Opinion
Case No. 00-38-CIV-MOORE.
November 8, 2001
ORDER ON MOTION FOR SUMMARY JUDGMENT
THIS CAUSE came before the Court upon Plaintiffs Motion for Summary Judgment (filed June 28, 2001).
UPON CONSIDERATION of the motion, responses, materials submitted, the pertinent portions of the record, and being otherwise fully advised in the premises, the Court enters the following Order GRANTING in part and DENYING in part Plaintiffs Motion for Summary Judgment.
A. Background
The matter arises from a dispute over an insurance agreement between Plaintiff AXA Global Risks (UK) Ltd. (hereinafter "AXA") and Defendant Frank Pierre, Jr. Plaintiff AXA issued a policy of marine insurance coverage for the vessel "THE FOUR OF US." On November 13, 1999, Defendant Frank Pierre reported the vessel stolen, and sought to recover for its total loss under the insurance policy. Plaintiff AXA subsequently investigated the reported loss. According to AXA, this investigation revealed that Defendant Frank Pierre had made several misrepresentations in the insurance application and failed to disclose certain material facts. AXA also discovered that the title of the vessel was held by Yola Pierre, Frank Pierre's wife, and therefore concluded that Frank Pierre did not have an insurable interest in the vessel.
Accordingly, Plaintiff AXA filed this action, pursuant to 28 U.S.C. § 2201 et seq., for declaratory judgment to void the maritime insurance policy. Shortly thereafter, Frank and Yola Pierre filed suit in state court against AXA, alleging breach of the marine insurance policy and seeking recovery of the stated value of the vessel. That case was removed to federal court, and consolidated with the present action. Plaintiff AXA then filed the motion for summary judgment that is the subject of this Order.
B. Summary Judgment Standard
The standard to be applied in reviewing a summary judgment motion is stated unambiguously in Rule 56(c) of the Federal Rules of Civil Procedure:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
Summary judgment may be entered only where there is no genuine issue of material fact. See Twiss v. Kury, 25 F.3d 1551, 1554 (11th Cir. 1994). The moving party has the burden of meeting this exacting standard. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). An issue of fact is "material" if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). It is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party. Id.
In applying this standard, the district court must view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion. See id. However, the non-moving party:
may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.
Rule 56(e), Fed.R.Civ.P. "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
In other words, the party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). In determining whether this evidentiary threshold has been met, the trial court "must view the evidence presented through the prism of the substantive evidentiary burden" applicable to the particular cause of action before it. Anderson, 477 U.S. at 254. If the non-movant fails to adduce evidence that would be sufficient, when viewed in a light most favorable to the non-movant, to support a jury finding for the non-movant, summary judgment may be granted. See id. at 254-55.
Additionally, the non-moving party must "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celetex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial and requires the court to grant the motion for summary judgment. See id.
C. Discussion
Plaintiff AXA seeks to void its maritime insurance policy with Frank Pierre for the vessel "The Four of Us" on two distinct grounds. First, AXA claims that the policy is void because it was issued in the name of Frank Pierre, but the vessel was owned exclusively by Frank Pierre's wife, Yola Pierre. Therefore, AXA contends, Frank Pierre did not have an insurable interest in the vessel, and any policy obtained by him is void. Second, AXA claims that the policy is void because of material misrepresentations and omissions committed by Frank Pierre when he applied for the insurance policy.
The Pierres oppose these arguments. First, the Pierres argue that Frank Pierre could validly obtain insurance for the vessel because he had an insurable interest in the vessel, even though his wife was the title-holder. Second, the Pierres argue that, even if Frank Pierre did not have an insurable interest in the vessel, the policy should be reformed to name Yola Pierre as an insured. Third and finally, the Pierres contend that the insurance application was vague and that any misrepresentations or omissions were not material to AXA's decision to insure the vessel. Each argument will be addressed in turn.
I. Frank Pierre's Insurable Interest
AXA contends that Frank Pierre did not have an insurable interest in the vessel at the time of its loss, because he was not the owner of the vessel. Therefore, according to AXA, any insurance policy for the vessel that names him as an insured would be void. However, it is well-established that a "right of property in a thing is not always indispensable to an insurable interest." See Hooper v. Robinson, 98 U.S. 528, 538 (1878); see also ABB Power T D Co., Inc. v. Gothaer Versicherungsbank VVAG, 939 F. Supp. 1568, 1578 (S.D. Fla. 1996). In short, one need not hold the title to something to have an insurable interest in it. Rather, the relevant inquiry in determining whether an individual has an insurable interest in something is whether the individual would be injured by its loss or benefitted from its preservation. See Hooper, 98 U.S. at 538; see also ABB Power T D Co., 939 F. Supp. at 1578. In other words, all that need be shown for Frank Pierre to have an insurable interest in the vessel is that he had " any pecuniary interest" in the vessel at the time of its loss. ABB Power T D Co., 939 F. Supp. at 1583 (emphasis added); see also Commercial Union Assur Co., Ltd., of London v. Jass, 36 F.2d 9, 10 (5th Cir. 1929) (holding that "[a]ny interest in property, legal or equitable, however slight, is insurable").
For the purposes of this motion, Frank Pierre has satisfied the Court that he had a "pecuniary interest" in the vessel. AXA does not dispute that Frank and Yola Pierre are married. It has been aptly noted that spouses may have pecuniary interests in each other's property, and that they may be injured by its loss and benefitted from its preservation. See COUCH ON INSURANCE § 42:3 (3d ed.) (Wife's Insurable Interest in Husband's Property). Furthermore, there is undisputed evidence on the record that Frank Pierre was the only operator of the vessel and used the vessel for fishing. See Plaintiff's Summary Judgment Motion, Ex. B at 23-24, 59 (Deposition of Frank Pierre). Fishing may of course have a pecuniary benefit as fish may be used for food. Therefore, the Court concludes that Frank Pierre has produced sufficient evidence showing that he had a pecuniary interest in the vessel to withstand a motion for summary judgment on this ground.
II. Reformation of the Policy to Cover Yola Pierre
Frank and Yola Pierre have also argued that the policy should be reformed to name Yola Pierre as an insured. The parties agree that there is no entrenched federal admiralty doctrine on the issue of reformation, and therefore, that state law should apply. The parties further agree that the choice of law provision in the policy dictates that New York law governs the dispute on this issue. Under New York law, the key requirement to reformation is that the requested additional terms "restate the intended terms of the agreement when the writing that memorializes that agreement is at variance with the intent of both parties." In re McLean Indus., Inc., v. United States Line (S.A.), Inc., 132 B.R. 271, 277 (Bankr. S.D.N.Y. 1991); see also Bryce v. The Lorillard Fire Ins. Co., 1873 WL 9258 (N.Y.) (holding that, in the absence of fraud by one party, the "mistake which will warrant a court of equity to reform a contract in writing must be one made by both parties to the agreement, so that the intentions of neither are expressed in it").
Accordingly, the insurance policy may be reformed to include the name of Yola Pierre only if Frank and Yola Pierre have produced sufficient evidence to show that (1) a mutual mistake was made when Frank Pierre's name was put on the insurance application, and (2) both the Pierres and AXA's true intent was for Yola Pierre to be the insured. See In re McLean Industries, 132 B.R. at 277; Bryce, 1873 WL 9258. Otherwise, summary judgment will be granted on this limited issue. Frank and Yola Pierre have claimed that it was their intention and the intention of AXA to insure the vessel "The Four of Us," and not a specific insured. In support of this argument the Pierres point out that the application did not inquire who the owner of the vessel was. See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). Rather, the application asked the name of the insured on the first page and the name of the operator on the second page. See id. However, the Pierres have produced absolutely no evidence of mutual mistake in naming Frank Pierre as "the insured" on the first page of the application, and more importantly, have produced no evidence that AXA intended Yola Pierre to be named as an insured under the policy. Accordingly, the Court finds that, as a mater of law, the policy cannot be rewritten or reformed to include Yola Pierre as an insured.
The case cited by the Pierres, McCoubray v. St Paul Fire Marine Insurance Co., 64 N.Y.S. 112 (N.Y.App.Div. 1900), does not require a different result. In McCoubray, the Court had before it evidence of mutual mistake by the agent of the insurer and the insured. Id. at 113. No such evidence was produced in the case at bar.
Furthermore, because the contract cannot be reformed to name Yola Pierre as an insured, and because no evidence has been introduced capable of showing that she was an intended third party beneficiary of the insurance contract, Yola Pierre has no standing to sue or be sued under the policy. Therefore, summary judgment must be granted in favor of AXA and against Yola Pierre on the counterclaims she has brought against AXA. III. Material Misrepresentations and Omissions
Notably, a motion to dismiss Yola Pierre's counterclaim was filed before this summary judgment motion was filed. This holding, of course, also disposes of the motion to dismiss.
Third, and finally, AXA has alleged that certain misrepresentations and omissions committed by Frank Pierre in his application for insurance void the policy. Specifically, AXA alleges that Frank Pierre misrepresented or failed to disclose accurate information on the following material facts: (1) ownership of the vessel; (2) storage location of the vessel; (3) use of crew on the vessel; (4) prior insurance claims on the vessel; and (5) non-renewal of the prior insurance policy on the vessel.
The parties agree that the doctrine of uberrimae fidei governs this dispute. In addition, the Eleventh Circuit has noted that "it is well-settled that the marine insurance doctrine of uberrimae fidei is the controlling law of this circuit." HIH Marine Services, Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000). The doctrine of uberrimae fidei requires that an insured "fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk." Id. at 1362. This duty to disclose "extends to those material facts not directly inquired into by the insurer." Id.
Furthermore, a material misrepresentation or omission on the policy application is grounds for voiding the policy. See id. at 1363. This "heavy burden on marine insurance applicants" is rationalized by the fact that the underwriter "often has no practicable means of verifying the accuracy or sufficiency of facts supplied by the applicant." Northfield Ins. Co. v. Barlow, 983 F. Supp. 1376, 1380 (N.D. Fla. 1997).
Notably, a party's intent to conceal, or lack thereof, is irrelevant to the uberrimae fidei analysis. See Gulfstream Cargo, Ltd v. Reliance Ins. Co., 409 F.2d 974, 981 (5th Cir. 1969) (noting that a material misrepresentation or omission voids a policy even if the failure arose from "mistake, accident, or forgetfulness"). Rather, the key issue in this inquiry is whether the fact misrepresented or omitted was material. A misrepresentation or omission will be considered material only if "it might have a bearing on the risk to be assumed by the insurer." HIH Marine Services, Inc. v. Fraser, 211 F.3d 1359, 1362 (2000).
Courts in other circuits have sensibly noted that the "standard for disclosure is an objective one, that is, whether a reasonable person in the assured's position would know that the particular fact is material." Albany Ins. Co. v. Horak, 1993 WL 269620 (E.D. N.Y. 1993); see also North Am. Specialty Ins. Co. v. Bader, 58 F. Supp.2d 493, 499 (D. N.J. 1999). Because this "reasonable applicant" standard has not been expressly used in this circuit, the Court has not applied this standard.
However, the Court pauses to note that its adoption in this Circuit would greatly clarify the uberrimae fidei analysis. The current Eleventh Circuit standard, which requires disclosure of any fact that might have a bearing on the risk to be assumed by the insurer, demands of the insured a certain expertise in the field of insurance risk. Such expertise cannot be expected of the ordinary insurance applicant. Therefore, the "reasonable applicant" standard, which requires disclosure only where a reasonable person in the insured's position would know that the particular fact is material, distributes the burdens of the insurance relationship more equitably.
Accordingly, the issue presented by this action is whether the alleged misrepresentations and omissions committed by Frank Pierre in his insurance application were material to AXA's risk and decision to insure. A finding that even one misrepresented or omitted fact might have affected AXA's decision to insure will void the policy. of course, however, the materiality determination must be based only on those record facts that are not genuinely disputed. Genuine issues of fact on the materiality issue will preclude the entry of summary judgment. See International Ship Repair and Marine Services, Inc. v. St. Paul Fire and Marine Ins. Co., 922 F. Supp. 577, 580 (M.D. Fla. 1996) (finding that material issues of fact precluded summary judgment on the issue of whether an insured complied with the disclosure requirements of uberrimae fidei). Each alleged misrepresentation and omission will be addressed in turn. a. Ownership of the Vessel
Notably, the terms of the policy are identical to the requirements under the doctrine of uberrimae fidei. Specifically, the policy provides: "Any misrepresentation in this application for Insurance, will render insurance coverage null and void from inception. Please therefore check to make sure that all questions have been fully answered and that all facts material to your insurance have been disclosed, if necessary by supplement to the application." See Plaintiffs Summary Judgment Motion, Ex. A at 2 (Yacht Application).
First, AXA claims that Frank Pierre did not disclose the fact that his wife Yola Pierre was the true owner of the vessel. If Pierre did misrepresent or omit this ownership information, and if this information was material to AXA's risk, AXA would be entitled to summary judgment in its favor. See HIH Marine Services, Inc., 211 F.3d at 1362. However, genuine issues of fact preclude summary judgment on this issue.
As discussed above, the application requested the name of the insured on the first page, and the name of the operator on the second page. See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). In response to both questions, Frank Pierre accurately supplied his own name. See id. Notably, the application never directly asked who the owner of the vessel was. See id. Therefore, Frank Pierre did not misrepresent the ownership of the vessel on the application.
However, AXA accurately argues that, if the ownership information was material to the decision to insure, Frank Pierre was obligated to disclose the information irrespective of whether it was requested on the application. See HIH Marine Services, Inc., 211 F.3d at 1362. Nevertheless, AXA has produced no specific evidence that Yola Pierre's ownership of the vessel materially altered the risk of insuring the vessel or might have affected its decision to insure. While AXA's underwriter did testify in an affidavit that "he would not have issued the policy to Pierre for a vessel owned by his wife," this statement is conclusory. See Plaintiffs Summary Judgment Motion, Ex. I at 2 (Affidavit of B. A. Usher). It is well-established that "conclusory allegations without specific supporting facts have no probative value." Evers v. General Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985). For example, in Evers, the court held that an affidavit filed by plaintiffs that contained only conclusory statements by their expert did not create a genuine issue of material fact that would preclude the entry of summary judgment in favor of defendants. Id. Likewise, a conclusory statement directed at eliminating a genuine issue of material fact, as in the present case, is not sufficient to warrant the entry of summary judgment. Id.
Furthermore, the materiality of ownership is particularly questionable where, as here, the vessel was owned by the spouse of the insured, and the insured was the only operator of the vessel. See Plaintiffs Summary Judgment Motion, Ex. B at 17, 59 (Deposition of Frank Pierre). Therefore, in the absence of specific supporting evidence showing that Yola Pierre's ownership of the vessel increased the risk to AXA and might have affected AXA's decision to insure the vessel, the Court is not persuaded that Pierre's failure to disclose that his wife owned the vessel is a material omission that voids the policy as a matter of law. b. Storage Location of the Vessel
In support of its position that ownership information is material to the decision to insure, AXA cites the Ninth Circuit case Cigna Property and Casualty Insurance Co. v. Polaris Pictures Corp., 159 F.3d 412, 422 (9th Cir. 1998), cert. denied, 120 S.Ct. 53 (11th Cir. 1999). This case is clearly distinguishable from the case at bar. In Cigna, the court held that an insurance policy on a yacht was void because the named insured, a corporation, failed to disclose one individual's ownership interest in the insured yacht, and that individual's loss history. However, the individual whose ownership interest was not disclosed had been involved in the total loss of three other yachts on prior occasions under suspicious circumstances, a background the court described as "rather incredible." Id. at 416. Furthermore, the district court found that the unusual corporate ownership and insurance arrangement was devised for the purpose of "distancing" that individual from the corporation's acquisition of the yacht. Id. In contrast, there is no evidence in the case at bar that the Pierres had any reason to conceal Yola Pierre's ownership interest in the vessel, or that it might have affected the decision to insure.
Second, AXA alleges that Frank Pierre did not disclose that the vessel would be stored part of the year at his second home in Islamorada, Florida rather than at his primary home in Miami Beach, Florida. If Pierre did misrepresent or omit this location information, and if this information was material as a matter of law, AXA would be entitled to summary judgment in its favor. See HIH Marine Services, Inc., 211 F.3d at 1362. However, issues of material fact preclude the Court from concluding that this location information was material.
Unlike the ownership information, the application did ask where the vessel would be stored, and Frank Pierre's answer was "residence." See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). This is not necessarily a misrepresentation, as both his Islamorada home and his Miami Beach home could be considered his "residences." Furthermore, the answer does accurately indicate that the storage would be at a private home, rather than at a commercial marina. However, when asked his mailing address, Pierre supplied his Miami Beach address. See id. at 1. Pierre made no mention of the Islamorada residence on his insurance application. See id.
Therefore, the relevant question is whether Pierre's failure to disclose that the vessel would sometimes be stored at his Islamorada residence was a material omission that requires the voiding of the policy. In support of its position that a failure to disclose the correct storage location of a vessel is a material omission, AXA cites the case AXA Global Risks (UK), Ltd v. Webb, 2000 AMC 2679 (M.D. Fla. 2000). However, this case is clearly distinguishable. In AXA Global Risks, the insured had warranted that the vessel would be stored "on shore," but the vessel sank while docked in the water at the insured's home. Id. at 2. That a vessel is more likely to sink when docked in water than when stored on dry land is apparent to even the most novice boater.
It is not so obvious, however, that storing a vessel at a home in Islamorada is riskier than storing a vessel at a home in Miami Beach. The comparative risk determination would likely require a careful analysis of crime rates of the two locations, the dock quality, the boating traffic, and the average weather conditions, including the likelihood of being subjected to hurricanes and tropical storms in each location — none of which are obviously different. Therefore, in the absence of any direct evidence that knowledge of the Islamorada storage might have affected AXA's decision to insure, the Court is not persuaded that the omission was material.
c. Use of Crew on the Vessel
Third, AXA alleges that Frank Pierre did not disclose that he would sometimes employ a "paid crew" on the vessel. If Pierre did misrepresent or omit this ownership information, and if this information was material as a matter of law, AXA would be entitled to summary judgment in its favor. See HIH Marine Services, Inc., 211 F.3d at 1362. However, issues of material fact preclude the Court from concluding that AXA is entitled to summary judgment on this issue.
The question on the application was whether the applicant employs "a paid crew." See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). Frank Pierre answered this question in the negative. See id., AXA argues that this was a misrepresentation because Pierre admitted that he sometimes hired navigational guides. Specifically, Pierre testified, "I run the boat myself, and when I'm fishing, I usually get one of those guides, you know, that tell you where the fish are, and I always get a guide with me. it's very messy, you know. They put their hands in the bait, and give them a couple fish after, in the bill, and that's all, they are happy." Plaintiffs Summary Judgment Motion, Ex. B at 23-24, 58 (Deposition of Frank Pierre). These facts present two issues. The first issue is whether Pierre's navigational guides are "crew members." If so, his answer on the application was a misrepresentation. The second issue is whether Pierre's use of navigational guides might have affected AXA's decision to insure the vessel, such that its omission voids the policy.
In Fireman's Fund Insurance Company v. Cox, 742 F. Supp. 609 (M.D. Fla. 1989), a court found that an insurance policy's use of the term "crewmember" was not ambiguous even though it was not defined by the contract, and that a "commonly accepted definition of crew" was "those who are on board and aiding in the navigation without reference to the nature of the arrangement under which they are on board." Id. at 610. This definition arguably includes the navigational guides hired by Pierre. However, even if Pierre's answer to the question was a misrepresentation, it will not void the policy under the doctrine of uberrimae fidei unless the misrepresentation was material.
Accordingly, the Court turns to the second issue, whether Pierre's use of navigational guides would have been material to AXA's decision to insure the vessel. Again, AXA refers to the Fireman's Fund case for the proposition that "the presence of hired crew increases the hazard insured against." See Plaintiffs Summary Judgment Motion at 9. While this could be a fair description of the Fireman's Fund holding when painted with only the broadest brush strokes, a more detailed picture reveals that Fireman's Fund is in fact not so analogous to the case at bar. In Fireman's Fund, the policy provided that the insurance would be void if the number of crew members on board the vessel exceeded three. Fireman's Fund Ins Co., 742 F. Supp. at 610. The vessel was ultimately lost as a result of a mutiny that occurred when four or five crew members were on board the vessel. Id. The court concluded that the number of crew members was material to the risk because the presence of additional crew members increased the risk of loss from mutiny over and above that which the insurer had agreed to insure. Id. at 611.
Unlike Fireman's Fund, there is no evidence that mutiny was the risk sought to be avoided by the question about crew members. Indeed, this is particularly unlikely given that Pierre's use of the vessel was limited to United States Coastal Waterways. See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). Furthermore, and more importantly, there is no specific evidence that Pierre's occasional use of navigational aides would have increased AXA's risk or affected AXA's decision to insure the vessel. Therefore, the Court is not persuaded that Pierre's use of navigational guides is a material misrepresentation or omission that voids the policy as a matter of law.
d. Prior Insurance Claims on the Vessel
Fourth, AXA alleges that Frank Pierre did not disclose two prior insurance claims he made on the vessel. If Pierre did misrepresent or omit these prior claims, and if this information was material as a mailer of law, AXA would be entitled to summary judgment in its favor. See HIH Marine Services, Inc., 211 F.3d at 1362. However, AXA has not provided the Court with sufficient evidence for the Court to find that the omissions are material as a matter of law.
The application asked whether "any operator [was] involved in a marine loss in the last 10 years (insured or not)." See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). Pierre answered this question in the negative. However, while investigating the claim, AXA discovered that two prior insurance claims had in fact been made on the vessel. First, Pierre had filed an insurance claim for partial flooding of the vessel during Hurricane Georges in 1998, and that this claim resulted in a law suit against the previous underwriters. See Plaintiffs Summary Judgment Motion, Ex. B at 20-22, 33-34, 59-60 (Deposition of Frank Pierre). Second, Pierre had filed an insurance claim for a burglary of the vessel when the vessel was moored behind Pierre's Miami Beach residence. See id. at 25-29, 59-60.
Pierre claims that he understood the application question to be directed at whether he, as an operator, was involved in a marine loss, and therefore, concluded that these prior losses, which involved only the vessel, were not covered by the question. AXA contends that the question was directed at whether the operator or the vessel had been involved in a marine loss. The application question is, at best, ambiguous, and could certainly be interpreted as Pierre did. Furthermore, all ambiguities must be interpreted strictly against the insured. See Fireman's Fund Ins. Co. v. Tropical Shipping and Constr. Co., 254 F.3d 987, 1003 (11th Cir. 2001) ("We examine the language of the policy in its entirety, construing any ambiguity against the insurer."). Therefore, the Court is not persuaded that Pierre committed a misrepresentation on his application.
AXA has also argued that the prior losses breach the warranty on the cover sheet of the policy that there were "no known or reported losses as at 13th July 1999." See Plaintiffs Summary Judgment Motion, Ex. C (Cover Note). However, this warranty must be interpreted with reference to the question asked on the application, which, as noted, inquired only whether any operator was involved in a marine loss. See Burton v. State Farm Fire and Casualty Co., 533 F.2d 177, 179 (5th Cir. 1976) (holding that in construing an insurance policy, "courts are not to read one term alone, but must consider each term or provision in context with the other provisions of the policy"). Therefore, for the purposes of this motion, the Court is not persuaded that the prior losses necessarily breached the warranty.
Nonetheless, if either of the two prior claims on the vessel was material to AXA's risk, Pierre was obligated to disclose the claim regardless of what question was asked on the application. Therefore, the relevant inquiry under the doctrine of uberrimae fidei is whether these prior losses materially altered AXA's risk, or might have affected AXA's decision to insure the vessel. AXA has filed the affidavit of its underwriter, who testified, "I never would have accepted the risk and never would have agreed to underwrite the subject policy had I been informed by Pierre that he had had a prior marine loss (with resulting litigation) against his previous underwriter who subsequently non-renewed his policy." See Plaintiff's Summary Judgment Motion, Ex. I at 2 (Affidavit of B. A. Usher).
This underwriter's statement, without other evidence, is insufficient for two reasons. First, the underwriter's statement is tied to the non-renewal, which will be discussed in the next section. Notably, the underwriter stopped short of testifying that the prior losses alone would have affected his decision to insure the vessel. Second, and more importantly, the underwriter's statement is conclusory. After-the-fact, conclusory statements by the insurer that a certain fact was material and would have affected its decision to insure are simply not adequate grounds upon which the Court can conclude that an omitted fact was material. See Evers, 770 F.2d at 986. Unless the materiality of the omitted fact is patently obvious — such as the fact that a vessel is not seaworthy — the insurer must provide some specific evidence capable of showing the omitted fact's materiality.
See, e.g., Gulfstream Cargo, Ltd v. Reliance Ins. Co., 409 F.2d 974 (5th Cir. 1969) (holding that policy was void because of failure to disclose "spectacular unseaworthiness" of vessel).
In further support of its argument that prior losses are invariably material, AXA cites All Underwriters at Lloyd's (London) Subscribing to Policy No. 200-451-7275 v. Kenney, 986 F. Supp. 1384 (S.D. Fla. 1997), aff'd by 144 F.3d 56 (11th Cir. 1998). In All Underwriters, the insured wrote on his application that the vessel had suffered "theft loss of engines," but failed to disclose that, on another occasion, he had suffered a loss of his entire boat. Id. at 1385-86. The court found that this omission of prior loss history was material, and therefore, that the insurer was entitled to summary judgment. Id. Notably, the court did not discuss what evidence was before it that supported the finding of materiality. Id. It is possible that the court concluded that prior loss of an entire vessel would always, as a matter of law, be material and that additional evidence of materiality need not be submitted. Regardless, theft of fishing gear from a vessel and interior water damage from a hurricane are less obviously material than the prior loss of an entire vessel. Accordingly, without supporting evidence of materiality, the Court is not willing to conclude that the prior losses were material to AXA's risk.
Indeed, AXA has provided no evidence showing that prior flood damage from a hurricane or a prior burglary of the vessel materially affected its risk. In fact, the evidence now before the Court points to the contrary. Pierre testified that the damage from Hurricane Georges was simply interior water damage. See Plaintiffs Summary Judgment Motion, Ex. B at 20-22, 33-34, 59-60 (Deposition of Frank Pierre). There is no evidence on the record that interior water damage to upholstery and electronics, all of which were replaced, has a long term impact on the risk to a vessel. In addition, there is no evidence that a vessel's having been subject to interior water damage in the past makes it more likely to be subject to interior water damage in the future. Without such evidence, the Court cannot conclude that the prior loss from Hurricane Georges was material to AXA's risk or might have affected AXA's decision to insure.
Similarly, there is no evidence on the record that the prior burglary claim was material to AXA's risk or might have affected AXA's decision to insure. The burglary was of fishing gear and tackle that had been stored on the vessel. See id. at 25-29, 59-60. This theft was covered by, and recovered from, Pierre's homeowner's policy, not his maritime insurance policy. See id. Therefore, the Court has no basis on which to conclude that the burglary materially affected the risk of AXA, the subsequent maritime insurer, or that it might have affected AXA's decision to insure. of course, at trial AXA will be free to present evidence that these prior losses did materially affect its risk. However, the evidence now before the Court is not sufficient to warrant summary judgment on these claims.
e. Non-Renewal of the Prior Insurance Policy on the Vessel
Fifth, and most importantly, AXA alleges that Frank Pierre failed to disclose that his previous insurer had refused to renew his policy on the vessel. If Pierre did misrepresent or omit this fact, and if this information was material, AXA would be entitled to summary judgment in its favor. See HIH Marine Services, Inc., 211 F.3d at 1362. For the purposes of this summary judgment motion only, AXA has not provided the Court with enough evidence for the Court to conclude that the non-renewal was material.
The application asks whether "any coverage [was] declined, cancelled or non-renewed during the last 5 years." See Plaintiffs Summary Judgment Motion, Ex. A (Yacht Application). Pierre responded in the negative. See id. However, at that time, he had already received a letter from his prior insurer indicating that "they will not be offering renewal terms due to the two claims you have recently had." See Plaintiffs Summary Judgment Motion, Ex. H (Letter from Seacoast Marine Insurance). Pierre argues that he applied for insurance with AXA before his prior insurance expired, and therefore, before the insurance was technically "non-renewed." According to Pierre, this future non-renewal was not covered by the question, which asked if there had been a non-renewal "during the last 5 years."
While arguably accurate grammatically, Pierre's highly technical interpretation of this question could certainly be viewed as evasive, or even duplicitous. However, as noted above, intent to conceal is irrelevant to the uberrimae fidei analysis. See Gulfstream Cargo, Ltd, 409 F.2d at 981. Under the uberrimae fidei doctrine, the insurance policy will be voided only if the prior non-renewal was material to the risk undertaken by AXA and might have affected AXA's decision to insure. See HIH Marine Services, Inc., 211 F.3d at 1362. Moreover, if the non-renewal was material, Pierre was of course obligated to disclose that fact regardless of what the question on the application asked. See id.
As noted above, AXA's underwriter testified, "I never would have accepted the risk and never would have agreed to underwrite the subject policy had I been informed by Pierre that he had had a prior marine loss (with resulting litigation) against his previous underwriter who subsequently non-renewed his policy." See Plaintiffs Summary Judgment Motion, Ex. I at 2 (Affidavit of B. A. Usher). However, the underwriter does not explain why this non-renewal would have affected his decision to insure. See id. This affidavit by the underwriter is the only evidence offered by AXA in support of its position that the non-renewal was material. As already discussed, the Court is unwilling to grant summary judgment on the basis of a conclusory after-the-fact statement by the insurer. See Evers, 770 F.2d at 986.
Importantly, if this Court were to grant summary judgment for AXA on this basis, it would have to conclude that a prior non-renewal is always, as a matter of law, material to the insurance risk, regardless of the circumstances surrounding the non-renewal. In support of this position, AXA has cited Albany Insurance Co. v. Horak, 1993 WL 269620 (E.D. N.Y. 1993). In that case, the court granted summary judgment to the insurer on the basis of certain omissions from the insurance application. While the court did provide some discussion of the materiality of a prior, non-disclosed insurance cancellation, the court ultimately based its decision on the insured's failure to disclose "the vessel's price and its prior loss history." Id. at 9. This Court is unwilling to conclude, only on the basis of that court's dicta, that a prior non-renewal of insurance coverage is always, as a mailer of law, material to the insurance risk.
As a policy mailer, it may be that prior non-renewals or cancellations of coverage should generally be considered material to the insurance risk. For instance, as noted in Albany Insurance, an insured providing virtually the same coverage as a prior insurer may not want to take on the risk without at least investigating the prior cancellation, and the insurer should be afforded the opportunity to do so. Id. at 8. However, pursuant to the uberrimae fidei doctrine, a policy is voided only if the omitted fact is actually material to the risk undertaken or might actually have affected the decision to insure. See HIH Marine Services, Inc., 211 F.3d at 1362. And, of course, a materiality determination cannot be made by the court without reference to the circumstances surrounding the non-renewal.
Because there is no specific evidence before the Court as to the materiality of the prior insurer's non-renewal, AXA is not entitled to summary judgment on this issue. Notably, this issue could well prove decisive at trial if the underwriter provides a credible explanation of why the specific prior non-renewal at issue was material to AXA's risk and might have affected his decision to insure. Likewise, however, if Pierre presents compelling evidence at trial that the prior non-renewal was not material to AXA's risk, and would not have affected the underwriter's decision to insure, then Pierre could prevail at trial. Pierre, therefore, should be given an opportunity to present such evidence. See All Underwriters at Lloyd's (London) Subscribing to Policy No. 200-451-7275, 986 F. Supp. at 1385 (noting that a court "should not grant summary judgment unless it is clear that a trial is unnecessary, . . . and any doubts in this regard should be resolved against the moving party") (internal citations omitted).
D. Conclusion
Based on the foregoing, it is ORDERED AN]) ADJUDGED that Plaintiffs Motion for Summary Judgment be GRANTED in part, and DENIED in part, as follows:
1. Summary Judgment is DENIED on the issue of whether Frank Pierre had an insurable interest in the vessel.
2. Summary Judgment is GRANTED to Plaintiff/Counter-Defendant AXA and against Yola Pierre only on Yola Pierre's Counterclaim.
3. Summary judgment is DENIED on the issue of whether Frank Pierre made material misrepresentations or omissions in the insurance application.