Defendants assert that plaintiff's poor security protocols and its failure to supply them with certain inventory and internal profit and loss statements precluded them from determining the exact amount of the losses claimed, and support their finding of fraud. In essence, defendants assert that plaintiff's failure to provide the foregoing documents regarding cash sales precludes plaintiffs from asserting that it cooperated with them as per the terms of the policy. Defendants claim that plaintiff maintains three different sets of books and records for the business, and that several of the key internal financial statements have never been disclosed to defendants, either as a result of the underwriters investigation, or through discovery in this matter. Plaintiff avers that the documents referred to do not exist, as they were prepared for temporary use, and were routinely destroyed in the usual course of its business. Defendants argue that the losses alleged by plaintiff are criminal at worst and fraudulent at best, and therefore, defendants should not be forced to pay plaintiff's claim.
Defendants assert that they have legitimate defenses to plaintiff's allegations.
Defendant's contend that plaintiff's failure to file a sworn written claim to the underwriters within 60 days from the initial discovery, violated the terms of the policy and therefore, summary judgment dismissing the complaint is appropriate. Plaintiff argues that in late February 1996, it provided sufficient notice to defendants through its broker of 10 years, who then notified defendants. Notably, the written, sworn proof of loss was filed with defendants in December 1997. Defendants argue that had the individual items been reported as soon as their disappearance was discovered, those pieces would not have met the deductible for the policy. Essentially, defendants contend that plaintiff's losses were ongoing in nature and, therefore, plaintiff cannot establish that any individual loss satisfies the deductible.