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Court determines Chubb unit’s obligation in bankruptcy case

court ruling

A Chubb Ltd. unit must pay $998,618 plus other expenses to a textiles company under a marine policy in connection with the nonpayment for goods sent to a customer that went bankrupt, a federal court ruled Thursday.

In a January 2019 decision, the U.S. District Court in New York ruled that New York-based Fabrique Innovations Inc. was entitled to recovery under its policy with Chubb unit Federal Insurance Co., according to the decision in Fabrique Innovations Inc. v. Federal Insurance Co.

The latest ruling established the amount Fabrique is entitled to recover.

In October 2015, Fabrique and Irving, Texas-based Hancock Fabrics Inc., which is not a party to the litigation, reached an arrangement under which Hancock would store Fabrique’s goods at Hancock’s storage facility in Baldwyn, Mississippi and ship those goods to Fabrique’s customers as well as sell the textile maker's goods in its own stores, according to the ruling.

In February 2016, Hancock filed for bankruptcy. A dispute between Hancock and Fabrique over the goods resulted in a $250,000 payment to Fabrique, according to the ruling.

Following the January 2019 decision, Fabrique moved for summary judgment in the issue of damages. While Fabrique contended it was entitled to $998,618.40 for the value of the missing goods, Chubb said there were issues as to what, if any, goods were “merchandise in transit” covered under the policy, and the quantity of goods that were stored at the Hancock warehouse at the time of the loss.

 “Contrary to defendant’s assertions, the record establishes both that the Goods at issue were ‘intracompany shipments’ and, therefore ‘merchandise in transit’ and that the value of the Goods, minus the credits for Plaintiffs recovery from Hancock, is $998,618.40,” the ruling said.

The ruling also said Fabrique is entitled to $555,904.47 in connection with expenses incurred in connection with its efforts to recover the goods from Hancock and prejudgment interest.

Chubb’s attorney had no comment, while Fabrique’s attorney could not immediately be reached.

Last week, a federal appeals court affirmed a lower court ruling and held a Louisiana bank cannot recover the $11.7 million settlement it reached with the federal government under its professional liability coverage with Chubb Ltd. and Travelers Cos. Inc. units because the government was not the bank’s client.