INTERN. SHIP REPAIR v. St. Paul Fire & Marine

• Decision Date: 08 April 1996
• Docket Number: No. 94-1368-CIV-T-17(E),94-1844-CIV-T-17(E).,94-1368-CIV-T-17(E)
• Citation: 922 F. Supp. 577,1997 AMC 225
• Parties: INTERNATIONAL SHIP REPAIR AND MARINE SERVICES, INC., Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff, v. INTERNATIONAL SHIP REPAIR AND MARINE SERVICES, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

922 F. Supp. 577

1997 AMC 225

INTERNATIONAL SHIP REPAIR AND MARINE SERVICES, INC., Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant.

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff, v. INTERNATIONAL SHIP REPAIR AND MARINE SERVICES, INC., et al., Defendants.

Nos. 94-1368-CIV-T-17(E), 94-1844-CIV-T-17(E).

United States District Court, M.D. Florida, Tampa Division.

April 8, 1996.

G. Calvin Hayes, Paul E. Parrish, Holland & Knight, Tampa, FL, U. Charles Remmel, R. Terrance Duddy, Leland N. Chisholm, Kelly, Remmel & Zimmerman, Portland, ME, for International Ship Repair & Marine Services, Inc.

Timothy Peter Shusta, Hayden & Milliken, P.A., Tampa, FL, John A.V. Nicoletti, Donovan, Parry, Walsh & Repetto, New York City, Seth S. Holbrook, Law Office of Seth S. Holbrook, Melrose, MA, for St. Paul Fire & Marine Insurance Company.

ORDER ON MOTION FOR REHEARING

KOVACHEVICH, Chief Judge.

This action is before the Court on the following motions and responses:

1. International Ship Repair and Marine Services' (hereafter International) motion for rehearing and supporting memorandum of law, filed December 1, 1995. (Docket No. 95)

2. St. Paul Fire and Marine Insurance Company's (hereafter St. Paul) memorandum in opposition to International's motion for rehearing, filed December 13, 1995. (Docket No. 97)

FACTS

The background to this case has been set forth by this Court, in detail, in its November 21, 1995, Order on the Motions to Strike and for Summary Judgment filed by both International and St. Paul. (Docket No. 92) The following facts are significant in deciding this Motion for Rehearing.

On June 29, 1995, International filed its motion for summary judgment, along with a memorandum and several affidavits in support. International stated that it was entitled to summary judgment because the parties' insurance contract admitted the seaworthiness of International's dry dock, the CHL2. As such, St. Paul could not prove that International breached the warranty of seaworthiness, an essential element to St. Paul's claims.

On August 4, 1995, St. Paul filed its motion for summary judgment along with a memorandum and affidavits in support. St. Paul's motion stated that the insurance policy was void and, therefore, it was entitled to summary judgment. According to St. Paul, the insurance policy was void because: (1) International failed to show St. Paul the utmost good faith required in marine contracts (uberrimae fidei); (2) International failed to disclose the CHL2's purchase price; (3) International knew or should have known of the CHL2's deteriorated condition; and (4) International's surveyor misrepresented the scope of the survey that he conducted on the CHL2.

After denying both parties' motions to strike affidavits, this Court determined that there were material issues of fact precluding the entry of summary judgment for either party. Specifically, this Court found that St. Paul was not entitled to summary judgment because material issues of fact remained regarding whether International made misrepresentations to St. Paul when it applied for insurance. This Court also found that International was not entitled to summary judgment against St. Paul because the insurance contract between the two (2) parties contained ambiguity requiring the presentation of extrinsic evidence regarding the parties' intent. It is on this latter determination that International has focused, in its motion for rehearing.

STANDARD OF REVIEW

A motion for reconsideration must demonstrate why the court should reconsider its prior decision and "set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision." Cover v. Wal-Mart Stores, Inc., 148 F.R.D. 294 (M.D.Fla.1993). Courts have recognized three (3) grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or manifest injustice. Major v. Benton, 647 F.2d 110, 112 (10th Cir.1981). The court will not reconsider a previous ruling when the party's motion fails to raise new issues and instead, only relitigates what has already been found lacking. Government Personnel Services, Inc. v. Government Personnel Mutual Life Ins. Co., 759 F.Supp. 792 (M.D.Fla.1991), aff'd, 986 F.2d 506 (11th Cir.1993). While International's motion does not raise new issues, it does suggest that the Court made an error in its previous order. International argues that under Florida law, it is entitled to summary judgment because ambiguity in a contract must be strictly construed against the insurer.

DISCUSSION

The Court recognizes International's argument as a proper statement of Florida law.¹ However, the Court also recognizes that a conflict exists between the present summary judgment rule and state laws, like Florida's, requiring ambiguities in insurance policies to be construed against the insurance company. The conflict was described by Judge Weinstein of the Eastern District of New York. Uniroyal, Inc. v. Home Ins. Co., 707 F.Supp. 1368, 1372-78 (E.D.N.Y.1988). New York has a law very similar to Florida's, requiring ambiguities to be construed in the insured's favor. Id. Judge Weinstein stated that

two aspects of `ambiguity' appear to be in conflict: ambiguity in an insurance contract that may render summary judgment improper as a matter of federal civil procedure; and ambiguity in an insurance contract that must be construed by the court as a matter of substantive state contract law. The former, proceduralist view, stresses that ambiguity inherently necessitates a full presentation of extrinsic evidence for the factfinder's evaluation. The latter, substantive view, rests on the assumption that, as a matter of substantive state insurance contract law, ambiguities in an insurance policy are to be construed by the court against the insurer. A motion for summary judgment on an ambiguous insurance policy in a diversity case appears to invoke these inconsistent rules simultaneously.

Id.

Judge Weinstein determined that the proper resolution of this conflict under federal procedure and New York law was to grant summary judgment for the insured on an ambiguous insurance policy only after allowing full discovery. Then, finding no valuable extrinsic evidence of the parties' intent, the court would apply as a last resort the state law presumption construing the policy against the insurer. Id.; Alfin, Inc., v. Pacific Ins. Co., 735 F.Supp. 115 (S.D.N.Y.1990). Judge Weinstein went on to state that summary judgment on an ambiguous insurance policy should not be granted while discovery is still incomplete. See Burroughs Wellcome Co. v. Commercial Union Ins. Co., 632 F.Supp. 1213, 1220, 1224-25 (S.D.N.Y.1986); Aetna Casualty & Surety Co. v. Abbott Laboratories, Inc., 636 F.Supp. 546, 550 n. 7 (D.Conn. 1986).

This Court finds Judge Weinstein's approach to the conflict between state law and the federal rules of civil procedure to be well reasoned. Granting summary judgment on ambiguous insurance contracts, only after discovery is complete and it is determined that the evidence does not raise issues of credibility between the parties does justice to both the federal rules and state law. However, this Court also finds that it does not have to rely on Judge Weinstein's sound reasoning to deny International's motion for rehearing, as there was another basis for the Court's refusal to enter summary judgment for International in its previous order. Even if the Court construed the ambiguous contract term against St. Paul, in favor of International, a material factual issue still remains regarding the alleged misrepresentations St. Paul claims International made when it sought coverage for the CHL2.

The federal maritime doctrine of uberrimae fidei requires the insured to make a full disclosure to the insurer of all the facts within his knowledge that are material to the risk insured. If the insured fails to make this disclosure the insurance contract is void. It does not matter whether the insured's failure to disclose was due to negligence, mistake, accident, or voluntary ignorance. Steelmet, Inc. v. Caribe Towing Corp., 747 F.2d 689 (11th Cir.1984). St. Paul raised the doctrine in its amended complaint and in its motion for summary judgment against International. St. Paul stated, inter alia, that International knew or should have known that the CHL2 dry dock was in a deteriorated and unseaworthy condition and its failure to disclose the dock's condition entitled St. Paul to summary judgment. This Court held that St. Paul was not entitled to summary judgment because International's knowledge, or lack thereof, regarding the condition of the...