Avemco Insurance Company v. Chung
| Decision Date | 07 January 1975 |
| Docket Number | Civ. No. 73-3866. |
| Parties | AVEMCO INSURANCE COMPANY, a Maryland Corporation, Plaintiff, v. May Evelyn Kirkpatrick CHUNG, Executrix of the Estate of Robert C. H. Chung, Deceased, Defendant. |
| Court | U.S. District Court — District of Hawaii |
COPYRIGHT MATERIAL OMITTED
A. Singleton Cagle, Jeffrey S. Portnoy, Cades, Shutte, Fleming & Wright, Honolulu, Hawaii, for plaintiff.
Paul F. Cronin, Allan S. Haley, Cronin, Fried, Sekiya & Haley, Honolulu, Hawaii, for defendant.
Edmund Burke, Conroy, Hamilton, Gibson, Nickelsen & Rush, Honolulu, Hawaii, for intervenors.
DECISION
Plaintiff, AVEMCO Insurance Company (AVEMCO), first issued an aviation insurance policy to Dr. Robert C. H. Chung on his 1959 Beech G-50 aircraft in December 1967. Dr. Chung thereafter annually renewed his insurance coverage with AVEMCO. AVEMCO's policy for the December 1972 to December 1973 policy year was extant,1 when on May 20, 1973, the insured aircraft crashed near Honolulu airport. Dr. Chung, who was piloting the plane, and his five passengers were all killed in the crash.
On July 9, 1973, AVEMCO filed this action against the executrix of Dr. Chung's estate seeking a declaratory judgment based on two counts: (1) that the policy issued on December 16, 1972, is void because of certain material misrepresentations made by Dr. Chung in his application, and (2) that there is no coverage under the policy because Dr. Chung did not have a valid and effective medical certificate at the time of the crash. The survivors of the five deceased passengers intervened in this action as parties defendant on September 5, 1973.
Now before this court are AVEMCO's motion for summary judgment on count two, intervenors' motion for summary judgment on count two, and defendant's motion for partial summary judgment as to liability on both count one and count two.
AVEMCO's motion for summary judgment and its disclaimer of liability under the policy is based on Item 7 of the DECLARATIONS which states:
Plaintiff argues that Dr. Chung's medical certificate expired on February 29, 1972, more than a year before the crash, and therefore, under the mandate of Item 7, the policy coverage was suspended and not in effect at the time of the crash. On the other hand, defendant and intervenors argue that Item 7 is no more than a representation or condition on coverage, and therefore, even if Dr. Chung did not have a valid and effective medical certificate at the time of the crash, coverage under the policy should be upheld unless Dr. Chung's breach of this representation or condition materially contributed to the accident.
From the depositions, affidavits and exhibits of the several parties the court finds these facts, solely for the purpose of the instant motions, to be uncontradicted:
1. The 1972 Insurance Policy
AVEMCO had issued its Aircraft Policy No. AV 1-016286 for the policy period of December 16, 1972 to December 16, 1973 to Dr. Robert C. H. Chung as named insured, with coverage, inter alia, under "A Liability (Including Occupants) Bodily Injury & Property Damage" on the Beech G-50 aircraft (piloted by Chung while "in flight", as defined by the policy).
The policy as delivered to Dr. Chung, was made up as follows:
Immediately below the EXCLUSIONS were the printed DEFINITIONS. The third sheet was headed DECLARATIONS. Appearing thereon, by item number, was the information above referred to under COUNT TWO — Item 7, supra.
Following the DECLARATIONS sheet is an "endorsement" entitled GUARANTEED RENEWABLE, whereby the company guaranteed that it would renew the policy for five years from the original effective date (in this case December 1967). Among other terms of renewal thereon was stated: "This guarantee . . . terminates in the event that: . . .
B. (2) During the guarantee period, any pilot named in the policy * * * (b) Does not maintain a valid Medical Certificate."
(The only two times that any reference is made anywhere in the policy to "a valid Medical Certificate" appears, as above indicated, on the Declarations and Renewal sheets.)
The following page of the policy was concerned with an endorsement providing All Risks coverage for the destruction of the plane itself. The next page was headed Below this appear the printed CONDITIONS covering limits of liability, actions against the company, assistance and cooperation of the insured, notices, etc. Number 22, the last "condition" reads:
It is to be noted that nowhere in the EXCLUSIONS section of the policy is there a specific exclusion of coverage to the named insured, as a pilot operating the aircraft in flight without a valid Medical Certificate.
Also to be noted is that the DECLARATIONS sheet of the policy is the only section thereof containing any typewritten entries.
2. The Applications for Insurance
In Dr. Chung's original application for insurance dated December 17, 1967, there was no request, printed or otherwise, on the application for any information regarding his possession of a Medical Certificate. The insurance company issued the first policy solely upon his statement in the application that he had a private pilot's license, had ratings for S&ME, had 110 hours piloting the Beech G-50, had 120 hours pilot experience in multi-engine craft, and had a total flying time of 600 hours with no accidents or suspensions. In effecting his renewals of December 1968, 1969 and 1970, Dr. Chung returned the renewal forms without providing any information on the spaces provided therefor, or even signing the forms — nevertheless, upon payment of premium, the policy was renewed by AVEMCO.
In 1971 Dr. Chung filled out the application blanks as requested, showing, inter alia, that he was 46 years old, had a private license, 300 hours in the "Below Model", 350 hours in "Retract Gear" craft, 300 hours in multi-engine craft and a total of 1100 hours flight and 50 hours flight time in the preceding 12 months. On his 1972 application he again reported his age as 46, that he had a private license with 250 hours in "Below Model", 300 hours in "Retract Gear" aircraft, 250 hours in multi-engine craft, 1200 hours total flight time and 50 hours flight time during the preceding year.
Prior to the issuance of the 1971 policy, the AVEMCO policy contained no reference either in the DECLARATIONS or the GUARANTEED RENEWABLE page thereof, to any "valid Medical Certificate." These words were first inserted with the 1971 policy.2 Nowhere in either the 1971, 1972 or 1973 applications for renewal, however, was there any request for information concerning a Medical Certificate.
AVEMCO's executive vice-president, David Jensen, stated, in deposition, that in issuing the renewal policies for the years 1968, 1969 and 1970, AVEMCO relied on nothing more than the original information supplied by Dr. Chung in 1967. He also stated that in his judgment as underwriting officer for AVEMCO, the 1969 information did not furnish sufficient information upon which to issue a renewal policy; that AVEMCO had no information in its records in the renewal years of 1968, 1969 and 1970 to indicate whether or not Dr. Chung had a currently effective pilot's certificate and/or medical certificate.3
For the renewal years of 1971 and 1972, as set out above, the information provided by Dr. Chung was obviously inconsistent as to age, hours flown, etc. Jensen stated, in response to the following question (deposition, Sept. 26, 1973, pp. 19-20):
The only inference that can be drawn therefrom is that the evaluation of Dr. Chung as an insurable risk when the renewal applications were sent in was superficial — if any evaluation was given to any factors save the payment of the premium, with no evidence of any crashes or accidents during the preceding years. AVEMCO assumed that when Dr. Chung on his application indicated that he had a private license that he also had a current Medical Certificate.4 It was not AVEMCO's policy to make any check regarding a valid Medical Certificate at the time it issued or renewed a policy. When any loss was reported, however, one of the first steps taken by AVEMCO was to determine the existence of a valid Medical Certificate.5
3. Dr. Chung's Medical...
To continue reading
Request your trial
-
Security Ins. Co. of Hartford v. Andersen
...510 F.Supp. 1204 (D.Mont.1981); American States Ins. Co. v. Byerly Aviation, Inc., 456 F.Supp. 967 (S.D.Ill.1978); Avemco Ins. Co. v. Chung, 388 F.Supp. 142 (D.Haw.1975); Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936 (Tex.1984); South Carolina Ins. Co. v. Collins, 269 S.C. 282, 237 S.E.2d 3......
-
Ranger Ins. Co. v. Kovach, 3:96CV02421 (EBB).
...on the insured's technical violation of the insurance policy. [Byerly Aviation, Inc.,] 456 F.Supp. at 968-70; AVEMCO Ins. Co. v. Chung, 388 F.Supp. 142, 147 (D.Hawai'i 1975).... Courts should be careful in the implementation of this policy, however, to avoid undue disruption of the parties'......
-
U.S. Fire Ins. Co. v. West Monroe Charter Service, Inc.
...510 F.Supp. 1204 (D.Mont.1981); American States Ins. Co. v. Byerly Aviation, Inc., 456 F.Supp. 967 (S.D.Ill.1978); Avemco Ins. Co. v. Chung, 388 F.Supp. 142 (D.Hawaii 1975); Puckett v. United States Fire Ins. Co., 678 S.W.2d 936 (Tex.1984); South Carolina Ins. Co. v. Collins, 269 S.C. 282, ......
-
Puckett v. U.S. Fire Ins. Co.
...held that causation is required. See Ranger Insurance Co. v. Phillips, 25 Ariz.App. 426, 544 P.2d 250 (1976); Avemco Insurance Co. v. Chung, 388 F.Supp. 142 (D.Hawaii 1975); American States Insurance Co. v. Byerly Aviation, Inc., 456 F.Supp. 967 (S.D.Ill.1978); Migues v. Universal Airways, ......