Commercial Union Ins. Co. v. Pesante

• Decision Date: 09 August 2006
• Docket Number: No. 05-2151.,05-2151.
• Parties: COMMERCIAL UNION INSURANCE COMPANY, Petitioner, Appellant, v. Dean PESANTE, Respondent, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 34

459 F.3d 34

COMMERCIAL UNION INSURANCE COMPANY, Petitioner, Appellant, v. Dean PESANTE, Respondent, Appellee.

No. 05-2151.

United States Court of Appeals, First Circuit.

August 9, 2006.

Robert J. Murphy, with whom Holbrook & Murphy was on brief, for petitioner-appellant.

Stephen T. Morrissey, was on brief, for respondent-appellee.

Before TORRUELLA and LYNCH, Circuit Judges, and YOUNG,^* District Judge.

TORRUELLA, Circuit Judge.

Appellant Commercial Union Insurance Company ("Commercial Union") brought a declaratory judgment action against appellee Dean Pesante ("Pesante") in the United States District Court for the District of Rhode Island, seeking a declaration that it was not liable under a marine insurance policy issued to Pesante for losses incurred by Pesante's vessel. During the ensuing litigation, Commercial Union filed a motion for summary judgment, which the district court denied. Following the denial, the parties filed a Joint Motion for Entry of Final Judgment. The district court then entered final judgment in favor of Pesante. Commercial Union now appeals the district court's entry of judgment for Pesante and denial of its motion for summary judgment. After careful review, we reverse.

I.

In 1997, Pesante purchased the F/V Oceana ("Oceana"). Pesante used the Oceana for gill-net fishing ("gill netting"), which entails the use of entangling stationary nets to catch fish. Until 2001, Pesante obtained his marine insurance from the Ocean Marine Insurance Agency. Due to rising premiums, Pesante decided to seek a new policy. He contacted Philip Christopher ("Christopher") of Christopher & Regan Insurance ("C & R") to help him obtain a policy with the lowest possible premiums. Through Christopher, Pesante submitted an Application for Fishing Vessel Insurance (the "Application") to Commercial Union on March 23, 2001. The Application identified the Oceana as a lobster boat.¹ Pesante has admitted that this was an inaccurate description of the vessel.² A document accompanying the Application indicated that Pesante was paying a yearly premium of $1,535 and that C & R needed to match that premium in order to secure Pesante's business.

On March 27, 2001, Russell Bond ("Bond"), an underwriter at Commercial Union, faxed Christopher a quote which identified the Oceana as a thirty-eight foot lobster boat and quoted a premium of $1,550. In an affidavit, Bond stated that had he known the vessel was a gill net vessel, the quote would have been twenty-five percent higher because gill net vessels pose a higher risk than lobster vessels. On March 30, 2001, Christopher responded to Bond via fax and requested certain changes. In his fax, Christopher also identified the Oceana as a thirty-eight foot lobster boat.

On April 5, 2001, Commercial Union issued the policy, which was renewed the following year. The policy contained an express warranty that "the only commercial use of the insured vessel(s) shall be for lobstering." Pesante has admitted that he never engaged in lobstering, which he described as "radically different" from gill netting.

On September 25, 2002, while returning to port from a gill netting trip, the Oceana was involved in a collision with a Boston Whaler. Occupants of the Boston Whaler sustained serious injuries and brought claims against the Oceana. Several months after the accident, Pesante sought to correct the policy. He crossed out "lobstering" on the form and sent it to C & R along with a handwritten note stating that he had never done lobstering and did not intend to engage in lobstering in the future. Christopher faxed the form and note to Bond on December 30, 2002. On December 31, 2002, Commercial Union issued a denial of insurance coverage based on Pesante's misrepresentation and breach of the express warranty found in the policy. Commercial Union, on January 22, 2003, issued a reservation of rights letter under which it agreed to defend the claims arising from the September 25, 2002 incident.

On May 16, 2003, Commercial Union filed a Petition for Declaratory Judgment in the district court seeking a declaration of its rights and responsibilities under the policy. On July 29, 2003, Pesante filed an answer and counterclaim. On November 3, 2003, Commercial Union filed a motion for summary judgment and statement of undisputed material facts. In its opposition to the motion for summary judgment, Pesante stated that Commercial Union's statement of undisputed material facts "appears accurate." On March 3, 2004, the district court entered its Memorandum and Order denying Commercial Union's motion for summary judgment. The court based its decision on a finding that there was no causal relationship between Pesante's breaches and the losses suffered. The court reasoned that, since Pesante was steaming home when the accident occurred, he technically was not gill netting and therefore was not in breach of the warranty at the time of the loss.

On June 21, 2005, the parties executed a stipulation of dismissal as to Pesante's counterclaim, then filed a Joint Motion for Entry of Final Judgment. In the motion, the parties stated that, based on the district court's denial of Commercial Union's motion for summary judgment and the stipulated dismissal of Pesante's counterclaim, there were no longer any factual matters to be resolved at a trial. On July 20, 2005, the district court found that there were no genuine issues of material fact that would prevent the entry of judgment. It therefore entered final judgment in favor of Pesante. Commercial Union has timely appealed from this final judgment, arguing that the district court erred in denying its motion for summary judgment and entering judgment for Pesante.

II.

We begin by noting that "we do not have jurisdiction over denials of summary judgment motions . . . where a genuine issue of material fact remains in dispute." Rivera-Jiménez v. Pierluisi, 362 F.3d 87, 93 (1st Cir.2004). We thus often do not have jurisdiction over denials of motions for summary judgment, because "a denial of a motion for summary judgment is merely a judge's determination that genuine issues of material fact exist. It is not a judgment, and does not foreclose trial on issues on which summary judgment was sought." Rivera-Torres v. Ortiz Vélez, 341 F.3d 86, 92 (1st Cir.2004). Here, however, following the denial of summary judgment and the stipulation of dismissal as to Pesante's counterclaim, the parties filed a Joint Motion for Entry of Final Judgment in which they stated that there were no longer any factual matters to be resolved at a trial. The district court agreed and entered final judgment. It is from this final judgment, based on undisputed facts, that Commercial Union appeals, and we therefore have jurisdiction. See 28 U.S.C. § 1291.

Our review of a district court's decision granting or denying a summary judgment motion is de novo. Rodríguez v. Am. Int'l Ins. Co. of Puerto Rico, 402 F.3d 45, 46 (1st Cir.2006). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

Commercial Union makes two arguments on appeal. First, it argues that Pesante made a material misrepresentation in his application for insurance and that the policy was therefore voidable under either federal or Rhode Island law.³ Second, it argues that Pesante breached an express warranty in the policy—by using the Oceana for gill netting and not lobstering—and that this breach rendered the policy voidable, regardless of whether there was any causal connection between the breach and the accident. Because we find the first argument determinative, we do not address the second argument.

This case arises under our admiralty jurisdiction since it involves a marine insurance policy. Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54 (1st Cir.1995). Generally, in cases involving a marine insurance contract, we will apply state law unless an established "maritime rule controls the disputed issue, and that rule is materially different from state law." Id. (emphasis in original). Commercial Union argues that the doctrine of uberrimae fidei is an established rule of maritime law and determines the outcome of this case....