul. After paying out $212,432.28 to settle Nike’s claim, it collected $100,000 from the insurer of the trucker from which the load was stolen. Out of pocket $112,432.28, it extended its open palm toward Crum & Forster for the difference under both aspects of coverage. When the insurer declined to fill that palm, CDN sued it in the U.S. District Court for the Northern District of Illinois.

On cross motions for summary judgment, Crum & Forster moved to dismiss any claim under the MTC coverage, asserting that the entire record confirmed CDN was wearing its broker hat in this transportation. CDN claimed it had trip leased a truck, and exercised a level of control over the transit that a question of fact remained as to whether it might have been wearing its carrier hat in this transaction. Agreeing, the court denied the MTC coverage part of Crum & Forster’s motion.

The policy’s CCL endorsement contained that standard language proclaiming it to be “excess over any other collectible insurance…,” and coverage was generally capped at $100,000 for wearing apparel cargoes. The insurer conceded this coverage applied, but urged it should be applied subject to set off of the $100,000 CDN had collected from the carrier’s insurer. CDN retorted by pointing to another endorsement that provided the $100,000 ceiling applied to the MTC coverage, and was an amendment to what would otherwise be a $10,000 cap for that part of the policy. Thus, CDN rationalized that the $100,000 cap doesn’t apply to the CCL endorsement at issue. This is just as confusing in the opinion, but in any event, the court shot it down, citing that the existence of an amendment applicable only to MTC coverage doesn’t negate the fact that the policy generally was limited to $100,000. The court also found unpersuasive terms mandating coverage requirements between the parties.

Thus, CDN survived summary judgment on the MTL coverage issue, with which it might ultimately have a tough time, but CTL coverage was nixed by the earlier insurance payment.