Wisconsin case reviews dispute over commercial crime insurance
Insurance law attorney Jared E. Stolz published an explanatory article on a recent case involving commercial crime insurance, Leicht Transfer & Storage Co. v. Pallet Central Enterprises, Inc.
By: Stolz and Associates
Pallet Central Enterprises, Inc. ("Pallet Central") forged certain delivery tickets and used them to bill Leicht Transfer & Storage Company ("Leicht") for the sale and delivery of pallets that Pallet Central never sold or delivered. Leicht sued and "sought coverage for its losses under the No. 2016AP2334 2 Commercial Crime Insurance Policy issued to it by Hiscox Insurance Company, Inc. ('Hiscox'). Specifically, Leicht asserts that the forged delivery tickets comprise 'directions to pay' within the meaning of the 'Forgery or Alteration' insuring agreement of the Hiscox policy."
At the trial court level, Hiscox was granted summary judgment. Upon appeal, the Supreme Court explained that Leicht had to satisfy three elements to prevail on their claim. "First, it must demonstrate that a 'delivery ticket' is the type of document encompassed by the Policy's insuring agreement. Second, it must show that the delivery tickets were '[m]ade or drawn by or drawn upon [Leicht]; or [m]ade or drawn by one acting as [Leicht's] agent; or that are purported to have been so made or drawn.' And third, it must establish that the payments it made to Pallet Central constitute a 'loss resulting directly' from the forgery."
First, the Court held that delivery tickets were not "directions to pay". It simply denotes the type and number pallets delivered and in fact contains no reference of any sum certain to be paid. While the Court acknowledged that Leicht used the delivery tickets as a direction to pay, the mere fact that they used the delivery tickets in such manner was insufficient to convert them to actual directions to pay under the policy. Put another way, "[t]he Policy required a direction to pay, not a standin for a direction to pay." Therefore, the Court affirmed the dismissal of the case.
Jared Elliott Stolz is an attorney in New Jersey, focusing on insurance law and litigation.
Attorney Profile: https://solomonlawguild.com/
Stolz and Associates
Jared E Stolz, Esq.