Flushing Bank is a relatively small bank with 19 branches in the NY area. It specializes in mortgage lending and offers a range of merchant services.
Its website proudly proclaims that it is “small enough to know you” while being “large enough to help you realise your dreams”- and it may be that personal touch that has just seen the bank lose a $1.3 million claim against AGCS Marine Insurance Co.
Fifteen years ago A2Z perfumes started wholesaling perfumes to boutiques, independent chain stores and other specialty shops. The company grew its wholesale business and raised funds from Flushing. Unfortunately, in 2015 the NJ based perfumery claimed that it had suffered a burglary when eight pallets of perfume worth around $1.3 million went missing.
A2Z promptly lodged a claim with AGCS in May 2015. A2Z’s policy listed Flushing Bank as the loss payee – the perfume wholesaler had taken out a line of credit with the lender – and had listed its perfume and other inventory as collateral.
When AGCS paid the claim, it paid it directly to A2Z. The premises that are listed as A2Z Perfume Inc are now occupied by a healthy food outlet and the bank, keen to get its funds turned to AGCS and sued the insurer for breach of contract, fair dealing breach, fiduciary breach and negligence. And this is where, maybe, the “small enough to know you” caused the bank its problems – AGCS produced a chain of emails between one of the bank’s VPs and the principal of the perfume wholesaler. In one of the emails the bank employee clearly stated that the insurance company could send the payment directly to A2Z and that the bank had no interest in the insurance claim.
Even though the bank’s attorneys argued that the insurer hadn’t communicated directly with the bank (the loss payee on the policy) and that the VP didn’t have the authority or permission to waive the claim, a NY federal jury found that the bank had done just that – leaving it empty handed. Which goes to show how important communications between an insurer and an insured – or the beneficiary of an insurance policy are.
