669 F.2d 1259 (9th Cir. 1982), 80-5342, Edinburgh Assur. Co. v. R. L. Burns Corp.

Docket Nº:80-5342, 80-5387 and 80-5663.
Citation:669 F.2d 1259
Party Name:EDINBURGH ASSURANCE COMPANY, et al., Plaintiffs, Appellants and Cross-Appellees, v. R. L. BURNS CORP. and American Pacific International, Inc., Defendants, Appellees and Cross-Appellants.
Case Date:January 22, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1259

669 F.2d 1259 (9th Cir. 1982)

EDINBURGH ASSURANCE COMPANY, et al., Plaintiffs, Appellants

and Cross-Appellees,

v.

R. L. BURNS CORP. and American Pacific International, Inc.,

Defendants, Appellees and Cross-Appellants.

Nos. 80-5342, 80-5387 and 80-5663.

United States Court of Appeals, Ninth Circuit

January 22, 1982

Argued and Submitted Oct. 8, 1981.

Page 1260

Roger A. Ferree, Charles E. Slyngstad, Jr., McCutchen, Black, Verleger & Shea, Los Angeles, Cal., for Edinburgh Assur. Co.

Steven A. Nissen, Manatt, Phelps, Rothenberg & Tunney, Los Angeles, Cal., for American Pac. Intern.

Orville A. Armstrong, MacDonald, Halsted & Laybourne, Los Angeles, Cal., for R. L. Burns Corp.

Appeal from the United States District Court for the Central District of California.

Before GOODWIN, WALLACE and FARRIS, Circuit Judges.

WALLACE, Circuit Judge:

Edinburgh Assurance Co. (Edinburgh) appeals from a judgment entered by the district court in favor of R. L. Burns Corp. (Burns) and American Pacific International, Inc. (API). Burns and API cross-appeal on the issues of damages, fraud, and bad faith. The case involves an insurance claim for damages to an offshore oil drilling platform (the Gatto). The facts are outlined in the opinion of the district court reported at 479 F.Supp. 138 (C.D.Cal.1979). We affirm the district court's judgment except for the failure to award prejudgment interest; we reverse that part of the judgment and remand for the district court to do so.

I. Actual Total Loss

Edinburgh claims that the district court erred in its construction of section 57(1) of the British Maritime Insurance Act of 1906 (the Act). 1 Apparently, Edinburgh challenges

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both the district court's interpretation of the Act and its application of the Act to the facts of this case.

First, Edinburgh challenges the district court's finding that after the Gatto was struck by the typhoon, "(i)t was no longer an off-shore drilling platform. It was a dispersed mass of scrap, a wreck. The Gatto had broken up." 2 On appeal, we will set aside a district court's findings of fact only if they are clearly erroneous. Fed.R.Civ.P. 52(a); Supplemental Rules for Certain Admiralty and Maritime Claims, Rule A. We have reviewed the entire record in this case and are not "left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948); Arrington v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 651 F.2d 615, 619 (9th Cir. 1981).

Second, Edinburgh asserts that the district court confused the definition of "actual total loss" with that of "constructive total loss." It argues that actual total loss "does not comprehend anything short of a total, physical loss," and that the district court improperly considered the cost of reconstruction or repair of the Gatto in its determination. Contrary to Edinburgh's contention, however, we believe the district court was correct in concluding that the second definition of actual total loss under the Act, namely whether the insured item is "so damaged as to cease to be a thing of the kind insured," may properly be applied to vessels, and not just to cargo. See George Cohen, Sons & Co. v. Standard Marine Insurance Co., 21 Lloyd's List L.R. 30, 33 (K.B. 1925); Knight v. Faith, 117 Eng.Rep. 605, 608 (Q.B. 1850). We also agree that there need not be a total, physical loss for a casualty to be considered an "actual total loss" under the Act. In its thoughtful and well-reasoned opinion, the district court adopted an intermediate position between the broad definition of actual total loss for which Burns and API argued, i.e., that a thing is an actual total loss when as a practical business matter it is not worthwhile recovering and rebuilding, and the definition for which Edinburgh argued, i.e., that a thing is a total loss only when it is not within the scope of present technological capacity to recover and repair. The district court concluded that a thing may cease to be a thing of the kind insured, and thus an actual total loss, even if there still exist significant, accessible physical remains.

This was a correct construction of English law. While the district court did suggest that the cost of recovering and refurbishing the thing insured may be relevant to an application of this test, any error involved there was harmless. Since we do not disturb the district court's findings of fact that it was "extremely unlikely that more than a few component parts of the (Gatto) could be used in any rebuilding of the platform," and that "the Gatto had to be considered as wreckage or as a dispersed wreck with little value other than as scrap metal," we affirm the judgment. United States v. County of Humboldt, 628 F.2d 549, 551 (9th Cir. 1980) (judgment affirmed on any basis supported by the record).

II. Damages

Edinburgh challenges the legal sufficiency...

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