Word to the wise: if you want coverage for inventory stored in a warehouse, use an actual warehouse.
In LaptopPlaza Inc. v. Starr Indemnity & Liability Co., the insured, LaptopPlaza Inc., sought coverage for the alleged theft of $711,000 worth of laptops housed in a trailer located on their premises. Starr Indemnity issued a policy that provided coverage by endorsement for “goods and merchandise…while temporarily detained in warehouses.” Because the goods were stored in a trailer that was stationary on their property, LaptopPlaza argued the trailer met the definition of a warehouse as per Black’s Law Dictionary and Merriam-Webster’s Collegiate Dictionary.
The Second Circuit, however, rejected this argument. Instead, the Court focused on the ordinary usage of the terms, noting a trailer “is not a building” and “is designed for the transportation, and not the storage, of merchandise.” Further, the Court observed the trailer should not be considered a warehouse since it “abutted a warehouse but was not permanently attached to it….”
In the end, when interpreting undefined terms in a policy, courts will not reinvent the English language, and will reject strained interpretations of ordinary words. Thus, a trailer, which is designed for transportation, is not transformed into a warehouse simply because it is parked.
Thanks to Chris Soverow for his contribution to this post.