Lack of Authentication of Assignment of Insurance Proceeds Costs Insured Party $1.2 Million

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In Warehousing v. Auto-Owners Ins. Co., 2014 U.S. App. LEXIS 18058 (11th Cir. Sept 22, 2014), the U.S. Court of Appeals for the Eleventh Circuit affirmed a lower court ruling which held that an insured party’s failure to authenticate a document allegedly transferring the right to $1.2 million in insurance proceeds warranted a grant of summary judgment against it.

Max Warehousing LLC owned a warehouse property insured by Auto-Owners Insurance Company that Max leased to third parties. Embassy National Bank held a mortgage on the property, and was listed as both the mortgagee and loss payee under the Auto-Owners policy. After Max’s warehouse tenant defaulted on its lease, some thieves broke into the warehouse and stole property, causing $1.2 million in damage.  Max filed a claim for this amount with Auto-Owners.

Max defaulted on its mortgage with Embassy shortly thereafter, causing Embassy to foreclose on the property. However, Max sued to collect the claim monies, asserting that Embassy had assigned Max the rights to the $1.2 million, and insisting that it had written documentation to that effect.  The district court disagreed, however, and granted Embassy summary judgment after noting that Max had failed to produce the document at issue during discovery, and also failed to authenticate it when Max suddenly produced it in opposition to Embassy’s motion.

The Eleventh Circuit agreed with the district court and affirmed the dismissal of Max’s claim. The court noted that, in addition to the problems posed by the lack of authentication, Max had failed to even address the authentication issue in its appellate brief, and therefore “abandoned any argument” that it might have had to that effect. Separately, the court noted that Max wouldn’t have had any interest in the insurance proceeds anyways, as the amount Max owed to Embassy on the defaulted mortgage was in excess of the $1.2 million in insurance proceeds.