The opinion of the court was delivered by: LASKER
This action arises from the insolvency of Seatrain Lines, Inc. and its subsidiaries ("Seatrain"), international common carriers by water. Plaintiffs allege that they leased ocean cargo containers and related equipment to Seatrain pursuant to leases which required Seatrain to procure insurance covering the equipment for the benefit of the plaintiffs. Seatrain obtained the required insurance from United States Fire Insurance Co. ("U.S. Fire") and plaintiffs contend that they are additional insureds or loss payees or beneficiaries entitled to make claims against the policy or policies.
Seatrain's operations were world-wide: it had offices and agents throughout the United States and Europe, as well as Korea, Japan, Mexico and Canada. (List of Seatrain offices, Exhibit A to Affidavit of James B. Wieland). Plaintiffs contend that when Seatrain became insolvent, it "abruptly ceased operations leaving the containers at various locations where they lay, to become subject to loss or damage from external causes including natural forces, the actions of third parties . . . and fortuitous or mysterious causes." (Affidavit of James B. Wieland, para. 5).
U.S. Fire contends that in addition to the four plaintiffs in the instant action, fifteen of Seatrain's other lessors have asserted claims on the same or similar policies. Five lessors have filed another action in this Court, CATU Containers, et al v. United States Fire Insurance Co., 82 Civ. 2865, which has been designated a related case to the case at bar, and two have filed actions in state court in California. U.S. Fire contends that claims to date amount to more than $21 million.
U.S. Fire moves pursuant to Fed. R. Civ. Pr. 19 for an order directing that the claimants who are not presently parties in this action be joined as plaintiffs. U.S. Fire contends that all of the claimants are competing for a single fund because Clause 9 of the relevant policy
which is quoted below, limits recovery to $5 million. (Exhibit A to Affidavit of Frank Marcigliano). Plaintiffs answer that there is no single fund for which all of the claimants are competing because the policy does not contain any recovery limitation relevant to the losses alleged. In particular, plaintiffs contend that Clause 9 is an "event limitation;" that is, that it limits U.S. Fire's liability only
"for losses which flow from a particular event or location, most typically the catastrophic kind of loss that would occur where a single vessel or connecting conveyance became involved in a disaster, or where some other catastrophic loss, such as a hurricane, happens to strike insured equipment 'at any one place or at any one time.'"
(Plaintiffs' Memorandum of Law, filed October 28, 1982, at 7-8). Because no event or events as contemplated by Clause 9 are alleged, plaintiffs' argument continues, the limitations of Clause 9 are not invoked. Therefore, the plaintiffs say, there is nothing in the instant action that could, under Rule 19, "impair or impede [the] ability" of the other claimants "to protect [their] interests."
In reply, U.S. Fire contends that it must be plaintiffs' intent to allege that Seatrain's bankruptcy was the cause of their losses, and that bankruptcy is an event which would invoke the limits of Clause 9. In support of its prediction as to what plaintiffs will allege, U.S. Fire asserts that if plaintiffs do not allege that bankruptcy is the cause of their losses, then the policy's $10,000 deductible will apply to wipe out the claims.
Clause 9 of the policy states:
"These Assurers shall be liable for not more than Five Million ($5,000,000.) Dollars by any one vessel or by any one usual connecting conveyance or at any one place at any one time."
The primary question presented is whether Clause 9 can be invoked by a bankruptcy. We think not. The plain language of the provision limits it to incidents which occurred at one place and one time, or on one vessel or conveyance.
Although U.S. Fire does not ask to be permitted to submit parol evidence on the meaning of Clause 9, we note that parol evidence would not be admissible to prove that the writers of Clause 9 might have contemplated a concept such as bankruptcy. In the first instance, U.S. Fire has at no point indicated that its interpretation of Clause 9 is based on anything other than its reading of the language, which we find unconvincing, and ...