MERIDIAN TEXTILES INC v. INDEMNITY INSURANCE COMPANY OF NORTH AMERICA et al
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"2. The Marine Open Ocean Cargo Policy Issued to Meridian Textiles, Inc.
On or about March 1, 2004, Indemnity Insurance Company of North America (“Defendant”) issued a Marine Open Ocean Cargo Policy to Meridian for the policy period March 1, 2004 through March 1, 2005. Defendant’s marine policy, among its other coverages, included, through Endorsement No. 2, a Warehouse Endorsement. The Warehouse Endorsement.
3. The Fire at Novelty Knits
On December 31, 2004 at approximately 10:00 a.m. a fire broke out in the warehouse at Novelty Knits incinerating a portion of Meridian’s stored product and damaging the rest.
4. The Insurance Claim
On January 4, 2005, Meridian submitted its claim for the loss of its entire inventory located at Novelty Knits. Defendant investigated the loss by engaging an “expert” who determined that the vast majority (90%) of the yarn was undamaged. On October 3, 2005, Defendant made a payment to Meridian in the amount of $376,952.00, representing Defendant’s purported adjustment of Meridian's loss claim. This sum was accepted by Meridian without prejudice to its claim for the policy limit of$1,000,000. The $376,952.00 figure reflected the Defendant’s view that the vast majority (90%) of the yarn did not actually sustain physical damage. Indeed, in reliance on the expert’s conclusion, Defendant’s coverage counsel wrote a letter dated August 7, 2006 in which he argued that Meridian was not entitled to additional compensation “because the policy was written only to ‘cover against all risk of physical loss or damage from any external cause . . .’ and this language limits Meridian’s right to recover only for yarn which actually sustained physical damage.”