Adams v. Unione Mediterranea Di Sicurta
| Decision Date | 14 August 2000 |
| Docket Number | DAI-TOKYO,No. 98-30875,98-30875 |
| Citation | 220 F.3d 659 |
| Parties | (5th Cir. 2000) STEVEN HENRY ADAMS, for Himself and as Representative of Certain Underwriters at Lloyd's; INDEMNITY MARINE ASSURANCE COMPANY LTD; THE YORKSHIRE INSURANCE COMPANY LIMITED; COMMERCIAL UNION ASSURANCE COMPANY PLC; PHOENIX ASSURANCE PLC; CORNHILL INSURANCE PLC; NORWICH UNION FIRE INSURANCE SOCIETY LTD; MARITIME INSURANCE COMPANY LTD; THE NORTHERN ASSURANCE CO, LTD; SKANDIA UK INSURANCE PLC; OCEAN MARINE INSURANCE COMPANY; FOLKSAM INTERNATIONAL INSURANCE COMPANY (U.K.) LTD; SCOTTISH LION INSURANCE COMPANY LTD; WURTTEMBERGISCHE FEUERVERSICHERUNG AG; SPHERE DRAKE INSURANCE PLC;INSURANCE COMPANY (U.K.) LTD Plaintiffs-Appellees-Appellants-Cross Appellants-Cross Appellees v. UNIONE MEDITERRANEA DI SICURTA; ET AL Defendants AMERICAN EAGLE MARINE, INC Defendant-Appellee-Appellant-Cross Appellant-Cross Appellee v. AK STEEL CORPORATION, formerly know as, Armco Steel Company, L P Defendant - Appellee - Cross Appellant v. UMS GENERALI MARINE S.P.A., formerly known as Union Mediterranea Di Sicurta' Defendant - Appellant - Cross Appellee v. BRITAMCO UNDERWRITERS, INC Defendant-Appellee-Appellant-Cross Appellant-Cross Appellee |
| Court | U.S. Court of Appeals — Fifth Circuit |
Appeals from the United States District Court For the Eastern District of Louisiana
Before JONES, DUHE, and WIENER, Circuit Judges.
This appeal involves two causes of action arising out of the sinking of a cargo of 158 steel slabs in the Mississippi River. The first cause of action is a dispute between two insurers of the cargo, Steve Henry Adams, et. al. ("the Plaintiffs") and U.M.S. Generali Marine S.P.A. ("UMS"), over whether the non-paying co-insurer (UMS) should be required to contribute to the payment of loss. The second action is a claim by the Plaintiffs for conversion of the cargo against a voluntary salvor, American Eagle Marine, Inc. ("American Eagle"), and the subsequent purchaser of the salvaged cargo, A.K. Steel Corp. ("A.K. Steel").
Regarding the dispute between the insurers, we conclude that UMS did not waive its personal jurisdiction defense, and we reverse and remand for the district court to determine jurisdiction. We do not decide the other issues UMS and the Plaintiffs raise on appeal against each other. As to the conversion dispute, we affirm on all grounds except one. We reverse and vacate the district court's determination that American Eagle's general liability insurance policy with Britamco Underwriters, Inc. ("Britamco") provided coverage for American Eagle's negligent conversion. We do not decide whether UMS may subrogate against American Eagle and A.K. Steel.
1. Factual Background
While en route from New Orleans to Cincinnati, Canal Barge Company ("Canal Barge") barges CBX 207 and 214 sank in the Mississippi River. This case involves a dispute over the 158 slabs of steel cargo carried to the riverbed aboard those two barges. A.K. Steel of Middletown, Ohio, had originally agreed to purchase the steel slabs from Duferco, S.A ("Duferco"), a Swiss Company.
The Plaintiffs and UMS concurrently insured the cargo under open marine cargo policies. Duferco had an open cargo policy with UMS, an Italian insurance company, which was written and issued in Italy and delivered to Duferco in Switzerland. Canal Barge had an open cargo/shippers' interest insurance policy with the Plaintiffs, on which Duferco was named as an additional insured.
After the accident, Duferco made a claim with UMS. Duferco, through its agent, the Italian Claims Agency ("ICA"), awarded a salvage contract to American Eagle to raise the cargo. The contract provided that it could be canceled with notice and that American Eagle did not have to perform salvage until the river gauge at Vicksburg fell below 20 feet, the depth at which salvage could be prudently performed. UMS advanced to Duferco $191,000 in sue-and-labor costs for the salvage effort. In March 1994, UMS denied the claim primarily because Duferco failed to warrant proper loading of the cargo. In the meantime, A.K. Steel (the original intended purchaser) confirmed that it did not own the cargo and assigned any and all of its rights to Duferco.
The salvage contract remained in effect until July 6, 1994, when ICA wrote American Eagle advising that Duferco was canceling the contract. In the letter, an ICA representative wrote that the cargo "had been abandoned." The parties greatly dispute the meaning of this letter and the circumstances surrounding it. From July 6, 1994 until it mobilized its voluntary effort near the end of January 1995, American Eagle did not salvage the steel, although the river gauges suggested that the months of September, October and November of 1994, presented optimum times for salvage because of the low water depths. On February 18, 1995, with the river gauge just below the minimum depth for prudent operations, American Eagle voluntarily undertook salvage of the steel.
American Eagle did not negotiate with potential buyers for the steel before commencing the salvage operation. While it made some attempt to discover the chemical composition of the steel, it abandoned those efforts, thereby lowering the potential market value for the steel. American Eagle first contacted A.K. Steel on January 7, 1995. A.K. Steel offered to purchase what it described as the "Duferco Steel, that had sunk in the Mississippi." American Eagle was unaware that A.K. Steel was the original intended purchaser of the steel. A.K. Steel did not advise the Plaintiffs or other interested parties of its negotiations with American Eagle to purchase the steel.
In negotiations, American Eagle refused to warrant title to the steel as insisted by A.K. Steel. During the salvage operation, American Eagle also refused to sell the steel to another buyer because this purchaser demanded that American Eagle warrant title. Instead, it would only warrant abandonment for salvage, a demand to which A.K. Steel eventually acceded. On March 8, 1995, American Eagle sold all its rights in the cargo retrieved to A.K. Steel. In the purchase agreement, American Eagle sold to A.K. Steel its "rights, and possession in salvage and title rights, if any."
Salvage operations commenced on February 21, 1995, and continued through April 26, 1995. American Eagle successfully salvaged 127 steel slabs, relinquishing them to A.K. Steel as they were placed aboard barges in the river. Pursuant to their contract, A.K. Steel paid American Eagle $525,424.32. The Plaintiffs did not assert an ownership interest in the steel until after the salvage operation was completed.
The Plaintiffs were made aware of the salvage operation in April 1995 by Canal Barge's counsel, who advised Plaintiffs' counsel that Douglas Adams of American Eagle had inquired about salvaging the cargo. When the Plaintiffs advised American Eagle and A.K. Steel that the cargo was theirs and that the salvage should cease, they both refused. American Eagle and A.K. Steel initially argued that they owned the steel. Later American Eagle and A.K. Steel asserted defenses based on the laws of salvage.
II. Procedural History
The Plaintiffs brought this case originally as an action for declaratory relief to ascertain the proper party to pay the constructive total loss of cargo under the insurance policy they issued to Canal Barge. They also sought to determined whether UMS, which also issued Duferco a similar policy insuring the same cargo, was obligated to contribute to the payment. Plaintiffs named as defendants Ilva, the manufacturer of the steel; Duferco; Canal Barge; UMS; and Duferco Steel, Inc., an American sister company to Duferco. The court voluntarily dismissed Ilva, Duferco, Duferco Steel, Inc., Canal Barge and A.K. Steel from this initial action at various times. The Plaintiffs later made A.K. Steel a co-defendant in the action for conversion of the steel.
In the initial declaratory relief action, the district court held that Duferco was entitled to recover its loss from either Plaintiffs or UMS. Since Duferco made demands on the Plaintiffs first, the Plaintiffs were obliged to pay Duferco before seeking contribution from UMS. Pursuant to this ruling, the Plaintiffs paid Duferco $986,352.41 in exchange for an assignment of Duferco's rights, if any, against UMS. Plaintiffs refused Duferco's claim for payment of approximately $191,000 in sue and labor expenses (, investigation expenses, survey costs, and attorney's fees) advanced by UMS during the preliminary loss investigation. The district court voluntarily dismissed A.K. Steel, which had relinquished any claim it may have had, from the suit prior to payment of the Duferco claim.
The Plaintiffs then discovered the salvage effort and demanded that American Eagle and A.K. Steel return the cargo or pay its value. When American Eagle and A.K. Steel refused, the Plaintiffs filed an amended declaratory judgment action, which asserted a claim to recover the value of the steel from American Eagle and A.K. Steel. UMS then filed a cross-claim against A.K. Steel and American Eagle.
At trial on the amended declaratory action, it was determined that although UMS had initially agreed to pay Duferco's claim, UMS denied coverage after learning Canal Barge had additional coverage. The district court rejected every coverage defense raised by UMS.1 In rejecting these defenses, the district court found that UMS was obliged under its policy with Duferco to contribute to the loss in proportion to the amount its coverage bore to the total amount of insurance (80 percent of the loss). The district court awarded the Plaintiffs $789,081.93 against UMS or 80 percent of $986,352.41.
In the conversion action, the district court found that American Eagle and A.K. Steel had, albeit in good faith, negligently converted the steel.2...
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