Before Judges King, P.G. Levy and Lefelt.
The opinion of the court was delivered by: King, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: February 24, 2000
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County.
This is an insurance claim by plaintiff Lilliston Chrysler Plymouth, an automobile dealer, under the extended theft provision of its policy with defendant Universal Underwriters Group (Universal). The dealer appeals from a summary judgment in favor of Universal on the ground that the dealer's alleged theft loss, as a matter of law, was not a covered event under the policy. We disagree and reverse. We conclude that the dealer presented a case for consideration by the trier-of-fact under the inventory-theft coverage provision of the policy.
On July 17, 1997 plaintiff Lilliston filed a complaint and a jury trial demand against Universal; Vincent Dorsey; four corporations operated by Dorsey: Eagle Acceptance Corporation, Eagle Financial Management, Inc., Talon Acceptance Company and Prime Lending Corporation; and Granite Funding I Corporation. Lilliston dismissed this action as to Dorsey and his corporations because of service of process difficulties and their destitute status. Lilliston took a default judgment against Granite, which later went into Chapter 11. This case then boiled down to the coverage claim by Lilliston against Universal. On cross-motions for summary judgment, Universal prevailed.
Lilliston's claim was based on the "Extended Theft" section (1)(d) provision of its Unicover policy with Universal, specifically the AUTO INVENTORY coverage feature. The applicable coverage clause states in pertinent part:
(1) YOUR voluntarily parting with evidence of title to or possession of a COVERED AUTO when induced by:
(d) any other criminal scheme, criminal trick or criminal device which induces YOU, at that time, to part with evidence of title to or possession of the COVERED AUTO.
Lilliston contended it was induced to part with two vehicles and their titles by a criminal scheme, trick or device perpetrated by Dorsey.
Many of the pertinent facts are contained in a certification by Robert Ternay, Lilliston's controller. Plaintiff had been using Dorsey to procure financing for "high risk" loans for about a year before the 1996 Elliot and Loatman transactions on which these claims are based. On March 27, 1996 plaintiff sold a vehicle to Loatman for $20,557 with financing for $19,249.96. On May 8, 1996 plaintiff sold a vehicle to Elliot for $22,821.50 with financing of $22,000.01. Both of these loans were "high risk." On both of these transactions, Dorsey "shopped" the financing to Granite.
After Dorsey obtained the commitments for the loans from Granite, Elliot and Loatman made initial payments on their vehicles to Lilliston directly until the paper work was completed and the payment booklets were forwarded. Lilliston then sent these initial payments, which it had received on the loans, to the financing entity, here Granite. That entity in turn, as was customary, sent a check to Dorsey for the balance of the purchase price of the financed vehicles, which included the commission for Dorsey's services. Customarily, Dorsey would remit a check to Lilliston for the net cost of the vehicle after deducting his commission. Presumably, the installment sales contracts and the titles were ultimately assigned to Granite, the financier of the vehicles, through Dorsey. There is no irregularity claimed in this respect as to these transactions. The purchasers now are driving their cars and making regular payments, apparently to Granite's representative in bankruptcy reorganization. The problem is ...