Shipbuilder Denied Coverage as Third-Party Beneficiary Under Architects and Engineers Liability Policy

Atlantic Marine Florida, LLC v. Evanston Ins. Co. (Eleventh Cir., Dec 24, 2014)

The U.S. Court of Appeals for the Eleventh Circuit reversed a lower court judgment that found a shipbuilder to be a thirdparty beneficiary under an architects and engineers professional liability policy (“A&E policy”) issued to the designer of a passenger vessel. The primary issue was whether the endorsements in the A&E policy obligated the insurer to defend and indemnify the builder in a related wrongful death action based on a negligent design theory. Reversing the lower court’s decision, the Eleventh Circuit held that they did not because it would place the insurer in a conflict of interest situation — i.e., it would force the insurer to separately finance the claims and cross-claims of both parties against each other, which the insurer could not have intended when the policy was issued.