ABB POWER T & D v. Gothaer Versicherungsbank VVAG

Decision Date10 September 1996
Docket Number92-1130-CIV-ATKINS.,No. 91-1432-CIV-ATKINS,91-1432-CIV-ATKINS
Citation939 F. Supp. 1568
CourtU.S. District Court — Southern District of Florida
PartiesABB POWER T & D COMPANY, INC. and Occidental International, Inc., Plaintiffs, v. GOTHAER VERSICHERUNGSBANK VVAG, et al., Defendants. ABB POWER T & D COMPANY, INC., Plaintiff, v. ARKWRIGHT MUTUAL INSURANCE CO., Defendant.

Michael G. Shannon, Wallace, Bauman, Fodiman, & Shannon, P.A., Coral Gables, FL, for Occidental.

Michael B. Waitzkin, Nussbaum & Wald, Washington, DC, for ABB.

Timothy J. Armstrong, Armstrong & Mejer, PA., Coral Gables, FL, for Gothaer.

William H. Stanhope, Robins, Kaplan, Miller, et al., Atlanta, GA, for Arkwright.


ATKINS, Senior District Judge.

THIS MATTER is before the Court on Defendant Gothaer's above referenced motion, seeking a reconsideration of this Court's prior Order on Defendant Gothaer's Motions for Summary Judgment as to Plaintiffs ABB Power ("ABB") and Occidental International ("Occidental") (hereinafter Gothaer Order). After careful review of the motion, ABB's Response and Occidental's adoption thereof, Gothaer's reply, applicable law and otherwise being fully briefed on all issues before the Court, it is hereby,


(1) Gothaer's Motion is DENIED. However, for reasons expressed below, the Court finds that some clarification of the Gothaer Order is needed.


On August 29, 1988, the Puerto Rico Electric Power Authority ("PREPA") contracted with Occidental International, Inc. ("Occidental") for the purchase of an electric transformer. PREPA agreed to pay $1,674,345.50 upon delivery of the transformer to Puerto Rico. As part of that contract, Occidental was required to deliver the transformer to PREPA "FOB Eastern Port of Embarkation." All sides agree that Talleyrand Terminal, in Jacksonville, Florida, constitutes the point of embarkation eventually settled upon in the contract.

Occidental, for its part, on September 7, 1988, contracted with ABB, as Westinghouse Electric Corp.'s successor,1 for the construction and purchase of the transformer to be delivered to PREPA. Occidental agreed to pay, and ABB agreed to accept, $1,587,000.00 to manufacture the transformer. The contract provided that ABB was to deliver the transformer "FOB Point of Shipment." The purchase order further declared that:

Terms Are Net 30 Days with an Assignment of Proceeds to Westinghouse in Order that Payment for our invoice will go from (PREPA) directly to Westinghouse.

According to the unambiguous language of the purchase order, PREPA was to pay ABB for the price of the transformer. Occidental was to receive from ABB the difference in price between the PREPA purchase order, and the Occidental purchase order — the price difference between the two contracts constituting Occidental's profits for the transaction.

The transformer, ALM 3030, was eventually completed and ready for transport from Muncie, Indiana to Puerto Rico in 1990. ALM 3030 was transported by railcar from Muncie to Jacksonville, Florida in May, 1990. Once at the port in Jacksonville, it was to be lifted from the railcar, placed onto a lowboy and rolled onto a barge for delivery to Puerto Rico. Occidental contracted with Nelson & Associates, who in turn contracted Lane Crane to handle the discharge of ALM 3030 from the railcars.

There is substantial disagreement whether Occidental was acting as carrier for PREPA after delivery of the transformer to Jacksonville, or was merely completing its contract to deliver the transformer onto the barge at port. Regardless of the legal question of who possessed title to the transformer at the time of the accident, there is no disagreement that Occidental, through its various agents, was in charge of moving the transformer from the railcar to the barge.2

As part of its overall responsibility to deliver the transformer Occidental obtained, through its agent S & L Transportation Co., marine insurance to cover the transformer during transport. The insurance was obtained with the aid of John Sexton & Associates ("Sexton"), an insurance broker located in New York City. Sexton, in turn, contacted a European broker, Henrijean, to aid in the procurement of a quote from the European insurance market. Henrijean, for its part, worked closely with Carl Schroter GmbH ("Schroter"), underwriting manager for Gothaer, and others, in order to obtain the requested coverage. Sexton originally prepared the Cover Note,3 a document intended to define the scope of coverage, in late April 1990. The final form of the Cover Note was not issued until May 4, 1990, after review and approval by Schroter, and the insurance was bound on that date.

The Cover Note in its final form is best characterized as an all-risk marine cargo insurance policy, written for "S & L transportation &/or other parties as may be required.... with risk attaching upon discharge from rail cars at port and ceasing on safe delivery to local utility at destination." The quoted language differs from an earlier draft in which risk attached upon arrival at the pier. Frischen Depo. at p. 138, lines 24-25.

On May 18, 1990, cranes were hooked to the transformer and it was lifted from the railcar, the railcar was then wheeled out from underneath leaving the transformer suspended in midair. Before the lowboy could be brought under, one of the padeyes to which the cranes were attached gave way and the transformer fell to the ground. One crane was substantially damaged, and ALM 3030 was destroyed. In a lawsuit separate to this (but previously consolidated), Case No. 93-1144, Lane Crane sued ABB and Occidental for the damage to its crane. ABB and Occidental counterclaimed for the damage to the transformer. Since ABB had not yet been paid for manufacturing the transformer, it sued for the value of the transformer, while Occidental sued only for consequential damages. The main issue in 93-1144, was who of the three principals — Lane Crane, Occidental or ABB — was responsible for the attachment of the cranes to the wrong lifting points on the transformer.

This court severed case number 93-1144 for trial in an order dated October 8, 1993 (D.E. # 373 in case number 91-1432). Case number 93-1144 was tried before a jury during the week of December 13, 1993. On December 17, 1993 the jury returned a special verdict4 finding all parties negligent in causing damage to the crane and to the transformer. The jury found Occidental 80% liable, ABB 15% liable and Lane Crane 5% liable. The jury found that the total amount of damages to the crane suffered by Lane Crane was $47,905.47. The total amount of damages to the transformer suffered by ABB was assessed at $1,494,000.00. Finally, the damages suffered by Occidental as a result of the damage to the transformer was valued at $98,309.59. The Court entered Final Judgment, based on joint submission by the parties, on January 20, 1994. The final judgment apportioned the damages based on the allocation of fault on the verdict form, in accordance with Florida Statute § 768.81.

The current controversy, Case no. 91-1432, involves attempts by ABB and Occidental to recover any loss from their insurers, nominally referred to as Gothaer in this litigation. It is undisputed that Gothaer agreed to bind insurance to cover the transformer. It is further undisputed that the transformer was destroyed by the accident on May 18, 1991, resulting in economic loss to both ABB and Occidental. Nonetheless, Gothaer refused coverage to ABB or Occidental, and filed motions for summary judgment as to both.

In Gothaer's motions for summary judgment against ABB and Occidental, the main point of contention revolved around the issue of insurable interest. According to Gothaer, neither ABB nor Occidental possessed insurable interests and, therefore, lacked standing necessary to bring suit against Underwriters.

On June 4, 1996, this Court issued an Order on Defendant Gothaer's Motions for Summary Judgment as to Plaintiffs ABB Power ("ABB") and Occidental International ("Occidental"), (hereinafter, Gothaer Order) denying Gothaer's motions for summary judgment. In that Order, the Court not only denied Gothaer's motions, but also granted partial cross-summary judgments to Plaintiffs ABB and Occidental on two issues. First, the Court determined, pursuant to the language of the insurance contract, that both "ABB and Occidental are assureds under the terms" of the insurance. Second, the Court concluded that "the jury verdict in 93-1144 does not estop ABB or Occidental from seeking a claim under the Gothaer insurance."

Gothaer now moves to have this Court reconsider its decision in the Gothaer Order, and instead grant Gothaer's motions for summary judgment. In particular, Gothaer discusses five (5) areas of apparent disagreement between what counsel for Gothaer believes the law to be, and what this Court has previously declared in the Gothaer Order. These are:

1. That "the Court has no authority or discretion to `disagree with the Fifth Circuit's ruling in Glukstad, and find that in the marine insurance context, Fla.Stat.Ann. § 672.501(2) is inapplicable.'" Gothaer Motion to Amend at 2 (quoting Gothaer Order, p. 16);
2. That the Fifth Circuit's decision in York-Shipley, Inc. v. Atlantic Mutual Insurance Co., 474 F.2d 8, 9 (5th Cir. 1973), Farbwerke Hoeschst A.G. v. M/V "Don Nicky", 589 F.2d 795, 797-98 (5th Cir.1979) and Sig M. Glukstad, Inc. v. Lineas Aereas Paraguayas, 619 F.2d 457 (5th Cir.1980), which this Court is compelled to follow, mandate that the Court find that neither ABB nor Occidental have an insurable interest. Gothaer Motion to Amend at 2-3;
3. That pursuant to the same cases as in # 2 above, this Court must vacate its "summary conclusion `that ABB and Occidental are named insureds under

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