This case is about counterfeit wine and apparently Shakespeare. The first line of the opinion reads, “O thou invisible spirit of wine, if thou hast no name to be known by, let us call thee devil!” (Shakespeare, Othello, act II, scene 3.).
David Doyle is a collector of rare and vintage wine. In 2007, he obtained a “Valuable Possessions” insurance policy from Fireman’s Fund Insurance Company, with a blanket policy limit of $19 million. During the eight years that Doyle was insured under the policy, he purchased close to $18 million of purportedly rare, vintage wine from Rudy Kurniawan. Unbeknownst to Doyle, Kurniawan had apparently been filling empty wine bottles with his own wine blend and had been affixing counterfeit labels to the bottles. In 2013, Kurniawan was convicted of fraud and was sent to prison for 10 years.
Doyle filed a claim seeking reimbursement from Fireman’s Fund “for the losses he sustained” due to Kurniawan’s fraud. The insurance company denied the claim.
The insurance policy in this case covered “direct and accidental loss or damage to covered property.” Firearm’s Fund argues that no “loss or damage to covered property” occurred; that is, “the wine is in the exact same condition now that it was in when [Doyle] first insured it.”
Based on the nature of property insurance and the plain language of the policy, the Appellate Court agreed with Fireman’s Fund; Doyle indeed suffered a financial loss, but there was no loss to his covered property. The threshold requirement for recovery under a contract of property insurance is that the insured property has sustained physical loss or damage. When it comes to property insurance, diminution in value is not a covered peril, it is a measure of a loss.
The last sentence of the opinion once again quotes Shakespeare. “Finally, we can merely offereth to Doyle this small piece of wisdom from the Bard of Avon: ‘The robbed that smiles steals something from the thief.’ (Shakespeare, Othello, act I, scene 3.)” A better advice would be to call your attorney to review your insurance policies and its coverage.
Anton Vialtsin, Esq.
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