Bankruptcy of Storage Facility Created a Compensable Loss
Barry Zalma
Jan 15, 2024
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Plaintiffs insurers sought a declaration that there is no coverage for the insurance claim made under the policy for the loss of soybeans. The Defendants moved for partial summary judgment on its first and second counterclaim. In Endurance American Insurance Company, Zurich American Insurance Company, and, Atain Insurance Company v. Stonex Commodity Solutions, LLC F/K/A FC Stone Merchant Services, LLC, 2024 NY Slip Op 30076(U), Index No. 653234/2022, Motion Seq. No. 004, NYSCEF Doc. No. 108, Supreme Court, New York County (January 8, 2024) the Supreme Court (trial court) resolved the dispute.
BACKGROUND
From 2017 to 2021, defendant stored millions of bushels of soybeans at warehouses owned by non-party, Express Grain Terminals, LLC (“EGT”). In September 2021, upon the discovery by EGT’s lender that EGT had less inventory than it was reporting, EGT was forced into bankruptcy, resulting in the dispossession from StoneX of 2,780,000 bushels of soybeans subject to a determination by the bankruptcy court of various competing interests in the disposition of EGT’s assets.
Ultimately, in the bankruptcy proceedings, defendant recovered all but 502,315 bushels of soybeans. Defendant seeks coverage for the loss of these 502,315 bushels of soybeans.
SUMMARY JUDGMENT STANDARD
The proponent of a motion for summary judgment must tender sufficient evidence to show the absence of any material issue of fact and the right to entitlement to judgment as a matter of law. Courts have also recognized that summary judgment is a drastic remedy that deprives a litigant of his or her day in court. Therefore, the party opposing a motion for summary judgment is entitled to all favorable inferences that can be drawn from the evidence submitted.
DISCUSSION
In support of its motion defendant cites to the language of the insurance policy that provides that warehouse receipts, together with third-party inspection reports showing that the warehouse has sufficient goods to meet the insureds requirements, demonstrates the existence of an insurable interest.
Defendant contends that the warehouse receipts establish that EGT was in possession of the requisite number of soybeans to cover the amount of defendant’s soybeans. Further, inspection reports, prepared by independent inspectors, confirm that EGT maintained the appropriate number of soybeans to satisfy defendant’s stored amount. With respect to the date of the loss, defendant contends that September 2021 is the date when it became actually dispossessed based on the bankruptcy filing by EGT.
Specifically, plaintiffs contend that inspector indicating that “obligations to other depositors cannot be adequately verified […] therefore I am unable to make any certifications on these actual obligations and their effect regarding these inventories” creates an issue of fact as to whether the soybeans for which defendant seeks coverage were in existence.
CONCLUSION
The New York Court found that defendant established an actual loss as well as an ascertainable date of the loss, September 29, 2021. The Court declined to read terms into the policy that are not there, specifically that defendant was required to ascertain whether EGT had sufficient soybeans to satisfy all receipt-holders. The parties could have contracted to include those terms in the policy but did not.
The unrefuted evidence was that there were in fact a sufficient number of bushels of soybeans to satisfy defendants claim at the time EGT filed for bankruptcy, it follows that once EGT filed for bankruptcy defendant no longer had access to the soybeans, thus triggering the date of the loss.
Defendant’s motion for partial summary judgment on its first counterclaim is granted; and it is further Adjudged and Declared there is insurance coverage to cover the loss of 502,315 bushels of soybeans; and it is further Ordered that defendant’s motion for summary judgment on its second counterclaim is granted; and it is further adjudged and declared that plaintiffs have breached the underlying contract between the parties for refusing to provide coverage.
ZALMA OPINION
Since the evidence showed that there were enough soybeans to cover that deposited by the defendants when EGT was forced into bankruptcy the division of the assets by the court resulted in a loss to the defendants that was not excluded from the coverages provided by the Plaintiffs.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Posted on January 2, 2026 by Barry Zalma
ZIFL – Volume 30 Number 1
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
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Supreme Court of Louisiana Removes Judge
Judge Who Lied to Get Elected Cannot Serve
In In Re: Judge Tiffany Foxworth-Roberts, No. 2025-O-01127, Supreme Court of Louisiana (December 11, 2025) the Louisiana Supreme Court in an opinion by Chief Justice Weimer dealt with the recommendation of the Judiciary Commission of Louisiana (Commission) that Judge Tiffany Foxworth-Roberts be removed from office for:
1. making false and misleading statements regarding her judicial campaigns;
2. making false and misleading statements to police investigating the reported burglary of her car; and
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Post 5251
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A Lawyer Who Commits Insurance Fraud and Pleas to a Lower Charge Only Suspended
In The Matter Of: Naomi R. Leisz, Attorney at Law, No. PR 25-0150, Supreme Court of Montana (December 23, 2025) the Montana Office of Disciplinary Counsel (ODC) filed a formal disciplinary complaint with the Commission on Practice (Commission) against Montana attorney Naomi R. Leisz.
On September 25, 2025, Leisz tendered a conditional admission and affidavit of consent. Leisz acknowledged the material facts of the complaint were true and she had violated the Montana Rules of Professional Conduct as alleged by ODC.
ADMISSIONS
Leisz admitted that in April 2022, her minor son was involved in a car accident in which he hit a power pole. Leisz’s son ...
Montana County Attorney Admits to Insurance Fraud & Is Only Suspended from Practice for 60 Days
Post 5251
Read the full article at https://lnkd.in/gnBaCjmv, see the video at https://lnkd.in/gfpVsyAd and at https://lnkd.in/gC73Nd8z, and at https://zalma.com/blog plus more than 5250 posts.
A Lawyer Who Commits Insurance Fraud and Pleas to a Lower Charge Only Suspended
In The Matter Of: Naomi R. Leisz, Attorney at Law, No. PR 25-0150, Supreme Court of Montana (December 23, 2025) the Montana Office of Disciplinary Counsel (ODC) filed a formal disciplinary complaint with the Commission on Practice (Commission) against Montana attorney Naomi R. Leisz.
On September 25, 2025, Leisz tendered a conditional admission and affidavit of consent. Leisz acknowledged the material facts of the complaint were true and she had violated the Montana Rules of Professional Conduct as alleged by ODC.
ADMISSIONS
Leisz admitted that in April 2022, her minor son was involved in a car accident in which he hit a power pole. Leisz’s son ...
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
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