Misplaced Trust Excluded
Barry Zalma
Mar 7, 2024
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Read the full article at https://lnkd.in/d5PzkgWM and see the full video at https://lnkd.in/dwRCQUAA and at https://lnkd.in/d8p2WgD9 and at https://zalma.com/blog plus more than 4750 posts.
W.W. Contracting, Inc. and its owner, Doug Williams (collectively, W.W.), entrusted tools to a W.W. employee but demanded their return at the end of his employment. When the now-former employee allegedly failed to return all the tools, W.W. reported them as stolen and sought insurance coverage for the alleged theft. W.W.’s insurance company denied the claim primarily because W.W.’s insurance policy excluded coverage for property loss “caused by or resulting from dishonest acts by anyone entrusted with the property.”
In Doug Williams and W.W. Contracting, Inc. v. Pekin Insurance, Inc., No. 23A-PL-995, Court of Appeals of Indiana (March 4, 2024) the Court of Appeals resolved the dispute.
FACTS
W.W. employed Dante Wells from December 2017 to January 2019. During this time, Wells allowed W.W. to store its company tools on a piece of real estate Wells owned in Tippecanoe County. In exchange, W.W. allowed Wells to use the tools for “side work” in his own name.
In March 2019, after Wells stopped working for W.W., the company demanded that Wells return the tools stored on his property. When Wells refused, W.W. reported the tools as “stolen” to the Tippecanoe County Sheriff’s Department and sued Wells for replevin. Wells eventually returned what he claimed were all of W.W.’s tools. W.W. therefore submitted an insurance claim to its insurance company, alleging Wells stole the missing tools.
THE POLICY
At all relevant times, W.W. Contracting, Inc. was the named insured on a commercial insurance policy (the Policy) issued by Pekin Insurance (the Insurer). The policy excluded: “Dishonest Act/Entrusted Person, We will not pay for a ‘loss’ caused by or resulting from dishonest acts by anyone entrusted with the property.”
DISCUSSION
W.W.’s allegation that Wells stole its tools established the occurrence of a dishonest act for purposes of the Insurer’s motion for summary judgment.
Wells Was a Person Entrusted with W.W.’s Tools
By entrusting its tools to Wells, W.W. placed its confidence in Wells not to steal the tools.
ZALMA OPINION
When an insurance policy excludes certain potential losses in clear and unambiguous language a court must apply the exclusion as written. There was no question that WW entrusted the tools to Wells and claimed he either stole the tools or they disappeared mysteriously. Both potential events were excluded and the policy excluded the claimed loss.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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