Commercial Union Assurance v. Hartford Fire Ins.

Decision Date11 February 2000
Docket NumberNo. 4:97 CV 2264 DDN.,4:97 CV 2264 DDN.
Citation86 F.Supp.2d 921
PartiesCOMMERCIAL UNION ASSURANCE CO. OF AUSTRALIA, LIMITED, MELBOURNE; G.R.E. Insurance Ltd., Melbourne; and Associated Marine Insurers Agents Pty., Ltd., Plaintiffs, v. HARTFORD FIRE INSURANCE CO., Defendant.
CourtU.S. District Court — Eastern District of Missouri

Kurt S. Odenwald, Guilfoil and Petzall, St. Louis, MO, for plaintiffs.

John S. Sandberg, Jonathan H. Garside, Sandberg and Phoenix, St. Louis, MO, for defendant.


NOCE, United States Magistrate Judge.

This action is before the Court following a non-jury trial upon a stipulated record. The parties consented to the exercise of authority by the undersigned United States Magistrate Judge under 28 U.S.C. § 636(c).

This action involves the issue of whether defendant's insurance policy covered damage to a shipment of helicopter parts during shipment. Plaintiffs Commercial Union Assurance Co. of Australia, Ltd., Melbourne; Associated Marine Insurers Agents Pty. Ltd.; and G.R.E. Insurance Ltd., Melbourne, claim that defendant Hartford Fire Insurance Co. is liable to them for contribution on the theory of double insurance. Plaintiffs seek monetary damages from Hartford, prejudgment interest from May 26, 1988, postjudgment interest, costs, and any other relief the Court may deem proper. Hartford alleges that the policy under which plaintiffs claim contribution was canceled; that the action is for subrogation, not contribution; and that the statute of limitations on the subrogation claim has run.

The Court has subject matter jurisdiction over this action, based upon the parties' diversity of citizenship and the amount in controversy. 28 U.S.C. § 1332. In such a case, the Court must apply the rules of decision that the state courts of Missouri would select. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Birnstill v. Home Sav. of Am., 907 F.2d 795, 797 (8th Cir.1990). Missouri's choice of law standard in a case such as this is not entirely definite. Missouri courts have been held to follow the principal contacts — most significant relationship rule of § 188 of the Restatement (Second) of Conflicts of Law for choice of law determinations dealing with contracts. Bonner v. Automobile Club Inter-Insurance Exchange, 899 S.W.2d 925, 929 (Mo.Ct.App.1995); Frost v. Liberty Mut. Ins. Co., 828 S.W.2d 915, 920 (Mo.Ct.App.1992); see also Baxter Int'l, Inc. v. Morris, 976 F.2d 1189, 1195 (8th Cir.1992) (stating without discussion that Missouri applies the Restatement (Second)' s choice of law provisions).1 The following Restatement factors are relevant to the most significant relationship doctrine:

(1) the place of the contract;

(2) the place of negotiation of the contract;

(3) the place of performance;

(4) the location of the subject matter of the dispute; and

(5) the domicile, residence, nationality, place of incorporation and place of business of the parties.

Frost, 828 S.W.2d at 920.

After considering these factors, the Court concludes that the State of Missouri has the paramount interest in the litigation. Plaintiffs are Australian companies and have chosen to bring the lawsuit in Missouri. The policy at issue was issued by insurance agency Daniel and Henry Company, which is located in St. Louis, Missouri. The communication that purported to cancel the policy was a telefacsimile from Alan Edwards of the Sayfor Company in Australia to Henry Johnson of the Daniel and Henry Company in St. Louis. Finally, the location of the subject matter of the policy, the helicopter parts cargo, was at all times during the contract in transit from one location to another. The cargo shipment originated in Fort Collins, Colorado, was intended for delivery in Australia, but ended up on the east coast of the United States. The only time it was ever stationary was the short time it remained in Fort Collins, Colorado, before pickup by the transportation company. Using either the Restatement (Second) or lex loci contractus factors, Missouri courts would apply the substantive law of Missouri as the rules of decision in this case. Galvin v. McGilley Mem'l Chapels, 746 S.W.2d 588, 590-91 (Mo.Ct.App.1987).

Motion to strike affidavits.

Defendant moves to strike any reference to the written affidavits of Henry Johnson and Larry Hansen, identified in the stipulated record as Exhibits L and O. Plaintiffs had previously submitted them on the previously filed motions for summary judgment. The Court will sustain the motion to strike. Hearsay evidence is, of course, not admissible at trial under Federal Rule of Evidence 802. Without consent, trial by affidavit is prohibited. United States v. McCall, 740 F.2d 1331, 1342 (4th Cir.1984) ("the use of Neal's statement in the trial amounted to no more than the trial by affidavit the hearsay rule prevents").


From the evidence included in the submitted record, the Court makes the following findings of fact and conclusions of law, required by Rule 52(a), Federal Rules of Civil Procedure:

1. Century Helicopters, Inc. ("Century") is located in Fort Collins, Colorado. Larry Hansen is its principal owner. Century buys, equips, and sells new and used helicopters. Century procures insurance on behalf of its customers to cover loss during the transportation and storage of the aircraft. To do this, Century has a master insurance policy, issued by Hartford Fire Insurance Company through the Daniel and Henry Company agency, which generally covers Century's products. To cover specific shipments of property, Hansen secures insurance from Hartford through Daniel and Henry. This master policy allows for the issuance of certificates of airworthiness by the Federal Aviation Administration.

2. The Daniel and Henry Company is located in St. Louis, Missouri, and is an agent of Hartford Fire Insurance Company. Daniel and Henry is authorized by Hartford to bind and cancel marine insurance contracts on behalf of Hartford. Henry Johnson is employed as a broker by Daniel and Henry.

3. Alan Edwards is the owner of Sayfor Pty. Ltd., an Australian company located in Sydney, Australia. Edwards also does business under the name of A.R. & S.D. Trading, although this company name has never been registered in Australia. Edwards' business enterprises operate, buy and sell helicopters.

4. Prior to July 21, 1987, Century procured three partially disassembled helicopters for Alan Edwards and his business. The helicopters and parts were to be shipped by rail from Fort Collins, Colorado, to Long Beach, California, for ocean transport to Sydney, Australia.

5. On July 21, 1987, at Hansen's request, Daniel and Henry issued a binder of insurance on behalf of Hartford. The binder specifically identified the covered helicopters and their respective amounts of insurance as "1972 Bell 206B #834" for "160,000," "1971 Bell 206A # 617" for "160,000," "Hughes 269, #0089" for "40,000," and "Spare parts" for "20,000." The binder described the covered perils as

Storage & Transportation of three partially disassembled helicopters within the U.S. and to the warehouse of AR & S.D. Trading, Sydney Australia

See Joint Exh. M.

6. On July 30, 1987, Hartford issued its Original Marine Insurance Policy covering the helicopter parts Century sold to Alan Edwards. The policy, No. 84 C0100012 D-H-HJ-10, stated that the premium was $2508; the insureds were described as

Allan Edwards, A.R. and S.D. Trading and Century Helicopters.

The insured property was described as

1 container of disassembled helicopter parts, packed for export. Sealed in Ft. Collins, CO.

for transportation to Sydney, Australia, beginning on or about June 18, 1987. The value of the cargo was stated as $418,000 (U.S.). See Joint Exh. B.

7. On August 10 or 11, 1987, because he had not yet received a copy of the Hartford policy and was concerned about a lack of coverage, Edwards obtained a second policy of marine insurance in Australia from Associated Marine Insurers Agents Pty. Ltd. This Associated Marine policy covered the same disassembled helicopters and parts that were covered by the Hartford policy. The Associated Marine policy stated the coverage limit as $550,000 (Aus.) and named only "Sayfor Pty. Ltd." as the party insured. See Joint Exh. CC.

8. On August 11, 1987, the disassembled helicopters and parts suffered a substantial loss and damage.2 On that date the cargo was loaded for transit from Fort Collins, Colorado, to Sydney, Australia. At approximately 2:30 p.m. on that date, the cargo was received from Century by HVH Transportation Company for delivery to the Union Pacific Railroad for rail shipment to Long Beach, California. Century had the cargo packed in a sealed container. Century and Sayfor intended that the sealed container be loaded on the M.V. Willowbank in Long Beach on August 13, 1987. The cargo never reached Long Beach, but was found later on the east coast of the United States. Thereafter, the container and cargo were shipped to Denver, Colorado.

9. On August 13, 1987, at approximately 10:59 a.m. in Sydney, Australia, Edwards telefaxed a letter on Sayfor letterhead stationery to Henry Johnson at Daniel and Henry in St. Louis. Due to the fifteen hour time difference between St. Louis and Sydney, Daniel and Henry received the telefaxed letter on August 12, 1987, at approximately 7:44 p.m.3 The letter conveyed Edwards' concern that he had not received a copy of the Hartford policy and it expressed his worry that his exposure to loss was great. He advised Johnson that he "decided to insure in Australia immediately" and that "on this occasion we do not require insurance through your company." See Exh. Q.

10. On August 13, 1987, the day after he received the faxed letter, Johnson telephoned Hansen to discuss the letter from Edwards. Hansen confirmed the telephone conversation with a letter to Johnson dated August 13, 1987, expressing his desire to keep the...

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