Opinion ID: 30554
Heading Depth: 2
Heading Rank: 1

Heading: Pigg Inventory Loss Claim

Text: 24 First, we address whether the district court properly granted Mid-Continent's motion for summary judgment and denied Performance's motion for partial summary judgment on the Pigg inventory claim. 25 Performance argues that it suffered a covered loss and that the inventory computation exclusion does not apply. Performance first contends that its made out its prima facie case because the fact that Pigg caused some of the loss raises the inference that he is responsible for the entire loss. Next, Performance argues that the inventory performed in this case is not an inventory computation as a matter of law because it was a physical inventory that did not involve estimation or account comparison. 8 Performance also argues that under the policy, an inventory computation may be used to quantify a loss once there is independent proof that employee dishonesty caused the loss. 26 Mid-Continent disputes that it should pay the portion of the Pigg loss at issue. Mid-Continent initially contends that Performance did not come forward with sufficient evidence to show that the Pigg claim was a covered employee dishonesty loss. Alternatively, Mid-Continent argues that, even if Performance showed the loss was due to employee dishonesty, the loss is excluded because the method used to quantify the loss is an inventory computation. 27 The district court granted summary judgment in favor of Mid-Continent. The district court did not address whether Performance showed the loss was due to employee dishonesty, though Mid-Continent made this argument, but instead determined that the inventory computation exclusion barred coverage. 9 Because Performance could not trace the disputed portion of its losses to Pigg but could only estimate these losses using its annual inventory, the district court denied coverage. 28 We do not address the inventory computation exclusion because we conclude that Performance has not made out its prima facie showing that it suffered a covered loss due to employee dishonesty. Put simply, Performance has not provided sufficient evidence to create a genuine issue of material fact that Pigg caused the loss at issue. It is Performance's burden to show that coverage applies. The policy requires that Performance show loss of... Covered Property resulting directly from the Covered Cause of Loss [employee dishonesty]. Campos & Stratis specifically tied about half of the loss, $5,643 in cash and $47,222 in parts, to Pigg. The Campos & Stratis report is fortified by Pigg's own admission that he took approximately $4,000 in cash and approximately $25,000 to $30,000 in parts. Performance offers only two other pieces of evidence to tie Pigg to the remainder of the loss: (1) the inference that the loss must have been caused by Pigg because Performance had not determined any other potential cause and (2) the fact that Pigg, as Parts Department Manager, could have stolen more than he admitted and generated false sales invoices that would make the stolen parts untraceable. 10 Performance does not provide evidence to back up these two suggestions. Pigg admitted, and Campos & Stratis verified, the details of several transactions he used to defraud Performance. For example, Pigg explained how he sold parts to Dugan's Body Shop for which he was paid in cash, how he kept the cash rather than turning it in to Performance, and how he manipulated inventory records to cover the loss. Pigg provided similar detail for each of his other fraudulent transactions. When asked about the remaining, un-accounted for amount, Pigg said, I can't tell you where the rest of it went but I know what I've told you is what I know about. All Performance relies on to prove its prima facie case is Pigg's admission, the Campos & Stratis report, and the inventory discrepancy. Even if the inventory discrepancy could be used to substantiate the amount of the loss under the inventory computation exclusion (an issue we do not reach), there is no evidence, direct or circumstantial, that Pigg caused that portion of the loss. Without some evidence linking Pigg to the loss, Performance cannot withstand summary judgment. We affirm the district court on this issue.