Lemar Towing Co., Inc. v. Fireman's Fund Insurance Co.
| Decision Date | 17 July 1972 |
| Docket Number | Civ. A. No. 70-1054. |
| Citation | 352 F. Supp. 652 |
| Parties | LEMAR TOWING CO., INC. v. FIREMAN'S FUND INSURANCE COMPANY. |
| Court | U.S. District Court — Eastern District of Louisiana |
COPYRIGHT MATERIAL OMITTED
Joaquin Campoy, William S. Stone, Campoy, Hurley & Senter, New Orleans, La., for plaintiff.
Francis Emmett, Bruce W. Dinwiddie, International Trade Mart, Terriberry, Carroll, Yancey & Farrell, New Orleans, La., for defendant.
The Tug TRUDY B1 left the Industrial Canal in the Port of New Orleans on October 14, 1969, at about 11:00 p. m., bound, via the Intracoastal Waterway and waters known as the Rigolets, for a destination on the West Pearl River some 80 miles north of its mouth, all of said waterways being Louisiana waters.
At all times pertinent the TRUDY B was manned by a captain, a mate and a deckhand. The two light shell barges she was to deliver to a Jahncke loading dock were made up for pushing until she reached the Rigolets when they were placed in tow astern because of the shallow waters of that body. When she reached the mouth of the West Pearl the barges were again positioned for pushing and so remained until reaching their destination.
The voyage was not uneventful. On the night of October 15, 1969, when in negotiating a bend in the West Pearl, not far above lock #2, the tug struck and scraped her port side against the river bottom, bank or some other unknown submerged object. Fearful that some damage may have been caused by the grounding, the captain backed the TRUDY B down to lock #2, tied off the barges, and put the tug on the bank for the night.
The next morning, at approximately 6:00 a. m., it was discovered that there was at least a foot of water above the engine room deck plates. Captain Bearb then sent the mate to telephone the Jahncke facility to request a pump since the vessel's electric pump, which had been underwater during the night, was feared inoperative. Using both the Jahncke pump and the vessel's engine pump, the captain was able to pump out the vessel to the point where he could see that water was entering through the loosened stuffing boxes and a small crack2 which he discovered in the vessel's port chine. The stuffing boxes were tightened to a mere drip and the tug continued upriver to the Jahncke location where Captain Bearb again inspected the vessel.
Captain Bearb then contacted Marcus Smith, then secretary-treasurer and now the president of Lemar Towing Co., Inc., (hereafter Lemar) and reported the condition of the tug. Smith instructed the captain to change the oil in the clutches, plug the leak by placing rags in the crack, and return the tug to a shipyard on the Harvey Canal in Harvey, Louisiana. These tasks were accomplished and the tug was once again underway.
During the return voyage down the West Pearl the vessel's electric pump had dried and was used only intermittently to prevent its overheating. The engine pump remained operative and the entry of water was apparently controlled.
Nearing the mouth of the West Pearl, at approximately 11:00 p. m., the TRUDY B momentarily paused at the Highway 90 bridge to take on fresh water and to check the water level in the engine room which was then below the floor plates. Leaving the West Pearl the TRUDY B next stopped at the railroad bridge which crosses the Rigolets where she tied up. When the fog patches, which were encountered about the railroad bridge, appeared to be lifting the vessel then headed for Catfish Point around which lay the Intracoastal Waterway and the route home. Between the Highway 90 bridge and the railroad bridge both pumps were continuously used to control the water level in the engine room.
The captain testified that after running for approximately twenty-five minutes in the direction of Catfish Point the TRUDY B encountered dense fog and attempted to return to the railroad bridge. However, the vessel did not find the return course and after the estimated running time had elapsed without locating the bridge the captain realized that he was lost. The vessel, having no anchor, kept running in search of a place to tie off. When the fog finally lifted, it was 4:00 a. m. on the morning of the 17th and, as was later discovered, the vessel was off the coast of Mississippi near the Gulfport-Biloxi area.
At 6:00 a. m. the vessel came upon an oyster boat whose crew gave her directions to the Gulfport Ship Channel which led into the Intracoastal. Pursuing the given course, the TRUDY B, now with water above her floor plates in the engine room, found the channel and the buoy markers as described by the oyster boatmen. As she passed Ship Island about 7:00 a. m., she encountered heavy seas and, already having taken a slight list to port, on one heavy roll to port she was unable to recover, continued to roll over, and then sank in the vicinity of the intersection of the Intracoastal and the Gulfport Ship Channel near buoy #25. The crew was taken from the sinking vessel by a passing yacht.
Notice of the sinking and tender of abandonment of the vessel to defendant underwriter was immediately given by plaintiff. Defendant rejected tender of abandonment and, while reserving all rights and defenses under the policy, denied coverage for the reason that the vessel appeared to have been beyond the navigational confines of the policy (Joint Exhibit #1). Plaintiff hired a diver to attend to the wreck and to determine the feasibility of raising it. Plaintiff was also required to rent a buoy for marking the wreck because of the Coast Guard's insistence that it constituted a hazard to navigation. The Tug TRUDY B was subsequently raised in March, 1970, at a cost of $18,000.00. Having concluded that the vessel was a total constructive loss,3 plaintiff sold the wreck for the sum of $1.00 to Gulf Marine Surveyors who bore the expense of raising.
It is undisputed that defendant issued its Ocean Marine term policy V-57424 on the steel Tug TRUDY B owned by plaintiff; that plaintiff paid a premium of $3,262.50; that the TRUDY B sank within the time period specified in the policy; and that the defendant was timely notified of the casualty but has not made any payments under the policy nor returned the premium, or any part thereof, to the plaintiff.
Plaintiff has brought this suit to recover from defendant the full insured value under the policy, "sue and labor" expenses and penalties for the defendant's alleged arbitrary and capricious failure and refusal to pay to plaintiff the amount claimed under said policy.
Defendant takes the position that the policy issued does not cover the loss occasioned by the vessel's sinking on the grounds that several terms and conditions of said policy were breached by plaintiff prior to and at the time of the sinking, namely: (1) that the vessel was not within the navigation limits of the policy thereby suspending coverage; (2) alternatively, if the vessel had re-entered the navigation limits and sank therein, the policy did not reattach since the vessel was not seaworthy at the time of re-entry; (3) a breach of the management warranty; (4) that the sinking did not result from a peril of the sea, but from the unseaworthiness of the vessel known by the owners; and (5) failing to notify the defendant of the grounding and the resulting damage thereby depriving defendant of its right to survey the vessel after every accident. Plaintiff contends that these defenses are without merit and, in the alternative, that defendant should be estopped from asserting any defense other than breach of the policy's navigation limits, numbered (1) above.
The plea of estoppel urged by plaintiff is based on the ground that defendant initially denied coverage under the policy for breach of the navigation limits and merely added other defenses at its convenience. In support of this plea plaintiff relies on the following rule of law: "When a party to a contract refuses to perform and bases its refusal on one ground it will be held to have waived all other grounds and to be estopped when suit is brought from setting up other grounds for its refusal."4 We need not determine the propriety of applying such rule to the case at bar since plaintiff is in error as to its major premise. On October 20, 1969, only three days after the sinking of the TRUDY B, defendant sent plaintiff a telegram5 in which it not only denied liability for the reason that the sinking occurred outside of the policy navigation limits but also specifically reserved all of its rights and defenses under the policy.6
Plaintiff also contends that defendant should not be allowed to defend on any basis because of its failure to tender a return of the premium. As authority for this proposition plaintiff cites Cass Bank & Trust Co. v. National Indemnity Co., 326 F.2d 308 (8th Cir. 1964) and Phoenix Assurance Co. of New York v. City of Buckner, 305 F.2d 54 (8th Cir. 1962). Both cases, which involve the application of Missouri law, are inapposite for they hold that a tender or return of premium is a prerequisite for defending on the ground that a policy is void ab initio. We do not construe the defenses raised by the underwriter as contending that the policy sued on was void ab initio. On the contrary, said defenses are based on the policy, its terms and conditions.
We note with considerable interest, however, the language of the policy with respect to the management warranty clause:
Defendant argues that a change in management of the vessel occurred prior to the time of its sinking and that the policy terminated as of the...
To continue reading
Request your trial
-
Employers Ins. of Wausau v. Occidental Petroleum Corp., 14880
...903 F.2d 828 (11th Cir.1990); Gregoire v. Underwriters at Lloyds, 559 F.Supp. 596, 599 (D.Alaska 1982); Lemar Towing, Inc. v. Fireman's Fund Ins. Co., 352 F.Supp. 652, 660 (E.D.La.1972), aff'd, 471 F.2d 609 (5th Cir.1973), cert. denied, 414 U.S. 976, 94 S.Ct. 292, 38 L.Ed.2d 219 (1973).14 W......
-
State Nat'l Ins. Co. v. Anzhela Explorer, L.L.C.
...the last named port.... To get to and from it ships must navigate the Gulf of Mexico.”); see, e.g., Lemar Towing Co., Inc. v. Fireman's Fund Ins. Co., 352 F.Supp. 652, 658–59 (E.D.La.1972) (rejecting insurer's argument for strict application of navigational warranty where “[c]ommon sense wo......
-
Continental Cas. Co. v. Canadian Universal Ins. Co.
...if there is no controlling federal decision of the specific issue before us, we should apply state law. Lemar Towing Co. v. Fireman's Fund Insurance Co., E.D.La.1972, 352 F.Supp. 652, Aff'd, 5 Cir. 1973, 471 F.2d 609, Cert. denied, 1973, 414 U.S. 976, 94 S.Ct. 292, 38 L.Ed. 219. See also Tr......
-
Cont. Ins. v. Lone Eagle Shipping Ltd. (Liberia), 94 CIV. 3306 (DLC).
...2 L.Ed.2d 260 (1957); Texaco, Inc. v. Universal Marine, Inc., 400 F.Supp. 311, 322-23 (E.D.La.1975); Lemar Towing Co., Inc. v. Fireman's Fund Ins. Co., 352 F.Supp. 652, 660-61 (E.D.La.1972), aff'd, 471 F.2d 609 (5th Cir.), cert. denied, 414 U.S. 976, 94 S.Ct. 292, 38 L.Ed.2d 219 (1973).22 O......