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Fireman's Fund Insurance Co. v. Great America Insurance Co.

United States District Court, S.D. New York

March 31, 2014

FIREMAN'S FUND INSURANCE CO., ONE BEACON INSURANCE CO., NATIONAL LIABILITY AND FIRE INSURANCE CO., and QBE MARINE & ENERGY SYNDICATE 1036, Plaintiffs,
v.
GREAT AMERICAN INSURANCE CO. OF NEW YORK, MAX SPECIALTY INSURANCE CO., and SIGNAL INTERNATIONAL, LLC, Defendants

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For Fireman's Fund Insurance Company, One Beacon Insurance Company, National Liability and Fire Insurance Company, QBE Marine & Energy Syndicate 1036, Plaintiffs, Counter Defendants: John Anthony Vincent Nicoletti, LEAD ATTORNEY, Nicoletti Hornig & Sweeney, New York, NY.

For Great American Insurance Company of New York, Defendant, Cross Claimant, Counter Claimant: George Richard Zacharkow, Stephen J. Galati, LEAD ATTORNEYS, Mattioni, Ltd., Philadelphia, PA.

For Max Specialty Insurance Company, Defendant, Cross Claimant, Counter Claimant, Cross Defendant: Meryl R. Lieberman, Stephen D. Straus, Traub Lieberman Straus & Shrewsberry LLP, Hawthorne, NY.

For Signal International, LLC, Cross Defendant, Cross Claimant: Stephen Patrick Kyne, LEAD ATTORNEY, Burke & Parsons, New York, NY; Allison Raquel Colon, David S. Bland, James D. Prescott, III, PRO HAC VICES, LeBlanc Bland P.L.L.C., New Orleans, LA.

For Max Specialty Insurance Company, Cross Defendant: Adam Daniel Krauss, Meryl R. Lieberman, Stephen D. Straus, Traub Lieberman Straus & Shrewsberry LLP, Hawthorne, NY.

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OPINION AND ORDER

J. PAUL OETKEN, United States District Judge.

On August 20, 2009, one of the world's largest drydocks, the AFDB-5 (the " Drydock" ), sank at its berth in calm waters in Port Arthur, Texas. Fireman's Fund Insurance Company (" FFIC" ), One Beacon

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Insurance Company (" One Beacon" ), National Liability and Fire Insurance Company (" National Liability" ), and QBE Marine & Energy Syndicate 1036 (" QBE" ) (collectively, " Plaintiffs" ) brought this action against Great American Insurance Company of New York (" Great American" ), Max Specialty Insurance Company (" MSI" ), and the insured, Signal International, LLC (" Signal" ), seeking a declaration as to the rights and obligations of the parties under various insurance policies. After several years of discovery and the unearthing of documents reflecting the Drydock's dilapidated condition, disagreement over the extent of coverage has given way to accusations of fraud and concealment. MSI and Great American have moved for declarations that their respective policies are void on such grounds. Plaintiffs and Signal have cross-moved on the same, and seek declarations requiring payment under the policies. For the reasons that follow, the Court holds that both policies are void ab initio. MSI and Great American's motions for summary judgment on these issues are therefore granted; all remaining motions are denied.

I. Background

A. Factual Background

The following facts are drawn from the parties' Local Civil Rule 56.1 Statements and other submissions made in connection with the instant motions. They are undisputed unless otherwise indicated.

1. Signal

Signal is a marine repair and fabrication company that came into existence in 2003 when it purchased the offshore repair division of Friede Goldman Halter in bankruptcy. The division consisted of six facilities in Mississippi and Texas, including a dockyard in Port Arthur, Texas (" dockyard" ). Initially, Signal was predominantly involved in the repair, upgrade, and conversion of offshore drilling rigs. In 2006, it expanded its business model to include marine fabrication--performing new construction from engineering plans. By 2009, more than sixty percent of its revenue was derived from new construction projects. In 2010, Signal entered the ship repair business by purchasing the assets of Bender Shipbuilding in Alabama.

2. The Life and Death of a Drydock

In connection with its 2003 asset purchase, Signal assumed a lease with the Port Arthur Navigation District Industrial Development Corporation (" PANDIDC" ) to operate the AFDB-5 drydock at the Port Arthur dockyard. The Drydock was built by the United States Navy during World War II for the purpose of repairing naval vessels, and acquired by the Port of Port Arthur (" Port" ) in 1984. Later that year, the Port entered into a Lease Agreement to lease the dockyard from the City of Port Arthur (" City" ) and assigned its leasehold interest to PANDIDC, which contemporaneously entered into a Project Agreement with Bethlehem Steel Corporation (" Bethlehem" ) for the latter to operate the Drydock at the dockyard. Under the Project Agreement, the Drydock operator--first Bethlehem, and ultimately Signal--assumed all of the Port's obligations under the Lease Agreement. The Lease Agreement was for a term of twenty-five years, with an option for the operator to renew for another twenty-five years provided it gave two years' notice to PANDIDC, the Port, and the City. The Drydock consisted of eight pontoons designated " A" through " H." Each pontoon was 240 feet long, 101 feet wide, and twenty-three and a half feet deep, with a fixed wing wall at one end and a removable wing wall at the other. The wing walls rose 48 feet above a pontoon deck, and each had a watertight level called the safety

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deck. The center of each pontoon had a compartment called the machinery space, which housed the main ballast pumps as well as old engines, generators, and a boiler room no longer in use. The safety deck, which once functioned as a machine shop, also contained old machinery and parts. Asbestos and transite (an asbestos-containing material) were present in the safety deck and in the crew deck and machinery spaces of the pontoons. The Drydock was located in navigable waters along the Sabine-Neches Waterway in an area that had been carved out of the land by Bethlehem for the purpose of its installation. In addition to the AFDB-5, Signal owned and operated a second drydock--the " Dual Carrier" in Pascagoula, Mississippi.

Signal became aware soon after acquiring the Drydock that it was nearing the end of its useful life and in need of serious renovation.[1] A December 2002 appraisal report prepared by surveyor Robert Heger stated that " [t]he dry dock would require extensive repairs to the pontoon deck to make it operational," which would require some 3.5 million pounds of steel, and the cost of doing so in the United States rendered its value " below zero." (Dkt. No. 246 (" Zacharow Decl." ), Ex. 11 (" 2002 Heger Report" ) at 7-8.)[2] Neither the Drydock's owners nor its operators seemed interested in making such costly repairs. A March 2003 condition and valuation (" C& V" ) survey issued by ABS Consulting, Inc. (" ABS" ), which had been retained by PANDIDC to periodically inspect the condition of the Drydock, found that " the shipyard is only marginally keeping up with the rapidly increasing rate of overall deterioration" and " within the last year more than a hundred doubler plates have been welded over severely wasted/holed original main deck platings." (Zacharow Decl., Ex. 7 (" Mar. 2003 ABS Survey" ) at 3-4.)[3] The survey also stated that although ABS had notified the Drydock's owners and operators in January 2000 of the " advanced state of pontoon shell and deck plating deterioration" and recommended " drydocking or outright renewal of the pontoons" to prevent the Drydock from " conceivably becom[ing] unserviceable well within the next 5 years," " the drydock operators are attempting to effect essential maintenance/repair work (that can be accomplished without removing pontoons) in order to keep the facility operational in the short term." ( Id. at 5.)

Consistent with this observation is an April 2003 staff study conducted by Signal to determine whether it would be economically justifiable to purchase the Drydock from the Port. On the one hand, if Signal

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purchased the Drydock it would have discretion over " operation, maintenance, and disposal costs," and could prevent the Port from offering to sell it to Signal's largest competitor. (Zacharow Decl., Ex. 8 (" Staff Study" ) at 2-3.) On the other hand, the pontoon deck plate, which was being kept watertight with doublers and insert plates, was expected to last only another three to five years absent major renewal efforts which could cost $22 million and render the Drydock inoperable for two years. ( Id.) Moreover, even if Signal owned the Drydock, it would remain responsible under the Lease Agreement for disposal costs that " could run into the millions or even tens of millions of dollars due to age, condition and the presence of asbestos." ( Id. at 4-5.) In light of " the relatively short remaining useful life and extreme costs of renewals/life extensions and subsequent/eventual dry-dock disposal," the study concluded that, " [i]n the Port's own words, [the Drydock] is too much potential liability," and recommended that Signal decline the Port's offer and attempt to renegotiate the Lease Agreement to place the burden of disposal upon the Port. ( Id.)

In a subsequent C& V survey dated September 2003, ABS observed that Pontoon H was " the most deteriorated pontoon" and had " very serious hull leakage," such that pumps were used constantly to maintain ballast levels. (Zacharow Decl., Ex. 6 (" Sept. 2003 ABS Survey" ) at 5.) The survey went on to state that since ABS's January 2000 recommendation, " no major, permanent, hull plating repairs have been accomplished," and " even with the repairs and maintenance that have been done, the overall rate of drydock deterioration appears to be progressing at an ever increasing rate," such that " the drydock is now well past the point where a major restoration effort would be economically practical." ( Id. at 7.) " At the time of inspection, repair personnel were actively looking for deck fractures over pontoon machinery areas and were affixing doublers as necessary," and " due largely to excessive leakage in 'H' pontoon, it appeared that unsafe drydock operations were being conducted and . . . that it [was] the Operator's intention to continue the same." ( Id. at 5-6 (emphasis in original).) The survey concluded by " highly recommend[ing] that drydock Owners advise Operators not to conduct additional drydockings until substantial repairs are made to the 'H' pontoon and the repairs are verified." ( Id. at 6 (emphasis removed).) In light of the survey's conclusions, PANDIDC held an emergency meeting on September 30, 2003 to address the Drydock's condition. As a result of that meeting, Signal and PANDIDC entered into an agreement whereby Signal made various commitments, including that it would remove the Drydock from service no later than October 2003 to perform the repairs mentioned in the survey. (Zacharow Decl., Ex. 9.)[4]

In March 2005, Signal purchased the Drydock from the Port for $10 pursuant to a Conditional Bill of Sale. (Zacharow Decl., Ex. 19 (" CBOS" ).) Under the CBOS, Signal continued to bear the burden of disposal and was required to make payments to PANDIDC in varying amounts depending upon Drydock usage. However, its obligations to make such payments ceased " at the end of the useful life" of the Drydock. ( Id.) It also now paid rent under the Lease Agreement to the Pleasure Island Commission (" PIC" ), an arm of the City.

In December 2005, marine surveyors Dufour, Laskey, and Strauss (" DLS" ) issued a report finding that the Drydock " had significant water in most compartments . . .

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[which] requires pumping and trimming every four hours," and " [t]he deck plating was noted to have significant doubler plates where plating was either wasted or separated from internal framing due to shear stresses aboard the drydock." (Dkt. No. 259 (" Straus Decl." ), Ex. 13 (" 2005 DLS Survey" ) at 26.) Despite these problems, the survey concluded that the Drydock was in " fair" condition, relying upon reports from Signal that it would be " self-drydocked in the near future to effect repairs to the bottom of each of the pontoon sections," and the fact that the Drydock was " overbuilt and significantly strong at the time of its construction," which " translated into a significant effective age as well as extended remaining economic life considering that the noted maintenance is performed on a regular and continuing basis." ( Id.) In December 2006, DLS issued another survey concluding that the Drydock was in " fair" condition. (Straus Decl., Ex. 14 (" 2006 DLS Survey" ) at 27.) The observations in the 2006 survey were largely verbatim of the 2005 survey, but added that " [a]t the time of inspection there were divers present and those divers were patching holes or deficient areas of the bottom of the drydock." ( Id.)

In 2007, Signal began investigating alternatives to extend the useful life of the Drydock. In February, its docking master, Jim Booker, contacted Heger about replacing the pontoons two at a time and refurbishing the wing walls. Heger subsequently conducted an inspection of the wing walls to determine whether they were suitable for refurbishment and issued a report in May 2007. That report concluded that the wing walls were in " fair to poor" condition and the ballast tanks and safety tanks had lost their protective coating and needed to be repainted; otherwise, any attempt to continue using the wing walls " would result in an extremely limited useful life for the wings." (Zacharow Decl., Ex. 24 (" May 2007 Heger Report" ) at 31.) In a report issued in June 2007, Heger observed that " [p]ontoon sections E, F, G, and H are in very poor condition throughout and need complete replacement if long term use is to be considered," and recommended that Signal build new pontoons as " repair of the pontoons is not economically justifiable." (Zacharow Decl., Ex. 25 (" June 2007 Heger Report" ) at 28, 32.) In July, in response to an inquiry from Signal about what repairs were necessary for the Drydock's continued safe operation, Heger reiterated that the deck plate for the pontoons needed to be replaced and observed that, in addition to other issues requiring repair, the " [p]ontoon deck is extremely thin with many holes and cracks" and " [a] blow out . . . could rapidly flood the machinery compartment." (Zacharow Decl., Ex. 27 at 2-3.)

On September 24, 2007, two days before expiration of the Lease Agreement, Signal sent a letter to PANDIDC, the Port, and PIC indicating its desire to renew. However, citing the fact that the Drydock was approaching " the end of its useful life and . . . [would] likely not be operational for the entirety of the renewal period," Signal rejected the twenty-five year renewal term and proposed a term that would automatically expire " in the event that the Drydock must be disposed of prior to the current expiration of the renewal period and a suitable dry dock cannot be obtained." (Dkt. No. 250, Ex. 7.) In October 2007, DLS issued a C& V survey that essentially parroted the observations in its 2005 and 2006 surveys, but concluded that the Drydock was in " satisfactory" rather than fair condition, and recommended that the pontoons be drydocked and repaired " [a]s soon as practical within the succeeding eighteen months . . . in order to render

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this vessel in good stable operating condition and provide a life extension to the drydock." (Zacharow Decl., Ex. 28 (" 2007 DLS Survey" ) at 7.)

In May 2008, having determined that it would not be economically feasible to replace the pontoons, Signal proposed a plan to Heger to extend the Drydock's life by removing the two worst pontoons--H and E--and converting the Drydock to a 6-pontoon configuration. Heger stated that this configuration would not be stable without certain modifications and reiterated that " it is our opinion that all sections need major repair work before they can be safely used," and therefore " [a]ny designs we perform will be provided with the understanding that the dock will no[t] be operated with our 'blessing' unless all sections are repaired to our satisfaction." (Zacharow Decl., Ex. 33 at 2.) On June 9, Heger provided Signal with design options for reconfiguring the Drydock to a 6- or 7-pontoon configuration. Signal directed Heger to develop the design for the 7-pontoon configuration, which called for the removal of Pontoon H, and began work on the project around December 2008.

In January 2009, Stephen Heller & Associates, Inc. (" Heller" ) issued a 2009 Property Risk Assessment Report concluding that " the Signal International facilities reviewed are rated as an 'Above Average' risk." (Dkt. No. 260 (" Morano Decl." ), Ex. 2 (" 2009 Heller Report" ) at 8.) This was the second highest rating possible, defined as " [a]cceptable standards including some best industry practices." ( Id.) The report also described the risk of the Drydock becoming a total loss as one of " extremely low probability and frequency based on previous industry experience." ( Id. at 36-37.) In April 2009, Heger warned Signal that " it is imperative that all [pontoons] and original connection plates be adequately repaired according to our reports of May 18, 2007 . . . and June 28, 2007" prior to reconfiguring the Drydock. (Zacharow Decl., Ex. 39 at 2.) Despite this warning, Signal proceeded to reconfigure the Drydock without making such repairs, beyond the continued periodic installation of new insert plates. (Straus Decl., Ex. 15 at 55:2-56:15; Ex. 23 at 207:15-208:7; Ex. 24 at 77:19-80:1, 102:13-23.)

In a letter dated August 12, 2009, PIC's lawyers informed Signal that, because it was in default of the Lease Agreement for various reasons, PIC was exercising its contractual right to terminate, effective September 15, 2009, and demanding in accordance with the lease two years' rent representing liquidated damages. On August 18, representatives from Signal and PIC signed a proposal for an extension of the lease, which reflected mutual agreement upon a six-year lease extension with specified annual rent, and two options to renew for additional six-year terms with rent to be determined. By its own terms, the proposal was " to be presented to each entity for approval" and PIC was to respond by September 3, 2009.

On August 20, 2009, Signal reached the point in the reconfiguration where it was ready to remove Pontoon H. Shortly before 3:00 p.m., it removed and drydocked Pontoon H on blocks situated on Pontoons G, F, and E.[5] At 5:00 p.m., the ballast tanks of the remaining seven pontoons were pumped. Later that evening, the Drydock sank.

3. The Policies and Underwriting Process

At the time of the sinking, Signal held five insurance policies that potentially provided

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coverage for the Drydock: (1) a marine general liability policy subscribed to by FFIC and One Beacon on a 50-50 basis with FFIC as lead insurer having full claims control, providing $1 million coverage per occurrence less a $100,000 deductible (" MGL Policy" ); (2) a marine excess liability policy subscribed to by FFIC, National Liability, and QBE on a 34-34-32 basis, also with FFIC as lead insurer, providing $25 million coverage per occurrence (" Bumbershoot Policy" ); (3) a pollution policy subscribed to by Great American, providing $5 million coverage (" Pollution Policy" ); (4) a primary property policy subscribed to by Westchester Surplus Lines Insurance Company (" Westchester" ), providing $10 million coverage (" PPI Policy" ); and (5) an excess property policy subscribed to by MSI, providing $15 million coverage in excess of the PPI Policy (" EPI Policy" ).

The PPI and EPI Policies insure loss or damage to real and personal property listed in a property schedule, as well as business interruption and " extra expenses." Business interruption covers loss resulting from interruption or reduction of business operations due to loss or damage to insured property; extra expenses are the reasonable and necessary costs incurred to temporarily continue the business pending recovery. The Pollution Policy provides coverage for pollution liability based upon discharges into navigable waters arising under the Oil Protection Act (" OPA" ), the Comprehensive Environmental Response, Compensation, and Liability Act (" CERCLA" ), the Federal Water Pollution Control Act (" FWPCA" ), and corresponding state law. Pursuant to an endorsement, the policy also provides coverage for " the on-water removal of materials of a non-OPA and non-CERCLA nature which has been mandated by an authorized public authority and is the result of a defined single, sudden and accidental event." (Dkt. No. 215, Ex. 4 (" Pollution Policy" ) at GAI2279.) In addition to the Drydock, the Pollution Policy covers the Dual Carrier, Signal's fleet of twenty-five barges and tugs that were used in connection with its Drydock operations, and any vessels that were on the Drydock for business purposes.

Signal obtained these policies through its insurance broker, Willis of Alabama, Inc. (" Willis" ). From its inception, Signal insured its drydocks under its property insurance program. However, prior to soliciting property coverage from MSI, it attempted to obtain hull insurance on the Drydock in 2005. In connection with applications to Trident Marine (" Trident" ) and FFIC, Willis submitted the 2002 Heger Report. Both underwriters singled out the report's description of the poor condition of the pontoon deck plating and asked Willis if any work had been done. The FFIC underwriter stated that he would need a description of the repairs done or else he would " have a tough time convincing anybody that this is worth $5,000,000." (Zacharow Decl., Ex. 15 at 2.) The Trident underwriter similarly remarked that " [w]e would need confirmation from the assured that [the pontoon deck of all sections and Pontoon H has been replaced or fixed] before we would commit to cover it." ( Id. at 4.) Willis indicated that Signal had " performed a great deal of work" but it did not know the specifics; offered to obtain a new C& V survey; and requested a quote assuming receipt of an acceptable survey. (Dkt. No. 215, Ex. 16 at 2.) The Trident underwriter responded that he " c[ould not] support any pricing without some feedback from the assured detailing what work had been done on the Drydock." (Dkt. No. 215, Ex. 17 at 2 (emphasis added).)

Signal subsequently sought property insurance on the Drydock. In connection with the solicitation of coverage for the

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2009-10 year, Willis employed AmWins of New York (" AmWins" ), a wholesale broker, which provided Westchester with a 2009 Property Submission. That submission contained, among other things, the 2009 Heller Report and a Statement of Values listing the Drydock's value as $13.6 million based upon the most recent survey, the 2007 DLS Survey. Westchester relied upon this submission to underwrite the PPI Policy. Seeking additional coverage, AmWins provided MSI with the same submission, which it relied upon to underwrite the EPI Policy.

Signal held pollution coverage with Great American beginning in 2004. In connection with its solicitation of coverage for the 2009-10 year, Willis, on behalf of Signal, submitted a Vessel Pollution Liability Application and an attached Vessel Schedule. The Vessel Schedule identified the pieces for which Signal sought coverage, including the Drydock, and described, among other things, the age of each item. Willis did not submit any surveys or reports regarding the condition of the Drydock.

4. After the Sinking

The Drydock was declared a constructive total loss. Signal subsequently made demand upon its insurers and notified the Texas General Land Office (" GLO" ) of the sinking. In a letter dated September 2, 2009, the GLO notified Signal that it had determined that the Drydock " could be a threat to health, safety, or welfare and a threat to the environment," noted the potential consequences of abandonment, and inquired as to what actions Signal would take " to minimize pollution impacts to waters of the state." (Dkt. No. 19, Ex. 5 (" Sept. 2009 GLO Letter" ).) The GLO cited as authority the Oil Spill Prevention Act of 1991 (" OSPRA" ), which prohibits a person from leaving a wrecked structure in coastal waters if the GLO finds it to be involved in an actual or threatened discharge of oil; a threat to public health, safety, or welfare; a threat to the environment; or a navigation hazard. ( Id. (citing Tex. Nat. Res. Code § 40.108).)[6]

On September 8, Signal's Chief Financial Officer, Chris Cunningham, sent a letter to PIC informing it that the Drydock had sunk, and because Signal would not be purchasing a replacement, it would not be entering into a new lease. Effective September 25, 2009, Signal and PIC executed a First Amendment and Lease and Release Agreement, which reflected Signal's withdrawal of its September 24, 2007 notice of intent to renew; extended the lease for six months to March 25, 2010 for the purpose of removal and cleanup; and required Signal to pay PIC $800,000 for rent through March 25, 2010 and in resolution of its alleged breaches under the lease.

In January 2010, Westchester paid Signal the full $10 million coverage under the PPI Policy, without allocating the payment between coverage for the value of the Drydock and coverage for removal costs. MSI also eventually paid Signal $3.6 million less deductible as the remainder of the cash value of the Drydock. However, MSI and Great American took the position that their respective policies did cover removal costs. FFIC, as lead insurer for the liability policies, took the position that removal and cleanup were covered under the property and pollution policies, and if the liability policies responded at all, it was not until the other policies were exhausted or at least contributed. In due course, the

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liability insurers agreed to assist Signal in the process of obtaining bids for removal of the Drydock and provided it with funds on a reservation of rights basis.

In late January 2010, Signal issued a request for best and final proposals for removal and cleanup of the Drydock, which provided that there were known and documented hazardous materials on the Drydock when it sank, including asbestos, transite, PCBs, and oil. In June 2010, Signal contracted with Weeks Marine, Inc. (" Weeks" ) for the removal of the Drydock, including " possible friable asbestos containing materials, oils and/or petroleum products." (Zacharow Decl., Ex. 66 at 14.) Weeks subcontracted ESCO Marine, Inc. (" ESCO" ) to remove all hazardous materials and process them in accordance with regulatory requirements. Representatives of the GLO and the United States Coast Guard were present at the Drydock removal kick-off meeting on July 1, 2010 due to concerns over emissions of hazardous materials into the water. In connection with the project, ESCO removed and properly disposed of 70.5 fifty-five gallon drums of petroleum-based materials, 443,290 pounds of PCB bulk, 90,080 pounds of non-friable asbestos, and approximately 6.5 million pounds of contaminated soil.

The removal of the Drydock and cleanup of the location were completed by March 2012. Plaintiffs ultimately paid Weeks $12,395,026 on Signal's behalf. In a letter dated March 5, 2012, the GLO informed Signal that " the sunken structure and all associated debris that could create a navigation or environmental hazard have been removed from Texas coastal waters," and therefore the incident was closed. (Dkt. No. 225, Ex. 7 (" 2012 GLO Letter" ).)

B. Procedural Background

Plaintiffs initiated this action on March 2, 2010, invoking this Court's admiralty jurisdiction and seeking declaratory relief. (Dkt. No. 1.) Signal subsequently filed crossclaims against MSI for failure to cover business interruption and extra expenses, and for mishandling its insurance claims in violation of state law. (Dkt. No. 79.)[7] MSI answered these crossclaims on January 28, 2011, and added crossclaims against Signal to void the EPI Policy for fraud, concealment, and material non-disclosure; recover payments made; and decline Signal's remaining insurance claims. (Dkt. No. 84.) On March 18, MSI amended its answer to the complaint to include an affirmative defense that the EPI Policy is void for the same reasons. (Dkt. No. 101.) On March 25, Great American also amended its answer to include a counterclaim against Plaintiffs and crossclaims against Signal asserting that the Pollution Policy is void under the doctrine of utmost good faith, and for misrepresentation and willful misconduct. (Dkt. No. 104.) This case was reassigned from Judge Kaplan to the undersigned on October 6, 2011. (Dkt. No. 125.)

On August 10, 2012, after discovery, Plaintiffs moved for summary judgment seeking a declaration that the EPI Policy must contribute on a prorated basis for removal and cleanup of the Drydock, and Signal moved for partial summary judgment seeking a declaration that the EPI Policy is not a maritime contract subject to uberrimae fidei. (Dkt. Nos. 159 & 162.) On January 25, 2013, the Court held that because the Drydock was not a " vessel" under Lozman v. City of Riviera Beach, Fla., 133 S.Ct. 735, 184 L.Ed.2d 604 (2013), none of the insurance policies were maritime contracts and it

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therefore lacked admiralty jurisdiction over all claims in the case. Fireman's Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 2013 WL 311084 (S.D.N.Y. Jan. 25, 2013). The Court subsequently determined that it has jurisdiction over all claims pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1367(a), limited its January 25 Order to the PPI and EPI Policies, and reserved judgment on the maritime status of the remaining policies. (Dkt. Nos. 219 & 232.) On February 5, the Court denied Signal's motion for partial summary judgment as moot in light of its January 25 Order. (Dkt. No. 212.) On March 25, it granted Plaintiffs' motion for summary judgment and held that the EPI Policy provides coverage for removal and cleanup of the Drydock. Fireman's Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 2013 WL 1195277 (S.D.N.Y. Mar. 25, 2013).

The eight pending motions relate exclusively to the Pollution and EPI Policies. With respect to the former, Plaintiffs and Signal jointly move for summary judgment seeking a declaration that the policy is not a maritime contract subject to uberrimae fidei, and is not otherwise void for misrepresentation, concealment, or material non-disclosure. (Dkt. No. 226.) Plaintiffs also independently move for partial summary judgment seeking a declaration that the policy covers removal of the Drydock. (Dkt. No. 230.) Great American cross-moves for summary judgment on the same issues. (Dkt. Nos. 242 & 244.) With respect to the EPI Policy, Signal moves for partial summary judgment seeking a declaration that the policy is not void for fraud, misrepresentation, concealment, or material non-disclosure, and MSI cross-moves for summary judgment on the same. (Dkt. Nos. 226 & 257.) MSI also moves for summary judgment to dismiss Signal's business interruption crossclaim, and for an order reconsidering or altering this Court's March 25 Order. (Dkt. Nos. 249 & 253.)

II. Legal Standards

A. Summary Judgment

Summary judgment is appropriate when " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. A fact is material if it " might affect the outcome of the suit under the governing law," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and a dispute is genuine if, considering the record as a whole, a rational jury could find in favor of the non-moving party, Ricci v. DeStefano, 557 U.S. 557, 586, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

The initial burden of a movant on summary judgment is to provide evidence on each element of his claim or defense illustrating his entitlement to relief. Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004). If the movant makes this showing, the burden shifts to the non-moving party to identify specific facts demonstrating a genuine issue for trial, i.e., that reasonable jurors could differ about the evidence. Fed.R.Civ.P. 56(f); Anderson, 477 U.S. at 250-51. The court should view all evidence " in the light most favorable to the non-moving party and draw all reasonable inferences in its favor," and a motion for summary judgment may be granted only if " no reasonable trier of fact could find in favor of the nonmoving party." Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (citations and quotations omitted). At the same time, the ...


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