UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

Plaintiff Tapper’s Fine Jewelry usually sells jewelry to consumers. But a few years ago, it 

started to buy consumers’ jewelry and then deliver it in bulk to a refiner to melt the jewelry into 

bars. After testing the bars to determine their content, the refiner would generally pay Tapper’s a 

sum of money to keep the bars. After two of Tapper’s deliveries in 2013, however, the refiner 

did not pay what it owed. The refiner’s owner then disappeared, and has not been heard from 

since. Tapper’s filed an insurance claim, but Defendant Chubb National Insurance Company 

denied coverage. As a result, Tapper’s filed this breach of contract case against Chubb. 

The parties dispute the nature of Tapper’s arrangement with the refiner. Chubb argues 

that Tapper’s sold the bars to the refiner “under a deferred payment sales agreement,” which 

would put Tapper’s losses outside of the scope of “covered property” under the relevant 

insurance policies. But Tapper’s claims that it never intended to complete any sale until after the 

refiner determined the bars’ content and value, which never happened in the transactions at issue 

here. The parties also dispute what happened to the bars once in the refiner’s hands. Chubb 

argues that the refiner stole the bars, putting Tapper’s losses squarely within an exclusion for 

TAPPER’S FINE JEWELRY, INC., 

 Plaintiff, 

 

v. 

 

CHUBB NATIONAL INSURANCE 

COMPANY, 

 Defendant. 

Case No. 14-13280 

Honorable Laurie J. Michelson 

Magistrate Judge Mona K. Majzoub 

OPINION AND ORDER DENYING CROSS MOTIONS FOR SUMMARY 

JUDGMENT [18, 20] 

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“dishonest or criminal acts.” But Tapper’s claims that one can only speculate as to what 

happened. 

Despite these factual disputes, both parties filed motions for summary judgment, arguing 

that the undisputed facts favor only their own position. (Dkts. 18, 20.) After careful consideration 

of the briefs and thorough review of the record, the Court finds that oral argument will not aid in 

resolving the pending motions. See E.D. Mich. LR 7.1(f)(2). Given the genuine issues of material 

fact, the Court will deny both motions for summary judgment. 

I. 

A. 

Plaintiff Tapper’s Fine Jeweler’s, Inc. is a jewelry retailer in Michigan. (Dkt. 18, Pl.’s 

Mot. Summ. J. Ex. 1, H. Tapper Dep. at 7.) In 2009, Tapper’s started a new business line to take 

advantage of rising precious metals prices, opening several “Tapper’s Gold Exchange” locations. 

(Id. at 7–9.) 

Under this new business model, individuals would sell jewelry they no longer wanted to 

Tapper’s. (Id. at 9.) Tapper’s would hold onto the jewelry for at least nine days in case the seller 

had a change of heart (and as required by state law). (Id. at 10.) Jewelry sold to Tapper’s would 

then generally be utilized in one of three ways. First, Tapper’s would resell some items in its 

retail stores. (Pl.’s Mot. Ex. 2, M. Tapper Dep. at 10.) Second, Tapper’s would sell some items to 

a wholesaler. (Id.) Third, and the only option relevant here, Tapper’s would often enlist a refiner 

to melt the jewelry into bars. (Id.) 

A company known as PMG served as Tapper’s refiner, and the two typically used the 

following process. (See Pl.’s Mot. App’x 1.) Tapper’s owner, Howard Tapper, would take 

jewelry to PMG, and if he had not already sorted it into bags for different metals (gold, silver, 

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platinum, etc.), he would do so at PMG. (H. Tapper Dep. at 13.) PMG would then melt the 

jewelry into bars. (Id. at 14.) Next PMG would perform a preliminary “assay”—a test to 

determine the bars’ composition—and provide a small sample of each bar so that Tapper’s could 

confirm the results with further testing. (Id.) Finally, PMG would send the bars to another refiner 

for a final assay. (Id. at 15.) 

PMG would initially pay Tapper’s 85% of the bars’ anticipated value the day after 

Tapper’s delivered the jewelry to PMG. (Id. at 15.) PMG’s payments were priced according to 

spot prices (per ounce) in the relevant precious metals market on the day of delivery. (Id. at 16, 

25.) For example, PMG would pay Tapper’s 99% of the spot price per ounce for gold, 95% for 

silver, and 85% for palladium. (Pl.’s Resp. Ex. 5.) So spot market prices would influence 

Tapper’s decision to delivery jewelry; it would sometimes wait to deliver to lock in a higher 

price. (Id. at 16–18.) After PMG’s refiner completed the final assay to determine the bars’ 

content, assuming there was no major discrepancy, PMG would calculate and pay Tapper’s the 

balance owed beyond the 85% initial payment. (Id. at 19–25.) In exchange, PMG kept the bars. 

(Id. at 24.) 

Over the course of several years, Tapper’s and PMG did roughly $51 million of business 

in this way without incident. (Id. at 30; Def.’s Mot. Ex. 3, Letter from H. Tapper.) But two 

transactions were different. 

B. 

On July 11, 2013, Tapper’s dropped off jewelry that was sorted into three bags. (Pl.’s 

Mot. Ex. 5, Jul. Calculation Summ.) According to a summary prepared by PMG, the first bag, 

which had gold, platinum, and palladium, added up to a value of $61,047.46 based on the initial 

assay and the percentages of the spot prices PMG would pay. (Id.) PMG did not calculate an 

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estimate for the second and third bags, which contained platinum and gold scrap. (Id.) But 

Tapper’s estimates the total value of all three bags for the July delivery at $129,118.72. 

(H. Tapper Dep. at 45.) Instead of paying 85% of the total value the next day like usual, PMG 

asked Howard Tapper for more time, and he agreed. (Id. at 27.) 

On September 18, 2013, after successful transactions in August, (see Def.’s Mot. Ex. 3, 

Report; H. Tapper Dep. at 30), Tapper’s delivered more jewelry to PMG, (Pl.’s Mot. Ex. 7, Sep. 

Calculation Summ.). PMG’s initial estimated value for the first bag (containing gold and silver) 

was $77,188.64. (Id.) PMG valued the second bag (also gold and silver) at $84,625.60. (Id.) The 

third bag had gold valued at $11,025.88. (Id.) Two other bags had stones, the final value of 

which PMG did not indicate. (Id.) PMG calculated the total price at $172,840.12. (Id.) At 

Howard Tapper’s request, PMG paid Tapper’s via check that day. (H. Tapper Dep. at 30.) The 

check was for $137,542.10, roughly 80% of the estimated total value, leaving a balance of 

$35,298.02. (Sep. Calculation Summ.; Pl.’s Mot. Ex. 8, Check.) 

PMG neither paid the balances for the July or September 2013 deliveries nor returned 

Tapper’s refined metal bars. Tapper’s Chief Financial Officer, Robert Hutter, tried to collect the 

money PMG owed by making several calls. (Pl.’s Mot. Ex. 6, Hutter Dep. at 23–24.) He testified 

that the one response he could recall was that PMG had “a timing difference on them getting 

their funds and being able to pay funds.” (Id. at 24.) In October 2013, Howard Tapper also got in 

touch with PMG’s owner, Allan Light, who apologetically said “he would get [Tapper] the 

money.” (H. Tapper Dep. at 33.) That was the last time Howard Tapper spoke with Light. (Id.) 

The next month, Howard Tapper reported Tapper’s losses from PMG to the Redford 

Police Department. (Pl.’s Mot. Ex. 9, Police Report.) The police report indicated that Light had 

also called the police to report that two of his employees were stealing from him. (Id. at 3.) 

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C. 

On January 16, 2014, Tapper’s sought to recover its losses by filing a claim under two 

“Jeweler’s Block” insurance policies it had with Defendant Chubb National Insurance Company. 

(Pl.’s Resp. Ex. 10, Property Loss Notice.) One policy was in effect from August 1, 2012 to 

August 1, 2013, during the July delivery. (Pl.’s Mot. Ex. 3, 2012–13 Policy at 1.) The other 

policy was in effect from August 1, 2013 to August 1, 2014, during the September delivery. 

(Pl.’s Mot. Ex. 4, 2013–14 Policy at 1.) Tapper’s paid a premium of $44,076.00 for the first 

policy and $59,619.00 for the second policy to cover certain property losses. (2012–13 Policy at 

1; 2013–14 Policy at 1.) 

The relevant provisions were the same under each policy. Chubb agreed to “pay for direct 

physical loss of or damage to Covered Property from any of the Covered Causes of Loss.” 

(2012–13 Policy, Jewelers Block Coverage Form at 1; 2013–14 Policy, Jewelers Block Coverage 

Form at 1.) The policies defined “Covered Causes of Loss” as “Direct Physical Loss or Damage 

to the Covered Property except those causes of loss listed in the Exclusions.” (Id.) Coverage 

included a $100,000 limit for “PROPERTY AT PREMISES OF ANY DEALER, PROCESSOR 

OR SIMILAR BAILEE IN THE JEWELRY TRADE.” (2012–13 Policy, Jewelers Block Decls.; 

2013–14 Policy, Jewelers Block Decls. (emphasis in originals).) 

Two coverage limitations are at issue in this case. First, the policies stated that “Covered 

Property does not include,” among other things, “Property sold under a deferred payment sales 

agreement after it leaves your premises.” (2012–13 Policy, Jewelers Block Coverage Form at 1; 

2013–14 Policy, Jewelers Block Coverage Form at 1.) Second, the policies excluded “loss or 

damage caused by or resulting from any . . . Dishonest or criminal act committed by [certain 

people, including] . . . Anyone else to whom the property is entrusted” (with a few exceptions 

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that are irrelevant here). (2012–13 Policy, Jewelers Block Coverage Form at 3; 2013–14 Policy, 

Jewelers Block Coverage Form at 3.) 

D. 

Chubb rejected Tapper’s claim by letter on February 5, 2014. (Pl.’s Resp. Ex. 10, Letter 

from Dana Staton.) Chubb reasoned that the loss was not “fortuitous” and that “[t]here was not 

an act committed upon the Covered Property that caused direct physical loss or damage to the 

Covered Property.” (Id. at 2.) Chubb also said that certain exclusions applied, including the 

exclusion for losses from dishonest or criminal acts. (Id. at 2–3.) Chubb also said that money did 

not qualify as “Covered Property” under the policies. (Id. at 3.) Later that month, Tapper’s 

counsel responded to dispute Chubb’s position. (Pl.’s Resp. Ex. 12, Letter from Philip 

Cwagenberg.) 

The next month, Dana Staton, a Property Claims Examiner with Chubb, left a voicemail 

for Tapper’s counsel and said that Chubb had changed course and would provide coverage. (Dkt. 

21, Pl.’s Resp. Ex. 22, Mar. 18, 2014 File Note.) David Trippel, Staton’s supervisor at Chubb, 

similarly wrote in an internal email that month that Chubb would pay the claim (subject to per 

occurrence limits of $100,000), in part because “we can not prove a dishonest act on the part of 

the refiner.” (Pl.’s Mot. Ex. 18, Email from David Trippel.) 

But by April 2014, Chubb again changed its position, this time denying coverage for 

three reasons. (Pl.’s Mot. Ex. 13, Letter from James Hamilton.) First, Chubb asserted that 

Tapper’s losses to PMG stemmed from “property sold under a deferred payment sales 

agreement” and thus were not “Covered Property.” (Id. at 2.) Second, Chubb stated that the 

dishonest act exclusion applied. (Id.) Finally, Chubb said that the losses did not fall within the 

policies’ limited coverage for losses of money. (Id.) The author of that letter, Chubb Home 

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Office Property Claims Examiner James Hamilton, had previously written to Trippel that he 

wanted to “consider” the provision relating to “[p]roperty sold under a deferred payment sales 

agreement after it leaves your premises.” (Pl.’s Mot. Ex. 16, Email from James Hamilton.) 

Tapper’s counsel again wrote a response letter (Pl.’s Mot. Ex 14), and Chubb reiterated that it 

would deny coverage (Pl.’s Mot. Ex. 15). 

Tapper’s thus filed a three-count Complaint against Chubb in Oakland County Circuit 

Court on August 1, 2014, and the suit was removed to this Court on August 25, 2014. (Dkt. 1, 

Notice of Removal.) Count I asserts a breach of contract claim. (Compl. ¶¶ 30–41.) Count II 

asserts a claim under the Uniform Trade Practices Act. (Compl. ¶¶ 42–47.) And Count III asserts 

a claim under the Michigan Consumers Protection Act. (Compl. ¶¶ 48–54.) 

Chubb filed its motion for summary judgment on June 3, 2015. (Dkt. 18.) Tapper’s filed 

its on June 9, 2015. (Dkt. 20.) Both motions are fully briefed. (See Dkts. 21–23.) In its response 

to Chubb’s motion, Tapper’s indicated that it has agreed to withdraw Count III. (Dkt. 21, Pl.’s 

Resp. at 22.) Thus, that count will be dismissed. 

II. 

Because Chubb seeks summary judgment on claims for which it does not bear the burden 

of persuasion at trial, Chubb may discharge its initial summary-judgment burden by “pointing 

out to the district court . . . that there is an absence of evidence to support [Tapper’s] case.” See 

Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If Chubb does so, Tapper’s “must come 

forward with specific facts showing that there is a genuine issue for trial.” See Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court must then determine 

whether the evidence presents a sufficient factual disagreement to require submission of 

Tapper’s claims to a jury, or whether the evidence is so one-sided that Chubb must prevail as a 

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matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In making this 

determination, the Court views the evidence, and any reasonable inferences drawn from the 

evidence, in the light most favorable to Tapper’s. See Matsushita, 475 U.S. at 587. 

Tapper’s summary judgment burden is greater. Because it seeks summary judgment on 

claims for which it has the burden of persuasion, Tapper’s showing “must be sufficient for the 

court to hold that no reasonable trier of fact could find other than for [it].” See Calderone v. 

United States, 799 F.2d 254, 259 (6th Cir. 1986) (quoting W. Schwarzer, Summary Judgment 

Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487–88 

(1984)). In making this determination, the Court views the evidence, and any reasonable 

inferences drawn from the evidence, in the light most favorable to Chubb. See Matsushita, 475 

U.S. at 587. 

III. 

Tapper’s claims were removed to this Court under its diversity jurisdiction. “[F]ederal 

courts sitting in diversity ‘apply state substantive law and federal procedural law.’” Shady Grove 

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 417 (2010) (quoting Hanna v. 

Plumer, 380 U.S. 460, 465 (1965)). When deciding issues of substantive law, this Court must 

apply the law of the state’s highest court. Saab Auto. AB v. Gen. Motors Co., 770 F.3d 436, 440 

(6th Cir. 2014). If the state’s highest court has not decided the applicable law, state law must be 

ascertained “‘from all relevant data,’ which includes the state’s appellate court decisions.” Id.

(quoting Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir. 1995)). 

“Interpretation of [an insurance policy] is a question of law, and Michigan courts look to 

the language of the insurance policy and interpret the terms therein in accordance with 

Michigan’s well-established principles of contract construction.” Fed.–Mogul U.S. Asbestos 

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Pers. Injury Trust v. Cont’l Cas. Co., 666 F.3d 384, 387 (6th Cir. 2011) (internal quotation marks 

and citations omitted). Such principles include the following: 

First, an insurance contract must be enforced in accordance with its terms. A court 

must not hold an insurance company liable for a risk that it did not assume. 

Second, a court should not create ambiguity in an insurance policy where the 

terms of the contract are clear and precise. Thus, the terms of a contract must be 

enforced as written where there is no ambiguity. 

Id. (quoting Citizens Ins. Co. v. Pro–Seal Serv. Group, Inc., 730 N.W.2d 682, 685 (Mich. 2007)). 

A court must “view the policy as a whole, striving to give meaning to each of its terms and avoid 

redundancy or surplusage.” Fed.–Mogul, 666 F.3d at 388 (citation omitted). “While it is the 

insured’s burden to establish that his claim falls within the terms of the policy . . . the insurer 

should bear the burden of proving an absence of coverage.” Hunt v. Drielick, 852 N.W.2d 562, 

565 (Mich. 2014) (internal quotation marks and citations omitted). 

A. 

Chubb first argues that it is entitled to summary judgment because Tapper’s has failed to 

meet its burden to establish coverage for its losses. Chubb says that as a matter of law, the 

following provision precludes Tapper’s from establishing coverage: “Covered Property does not 

include . . . Property sold under a deferred payment sales agreement after it leaves your 

premises.” (2012–13 Policy, Jewelers Block Coverage Form at 1; 2013–14 Policy, Jewelers 

Block Coverage Form at 1.) This is a close call. But the Court finds that while Tapper’s is far 

from prevailing on its own motion for summary judgment on this issue, it has raised a genuine 

issue of material fact. 

Tapper’s contends that “there is no evidence, whatsoever, that any sale, under any terms, 

occurred” and that Chubb “can offer no evidence to support that the claim [sic] that any type of a 

‘deferred payment sales agreement’ existed.” (Pl.’s Mot. at 14, 16.) Yet the record contains 

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numerous facts consistent with the conclusion that Tapper’s losses to PMG were the result of 

“[p]roperty sold under a deferred payment sales agreement after it le[ft] [Tapper’s] premises.” 

Sales of goods under Michigan law are governed by Article II of Michigan’s Uniform 

Commercial Code, which defines a sale as “the passing of title from the seller to the buyer for a 

price.” Mich. Comp. Laws Ann. § 440.2106(1). The course of dealing between Tapper’s and 

PMG suggests that Tapper’s routinely did just that: passed title in jewelry (later refined into bars) 

to PMG, for a price. See Id. at § 440.1303(4) (providing that course of dealing “is relevant in 

ascertaining the meaning of the parties’ agreement, may give particular meaning to specific 

terms of the agreement, and may supplement or qualify the terms of the agreement”). For one, 

Tapper’s delivered jewelry to PMG. That Tapper’s often waited to do so for a time when it 

thought market prices were favorable strongly suggests that Tapper’s intended to sell its goods to 

PMG. (H. Tapper Dep. at 16–17.) After PMG refined the jewelry into bars, PMG would pay 

Tapper’s for the bars, reinforcing the conclusion that a reasonable jury could find that the 

transactions within PMG and Tapper’s usual course of dealing were “sales.” 

A reasonable jury could also find that PMG’s payments under the transactions were 

“deferred.” In particular, PMG would pay Tapper’s 85% of the bars’ anticipated value a day or 

so after delivery, with a final payment coming later after the final testing. (H. Tapper Dep. at 15, 

24.) In other words, when Tapper’s sold bars to PMG, it arguably did so “under a deferred 

payment sales agreement.” Tapper’s course of dealing with PMG in this manner extended over 

several years and totaled $51 million in business. (Def.’s Mot. Ex. 3, Letter from H. Tapper; H. 

Tapper Dep. at 30.) 

It would not be unreasonable to find that the July and September 2013 deliveries at issue 

here fit this mold: Tapper’s delivered jewelry to PMG in exchange for PMG’s promise to pay 

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sometime later. After Tapper’s July 2013 delivery, though PMG did not pay the next day, it 

implicitly promised to pay later by requesting to do so. (H. Tapper Dep. at 27.) The summary 

prepared by PMG indicated, “INITIAL ASSAY FOR ADVANCE; PAYMENT BASED ON 

FINAL SETTLEMENT,” which further suggests that final payment would be deferred. (Jul. 

Calculation Summ. (emphasis in original).) In September 2013, Tapper’s delivered more 

jewelry, and because Howard Tapper asked to be paid immediately, PMG cut Tapper’s a check 

(for roughly 80% of the estimated value of Tapper’s delivery). (Howard Tapper Dep. at 30.) But 

that still left balance to be paid later, i.e., a deferred payment. (See Sep. Calculation Summ.) 

Furthermore, because of the balances PMG owed Tapper’s from July and September, 

Tapper’s tried to obtain the money, strongly suggesting that Tapper’s contemplated deferred 

payments as part of a final sales agreement. For instance, in October, Howard Tapper called 

PMG’s owner and said, “I needed the money, could he please pay me. . . . [H]e apologized and 

said he would get me the money.” (H. Tapper Dep. at 33.) Similarly, Tapper’s Chief Financial 

Officer recalled calling PMG and “asking if there was a timing issue or was there a reason why 

we didn’t get funds.” (Hutter Dep. at 23.) No evidence indicates that Tapper’s instead asked for 

the refined bars. It is also telling that the police report stemming from Howard Tapper’s report 

indicates that he stated he was owed money and that the property at issue was 

“MONEY/CASH,” and not the bars. (Police Report at 1, 3.) 

In short, the evidence is consistent with the conclusion that Tapper’s and PMG entered 

sales contracts in July and September 2013 and that all payments other than the initial September 

payment under those agreements were to be deferred. It is of no consequence that no written 

agreement evidences Tapper’s arrangement with PMG (see H. Tapper Dep. at 13; Hutter Dep. at 

35): “A contract for sale of goods may be made in any manner sufficient to show agreement, 

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including conduct by both parties which recognizes the existence of such a contract.” See Mich. 

Comp. Laws Ann. § 440.2204(1); see also § 440.2201(3)(c) (providing statute of frauds 

exception when goods have been “received and accepted” under § 440.2606). And while 

Tapper’s says that “without dispute no consideration was exchanged for the precious metals that 

Tapper’s delivered to PMG” (Pl.’s Mot. at 14), Tapper’s delivery of goods in exchange for 

PMG’s promise to pay later would easily qualify as consideration. See Higgins v. Monroe 

Evening News, 272 N.W.2d 537, 543 (Mich. 1978) (“The essence of consideration . . . is legal 

detriment that has been bargained for and exchanged for the promise.”). 

But despite these supporting facts, several issues caution against finding as a matter of 

law that Tapper’s losses from July and September 2013 were from property sold under “deferred 

payment sales agreement[s].” To start, though the parties do not argue that this provision is 

ambiguous, the policies do not define any of the relevant terms. Nor does any case law interpret 

this type of provision in an insurance contract. The parties cite nothing, and the Court has not 

found any cases interpreting similar language. The primary purpose of the “deferred payment 

sales agreement” language is, apparently, to exclude consignment sales to customers, but the 

plain language is not limited to such arrangements. Furthermore, without a written agreement 

concerning the July and September 2013 transactions, and limited to testimony from only one of 

the parties involved with the transactions, it is difficult to determine as a matter of law whether 

these transactions qualified as deferred payment sales agreements. 

Some evidence is consistent with the conclusion that Tapper’s did not intend to complete 

any sale to PMG until after PMG shipped the bars for a final test to determine the bars’ 

composition, and thus, their value. Though PMG and Tapper’s would price each transaction from 

spot prices on the day of delivery, a transaction’s final price depended on the final assay. As 

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Mark Tapper testified, the real purpose to leave the bars with PMG in the first place was to have 

“an assay process to understand how much gold is actually there.” (Mark Tapper Dep. at 23.) 

According to Howard Tapper, the bars’ content based on the final assay determined whether 

Tapper’s chose to proceed with each transaction. (H. Tapper Dep. at 18.) Thus, at times, 

Tapper’s chose not to finalize a transaction with PMG. (M. Tapper Dep. at 20.) In such 

circumstances, PMG would not charge Tapper’s a refining fee because Tapper’s did such a high 

volume of business with PMG. (Id. at 20–21.) No evidence establishes that Tapper’s received the 

final assay for the two deliveries at issue here. 

This is all to say that there is enough evidence (or lack thereof) concerning Tapper’s 

arrangement with PMG to bar finding as a matter of law that Tapper’s losses in July and 

September 2013 were from “Property sold under a deferred payment sales agreement after it 

le[ft] [Tapper’s] premises.” Chubb’s own supervisor of adjusters initially agreed, as he testified 

that he did not consider this language to be “relevant” to Tapper’s claim. (Pl.’s Mot. Ex. 17, 

Trippel Dep. at 54.) It is hard to say that no reasonable jury could reach the same conclusion. 

Thus, a genuine issue of material fact remains concerning whether Tapper’s has met its burden to 

establish coverage, so neither party is entitled to summary judgment on this issue. 

B. 

Chubb next argues that it is entitled to summary judgment because of the policies’ 

dishonest or criminal acts exclusion, which excluded “loss or damage caused by or resulting 

from any . . . Dishonest or criminal act committed by [certain people, including] . . . Anyone else 

to whom the property is entrusted.” (2012–13 Policy, Jewelers Block Coverage Form at 3; 2013–

14 Policy, Jewelers Block Coverage Form at 3.) 

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Tapper’s “agrees that a dishonest act was a possibility,” but it argues that “there are no 

known facts upon which any conclusion can be drawn, and Chubb’s policies cannot be read to 

exclude coverage if Chubb only ‘suspects’ that a dishonest act occurred.” (Pl.’s Mot. at 18.) 

While another close call, the Court agrees with Tapper’s: the evidence is insufficient to establish 

as a matter of law that Tapper’s losses arose from the dishonest or criminal act of someone to 

whom the property was entrusted. 

On one hand, the parties do not dispute that neither PMG nor its owner, Allen Light, 

(fully) paid for the bars stemming from the July and September 2013 deliveries or returned the 

bars to Tapper’s. Nor is it disputed that Howard Tapper filed a police report as a result and that 

the report described Light as a “suspect,” noted that Tapper’s loss was from a “theft,” and 

indicated that the reported crime was “Fraud – False Pretense,” resulting in the loss of 

“Money/Cash” to Tapper’s. (Police Report.) The report also noted that Light told the police that 

one of his employees was stealing from PMG, but it does not indicate that was specifically 

related to Tapper’s losses. (Id.) Moreover, Howard Tapper wrote in an undated letter that in July 

2013, “the representative of PMG converted the gold we had provided to PMG for his own uses. 

A police report was filed.” (Def.’s Mot. Ex. 3, Letter from Howard Tapper (emphasis added).) 

Thus, there is certainly some evidence (and obvious inferences) that the dishonest or criminal 

acts of PMG or Light—to whom Tapper’s entrusted its precious metals for final testing—caused 

Tapper’s losses. 

But on the other hand, neither Tapper’s one time description of PMG’s actions as 

“conversion” nor the filing of a police report are sufficient as a matter of law to establish that 

Tapper’s losses arose from PMG’s dishonest or criminal acts. For instance, Howard Tapper 

testified that when he filed the police report, he did not “think about criminal activity,” “look at it 

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as a theft,” or “consider it like a robbery.” (H. Tapper Dep. at 36–37.) Rather, he said that he 

simply wanted “to substantiate what [he was] . . . saying to the insurance company.” (Id. at 33.) 

Furthermore, Chubb Claims Examiner James Hamilton wrote in an email, “I did finally get in 

touch with the detective. He indicated that he has filed an arrest warrant but the prosecutor has 

not approved it yet. He stated that the prosecutor may decide that this is more of a civil matter.” 

(Def.’s Mot. Ex. 12, Email from James Hamilton.) 

There may have been good reason for the prosecutor to consider this a civil matter. Recall 

that evidence suggests that PMG and Chubb’s overall arrangement was a sales agreement. If 

true, Chubb may have simply breached that agreement. Tapper’s Chief Financial Officer testified 

that he had heard from PMG that they had not paid on time because of a “timing difference on 

them getting their funds and being able to pay funds.” (Hutter Dep. at 24.) That Tapper’s chose 

to continue to do business with PMG after it failed to pay in July 2013 strengthens the inference 

that this was all a contractual arrangement—one that deteriorated because of PMG’s insolvency. 

And the Court is hard pressed to say that every breach of contract due to a party’s inability to 

pay amounts to a dishonest act. 

The bottom line is that no one knows exactly what happened to the metals once in PMG’s 

possession, why they disappeared, and why they failed to pay Tappers in full. (See H. Tapper 

Dep. at 36.) At least one Chubb employee seems to have agreed that establishing that a dishonest 

occurred is problematic in these circumstances: Chubb’s own supervisor of adjustors (who also 

doubted the relevance of the deferred sales agreement language) wrote at one point, “we can not 

prove a dishonest act on the part of the refiner.” (Pl.’s Mot. Ex. 18, Email from David Trippel.) 

Finally, the Court finds unpersuasive Chubb’s argument that it need only prove that 

Tapper’s “entrusted” its property to PMG for the dishonest acts exclusion to apply. (See, e.g., 

2:14-cv-13280-LJM-MKM Doc # 25 Filed 12/21/15 Pg 15 of 16 Pg ID 1431
16 

Def.’s Mot. at 16; Dkt. 22, Def.’s Resp. at 8.) To support this position, Chubb cites a laundry list 

of cases in which there was no dispute that a dishonest or criminal act occurred, so the only issue 

was whether the lost property had been “entrusted.” See, e.g., Abrams v. Great Am. Ins. Co., 

New York, 269 N.Y. 90, 92 (1935) (considering whether jewelry was “entrusted” to someone 

who “absconded with the proceeds of her crime to France whence she was extradited and upon 

indictment pleaded guilty to grand larceny.”). Such cases do not apply here. 

In sum, as a genuine issue of material fact surrounds what happened to Tapper’s bars, and 

why, neither party is entitled to summary judgment on the application of the policies’ dishonest 

or criminal acts exclusion to Tapper’s claim. 

IV. 

For the reasons discussed, the parties’ motions for summary judgment (Dkts. 18, 20) on 

counts I and II are both DENIED.1

SO ORDERED. 

s/Laurie J. Michelson 

LAURIE J. MICHELSON 

UNITED STATES DISTRICT JUDGE 

 Dated: December 21, 2015 

CERTIFICATE OF SERVICE 

The undersigned certifies that a copy of the foregoing document was served on the attorneys 

and/or parties of record by electronic means or U.S. Mail on December 21, 2015. 

 s/Jane Johnson 

Case Manager to 

 Honorable Laurie J. Michelson 

 

1

 Without summary judgment on count I, it would be premature for the Court to rule on 

count II—Tapper’s claim that Chubb is responsible for the payment of a 12% interest penalty 

under Michigan’s Unfair Trade Practices Act, MCL § 500.2001, et. seq. 

2:14-cv-13280-LJM-MKM Doc # 25 Filed 12/21/15 Pg 16 of 16 Pg ID 1432