Miller Marine Services, Inc. v. Travelers Property Casualty Insurance Co., et al.
2005 AMC 2601 (E. D. N. Y. 2005)
Miller Marine's commercial vessel, MV JAMES C MILLER, sank at her dock. The police and Coast Guard investigated the sinking. Although they suspected that it was caused by the acts of disgruntled former employees, they did not issue definitive findings about the cause of the sinking. The owner of Miller Marine attributed the loss to a crewmember's failure to close five valves after performing routine maintenance and service on the packing glands. But, in discovery responses he stated that the cause of the sinking was unexplained.
The MV JAMES C MILLER was insured under a named perils policy. Miller Marine made a claim under that policy and it was denied. Miller Marine sued its hull insurers. The hull insurers moved for summary judgment on the ground that Miller Marine could not prove that it was entitled to coverage. Miller Marine filed a cross-motion for summary judgment arguing that the loss was covered because the sinking was due to the negligence of a crewmember. The District Court granted the hull insurers' motion.
The District Court first analyzed whether the hull policy was a named perils policy or an all-risk policy. The difference was critical because under a named perils policy the insured has the initial burden of proof to show that the loss was caused by a named peril. Under an all-risk policy the insurer has the burden of proof to show that the loss was caused by an excepted peril. The District Court then examined three cases cited by the insured in which a phrase similar to "and all other like perils" appeared in the named perils clause and was held to have converted the policy into an all risk policy. The District Court distinguished all three. It further held that when an insurance policy "sets forth a list of conditions against which insurance is provided and also protects against loss suffered due to "all other like perils', the clause has only one reasonable interpretation." That is, the policy provides coverage for damage resulting from perils similar to those expressly listed. Otherwise, the District Court held, the phrase "like perils" would be meaningless, a result that is undesirable.
The District Court then analyzed whether there were disputed facts about the cause of the sinking that would preclude summary judgment.
First, the District Court held that New York law would apply because the policy was negotiated, prepared, and delivered in New York. Under New York law, the insured had the burden of presenting evidence that the sinking could be attributed to a "peril of the sea", one of the named perils for which coverage would be provided. Under New York law, a "peril of the sea" includes the negligence of the vessel's crew. Also under New York law, the insured had to show that the sinking was proximately caused by a peril of the sea.
Second, the District Court held that Miller Marine failed to demonstrate that there was a genuine issue of material fact in dispute. The affidavit of the company's owner to the effect that he believed that the sinking was due to covered peril (crew negligence) was not based on admissible evidence, because he was not on board the vessel on the night in question and his "belief" contradicted the statements of another employee and the police regarding the likelihood that two disgruntled former employees caused the sinking. Moreover, the Court noted that until the company's owner submitted his affidavit in the litigation, no one had suggested that a current crewmember was responsible for the sinking.