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DOCKET NO. FST-CV17-6031032-S
GERALD METALS LLC and : SUPERIOR COURT
GERALD METALS Sàrl, :
:
Plaintiffs, : JUDICIAL DISTRICT OF FAIRFIELD
: AT STAMFORD
v. :
:
CERTAIN UNDERWRITERS SUBSCRIBING :
TO MARINE CARGO INSURANCE POLICIES :
NOs. B07853PC1309890000, :
B0753PC1412113000, and :
B1353DC1501253000, :
: OCTOBER 31, 2022
Defendants. :
:
MEMORANDUM OF LAW IN SUPPORT OF
PLAINTIFFS’ MOTION IN LIMINE
REED SMITH LLP
599 Lexington Avenue
New York, New York 10022
(212) 521-5400
Attorneys for Plaintiffs Gerald Metals LLC and Gerald Metals Sàrl’s
Pursuant to Practice Book § 15-3, Gerald Metals LLC and Gerald Metals Sàrl’s
(collectively “Gerald” or “Plaintiffs”), by their undersigned counsel, hereby submit this
Memorandum of Law in support of Plaintiffs’ Motion to Preclude (“Motion”) any and all evidence
and argument relating to the Policies’ (as defined below) “mysterious disappearance” sub limit at
trial.
I. PRELIMINARY STATEMENT
This dispute arises from Defendants’ abject failure to pay Plaintiffs the insurance proceeds
that are contractually due under the Insurance Policies Nos. B07853PC1309890000,
B0753PC1412113000, and B1353DC1501253000 (the “Policies”). At this juncture, it is clear that
Defendants are intent on forcing Plaintiffs and this Court to wade through a morass of untenable
arguments that have no basis in law or fact. Plaintiffs anticipate that, consistent with their
scattershot approach, Defendants will argue at trial that Plaintiffs’ covered loss relating to 25,250
metric tons of alumina (the “Material”) that was stored at a bonded a bonded warehouse at the Port
of Qingdao, China (the “Port”) is subject to a $500,000 sub limit for “mysterious disappearance”
under the Policies. This argument fails because (i) Gerald’s loss was due to theft, not a mysterious
disappearance of the Material and, (ii) the mysterious disappearance provision in the Policies only
applies to theft or “mysterious disappearances” involving Gerald’s employees. Thus, introduction
of such evidence and arguments at trial will serve only to confuse the jury. As such, Plaintiffs
respectfully request that the Court grant the Motion in its entirety.
II. RELEVANT FACTUAL HISTORY
By now, the Court is fully familiar with the factual history of this case. Plaintiffs reiterate
only the facts germane to the instant Motion.
A. Gerald’s Acquisition of the Material
In July 2013 the Material was shipped onboard the vessel M/V Elysia (the “Elysia”) to the
Qingdao Port where it was offloaded and bagged. The bags were tagged with paper tags that bore
the name AS Elysia, the only identifying markings designating the bags as belonging to an
individual owner. On or about December 13, 2013, Plaintiffs purchased the Material from
Shenzhen Shenhuo Trading Co. Ltd. for $9,090,000, for which Gerald paid in full. See March 25,
2016 Claim Report (“Claim Report”), attached as Exhibit A to the October 31, 2022 Affidavit of
Anthony B. Crawford (“Crawford Aff.”) at GM0007457-7460.
B. The Theft of the Material
The Material was stored in two areas in the Port, Areas 64 and 65. Beginning in September
2014, Gerald representatives and Underwriters’ claims investigator, CSL Global Ltd. (“CSL”),
made several visits to the Port, both separately and together, and observed the Material. In her
initial visit in September 2014, Gerald representative Cherry Zheng, noted that out of the 25,250
metric tons of alumina that were supposed to be there, she could only positively identify 10,112
bags bearing tags with the name AS Elysia. 15,138 bags of Gerald’s Material were physically
missing. See Claim Report, Crawford Aff. Ex. A.
In subsequent visits to the Port, CSL and Plaintiffs observed that more of the Material was
physically missing or that bag tags identifying them had been changed to the name of a different
vessel. By October 28, 2015, only 504 metric tons of Plaintiffs’ alumina remained, the rest having
been stolen or misappropriated by unknown parties either through outright removal or through the
changing of identifying tags on the remaining bags. See Claim Report, Crawford Aff. Ex. A. After
a joint inspection on July 20, 2016, CSL generated a report (the “2016 CSL Report”)
acknowledging that bags of alumina were missing or tags were changed with the previous vessel
name still visible in faded ink. See 2016 CSL Report, attached as Exhibit B to Crawford Aff. On
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Plaintiffs’ final visit to the Port on January 23, 2019, Plaintiffs observed that the tags on all the
remaining bags of alumina now bore a different vessel’s name. Gerald will submit evidence at
trial establishing these undisputable facts.
III. LEGAL STANDARD
In Connecticut, motions in limine are used “to invoke a trial judge’s inherent discretionary
powers to control proceedings, exclude evidence, and prevent occurrences that might
unnecessarily prejudice the right of any party to a fair trial.” Carlson v. Waterbury Hosp., 280
Conn. 125, 140, 905 A.2d 654, 663 (2006). “The purpose of a motion in limine is to exclude
irrelevant, inadmissible, and prejudicial evidence from trial.” State v. LoSacco, 26 Conn. App.
439, 444, 602 A.2d 589, 592 (1992). As such, this Court has discretion to enter an order excluding
any anticipated evidence from trial. Connecticut Practice Book § 15-3. In particular, where a
review of the record shows that the proffered evidence does not render any other relevant fact
either certain or more probable, and has no relationship to the claims at issue, the court should
exclude such evidence. State v. Johnson, 28 Conn. App. 708, 714-15, 613 A.2d 1344, 1348 (1992).
Under this framework, courts routinely exclude evidence that is deemed inadmissible under
established rules of evidence.
IV. ARGUMENT
Plaintiffs anticipate that, at trial, Defendants will attempt to mischaracterize the theft or
misappropriation of the Material as a so-called “mysterious disappearance.” Likewise, Defendants
will argue that Plaintiffs’ recovery is restricted to a $500,000 sublimit covering such
disappearances. However, such arguments must be excluded as irrelevant because (i) there is no
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mystery as to the disappearance of the Material, 1 and (ii) the mysterious disappearance sublimit
does not apply to losses not involving Gerald’s own employees.
A. Defendant’s Mysterious Disappearance Argument is Irrelevant to this
Litigation
As a rule, irrelevant evidence must be excluded. Conn. Code Evidence § 4-2. The trial
judge is afforded “broad discretion in determining the relevancy of evidence” and “the primary
inquiry is whether” the proffered evidence “is relevant to a material issue in the case.” Doe v.
Lasaga, No. CV990430858S, 2004 Conn. Super. LEXIS 491, at *4-5 (Conn. Super. Ct. Mar. 1,
2004). Even if deemed relevant, the Court must then determine whether the evidence’s probative
value outweighs its prejudicial effect. See e.g. Sarfaty v. PFT Mgmt. Co., No. CV020394269S,
2008 Conn. Super. LEXIS 428, at *3 (Conn. Super. Ct. Feb. 15, 2008). In performing this critical
analysis, the Court must consider whether the proffered evidence would serve to confuse or
mislead the jury (Levinson v. Westport Nat’l Bank, No. 3:09-cv-269(VLB), 2013 U.S. Dist. LEXIS
71208, at *26 (D. Conn. May 20, 2013)), and must exclude evidence as a matter of law on the
grounds that it is irrelevant and/or immaterial to the issues to be tried. See e.g. Dorfman v. Smith,
No. HHD-CV-156062649S, 2018 Conn. Super. LEXIS 5850, at *1 (Conn. Super. Ct. Sept. 7,
2018) (granting motion in limine on the grounds that the proffered evidence was “irrelevant and
immaterial to the issues presented” at trial).
Importantly, courts must exclude specific provisions in contracts, including arguments
relating to such provisions, where they are “irrelevant to the determination” of the claims at issue.
See Johnson v. Bd. of Educ., 130 Conn. App. 191, 204, 23 A.3d 68, 77 (App. Ct. 2011) (affirming
1
To the extent that the mysterious disappearance sublimit can be read as exclusionary, Underwriters bear the burden
proving the exclusion applies. See Standard Structural Steel Co. v. Bethlehem Steel Corp., 597 F. Supp. 164, 192 (D.
Conn. 1984) (noting that once the policyholder has demonstrated a fortuitous loss, the burden then shifts tothe
defendant to “prove that the loss arose from a cause which is excepted”).
-5-
exclusion of provision in contract as irrelevant); Armour Capital Mgmt. LP v. SS&C Techs., Inc.,
No. 3:17-cv-00790 (JAM), 2020 U.S. Dist. LEXIS 2252, at *18-19 (D. Conn. Jan. 5, 2020)
(granting motion in limine to exclude “any evidence, reference or argument concerning or arising
out of” a specific section of an agreement because it had no “legal relevance”).
As set forth below, the mysterious disappearance provisions in the Policies, and all
evidence and argument relating to them, are manifestly irrelevant to the issues to be tried. As such,
Plaintiffs’ Motion should be granted.
1. The Loss of the Material Was Due to Theft, Not a Mysterious Cause
First and foremost, there is no mystery as to Plaintiffs’ loss of the Material. In the insurance
context, a “mysterious disappearance” consists of “a factual circumstance in which a reasonable
person could not infer based on the evidence presented the manner in which the reported loss
occurred.” Stella Jewelry Mfg. v. Naviga Belgamar ex rel. Penem Int’l, 885 F. Supp. 84, 86
(S.D.N.Y. 1995). In Stella the court rejected an insurance company’s attempt to characterize a
loss due to theft as a mysterious disappearance. 885 F. Supp. at 86. The Stella court reasoned
that:
Defendant seeks to play both ends against the middle. Loss from theft is not
excluded from coverage under the Policy. The facts as testified to by the only
witness, Plaintiff's president, bespeak only of theft, albeit a mysterious theft with
no evidence of a thief. With the defense of ‘mysterious disappearance’ left at issue,
the jury might be misled to find both theft and mysterious disappearance since the
circumstances appear to be mysterious.
Id.
Here, there is sufficient evidence showing that the Material was stolen either by physical
removal or misappropriation by changing the ship name on the bag tags on the Material. See Claim
Report, Crawford Aff. Ex. A; November 3, 2014 email from Cherry Zheng to Gary Lerner at
GM0001127-1128, attached as Exhibit C to Crawford Aff.; May 16, 2016 email from Pang Chong
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Kit to Joginder Randhawa at DEFS00001898, attached as Exhibit D to Crawford Aff.; November
10, 2015 email from Cherry Zheng to Gary Lerner at GM0000922-924, attached as Exhibit E to
Crawford Aff.; 2016 CSL Report at DEFS00000612-618, attached as Exhibit B to Crawford Aff.
In independent and joint inspections, both Gerald and Underwriters observed that Material was
either physically missing or that bag tags had been altered with a different vessel name, effectively
erasing evidence of Gerald’s ownership of the Material. Therefore, the reasonable inference is
that this was incremental, systematic theft, not a mysterious disappearance. See Stella, 885 F.
Supp. at 86. As warned against in Stella, here the jury would be misled and confused if tasked
with deciding on both theft and mysterious disappearance. See id. Accordingly, any evidence or
argument relating to a “mysterious disappearance” should be precluded as irrelevant because it is
not probative of any fact or issue the jury will have to decide. See Armour Capital Mgmt. LP,
2020 U.S. Dist. LEXIS 2252 at *19.
2. The $500,000 Sub Limit in the Policies Does Not Apply
Second, even if there was some “mystery” as to the loss of the Material – there is not – the
applicable provisions in the Policies confirm that the $500,000 sub limit only applies where
Gerald’s own employees cause the alleged “mysterious disappearance.” Connecticut law dictates
that terms in insurance contracts must be given their natural and ordinary meaning, and must be
construed in favor of the insured:
[C]onstruction of a contract of insurance presents a question of law . . . . The
[i]nterpretation of an insurance policy . . . involves a determination of the intent of
the parties as expressed by the language of the policy . . . [including] what coverage
the . . .[insured] expected to receive and what the [insurer] was to provide, as
disclosed by the provisions of the policy. . . .[A] contract of insurance must be
viewed in its entirety, and the intent of the parties for entering it derived from the
four corners of the policy . . . [giving the] words . . . [of the policy] their natural
and ordinary meaning . . . [and construing] any ambiguity in the terms . . . in
favor of the insured . . . .
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Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 773, 67 A.3d 961, 974 (2013)
(emphasis added).
Here, the Policies’ provisions addressing “mysterious disappearance” state:
11. AVERAGE TERMS AND CONDITIONS -
All goods and/or merchandise ON DECK, UNDER DECK or otherwise are
insured:
***
Against all risks of physical loss or damage from any external cause
including mysterious disappearance and infidelity of [Gerald’s]
employees
In respect of mysterious disappearance and infidelity losses, this insurance
is only to pay claims recoverable hereunder not recoverable under
[Gerald’s] Bankers Blanket Bond Policy
Sub limit $500,000 in respect of mysterious disappearance and infidelity
each and every loss.
See Policies attached as Exhibits F-H to the Crawford Aff. at § 11 (emphasis added). Thus, a plain
reading of the foregoing provision confirms that the mysterious disappearance sub limit applies
strictly to scenarios where Gerald’s employees or agents cause the mysterious disappearance,
through infidelity or otherwise. 2
Not surprisingly, a deponent in this matter, Jay Payne, a broker and former underwriter at
Jardine Lloyd Thompson (“JLT”), confirmed that the mysterious disappearance sub limit is
narrowly tailored to these circumstances. Mr. Payne testified:
17 Q.· ·OK.· Do you see the clause 11 is
18 ·“Average Terms and Conditions.”
19··A.· ·Yep.
20··Q.· ·Down four paragraphs, there is
21· a sub-limit of $500,000, do you see that?
22· “In respect of mysterious
23· disappearance and infidelity...”
24· Each and every loss.
25· A.· ·Yes, I see that.
2
Moreover, given that the Policies provide $15,000,000 per occurrence warehouse coverage, it makes no commercial
sense for Gerald to purchase a $500,000 sublimit of coverage for general losses under the Policies.
-8-
·1· Q.· ·Do you see that?
·2· A.· ·Yep.
·3· ·Q.· ·OK.· So I am going to go back to
·4· ·now my question about the warehouse endorsement.
·5· ·It doesn’t specifically state that there is
·6· ·a sub-limit for mysterious disappearance, but, to
·7· ·your knowledge, does this sub-limit in clause 11
·8· ·also apply to the warehouse endorsement –
***
12· · · · · · ·Q.· ·-- or losses under the warehouse
13· ·endorsement?
***
21· · · · · · ·Q.· ·Well, what’s your experience and
22· ·your understanding as the underwriter at JLT?
***
·3· · · · · · ·Q.· ·I’m sorry, as a broker at...
·4· ·Sorry, forgive me.
·5· · · · · · ·A.· ·Well, I am -- I’m happy to answer
·6· ·the question.· The -- the sub-limit there would --
·7· ·would apply and override the endorsement that
·8· ·specifically sets out the storage conditions.
·9· · · · · · ·I think the question and answer does
10· ·require some clarification about that particular
11· ·language.· It has been in there for about 20-odd
12· ·years and it is only covering mysterious
13· ·disappearance and the other perils when -- when
14· ·performed by the assured themselves.
15· · · · · · ·Gerald, buy a -- as it references, a --
16· ·a blanket bond policy and it has a half million
17· ·dollar deductible on it and we effectively buy
18· ·that deductible back as part of this cargo form.
19· ·So it isn’t a mysterious disappearance sub-limit;
20· ·it’s a mysterious disappearance sub-limit when
21· ·those mysterious disappearance are caused by
22· ·Gerald employees.
23· · · · · · Q.· ·OK.· So it deals with the assured’s
24· ·bankers blanket bond policy referred to in the
25· ·paragraph above it?
1· · · · · · ·A.· ·It does, yes.
2· · · · · · ·Q.· ·Got it.· All right.· Thank you.
-9-
See December 19, 2018 Transcript of Deposition of Jay Payne attached as Exhibit I to the Crawford
Aff. at 77:17-78:8; 78:12-13; 78:21-22; 79:3-80:2. Indeed, Mr. Payne emphasized that the
Policies’ mysterious disappearance provision “only cover[s] mysterious disappearance and other
perils when – when performed by the assured themselves.” See id. at 79:12-14. The foregoing
testimony confirms the Policies’ unambiguous text: the mysterious disappearance sub limit in the
Policies applies to Gerald’s conduct alone, not that of third parties, and there has been no
suggestion in this case that Gerald’s employees caused the Material’s disappearance.
Mr. Payne, now a broker at Marsh, confirmed this reading of the Policies when he
responded to Gerald’s questions concerning a number of provisions in the Gerald Marine Cargo
Policies, including the $500,000 sublimit for “mysterious disappearances.” Set forth below is
Gerald’s query concerning the $500,000 sublimit:
Misappropriation (pg 4/44) – [Gerald] raised our concern with the concept of
mysterious disappearance given that it is subject to a much lower sub-limit to
misappropriation. Our concern is [Underwriters’] ability to claim that any
misappropriation was in fact a mysterious disappearance which was then subject to
the lower sub-limit of $500,000. Our recollection was that Marsh advised
“mysterious disappearance” is intended to cover potential employee involvement
but it is still not clear to us how we would be able to evidence any misappropriation
not being a mysterious disappearance? Please can you explain how the sub-limit
works and how u/w would determine the difference? Please advise if the
Misappropriation wording we currently have is market standard and whether or not
there would be scope to amend this wording to make it clear that the sub-limit of
$500,000 would only apply if there was evidential proof that an employee had been
involved and what that evidential proof would likely consist of.
Marsh responded:
This cover/sub-limit is buying back the deductible under your crime policy (placed
by Epic). This is not misappropriation (third party theft) but employee
theft/mysterious disappearance. Ordinarily this is not covered under a Cargo
programme but some years back we plugged the deductible gap in in your Crime
policy to provide Employee mysterious disappearance. I’d strongly recommend not
amending this language as insurers really hate it already (not core cover for a Cargo
programme) so any undue focus will be unproductive for you/us.
- 10 -
July 22, 2021 email from Jay Payne to Claire Morgan at GM0025909, attached as Exhibit J to
Crawford Aff.
In sum, there is no evidence to indicate, nor have Underwriters ever suggested, that a
Gerald employee or agent was involved in the theft or misappropriation of the Material, just as
there is a dearth of proof suggesting that the Material disappeared under mysterious circumstances.
Defendants have not, and cannot, claim that Gerald employees caused Plaintiffs’ loss. As such,
“any evidence, reference or argument concerning or arising out of” the mysterious disappearance
sub limits should be precluded as irrelevant. See Armour Capital Mgmt. LP, 2020 U.S. Dist.
LEXIS 2252 at *19; see also Johnson, 130 Conn. App. 191 at 204.
V. CONCLUSION
For all of the foregoing reasons, Plaintiffs respectfully request that the Court grant the
Motion and exclude any argument related to mysterious disappearance of the Material.
The Plaintiffs,
GERALD METALS, LLC and
GERALD METALS S.a.r.l.
By: /s/ 407086
Patrick F. Lennon (Juris No. 407086)
Steven R. Winters (Juris No. 440168)
LENNON, MURPHY & PHILLIPS, LLC
(Juris No. 427089)
1599 Post Road East
Westport, Connecticut 06880
Tel. (203) 256-8600 / Fax (203) 256-8615
Email: pfl@lmplaw.net / srw@lmplaw.net
- and -
John B. Berringer, Esq. (pro hac vice)
Anthony B. Crawford, Esq. (pro hac vice)
Reed Smith LLP
599 Lexington Avel, 22nd Floor
New York, NY 10022
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CERTIFICATION
I hereby certify that on October 31, 2022, a copy of the foregoing was sent via electronic
mail to all counsel of record, to wit:
Thomas Tisdale, Esq.
Tisdale & Nast Law Offices LLC
10 Spruce Street
Southport, CT 06890
Anthony B. Crawford - pro hac vice
Reed Smith LLP
599 Lexington Ave, 22nd Floor
New York, NY 10022
John B. Berringer, Esq.- pro hac vice
Reed Smith LLP
599 Lexington Ave, 22nd Floor
New York, NY 10022
By: /s/ 407086
Patrick F. Lennon
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Preview
DOCKET NO. FST-CV17-6031032-S GERALD METALS LLC and : SUPERIOR COURT GERALD METALS Sàrl, : : Plaintiffs, : JUDICIAL DISTRICT OF FAIRFIELD : AT STAMFORD v. : : CERTAIN UNDERWRITERS SUBSCRIBING : TO MARINE CARGO INSURANCE POLICIES : NOs. B07853PC1309890000, : B0753PC1412113000, and : B1353DC1501253000, : : OCTOBER 31, 2022 Defendants. : : MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ MOTION IN LIMINE REED SMITH LLP 599 Lexington Avenue New York, New York 10022 (212) 521-5400 Attorneys for Plaintiffs Gerald Metals LLC and Gerald Metals Sàrl’s Pursuant to Practice Book § 15-3, Gerald Metals LLC and Gerald Metals Sàrl’s (collectively “Gerald” or “Plaintiffs”), by their undersigned counsel, hereby submit this Memorandum of Law in support of Plaintiffs’ Motion to Preclude (“Motion”) any and all evidence and argument relating to the Policies’ (as defined below) “mysterious disappearance” sub limit at trial. I. PRELIMINARY STATEMENT This dispute arises from Defendants’ abject failure to pay Plaintiffs the insurance proceeds that are contractually due under the Insurance Policies Nos. B07853PC1309890000, B0753PC1412113000, and B1353DC1501253000 (the “Policies”). At this juncture, it is clear that Defendants are intent on forcing Plaintiffs and this Court to wade through a morass of untenable arguments that have no basis in law or fact. Plaintiffs anticipate that, consistent with their scattershot approach, Defendants will argue at trial that Plaintiffs’ covered loss relating to 25,250 metric tons of alumina (the “Material”) that was stored at a bonded a bonded warehouse at the Port of Qingdao, China (the “Port”) is subject to a $500,000 sub limit for “mysterious disappearance” under the Policies. This argument fails because (i) Gerald’s loss was due to theft, not a mysterious disappearance of the Material and, (ii) the mysterious disappearance provision in the Policies only applies to theft or “mysterious disappearances” involving Gerald’s employees. Thus, introduction of such evidence and arguments at trial will serve only to confuse the jury. As such, Plaintiffs respectfully request that the Court grant the Motion in its entirety. II. RELEVANT FACTUAL HISTORY By now, the Court is fully familiar with the factual history of this case. Plaintiffs reiterate only the facts germane to the instant Motion. A. Gerald’s Acquisition of the Material In July 2013 the Material was shipped onboard the vessel M/V Elysia (the “Elysia”) to the Qingdao Port where it was offloaded and bagged. The bags were tagged with paper tags that bore the name AS Elysia, the only identifying markings designating the bags as belonging to an individual owner. On or about December 13, 2013, Plaintiffs purchased the Material from Shenzhen Shenhuo Trading Co. Ltd. for $9,090,000, for which Gerald paid in full. See March 25, 2016 Claim Report (“Claim Report”), attached as Exhibit A to the October 31, 2022 Affidavit of Anthony B. Crawford (“Crawford Aff.”) at GM0007457-7460. B. The Theft of the Material The Material was stored in two areas in the Port, Areas 64 and 65. Beginning in September 2014, Gerald representatives and Underwriters’ claims investigator, CSL Global Ltd. (“CSL”), made several visits to the Port, both separately and together, and observed the Material. In her initial visit in September 2014, Gerald representative Cherry Zheng, noted that out of the 25,250 metric tons of alumina that were supposed to be there, she could only positively identify 10,112 bags bearing tags with the name AS Elysia. 15,138 bags of Gerald’s Material were physically missing. See Claim Report, Crawford Aff. Ex. A. In subsequent visits to the Port, CSL and Plaintiffs observed that more of the Material was physically missing or that bag tags identifying them had been changed to the name of a different vessel. By October 28, 2015, only 504 metric tons of Plaintiffs’ alumina remained, the rest having been stolen or misappropriated by unknown parties either through outright removal or through the changing of identifying tags on the remaining bags. See Claim Report, Crawford Aff. Ex. A. After a joint inspection on July 20, 2016, CSL generated a report (the “2016 CSL Report”) acknowledging that bags of alumina were missing or tags were changed with the previous vessel name still visible in faded ink. See 2016 CSL Report, attached as Exhibit B to Crawford Aff. On -3- Plaintiffs’ final visit to the Port on January 23, 2019, Plaintiffs observed that the tags on all the remaining bags of alumina now bore a different vessel’s name. Gerald will submit evidence at trial establishing these undisputable facts. III. LEGAL STANDARD In Connecticut, motions in limine are used “to invoke a trial judge’s inherent discretionary powers to control proceedings, exclude evidence, and prevent occurrences that might unnecessarily prejudice the right of any party to a fair trial.” Carlson v. Waterbury Hosp., 280 Conn. 125, 140, 905 A.2d 654, 663 (2006). “The purpose of a motion in limine is to exclude irrelevant, inadmissible, and prejudicial evidence from trial.” State v. LoSacco, 26 Conn. App. 439, 444, 602 A.2d 589, 592 (1992). As such, this Court has discretion to enter an order excluding any anticipated evidence from trial. Connecticut Practice Book § 15-3. In particular, where a review of the record shows that the proffered evidence does not render any other relevant fact either certain or more probable, and has no relationship to the claims at issue, the court should exclude such evidence. State v. Johnson, 28 Conn. App. 708, 714-15, 613 A.2d 1344, 1348 (1992). Under this framework, courts routinely exclude evidence that is deemed inadmissible under established rules of evidence. IV. ARGUMENT Plaintiffs anticipate that, at trial, Defendants will attempt to mischaracterize the theft or misappropriation of the Material as a so-called “mysterious disappearance.” Likewise, Defendants will argue that Plaintiffs’ recovery is restricted to a $500,000 sublimit covering such disappearances. However, such arguments must be excluded as irrelevant because (i) there is no -4- mystery as to the disappearance of the Material, 1 and (ii) the mysterious disappearance sublimit does not apply to losses not involving Gerald’s own employees. A. Defendant’s Mysterious Disappearance Argument is Irrelevant to this Litigation As a rule, irrelevant evidence must be excluded. Conn. Code Evidence § 4-2. The trial judge is afforded “broad discretion in determining the relevancy of evidence” and “the primary inquiry is whether” the proffered evidence “is relevant to a material issue in the case.” Doe v. Lasaga, No. CV990430858S, 2004 Conn. Super. LEXIS 491, at *4-5 (Conn. Super. Ct. Mar. 1, 2004). Even if deemed relevant, the Court must then determine whether the evidence’s probative value outweighs its prejudicial effect. See e.g. Sarfaty v. PFT Mgmt. Co., No. CV020394269S, 2008 Conn. Super. LEXIS 428, at *3 (Conn. Super. Ct. Feb. 15, 2008). In performing this critical analysis, the Court must consider whether the proffered evidence would serve to confuse or mislead the jury (Levinson v. Westport Nat’l Bank, No. 3:09-cv-269(VLB), 2013 U.S. Dist. LEXIS 71208, at *26 (D. Conn. May 20, 2013)), and must exclude evidence as a matter of law on the grounds that it is irrelevant and/or immaterial to the issues to be tried. See e.g. Dorfman v. Smith, No. HHD-CV-156062649S, 2018 Conn. Super. LEXIS 5850, at *1 (Conn. Super. Ct. Sept. 7, 2018) (granting motion in limine on the grounds that the proffered evidence was “irrelevant and immaterial to the issues presented” at trial). Importantly, courts must exclude specific provisions in contracts, including arguments relating to such provisions, where they are “irrelevant to the determination” of the claims at issue. See Johnson v. Bd. of Educ., 130 Conn. App. 191, 204, 23 A.3d 68, 77 (App. Ct. 2011) (affirming 1 To the extent that the mysterious disappearance sublimit can be read as exclusionary, Underwriters bear the burden proving the exclusion applies. See Standard Structural Steel Co. v. Bethlehem Steel Corp., 597 F. Supp. 164, 192 (D. Conn. 1984) (noting that once the policyholder has demonstrated a fortuitous loss, the burden then shifts tothe defendant to “prove that the loss arose from a cause which is excepted”). -5- exclusion of provision in contract as irrelevant); Armour Capital Mgmt. LP v. SS&C Techs., Inc., No. 3:17-cv-00790 (JAM), 2020 U.S. Dist. LEXIS 2252, at *18-19 (D. Conn. Jan. 5, 2020) (granting motion in limine to exclude “any evidence, reference or argument concerning or arising out of” a specific section of an agreement because it had no “legal relevance”). As set forth below, the mysterious disappearance provisions in the Policies, and all evidence and argument relating to them, are manifestly irrelevant to the issues to be tried. As such, Plaintiffs’ Motion should be granted. 1. The Loss of the Material Was Due to Theft, Not a Mysterious Cause First and foremost, there is no mystery as to Plaintiffs’ loss of the Material. In the insurance context, a “mysterious disappearance” consists of “a factual circumstance in which a reasonable person could not infer based on the evidence presented the manner in which the reported loss occurred.” Stella Jewelry Mfg. v. Naviga Belgamar ex rel. Penem Int’l, 885 F. Supp. 84, 86 (S.D.N.Y. 1995). In Stella the court rejected an insurance company’s attempt to characterize a loss due to theft as a mysterious disappearance. 885 F. Supp. at 86. The Stella court reasoned that: Defendant seeks to play both ends against the middle. Loss from theft is not excluded from coverage under the Policy. The facts as testified to by the only witness, Plaintiff's president, bespeak only of theft, albeit a mysterious theft with no evidence of a thief. With the defense of ‘mysterious disappearance’ left at issue, the jury might be misled to find both theft and mysterious disappearance since the circumstances appear to be mysterious. Id. Here, there is sufficient evidence showing that the Material was stolen either by physical removal or misappropriation by changing the ship name on the bag tags on the Material. See Claim Report, Crawford Aff. Ex. A; November 3, 2014 email from Cherry Zheng to Gary Lerner at GM0001127-1128, attached as Exhibit C to Crawford Aff.; May 16, 2016 email from Pang Chong -6- Kit to Joginder Randhawa at DEFS00001898, attached as Exhibit D to Crawford Aff.; November 10, 2015 email from Cherry Zheng to Gary Lerner at GM0000922-924, attached as Exhibit E to Crawford Aff.; 2016 CSL Report at DEFS00000612-618, attached as Exhibit B to Crawford Aff. In independent and joint inspections, both Gerald and Underwriters observed that Material was either physically missing or that bag tags had been altered with a different vessel name, effectively erasing evidence of Gerald’s ownership of the Material. Therefore, the reasonable inference is that this was incremental, systematic theft, not a mysterious disappearance. See Stella, 885 F. Supp. at 86. As warned against in Stella, here the jury would be misled and confused if tasked with deciding on both theft and mysterious disappearance. See id. Accordingly, any evidence or argument relating to a “mysterious disappearance” should be precluded as irrelevant because it is not probative of any fact or issue the jury will have to decide. See Armour Capital Mgmt. LP, 2020 U.S. Dist. LEXIS 2252 at *19. 2. The $500,000 Sub Limit in the Policies Does Not Apply Second, even if there was some “mystery” as to the loss of the Material – there is not – the applicable provisions in the Policies confirm that the $500,000 sub limit only applies where Gerald’s own employees cause the alleged “mysterious disappearance.” Connecticut law dictates that terms in insurance contracts must be given their natural and ordinary meaning, and must be construed in favor of the insured: [C]onstruction of a contract of insurance presents a question of law . . . . The [i]nterpretation of an insurance policy . . . involves a determination of the intent of the parties as expressed by the language of the policy . . . [including] what coverage the . . .[insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy. . . .[A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . [giving the] words . . . [of the policy] their natural and ordinary meaning . . . [and construing] any ambiguity in the terms . . . in favor of the insured . . . . -7- Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 773, 67 A.3d 961, 974 (2013) (emphasis added). Here, the Policies’ provisions addressing “mysterious disappearance” state: 11. AVERAGE TERMS AND CONDITIONS - All goods and/or merchandise ON DECK, UNDER DECK or otherwise are insured: *** Against all risks of physical loss or damage from any external cause including mysterious disappearance and infidelity of [Gerald’s] employees In respect of mysterious disappearance and infidelity losses, this insurance is only to pay claims recoverable hereunder not recoverable under [Gerald’s] Bankers Blanket Bond Policy Sub limit $500,000 in respect of mysterious disappearance and infidelity each and every loss. See Policies attached as Exhibits F-H to the Crawford Aff. at § 11 (emphasis added). Thus, a plain reading of the foregoing provision confirms that the mysterious disappearance sub limit applies strictly to scenarios where Gerald’s employees or agents cause the mysterious disappearance, through infidelity or otherwise. 2 Not surprisingly, a deponent in this matter, Jay Payne, a broker and former underwriter at Jardine Lloyd Thompson (“JLT”), confirmed that the mysterious disappearance sub limit is narrowly tailored to these circumstances. Mr. Payne testified: 17 Q.· ·OK.· Do you see the clause 11 is 18 ·“Average Terms and Conditions.” 19··A.· ·Yep. 20··Q.· ·Down four paragraphs, there is 21· a sub-limit of $500,000, do you see that? 22· “In respect of mysterious 23· disappearance and infidelity...” 24· Each and every loss. 25· A.· ·Yes, I see that. 2 Moreover, given that the Policies provide $15,000,000 per occurrence warehouse coverage, it makes no commercial sense for Gerald to purchase a $500,000 sublimit of coverage for general losses under the Policies. -8- ·1· Q.· ·Do you see that? ·2· A.· ·Yep. ·3· ·Q.· ·OK.· So I am going to go back to ·4· ·now my question about the warehouse endorsement. ·5· ·It doesn’t specifically state that there is ·6· ·a sub-limit for mysterious disappearance, but, to ·7· ·your knowledge, does this sub-limit in clause 11 ·8· ·also apply to the warehouse endorsement – *** 12· · · · · · ·Q.· ·-- or losses under the warehouse 13· ·endorsement? *** 21· · · · · · ·Q.· ·Well, what’s your experience and 22· ·your understanding as the underwriter at JLT? *** ·3· · · · · · ·Q.· ·I’m sorry, as a broker at... ·4· ·Sorry, forgive me. ·5· · · · · · ·A.· ·Well, I am -- I’m happy to answer ·6· ·the question.· The -- the sub-limit there would -- ·7· ·would apply and override the endorsement that ·8· ·specifically sets out the storage conditions. ·9· · · · · · ·I think the question and answer does 10· ·require some clarification about that particular 11· ·language.· It has been in there for about 20-odd 12· ·years and it is only covering mysterious 13· ·disappearance and the other perils when -- when 14· ·performed by the assured themselves. 15· · · · · · ·Gerald, buy a -- as it references, a -- 16· ·a blanket bond policy and it has a half million 17· ·dollar deductible on it and we effectively buy 18· ·that deductible back as part of this cargo form. 19· ·So it isn’t a mysterious disappearance sub-limit; 20· ·it’s a mysterious disappearance sub-limit when 21· ·those mysterious disappearance are caused by 22· ·Gerald employees. 23· · · · · · Q.· ·OK.· So it deals with the assured’s 24· ·bankers blanket bond policy referred to in the 25· ·paragraph above it? 1· · · · · · ·A.· ·It does, yes. 2· · · · · · ·Q.· ·Got it.· All right.· Thank you. -9- See December 19, 2018 Transcript of Deposition of Jay Payne attached as Exhibit I to the Crawford Aff. at 77:17-78:8; 78:12-13; 78:21-22; 79:3-80:2. Indeed, Mr. Payne emphasized that the Policies’ mysterious disappearance provision “only cover[s] mysterious disappearance and other perils when – when performed by the assured themselves.” See id. at 79:12-14. The foregoing testimony confirms the Policies’ unambiguous text: the mysterious disappearance sub limit in the Policies applies to Gerald’s conduct alone, not that of third parties, and there has been no suggestion in this case that Gerald’s employees caused the Material’s disappearance. Mr. Payne, now a broker at Marsh, confirmed this reading of the Policies when he responded to Gerald’s questions concerning a number of provisions in the Gerald Marine Cargo Policies, including the $500,000 sublimit for “mysterious disappearances.” Set forth below is Gerald’s query concerning the $500,000 sublimit: Misappropriation (pg 4/44) – [Gerald] raised our concern with the concept of mysterious disappearance given that it is subject to a much lower sub-limit to misappropriation. Our concern is [Underwriters’] ability to claim that any misappropriation was in fact a mysterious disappearance which was then subject to the lower sub-limit of $500,000. Our recollection was that Marsh advised “mysterious disappearance” is intended to cover potential employee involvement but it is still not clear to us how we would be able to evidence any misappropriation not being a mysterious disappearance? Please can you explain how the sub-limit works and how u/w would determine the difference? Please advise if the Misappropriation wording we currently have is market standard and whether or not there would be scope to amend this wording to make it clear that the sub-limit of $500,000 would only apply if there was evidential proof that an employee had been involved and what that evidential proof would likely consist of. Marsh responded: This cover/sub-limit is buying back the deductible under your crime policy (placed by Epic). This is not misappropriation (third party theft) but employee theft/mysterious disappearance. Ordinarily this is not covered under a Cargo programme but some years back we plugged the deductible gap in in your Crime policy to provide Employee mysterious disappearance. I’d strongly recommend not amending this language as insurers really hate it already (not core cover for a Cargo programme) so any undue focus will be unproductive for you/us. - 10 - July 22, 2021 email from Jay Payne to Claire Morgan at GM0025909, attached as Exhibit J to Crawford Aff. In sum, there is no evidence to indicate, nor have Underwriters ever suggested, that a Gerald employee or agent was involved in the theft or misappropriation of the Material, just as there is a dearth of proof suggesting that the Material disappeared under mysterious circumstances. Defendants have not, and cannot, claim that Gerald employees caused Plaintiffs’ loss. As such, “any evidence, reference or argument concerning or arising out of” the mysterious disappearance sub limits should be precluded as irrelevant. See Armour Capital Mgmt. LP, 2020 U.S. Dist. LEXIS 2252 at *19; see also Johnson, 130 Conn. App. 191 at 204. V. CONCLUSION For all of the foregoing reasons, Plaintiffs respectfully request that the Court grant the Motion and exclude any argument related to mysterious disappearance of the Material. The Plaintiffs, GERALD METALS, LLC and GERALD METALS S.a.r.l. By: /s/ 407086 Patrick F. Lennon (Juris No. 407086) Steven R. Winters (Juris No. 440168) LENNON, MURPHY & PHILLIPS, LLC (Juris No. 427089) 1599 Post Road East Westport, Connecticut 06880 Tel. (203) 256-8600 / Fax (203) 256-8615 Email: pfl@lmplaw.net / srw@lmplaw.net - and - John B. Berringer, Esq. (pro hac vice) Anthony B. Crawford, Esq. (pro hac vice) Reed Smith LLP 599 Lexington Avel, 22nd Floor New York, NY 10022 - 11 - CERTIFICATION I hereby certify that on October 31, 2022, a copy of the foregoing was sent via electronic mail to all counsel of record, to wit: Thomas Tisdale, Esq. Tisdale & Nast Law Offices LLC 10 Spruce Street Southport, CT 06890 Anthony B. Crawford - pro hac vice Reed Smith LLP 599 Lexington Ave, 22nd Floor New York, NY 10022 John B. Berringer, Esq.- pro hac vice Reed Smith LLP 599 Lexington Ave, 22nd Floor New York, NY 10022 By: /s/ 407086 Patrick F. Lennon - 12 -