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BIG LIFT SHIPPING CO. v. BELLEFONTE INS. CO.

October 9, 1984

BIG LIFT SHIPPING COMPANY (N.A.) INC., Plaintiff, v BELLEFONTE INSURANCE CO., MIDLAND INSURANCE CO., PENNSYLVANIA LUMBERMENS MUTUAL INSURANCE CO., THE LUMBERMENS MUTUAL INSURANCE COMPANY, RANGER INSURANCE CO., AND REPUBLIC INSURANCE CO., Defendants.


The opinion of the court was delivered by: POLLACK

1 POLLACK, Senior District Judge:

Plaintiff sues to recover for damages arising from a marine casualty to a vessel insured under a policy of insurance issued through the New York Marine Managers, Inc. ("New York Marine") as agent and marine manager on behalf of the defendant insurance companies named herein. Jurisdiction of the Court is based on the Court's Admiralty and Marine Jurisdiction, 28 U.S.C. § 1333 (1982), the claim being within the meaning of Rule 9(h), Federal Rules of Civil Procedure. Liability was denied for failure to give timely notice of the casualty to the assurers. The matter was presented to the Court at a Bench Trial.

 After taking the proofs and hearing counsel, and upon due deliberation, the Court determines that the plaintiff is barred from recovering herein because it breached the conditions of the insurance requiring that notice of the occurrence which resulted in loss, damage and expense be given as soon as practicable, and that process, pleading and papers relating thereto be forwarded promptly, as required by the policy, to the assurers.

 FACTS

 Big Lift Shipping Company (N.A.) Inc. (hereafter Big Lift), a wholly owned subsidiary of Holland Amerika Lines, entered into a time charter of the M/V DANAOS with the owner of the latter on December 7, 1977.

 On December 23, 1977, while under the charter, DANAOS suffered a casualty to a winch block resulting in damage to its cargo and to the vessel's crane.

 Big Lift claimed that it had no office or employees in the U.S.A. -- that it had agents in Houston, Texas, where William Hepburn was the Operations Manager.

 The insurance coverage required by the charter party was split; one policy covered liability in connection with the cargo, and another policy covered damages to the vessel under charter. The policies were issued by two different groups of insurance underwriters. The insurance on the cargo was issued by the Standard Steamship Owners Protection and Indemnity Association (Standard Club), represented in New York by Lamorte Burns & Co., Inc.

 Big Lift's parent company, through its insurance department, arranged the vessel insurance required under the charter party with New York Marine representing the underwriters through Johnson & Higgins acting for Holland Amerika.

 The policy on which this suit is brought was executed in New York, having been drafted, prepared and submitted to New York Marine in New York by Johnson & Higgins, and became effective June 8, 1977. New York Marine bound the defendant insurers in stated shares to a policy of Charterers Legal Liability Insurance, reciting that it was made for Holland Amerika Holding N.V. Rotterdam and/or Big Lift N.V. and/or Affiliated Companies. The plaintiff is such an "affiliated company." The insurance coverage was for damage occurring to the vessel while under the charter.

 The policy's notice of loss requirement reads as follows:

 2. It is understood and agreed by the assured that in the event of any occurrence which may result in loss, damage and/or expense for which these Assurers are or may become liable under this insurance, notice thereof shall be given to these Assurers as soon as practicable and any and every process, pleading, and paper of any kind relating to such occurrence shall be forwarded promptly to these Assurers.

 Holland Amerika failed to notify its Houston agents that the insurance covering the cargo and the vessel was split between two companies, and no copy of the policy was furnished to the U.S.A. agents. The only document which the agents had in their files was a book of the Rules of the Standard Club which they had received a number of years earlier.

 Plaintiff, through error for which it and its parent company alone are responsible, failed to comply with the Notice of Loss requirement of the policy sued on, and did not notify defendants of the accident until ...


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