The opinion of the court was delivered by: ROBERT L. CARTER
Plaintiff Robin Kershaw, individually and on behalf of certain underwriters at Lloyd's of London, filed a complaint against defendant Nautica S.A. Ltd. ("Nautica"), owner of the yacht ALVA I, pursuant to 28 U.S.C. § 2201, for a declaratory judgment voiding a hull and machinery insurance contract (the "contract" or "policy"), claiming that (1) defendant misrepresented and failed to disclose material facts pertaining to the insurance policy at the time of its making, and (2) defendant intentionally submitted false information at the time it made a claim under the policy.
The complaint states that in or about August, 1991, and April, 1992, Nautica, via its insurance brokers and agents B. & P. International, Ltd. ("B. & P.") in New York and Crawley Warren & Co. Ltd. ("Crawley Warren") in London, in an attempt to obtain insurance for the motor yacht ALVA I, allegedly submitted "certain information to plaintiffs representing that the yacht was built in July, 1988 at the Manoleskos Shipyard located in Pireaus, Greece, and that the vessel had a value of one million dollars ($ 1,000,000)," (Compl. PP 7, 9), which allegedly resulted in plaintiffs' agreeing to provide one million dollars of hull and machinery insurance on ALVA I for a twelve-month period starting June 14, 1992. On or about April 8, 1993, the ALVA I was allegedly discovered missing from its berth at the Kalamaki Yacht Club in Greece, hence, Nautica made a claim for the full insured value under the insurance contract, allegedly providing certain information to plaintiffs, including specifications of the ALVA I supposedly prepared by a naval architect on or about April 23, 1986.
Plaintiffs contend that Nautica knowingly misrepresented the age and value of ALVA I in its representations and submissions. Plaintiffs allege that the vessel was a conversion of the yacht "MARY," which was built in South Africa in 1967, and registered in Greece under the ownership of Al Aydi Maritime Company Limited ("Al Aydi"), and was worth no more than $ 200,000. Plaintiffs assert that had they been provided with alleged accurate information regarding the age and value of ALVA I, they would not have agreed to provide coverage, or would have done so on substantially different terms. Consequently, plaintiffs argue that the insurance policy should be void, that plaintiffs should not be liable and that plaintiffs should receive costs, reasonable attorneys' fees and other and further relief as is just.
Plaintiffs argue that the complaint is based predominantly on insurance law and that, therefore, the complaint should be held to minimal pleading requirements, pursuant to Rule 8(a), F.R. Civ. P.
See 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1243 at 296 (1990) ("In general, the same pleading criteria established by the federal rules for other civil actions apply to insurance cases"). While plaintiffs request that an insurance policy be declared void as a result of material misrepresentations made in the formation of the policy and in the submission of a claim pursuant to the policy, the complaint's language illustrates that the primary basis of the complaint is common law fraud and not insurance law. For example, under plaintiffs' first cause of action, the complaint accuses Nautica and/or its agents of making "representations" regarding the age and value of ALVA I that were "materially false and misleading" and "were known by defendant to be false and misleading." (Compl. P 13.) Defendant is also accused of "willfully concealing and failing to disclose material facts." (Compl. P 17.) Under plaintiffs' second cause of action, the complaint accuses Nautica and/or its agents of providing information that "is false, [that] defendant knew such information to be false . . . [and that] defendant intended that plaintiffs rely on the false information." (Compl. PP 18, 19.)
Union Mutual Insurance Co. v. Bleetstein, 3 F.R.D. 205, 206 (E.D.N.Y. 1942) (Campbell, J.), upon which plaintiffs rely, can be distinguished from the present case. In Union Mutual Insurance Co., plaintiff's action was brought to rescind two life insurance policies solely because of misrepresentation. Id. at 206. While the court noted that "nowhere is fraud mentioned in the complaint," it did not base its decision only on these grounds, but instead examined the content of the complaint, concluding that it was not laid in fraud. Id. Here, plaintiffs not only bring a cause of action based on misrepresentation during the formation of the insurance contract but also bring a cause of action based on the intentional submission of false information when making a claim pursuant to that contract.
Defendant contends that the complaint should be dismissed because plaintiffs failed to state a cause of action for fraud. The general rule is that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Salahuddin v. Cuomo, 861 F.2d 40, 43 (2d Cir. 1988); Hudson's Bay Fur Sales Canada, Inc., No. 90 Civ. 8026, 1991 U.S. Dist. LEXIS 4552, 1991 WL 60377, at *2 (S.D.N.Y. Apr. 8, 1991) (Carter, J.) ("a claim will be dismissed only if its allegations would not entitle the claimant to relief on any possible theory"), and "the court must consider the legal sufficiency of the complaint, not the weight of evidence which might be offered at trial." Granat v. Center Art Galleries -- Hawaii, Inc., No. 91 Civ. 7252, 1993 U.S. Dist. LEXIS 14092, 1993 WL 403977, at *2 (S.D.N.Y. Oct. 6, 1993) (Carter, J.). The court must ...