Whorton v. Home Ins. Co., 83-1339
| Decision Date | 06 January 1984 |
| Docket Number | No. 83-1339,83-1339 |
| Citation | 724 F.2d 427 |
| Parties | , 1984 A.M.C. 937 Daniel WHORTON and Leroy Whorton, d/b/a Whorton Brothers Seafood Company, a partnership, Appellees, v. The HOME INSURANCE COMPANY, Appellant. Daniel WHORTON and Leroy Whorton, d/b/a Whorton Brothers Seafood Company, a partnership, Appellants, v. The HOME INSURANCE COMPANY, Appellee. (L), 83-1401. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Mark T. Coberly, John M. Ryan, Norfolk, Va. (Vandeventer, Black, Meredith & Martin, Norfolk, Va., on brief), for appellant/cross-appellee.
George H. Heilig, Jr., Norfolk, Va. (Mary G. Commander, Rixey, Heilig & McKenry, Norfolk, Va., on brief), for appellees/cross-appellants.
Before WIDENER, SPROUSE and CHAPMAN, Circuit Judges.
Defendant The Home Insurance Company appeals from the district court's judgment in favor of plaintiffs Daniel Whorton and Leroy Whorton, d/b/a Whorton Brothers Seafood Company. The judgment required Home Insurance to pay Whorton $225,000.00 insurance proceeds for the loss of the latter's boat as a result of its captain's act of barratry. The Whortons cross-appeal from the denial of their claim for prejudgment interest and attorneys' fees. The case was tried without a jury on depositions, exhibits, and briefs filed by both parties. Finding no error, we affirm.
The Home Insurance Company issued a policy of hull insurance in the amount of $225,000.00 on the KATHERINE J, a fishing vessel owned by the Whortons. The policy covered the period from July 1, 1981 to July 1, 1982. It originally provided navigational limits restricting coverage to an area from Bangor, Maine to Hatteras, North Carolina, and extending no more than 200 miles offshore of the United States mainland. The parties agree that "barratry" was a covered peril under the policy.
Deposition testimony and exhibits showed that in September, 1981, Leroy Whorton requested that the navigational limits of the policy be extended to include Key West, Florida and the Gulf of Mexico, and the Company's authorized agent approved the request during the week of September 14, 1981. After receiving the Company's approval, the Whortons sent the KATHERINE J from Hampton, Virginia to Key West via Brunswick, Georgia. In Brunswick, the KATHERINE J was converted from a scallop boat to a shrimp boat by the addition of shrimping equipment. The KATHERINE J then continued down the coast towards Key West, harvesting shrimp along the way.
The vessel lost a propeller while shrimping and was towed to Key West by the Coast Guard. The boat docked at the Marquesas Shrimp Company (Marquesas) on October 5, 1981, and remained there for over a month while undergoing repairs. During the period the KATHERINE J remained at the Marquesas dock, the vessel's captain, John Broksch, made a number of unusual preparations for the KATHERINE J's next voyage. He bought 2,500 gallons of fuel and a two-months' supply of groceries with his own funds. The Whortons had instructed him not to purchase additional gasoline, and the normal way to purchase groceries was to draw on the Whortons' account with Marquesas. More sophisticated navigational equipment and radios were installed on the KATHERINE J without the Whortons' knowledge or consent. The vessel's cook, Earline Lynn, who had been aboard the boat since it had left Hampton, was paid $950.00 to get off the boat, again without the Whortons' knowledge or consent. Lynn said that at one point Broksch had spoken to her about making a "pot run" with the KATHERINE J.
The vessel sailed from Key West on or about November 8, 1981 with the captain and a crew of three, and shrimped for five days. Early on the morning of the sixth day, the captain ordered the crew to put the shrimp nets on deck, and announced that he was taking them "where the money is at." The KATHERINE J ran for five more days without shrimping. One of the crew members, Arthur Dunton, became concerned about this and asked Broksch where they were going. The captain told Dunton they were making a "pot run." When Dunton asked if the Whortons knew about the captain's plans, Broksch replied In fact, there is no evidence in the record that the Whortons knew, when the KATHERINE J set out from Key West, about the captain's unusual activities, or that the boat was involved in anything other than a shrimp run.
On the tenth or eleventh day out of Key West, the three crew members were inspecting a broken generator in the hold when the KATHERINE J struck a reef and capsized. By the time the crew returned to the deck, the captain had disappeared--he apparently fell overboard. The crew abandoned ship in the life raft and remained afloat for eight days before being rescued and put ashore in Nicaragua. Neither the captain nor the KATHERINE J has been seen again.
Dale Wolfe was assigned by Home Insurance on January 6, 1982 to investigate the loss of the KATHERINE J. He interviewed Earline Lynn, the Whortons, and the owner of Marquesas and contacted the American Embassy in Nicaragua. He learned that Dunton was still in prison in Nicaragua and would not be released unless the United States agreed to take in his fellow crew member, an exiled Cuban which it had so far refused to do. 1 He was unable to locate the third crew member, a Canadian. The insurance company denied coverage on April 9, 1982, and Wolfe closed his investigative file on April 14, 1982. The Whortons filed this action on October 1, 1982.
The district court concluded that the policy's navigational limits had been extended in September to include Key West and the Gulf of Mexico. It further found that an act of barratry by the captain had occurred at the dock in Key West, within the policy's navigational limits, and that the barratry proximately resulted in the vessel's loss. As the parties did not dispute that barratry was a covered peril under the policy, the court entered judgment in favor of the Whortons for the policy amount, $225,000.00. The court denied the Whortons' requests for prejudgment interest and attorneys' fees, however, on the grounds that Home Insurance had exercised due diligence in investigating the claim and had denied coverage in the good faith though mistaken belief that the loss of the vessel did not proximately result from a covered peril.
Home Insurance contends that the district court's finding that an act of barratry occurred at the dock is not supported by the evidence. It argues that there is nothing in the record to suggest that the captain departed from Key West with the intention of engaging in a drug run; that it was only after he had been asea for at least five days--and after he had gone outside the policy's navigational limits--that any act of barratry occurred. The captain's...
To continue reading
Request your trial
-
Dann Marine Towing, LC v. Gen. Ship Repair Corp.
...Vaughan v. Atkinson, 369 U.S. 527 (1962), which held that an admiralty plaintiff may be awarded counsel fees); Whorton v. Home Ins. Co., 724 F.2d 427, 431 (4th Cir. 1984) ("In the absence of a statute or special agreement allowing recovery of attorneys' fees, a losing party may be assessed ......
-
Carney Fam. Inv. V. Insurance Co. of N. America
...sued by their insurance company and prevailed). There appears to be no Fourth Circuit law directly on point. In Whorton v. Home Ins. Co., 724 F.2d 427, 431 (4th Cir.1984), the court rejected a claim for attorney's fees based simply on a successful contract claim for insurance coverage; no b......
-
Tibbetts v. Secretary of the Treasury, B-C-83-312.
...95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975); Runyon v. McCrary, 427 U.S. 160, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976), and Whorton v. Ins. Co., 724 F.2d 427 (4th Cir.1984). The Court finds that the tax return and this action were filed by the Plaintiff in bad faith, and both are without merit a......
-
Adriatic Ship Supply Co., Inc. v. M/V SHAULA
...only partially and, in any event, I cannot conclude that the defendants have acted in bad faith. See, e.g., Whorton v. Home Insurance Co., 724 F.2d 427, 431 (4th Cir.1984); Ocean Barge Transport Co. v. Hess Oil Virgin Islands Corp., 598 F.Supp. 45, 48 (D.V.I.1984), aff'd mem., 760 F.2d 257 ......