A Chinese insurance company does not have to provide coverage for eight shipping containers containing $889,000 worth of copper wire scrap, which was stolen and replaced with cement brick pavers apparently before it ever left China for Virginia, says a federal appeals court, in affirming a lower court ruling.
New York-based Clones Investment LLC purchased the 440,395 pounds of copper scrap in 2014 from DaLian, China-based DaLian Lancheng Group Co. Ltd. and arranged for it to be shipped to Virginia, according to Monday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in Clones Investment LLC v. The People’s Insurance Co. of China.
The wire had been tested and inspected at DaLian’s facility before being put into containers that were shipped to Virginia. Upon their arrival in Portsmouth, Virginia, it was discovered the containers had been broken into and the wire scrap replaced with cement brick pavers.
DaLian had arranged for a PICC “all risks’ marine cargo insurance policy, whose premiums was included in Clones’ purchase price, according to the court papers.
After PICC refused to provide coverage in the theft, Clones filed suit in U.S. District Court in New York against the insurer, charging breach of contract.
The District Court granted the insurer’s motion for summary judgment, which was affirmed by a three-judge appeals court panel.
The policy’s coverage began when the wire was delivered to the Xingang Port. The dispute in the litigation was whether the place to which the scraps were first delivered, which apparently was where they were stolen, were part of the port, and therefore covered under the policy.
“Clones argues that the District Court erred in concluding that Tianjin Sinuoda Yard….to which the shipping containers were delivered on August 21st and 22nd, 2014, was not part of Xingang Port…for the purposes of whether or not the policy attached upon delivery,” said the ruling.
“By contrast, PICC was able to produce admissible testimony that the Yard and the Port were separate locations, and the entry to the Port to which the containers were subsequently delivered was approximately 15 kilometers away from the Yard.
“Accordingly, the District Court correctly determined that the policy’s coverage did not begin upon the containers’ delivery to Yard,” said the panel, in affirming the lower court’s ruling in the insurer’s favor.
Attorneys in the case could not be reached for comment.
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