Vons Companies, Inc. v. Federal Insurance

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

I.

INTRODUCTION AND RELEVANT BACKGROUND

On May 8, 1997, The Vons Companies, Inc. filed this action for declaratory relief and breach of insurance contract against Federal Insurance Company in the United States District Court for the Southern District of Florida. On November 25, 1997, the District Court transferred the case to the Central District of California and assigned it to the Honorable Irving Hill. It was subsequently reassigned to this Court.

The action arises out of Federal’s denial of insurance coverage to Vons. In its proof of loss Vons had informed Federal that Vons had suffered or might suffer a “direct loss of money or other property caused by thefts and forgeries by Gene Shirley, an employee of Stanford Trading, Inc., which company provided services to Vons as an independent contractor.” Declaration of Carleton R. Burch (“Burch Decl”), Ex. 1, at 55. Stanford worked with another entity, Premium Sales, in the purchase and sale of products in a secondary market in the grocery and health and beauty aid retail business known as “diverting.” Vons and Stanford…