Only protects against contingent or unknown events that are, therefore, fortuitous. That is, anything that happens suddenly, accidentally or by chance.
Chartis Property Casualty Company v. John Inganamort and Joan Inganamort Civ. 12-04075 (WHW) (CLW), United States District Court District of New Jersey (March 20, 2019) the New Jersey court was asked to find the insurer must first prove that it was excluded and changed how insurance claims are resolved . The attempt was inadequate, incompetent, and unsuccessful.
Plaintiff Chartis Property Casualty Company ("Chartis") issued a Private Client Group Yacht Policy (the "Policy") to John and Joan Inganamort ("the Inganamorts"). ”Or“ Defendants ”). The Policy Insured Defendants' 65-foot, 1
The issue at the heart of this matter is: what caused a boat to partially sink? Plaintiff claims it was a hole in Defendants' boat brought about by years of lack or upkeep. Defendants claim "heavy rainstorms" overwhelmed with the vessel, causing it to sink.
On July 2, 2012, Chartis sued the Defendants. Through its summary judgment, Chartis seeks declaratory judgment on the alleged loss is barred and / or limited (Count I); voidance and / or rescission of the Policy based on material representations (Count II); and right to assert additional grounds for declaratory relief, misrepresentation and / or rescission of the policy (Count III).
Defendants failed to file the required response to Chartis's Statement of Undisputed Material Facts, which Chartis filed appropriately . Local Rule 56.1 contemplates this situation: "any material not intended to be deemed necessary for the summary judgment motion."
Chartis argues that the insurance policy does not cover the damage sustained by Defendants 'boat because it is an' all-risk 'policy that only covers that the policyholders can prove to be fortuitous. Defendants contend that federal law is applicable, and that under Florida law, "since the burden of investigation [of the accident] is on Chartis, it must likewise bear the burden of proof that there is an exception to coverage."
Federal admiralty law Controls. The fortuity rule, entrenched in federal admiralty law, states that all-risk policies in marine insurance contracts only cover losses caused by fortuitous events. Federal courts have been applying some of the fortuity rule in marine insurance cases for over a hundred years and in so doing, these courts have predominantly looked to federal law as a precedent. Under the rule, a loss is not expected if the results from an inherent defect, ordinary wear and tear, or the insured's intentional misconduct.
Burden of Proof
In admiralty law, the burden of proof generally is on the insured to show that a loss arose from a covered peril. Defendants hold the initial burden. In an action under all risk policy, the insured has been required to show that the loss or damage was fortuitous. The burden then shifts to the insurer, to show an exception to coverage.
Defendants contend that the partial sinking of their boat stemmed from heavy rainfall, and cite two reports written by their expert, Charles M. Stephens, a Marine Surveyor and Licensed Insurance Adjustor. Basically, Mr. Stephens believed a circuit shortage cut power to the bilge pumps (which are tasked with removing excess water on a boat), resulting in the flooding, Defendants' theory for the boat's sinking requires them to put forward evidence of heavy rain in the area during the applicable time period. Mr. Stephens stated that there were "5 to 15 inches of rain" in South Florida in September of 2011 based on "talking to other people," including "people at the marina" and "the captain."
Chartis argued that heavy rain could not have been the proximate cause of the yacht's partial sinking. Plaintiff relies on an expert report prepared by Steven Roberts, a Certified Meteorologist that showed that rainfall occurred on three of the five dates chosen by the date of sinking, with the most rainfall occurring on September 12, 2011, at 1.21 inches. According to the report, this amount of rainfall happens “multiple times per year, and has a 100 percent chance of being equaled or exceeded in a given year.”
The ultimate question is: does enough evidence exist for a rational juror to find that the amount of rainfall was sufficiently fortuitous to have caused the partial sinking of the boat? The District Court found that there was no "Heavy rainfall" is a term that requires context to determine if the rainfall was sufficiently heavy to continue. "For a rainfall to be" heavy "in south Florida such that it would imply the "fortuitous loss" rule, there must be sufficient evidence, probably from either meteorological data or publicly available reports, as to the rain's severity. Defendants present no such evidence from which a fact-finder could find that rainfall caused the yacht to sink. It follows that Defendants have not included their initial burden.
As was stated by Plaintiff's expert Mr. Morris, rainfall alone is no cause for the boat to partially submerge. The boat is intended to prevent rain water falling on the deck from entering the bilges. What is covered is not the loss that may occur on the sea, but the loss of occurrence through extraordinary action of the elements at sea, or accident or mishap in navigation.
Even if Chartis's alternative theory (a hole in the hole) as to how the boat partially sunk were not sound, it is irrelevant if the burden of persuasion is never shifted to them, as was the case before the court. Defendants failed to measure their initial burden.
The insurer defeated, with admissible evidence, every claim of the insureds as to the cause of the sinking of their yacht. The insureds, on the other hand, did everything possibly wrong in their attempt to defeat the motion for summary judgment, including a failure to follow the local rules that, in essence, admitted all of the insurer's evidence and allegations. An old yacht, not well maintained, that sinks while it rains in Florida – something that happens with a great deal of regularity – will only work if there is some failure in the vessel.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for reading, and conveyed the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling laws and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org
Mr. Zalma is the first recipient of the first annual claims magazine / ACE Legend Award.
About the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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