Major Coverage Victory For National Pollution Insurer
Our client insured the barge Cynthia M for pollution liabilities. The Cynthia M sank at its dock on the Hackensack River in New Jersey, laden with a cargo of caustic soda which could have discharged into the river and the surrounding wetlands. At the Coast Guard’s direction, the owner salvaged the barge carefully, avoiding any pollution incident, and then sent the bill to their Hull & Machinery underwriter, Global Insurance. This company became insolvent. The owner then sued both Global and WQIS for reimbursement. After a bench trial, the district court found for WQIS, accepting our points that the salvage was ordered to prevent a threat to navigation on a busy waterway, the threat of pollution had been abated by sealing the Cynthia M’s tanks and valves, and that the cost of salvage is the obligation of the hull underwriter, not the pollution insurer. The Third Circuit affirmed. WQIS continues to cite this landmark opinion throughout the Country, and uses it to support the premium for an ancillary coverage, made available to its policyholders, for salvage of a vessel involved in a pollution incident. The findings of this case, in our favor, has saved millions of dollars for our client.
Barge Cynthia M. Kearny Barge Co., Inc. v. Global Insurance Co., 943 F.Supp. 441, 1997 A.M.C. 715 (D.N.J. 1996), aff’d, 127 F.3d 1095 (3d Cir. 1997)
Third Circuit Rules That Local Trucker’s Excess Coverage is Primary, Ocean Carrier’s Coverage is Secondary
Our client, a containerized ocean carrier, retained us to protect it from a $1,000,000 insurance coverage lawsuit by a trucker’s excess insurer. The suit followed a 3 million-dollar settlement of a truck accident case in California. The ocean carrier’s only connection to the case was the fact that the truck was hauling an intermodal container and chassis belonging to the client, at the time of the accident. The trucker’s primary insurer agreed to defend and indemnify our client, and paid its $1,000,000 policy limit as part of the settlement. In a creative settlement agreement, Landmark American agreed that it would pay the remaining $2,000,000 one year later, after pursuing “other insurance” from our client and its own insurer, a unit of AIG. The client’s policy had a $1,000,000 policy limit, subject to a $1,000,000 deductible. Landmark asserted that the policy extended to the trucker (its insured), and that the deductible was “insurance,” too. If so, our ocean carrier client would face a $1,000,000 liability. We argued that the deductible does not constitute “other insurance” under New Jersey law (where suit was brought) or California law (where the operative facts arose). We also argued that the indemnity provision in the equipment interchange agreement with the trucker bound all of the trucker’s insurers, primary and excess. Finally, we argued that the trucker’s excess insurance was primary in relation to the ocean carrier’s own policy. The Third Circuit Court of Appeals agreed (also finding that another insurer sued by Landmark, United National, had no coverage at all). The Court, applying California law, ruled that Landmark’s policy was primary to our client’s coverage. Since that policy’s limit was ample to pay the judgment, our client and its insurer, AIG paid nothing. Landmark had to pay the full $2,000,000 remaining in the settlement agreement.
Landmark American Ins. Co. v. United National Ins. Co., et al., etc., (3rd Cir. 1999)
Enterprising Pakistani Fails in Attempt to Recoup Future Business Losses From Shipping Interests
Syed Shah freely testified that he had twice entered the United States illegally from Pakistan, via Mexico, and created a life for himself here. Not content with the menial jobs he held for a few years, Shah went into the used car exporting business. He had one customer, a sheik in Dubai who agreed to purchase two or three Jeep Grand Cherokee vehicles per month for his auto dealership, for 30 years, if Shah could just demonstrate his reliability. Shah bought his first (and only) three Jeeps from an auto auction, and on the very first shipment, a Customs hold delayed the shipment from New York to Dubai. The Jeeps arrived one month late, the sheik refused delivery, and the oral contract was cancelled, according to Mr. Shah. Shah then sued his transportation broker, the intermediary NVOCC (our client), the ocean carrier, and the ocean terminal in New York, for $1.5 Million, the projected thirty-year loss of profits to Mr. Shah. The federal court in New Jersey was not impressed with Shah’s case, which was ultimately settled for a very small figure. Our client contributed 5 percent of the settlement, less than the cost of a day of trial. We never heard from the sheik in Dubai.
Syed Enterprises v. Sea Shipping Line, U.S. District Court, District of New Jersey, 2004