New York Appeals Court Rules on Insurers’ Liability for Soybean Loss
A New York appeals court has ruled that three insurance companies are obligated to cover the substantial loss of 502,315 bushels of soybeans incurred by a commodity trader due to the bankruptcy of a warehouse. The decision was handed down by a three-judge panel of the Supreme Court of New York’s Appellate Division, First Department, which sided with a lower court ruling that determined StoneX Commodity Solutions LLC had experienced a covered loss when Express Grain Terminals LLC (EGT) filed for bankruptcy in September 2021.
The case, identified as Endurance American Insurance Co. et al. v. StoneX Commodity Solutions LLC, highlighted the complexities surrounding commodity storage and insurance liabilities. The appellate panel noted that StoneX, based in Kansas City, Missouri, provided sufficient documentation to substantiate that EGT had stored enough soybeans to fulfill the commodity trader’s warehouse receipts.
From 2017 to 2021, StoneX stored soybeans at EGT’s facilities, but the unexpected bankruptcy led to a staggering loss of over 2.7 million bushels. While StoneX managed to reclaim the majority of its inventory through the bankruptcy proceedings, it still faced a significant deficit of 502,315 bushels, prompting the company to seek coverage from its insurers, which include Endurance American Insurance Co., Zurich North American Insurance Co., and Atain Insurance Co.
The insurers, however, contested their responsibility to cover the lost soybeans and initiated legal action against StoneX, requesting a court ruling to absolve them of any obligation. In response, StoneX filed counterclaims alleging breach of contract and failure to indemnify. In January 2024, the trial court granted StoneX’s motion for partial summary judgment, leading to the insurers’ appeal.
As of now, representatives from the involved parties have not responded to inquiries for comments regarding this ongoing legal matter.
Source: businessinsurance.com
