Opinion ID: 219231
Heading Depth: 2
Heading Rank: 3

Heading: prorated insurance premium

Text: The final issue is whether Evans’s Lexington commercial property insurance policy covering a period both before and after the APA was among the assets transferred to Greif under the APA, or was part of a separate transaction. In the latter case, Greif would owe Evans its prorated share of the coverage: $97,224.06. Greif concedes that it benefits from the policy which it asked Evans to transfer, but it asserts that it paid for the policy via the APA. Reversing the bankruptcy court, the district court found that the policy was the subject of a valid post-petition contract between Evans and Greif and ordered Greif to pay Evans $97,224.06. The APA does not discuss this insurance policy explicitly. Insurance appears in only two sections of the APA – Schedule A (Bill of Sale and Assignment) and Schedule G (Excluded Assets). Both provisions discuss “[p]repaid insurance deposits, tax refunds, prepaid vendor deposits and other deposits of all other forms including utility deposits . . . .” Greif contends the APA was all-encompassing: Evans sold to Greif, under APA § 1.1, “any and all of its assets owned or used by [Evans] in connection with the Business, wherever located (except for the Excluded Assets), including but not limited to the following . . .” When the APA is silent on a particular asset, according to Greif, the court should hold that the asset was transferred. The Trustee contends that the exclusion of such a significant item as the insurance policy is a sign that the parties did not intend it to be part of the APA. The Trustee further argues that the pre-paid premium is essentially a “prepaid 6 Case: 10-30387 Document: 00511514885 Page: 7 Date Filed: 06/21/2011 No. 10-30387 insurance deposit” and is therefore an excluded asset under Schedule G. Greif counters that pre-paid premiums are not “deposits” because the term “deposit” refers to something that might be refunded, whereas pre-paid insurance premiums are not intended to be refunded. We find Greif’s argument more persuasive. Because the APA intended to transfer all of Evans’s assets, and because it specifies that its list of assets is non-exclusive, the insurance coverage was transferred to Greif when the APA closed. Although the policy took effect post-petition, the plan was not confirmed until five months after the policy took effect; both parties obviously were aware of its existence when the APA was consummated. The terms in Schedule G do not exclude transfer of the insurance policy because insurance “premiums” plainly are not “deposits.” In light of the APA’s all-inclusive nature, we are unwilling to contort the meaning of “deposit” to fit Evans’s preferred definition. Because the APA effectively, if silently, transferred the policy to Greif, Greif need not reimburse Evans for the prorated premium. We reverse the judgment of the district court and remand with instructions to reject the Trustee’s setoff claim of $97,224.06.