INGERSOLL-RAND FINAN. v. Employers Ins. of Wausau

• Decision Date: 29 May 1984
• Docket Number: Civ. A. No. 82-5665.
• Citation: 637 F. Supp. 642
• Parties: INGERSOLL-RAND FINANCIAL CORPORATION, v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company.
• Court: U.S. District Court — Eastern District of Louisiana

637 F. Supp. 642

INGERSOLL-RAND FINANCIAL CORPORATION, v. EMPLOYERS INSURANCE OF WAUSAU, A Mutual Company.

Civ. A. No. 82-5665.

United States District Court, E.D. Louisiana.

May 29, 1984.

WICKER, District Judge.

Plaintiff, Ingersoll-Rand Financial Corporation, brings suit against defendant, Employers Insurance of Wausau, claiming that it is entitled to recover under a hull insurance policy issued by the defendant covering the MV SUZIE. The MV SUZIE was lost on December 14, 1981. It was owned and operated by Mire Marine Services, Inc., not a party to this suit. This matter was submitted to the Court on a former date. After considering the record, the stipulations of the parties, the evidence adduced at trial, the briefs of counsel and the applicable law, the Court issues the following Findings of Fact and Conclusions of Law, to wit:

FINDINGS OF FACT

1. Plaintiff, Ingersoll-Rand Financial Corporation (hereinafter Ingersoll-Rand) is the holder of a promissory note secured by a First Preferred Ship Mortgage executed by Mire Marine Service, Inc., the owner of the MV SUZIE. (Exhibits A and B)

2. At all times pertinent hereto, the SUZIE was covered by a hull insurance policy issued by the defendant, Employers Insurance of Wausau, which named plaintiff as an additional loss payee. (Exhibit F) Also in effect was a breach of warranty endorsement to the policy, admitting the seaworthiness of the vessel, whereby Employers agreed that the interest of the mortgagee, Ingersoll-Rand, was not to be impaired or invalidated by any negligence of the mortgagor, owner, master, agent or crew of the vessel. (Exhibit G)

3. On or about December 11, 1981, Owen Mire, President of Mire Marine, moored the vessel at its dock on the Intercoastal Waterway. On December 14, Mire discovered that the SUZIE was missing. Immediately thereafter, Mire contacted the bridge tender at the Louisa Street Bridge and the lockmaster at the Bayou Bouef locks. Both reported that their logs did not reflect that the vessel had effected passage through the locks or the bridge and the vessel has never been recovered to this date. (Deposition of Owen Mire)

4. It is undisputed that the premiums on the policy were timely paid and that demand for payment was properly made to the defendant.

5. After defendant refused to make payment on the policy, Ingersoll instituted this suit to recover the outstanding principal under the policy.

6. Defendant contends that the vessel was stolen and accordingly is not covered under the policy provisions. The great weight of the credible evidence reflects that the SUZIE was stolen. The vessel had been left unattended for two or three days, and the keys were easily obtainable and transferable by the various crew members and other employees of Mire Marine. Moreover, the Mire Marine dock was poorly lighted and in a remote and isolated area. (Deposition of Owen Mire) It is undisputed that the vessel could have been navigated into the Gulf of Mexico or the Atchafalya River without passing the Louisa Street Bridge or through the Bayou Bouef locks. Plaintiff's contention that the vessel was rammed by an oncoming tug or swept away by a current is based on mere speculation. There was no debris found at the Mire dock after the disappearance which would have indicated loss by collision, or heavy current. Furthermore, there was no evidence presented that the SUZIE was improperly moored, nor was any trace of the vessel ever discovered. (Deposition of Owen Mire)

7. However, the evidence reflects that Mire Marine, the owner of the MV SUZIE was negligent in failing to properly light its dock, to properly guard the vessel and in failing to adequately monitor the keys to the vessel. In his deposition, Owen Mire, President of Mire Marine testified that a watchman should have been posted over the SUZIE, and that many employees of the company possessed keys to the vessel and that these keys were unmonitored by the Company and easily copied. Accordingly, the Court finds that the theft of the vessel would not have occurred but for the negligence of Mire Marine.

8. It is undisputed that the indebtedness of Mire Marine to plaintiff under the aforementioned note as of time of the loss is $45,480.38.

CONCLUSIONS OF LAW

1. This is an admiralty and maritime claim within the meaning of Rule 9(h). 28 U.S.C. § 1333; Insurance Co. v. Dunham, 78 U.S. (11 Wall) 1, 20 L.Ed. 90 (1870).

2. The first legal issue to be decided is what law should be applied in interpreting the relevant portions of the policy in question. In Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), the Supreme Court held that in the absence of applicable federal statutes or judicially established federal admiralty law, the district court should look to the law of the appropriate state for guidance. Since none of the cases cited by the parties in their briefs, nor any other cases discovered by this Court reveal that this matter has been addressed by federal authorities, the Court must turn to state law. See Walter v. Marine Office of America, 537 F.2d 89 (5th Cir. 1976); Travelers Indem. v. Certain Underwriters at Lloyds, 566 F.Supp. 267 (E.D.La.1983). Louisiana law would undoubtably be the appropriate state law to apply, since the loss of the vessel occurred in Louisiana, the owner of the vessel is a Louisiana resident and the parties are corporations doing business in Louisiana. Walter v. Marine Office of America, supra, at 94; Travelers Indem. v. Certain Underwriters at Lloyds, supra, at 269. Unfortunately, Louisiana jurisprudence on the precise issues involved in this case is not well-defined and thus this Court must extrapolate a rule from available case law and from the decisions of other jurisdictions.

3. Plaintiff contends, inter alia, that it is afforded coverage for the loss of the SUZIE under Endorsement 14-A of the policy. Endorsement 14-A provides, in pertinent part, that

In consideration of an additional premium ... seaworthiness of the vessel(s) insured by this Policy as between this Company and plaintiff hereinafter called the mortgagee...is hereby admitted, and the interest of the mortgagee shall not be impaired or invalidated by any act of or omission or neglect of the mortgagor, owner, master, agent, crew of the vessel(s) insured by this Policy or by any failure to comply with any warranty or condition over which the mortgagee has no control or over which the mortgagee could, but has not exercised such control or by any change in the title, ownership, or management of such vessel(s); the interest of the mortgagee being that interest more particularly set forth in the mortgage on such vessel(s) in favor of the mortgagee and the note attached thereto, said mortgage and note being assignable to this Company upon demand provided full payment of the interest...of the mortgagee has first been paid. This coverage includes, but is not limited to Inchmaree protection.... In the event of cancellation or modification of this Policy this Company shall give 30 days written notice of such cancellation or modification to the mortgagee prior to the effective date thereof. All other terms and conditions and valuations remaining unchanged.

(Exhibit G)

4. Under Louisiana law, Endorsement 14-A is a standard mortgage clause. May v. Market Ins. Co., 387 So.2d 1081 (La.1980). Notwithstanding the fact that it...