I recently resolved a case that I thought was interesting for this day and age, particularly here in Tennessee. Here’s the scenario – an insured claims to have had cattle stolen from him on multiple occasions, but by the same person – yes, you guessed it, the “cowpoke” in our story. 

It seems that our “cowpoke” used his position as ranch hand to take cattle. The “cowpoke’s” trailer carried no more than 20 head of cattle at one time, but there were several hundred head missing. The policyholder submitted a claim for “rustling loss.”  Let’s assume for the sake of argument there were over 200 head taken over a year period. For the sake of example, let’s assume the cattle were valued at $1,500.00 per head, and the applicable policy limit was only $60,000.00. The deductible was $1,000.00 per loss.

Obviously, there is not enough in the coverage limit to cover all the cattle unless, as a very good lawyer argued – each event when the cattle were transported from the farm was a separate theft, thereby opening up a separate limit each time it occurred. Obviously, the insured’s attorney recognized that his argument meant a separate deductible would apply to each claim, but he was more than willing to “bear that burden.” 

Case law in Tennessee was harder to find than those cattle, so we turned elsewhere. We obviously found that policy language was important, but that courts which had addressed losses where there was a systematic and organized scheme to steal from an insured have held that such a scheme would be a single occurrence or theft subject to a single deductible. For instance, one court found that there was but a single occurrence even though there were 653 separate “thefts.” EOTT Energy Corp. v. Storebrand Internat. Ins. Co., 45 Cal.App.4th 565, 578, 52 Cal.Rptr.2d 894, 901 – 902 (Cal.App. 2 Dist.,1996). The Court, based on the language in the contract and precedent, found one occurrence because “there was a systematic and organized scheme to steal” that proximately caused the injury. Id. at 575, 52 Cal.Rptr.2d 894.

In PECO Energy v. Boden, 64 F.3d 852 (3rd Cir.1995), an electric utility presented a claim to its various insurers under a series of all risk policies for losses it sustained over a six-year period as a result of a multitude of thefts of fuel oil by an independent trucking firm with whom the utility had contracted to haul its fuel oil to various generating facilities. The case was tried to a jury, which found that each theft was a part of a larger scheme and that the scheme to steal was the proximate cause of each theft. The Third Circuit upheld the district court’s determination that the multiple thefts constituted a single occurrence, noting that in deciding the number of occurrences, a court should determine “if there was but one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage.” Id. (quoting Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56, 61 (3d Cir.1982)). The Court concluded that “when a scheme to steal property is the proximate and continuing cause of a series or combination of thefts, the losses for liability insurance purposes constitute part of a single occurrence.”

There are cases to the contrary, but this seemed to be the majority position. One court noted that each event had to be separate because each theft required a new decision by thief to get into his truck, drive to insured’s storage facility, and steal insured’s property.  Basler Turbo Conversions LLC v. HCC Ins. Co., 601 F.Supp.2d 1082 (E.D.Wis.,2009).