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INTERNATIONAL MULTIFOODS v. COMMERCIAL UNION INS.

October 22, 2001

INTERNATIONAL MULTIFOODS CORPORATION, PLAINTIFF,
V.
COMMERCIAL UNION INSURANCE COMPANY AND INSURANCE COMPANY OF NORTH AMERICA DEFENDANTS.



The opinion of the court was delivered by: Hellerstein, District Judge.

MEMORANDUM AND ORDER GRANTING SUMMARY JUDGMENT

I. The Undisputed Facts.

In September, 1997, Plaintiff Multifoods, a Delaware corporation principally located in Minnesota, shipped a cargo of frozen meat and foodstuff, from Pascagoula, Mississippi to St. Petersburg, Russia aboard the M/V Ozark, at the order and pursuant to a contract with ASCOP Corporation ("ASCOP"), a New York corporation. Upon satisfactory discharge to the consignee in St. Petersburg, ASCOP was to pay Multifoods $6,056,870.39, the balance remaining after a down payment of $465,802.21.

The ship arrived in St. Petersburg on September 14, 1997, but was unable to discharge Multifoods' cargo. Russian police authorities arrested the ship and its cargo, over Multifoods' objection and incident to a criminal investigation involving a different shipper. Multifoods was not able to recover the cargo or salvage, and made claim against Commercial Union under the policy obtained by ASCOP and indorsed to Multifoods.

A. Commercial Union's All-Risk Policy

The All-Risk Policy, procured by ASCOP from Commercial Union and certified by Commercial Union to Multifoods, comprised 71 pages. Its insuring clauses, exceptions and exclusions were repetitive and inconsistent. The cross-referencing of clauses, from and to indorsements, special indorsements, specimen clauses and appendices increased the difficulty.

The insurance covered Multifoods' shipment from "U.S. Gulf or East Coast Port . . . to safe release of tackle at . . . St. Petersburg Russia. . . ." An endorsement extended the coverage to "further transit or period of storage whether prior to, intervening or subsequent thereto," and including "risks whilst in the care, custody or control of . . . warehousemen or others . . . whether prior to loading and/or after discharge from overseas vessel. . . ."

This insurance covers the subject matter insured hereby during the whole of the period covered by the duration provisions of the insuring clauses applicable and any further transit or period of storage whether prior to, intervening or subsequent thereto for which provision is made under this contract and irrespective of whether the interest of the Assured is as principals, bailees or agents in any other capacity.
Including risks whilst in the care, custody or control of freight forwarders, consolidators, truckers, warehousemen or others for the purpose of storage, consolidation, decontainerization, distribution redistribution [sic], packing, repacking or otherwise whether prior to loading and/or after discharge from overseas vessel or at any transshipment point. Coverage after discharge from ocean vessel shall terminate on completion of discharge overside from the oversea vessel of the goods insured under this contract to any one port at that port.

The coverage was to remain in force despite delays, "deviation, forced discharge, reshipment or transshipment . . . until delivery to final destination as eventually established."

Insurance hereunder remains in force during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transshipment whether beyond the control of the Assured or otherwise and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of the affreightment.
Where after the attachment of this insurance, the destination is changed by the Assured insurance hereunder shall continue in accordance with the terms of this contract until delivery to final destination as eventually established.

If the assured or consignee refused or was unable to accept delivery, coverage under the Policy continued in effect during delay or return, until "otherwise disposed of."

In the event of refusal or inability of the Assured or other consignee to accept delivery of the subject matter insured hereunder this contract is extended to cover such goods during delay and/or return and/or otherwise disposed of subject to an additional premium if required. . . .

Further, by an indorsement covering "inland transit", the coverage extended for the property insured "until delivered to the warehouse or store at destination."

Thus, the coverage insured Multifoods against risk of loss to its cargo, not only during the ocean voyage, but continued until delivery at final destination, including delays, deviations and forced discharges.

In case of covered loss, the insured goods were to be valued at "cost and freight plus 10% advance."

The coverage was made subject to conditions, those specifically incorporated from a set of specimen clauses in an annex, "[London] Institute Frozen Meat Clauses (A) — 24 Hours Breakdown Cl. 324 (1.1.86)." "All risks of loss of or damage to the subject matter insured," were to be covered, subject only to specific exceptions, those specifically excluded ...


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