Wolstein v. Yorkshire Ins. Co. Ltd.
| Decision Date | 06 July 1999 |
| Docket Number | No. 42857-8-I.,42857-8-I. |
| Citation | 97 Wash.App. 201,985 P.2d 400 |
| Court | Washington Court of Appeals |
| Parties | Bertram L. WOLSTEIN, Appellant, v. The YORKSHIRE INSURANCE CO., LTD.; Insurance Company of North America (UK) Ltd.; Commercial Union Assurance Company Plc; Ocean Marine Insurance Co. Ltd.; Phoenix Assurance Public Limited Company; The Threadneedle Insurance Co. Ltd.; The Yasuda Fire and Marine Insurance Company of Europe Ltd.; Sovereign Marine & General Insurance Co. Ltd.; The Tokyo Marine & Fire Insurance Co. (UK) Ltd.; Taisho Marine & Fire Insurance Co. (UK) Ltd.; Storebrand Insurance Co. (UK) Ltd.; Atlantic Mutual Insurance Co.; Northern Assurance Co. Ltd.; Atlas Assurance Co. Ltd.; Indemnity Marine Assurance Co. Ltd.; The Prudential Assurance Co. Ltd.; Sphere Drake Insurance Plc; Tokyo Insurance Company (UK) Ltd.; Norwich Union Fire Insurance Society Ltd.; K.A. Long; P. Hunt; I.G. Agnew; S.R. Merrett; H.H. Hayward; A.D. Pilcher; N. Craig & Others; P.F. Wright & Others; M. Moss & Others; P.H. Jenks; G. Luben; R.C.D. Todd; S.H. Barber; R.H.M. Outhwaite; S.J. Sanfey; D.R. Gray; J.R. Charman; M.E. Brockbank; S.E. Spinney; P.E. Upton; E. Pieri; C.W. Rome; M.J. Bonds; S.G. Thomson; R.C. Cleverley; T.F. Hart; H.R. Dumas; and C.E. Burrill, Respondents. |
Hall Baetz, Davis Wright Tremaine, Michele G. Radosevich, Davis Wright Tremaine, Seattle, WA, for Appellants.
Richard F. Allen, Christopher W. Nicoll, John S. Devlin III, Steven C. Davis, Lane, Powell, Spears, Lubersky, Seattle, WA, for Respondents.
This is a marine insurance case where the original owner and vessel financier (Bertram Wolstein), as an additional assured on the marine builder's risk insurance policy, seeks to recover from the insurance underwriters for lost charter income, costs to rectify substandard workmanship, and cost overruns in completing a 105-foot yacht that resulted when the original boatbuilder abandoned construction and subsequently declared bankruptcy. The trial court granted the underwriters' motion for summary judgment and dismissed the case with prejudice, finding that there were no covered losses under the marine builder's risk insurance policy. We affirm in part and reverse in part. We reverse the trial court's order with respect to Wolstein's sue and labor claim because there are genuine issues of fact with respect to whether Wolstein took reasonable actions to prevent what would have been a covered loss. We remand with instructions that the factfinder determine which, if any, of Wolstein's claimed expenses were reasonably incurred to safeguard the yacht from vandalism and severe weather-related damage from the time of abandonment to the time coverage lapsed.
Bertram Wolstein entered into a contract with Burger Boat Company of Manitowoc, Wisconsin for the construction of a 105-foot, $4,487,608 yacht on May 25, 1989. At the time of contracting, Burger Boat had been recently purchased by Tacoma Boatbuilding Company (Tacoma Boat). The construction contract set out time lines for payment and completion of the yacht and required Burger Boat to procure standard marine builder's risk insurance covering itself and Wolstein, as an additional assured, against all risks of physical loss of or damage to the yacht. Burger Boat insured the yacht under the marine builder's risk policy that its parent, Tacoma Boat, had placed on the London insurance market in 1988 and listed Wolstein as an additional assured under the policy.
Wolstein claims that Burger Boat abandoned work on the yacht as a direct result of the Tacoma Boat directors improperly and illegally diverting Wolstein's progress payments from Burger Boat to satisfy Tacoma Boat's debts or to pay Tacoma Boat's officers and directors. Without access to Wolstein's progress payments, Burger Boat was unable to purchase the necessary parts and supplies or pay its employees, and on November 30, 1990, Burger Boat shut its doors, locked out its employees, and abandoned the boat yard. The marine builder's insurance policy was terminated on December 13, 1990, because of Tacoma Boat's failure to pay the insurance premiums beginning April 1990. Almost two years later and without again opening for business, Burger Boat filed for bankruptcy in October 1992.
Upon learning of Burger Boat's closing and its abandonment of his yacht, Wolstein traveled to Manitowoc, hired security personnel to safeguard the vessel, and arranged for the resumption of utilities in order to ensure that his yacht would not be damaged by the Wisconsin winter weather. Wolstein formed Manitowoc Boat Works Corporation, which took over and completed construction of his yacht, the M/V Lady Iris. Wolstein contemporaneously assigned all of his rights under the yacht construction contract to the Lady Iris Corporation, a closely held corporation in which he and his wife were the officers and directors. The Lady Iris was delivered to the Lady Iris Corporation in August 1991, a year later than the originally scheduled completion date.
Wolstein claims that he paid a total of $6,803,299 instead of the original contract price of $4,487,608 for the construction of the Lady Iris. In 1996, Wolstein filed an insurance claim under Tacoma Boat's marine builder's risk policy for losses resulting from Burger Boat's failure to complete the yacht. The insurance underwriters denied his claim, and he filed suit in King County Superior Court on September 27, 1996. According to Wolstein, the policy was an all risks policy and therefore covered repairs resulting from losses that flowed from Burger Boat's bankruptcy. These losses included design and workmanship defects, loss of charter fees resulting from the year delay in launching the boat, and additional costs incurred in completing the Lady Iris. The underwriters moved for summary judgment on April 24, 1998, on the alternate bases that Wolstein's damages were not covered and that whatever damages did occur, occurred after the policy had been canceled. The court granted summary judgment dismissing all of Wolstein's claims with prejudice on May 22, 1998.
Wolstein argues that the trial court erred as a matter of law by finding that his losses were not covered by the insurance policy's sue and labor, hull risks, and failure to launch provisions.
This court reviews summary judgment orders de novo. Key Tronic Corp., Inc. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 124 Wash.2d 618, 623-24, 881 P.2d 201 (1994). Summary judgment is proper if the pleadings and supporting declarations show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c); Key Tronic, 124 Wash.2d at 624, 881 P.2d 201. Facts and reasonable inferences are construed in the light most favorable to the nonmoving party. Our Lady of Lourdes Hosp. v. Franklin County, 120 Wash.2d 439, 452, 842 P.2d 956 (1993).
While the trial court dismissed Wolstein's causes of actions by finding that coverage under the policy did not exist, the underwriters also argued that Wolstein did not have standing to bring this action because he assigned all of his rights under the Lady Iris construction contract to the Lady Iris Corporation. They raise standing again on appeal as an alternate basis for affirming the dismissal of Wolstein's claims. Because standing is a threshold issue, we address it first and hold that Wolstein has standing to bring this action due to his insurable interest in the Lady Iris. Following the standing analysis, we address Wolstein's claims under the marine builder's risk insurance policy.
The underwriters assert that Wolstein does not have standing to pursue an insurance claim against them because he assigned all of his rights to enforce the construction contract to the Lady Iris Corporation. Wolstein answers with a three-prong response. First, Wolstein notes that the trial court, while presented with this issue, did not rule on Wolstein's standing as part of its summary judgment order. Thus, Wolstein asserts that the only inference that can be made is that the court considered him to have standing. Regardless of the trial court's position, we review issues of standing de novo.
Next, Wolstein argues that the issue of his standing is not properly before this court because the underwriters did not file a cross appeal. Wolstein, however, fails to support this assertion with authority. The rules of appellate procedure differentiate between respondents raising additional grounds for affirming a decision and asking for affirmative relief. Appellate courts "will at the instance of the respondent, review those acts in the proceeding below which if repeated on remand would constitute error prejudicial to respondent." RAP 2.4(a). Under RAP 5.1(d), a notice of a cross appeal is essential if a respondent seeks affirmative relief as distinguished from urging additional grounds for affirmance. Phillips Bldg. Co. v. An, 81 Wash.App. 696, 700 n. 3, 915 P.2d 1146 (1996) (citing Nord v. Phipps, 18 Wash.App. 262, 266 n. 3, 566 P.2d 1294 (1977)); see also 3 Lewis H. Orland and Karl B. Tegland, Wash. Prac. 48 (5th ed. 1998)). Here, the underwriters' challenge to Wolstein's standing is an additional basis for affirming the trial court's summary judgment order, and they accordingly did not need to file a cross appeal in order for the issue to be properly before us.
Finally, Wolstein claims that regardless of the ramifications of the assignment of his interests in the construction contract to the Lady Iris Corporation, he has standing to bring this action because he had an insurable interest in the Lady Iris. Wolstein claims that his insurable interest arose by virtue of him personally guaranteeing the Lady Iris construction loan as well as being a named party under the marine builder's risk insurance policy.
Wolstein does not support his position on the issue of whether a...
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