Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-02699/USCOURTS-cand-5_14-cv-02699-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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Case No. 5:14-02699-PSG

ORDER DENYING MOTION FOR SUMMARY JUDGMENT 

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

NANOLAB TECHNOLOGIES, INC., 

 Plaintiff,

 v. 

ROANOKE CLAIMS SERVICES, INC., et al., 

 Defendants. 

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Case No. 5:14-cv-02699-PSG

ORDER DENYING MOTION FOR 

SUMMARY JUDGMENT 

(Re: Docket No. 41) 

This is a case about the international journey of a spectrometer and who is financially 

responsible for paying for the damage it suffered along the way. Defendant Certain Underwriters 

at Lloyd’s moves for summary judgment on the basis that Plaintiff Nanolab Technologies, Inc.’s 

conduct indisputably allows for complete rescission of the insurance contract. Because the court is 

convinced that genuine issues of material fact remain, the motion is DENIED. 

I.

In early 2014, Nanolab purchased a spectrometer from a university in Mexico City.1

 

Nanolab engaged D.T. Gruelle, a freight forwarding company, who had a preexisting Marine Open 

Cargo Policy with Underwriters.2 In February, Underwriters issued a Certificate of Insurance 

 

1 See Docket No. 41-2 at 27:6-19; Docket No. 41-4 at 26:4-9. 

2 See Docket No. 41-10. 

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Case No. 5:14-02699-PSG

ORDER DENYING MOTION FOR SUMMARY JUDGMENT 

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United States District Court

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insuring Nanolab for transportation of the IMS system from Mexico City to Milpitas, California.3 

Nanolab sent its director Ming Hong Yang to Mexico to inspect the spectrometer and assist with its 

packing.4 Because of the university’s loading dock constraints, D.T. Gruelle arranged to have a 

small, non-air-ride van transport the spectrometer from the university to the outskirts of Mexico 

City, where it was transferred to an air-ride truck.5 Upon arrival in Milpitas, Nanolab noted that 

the spectrometer had been damaged at some point during the journey.6 Even after repair, the 

spectrometer only regained marginal operation.7 

This suit followed. Nanolab alleges breach of contract against Underwriters and seeks 

payment under the insurance policy.8

II.

This court has jurisdiction under 28 U.S.C. § 1331. The parties further consent to the 

jurisdiction of the undersigned under 28 U.S.C. § 636(c) and Fed. R. Civ. P. 72(a). 

Pursuant to Fed. R. Civ. P. 56(a), summary judgment is appropriate when “there is no 

genuine issue as to any material fact and the moving party is entitled to judgment as a matter of 

law.” Material facts are those that may affect the outcome of the case.9 A dispute as to a material 

fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the 

non-moving party.10 All evidence must be viewed in the light most favorable to the non-moving 

 

3 See Docket No. 41-11. 

4 See Docket No. 41-5 at 47:1-49:21, 60:23-61:8, 165:17-172:7. 

5 See id. at 186:3-194:23; Docket No. 41-11. 

6 See Docket No. 41-2 at 89:23-91:16; Docket No. 41-4. 

7 See Docket No. 45-3 at 51:2-52:18, 53:2-22. 

8 See Docket No. 1-3. 

9 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Only disputes over facts that 

may affect the outcome of the suit under governing law will properly preclude the entry of 

summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.”). 

10 See id.

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Case No. 5:14-02699-PSG

ORDER DENYING MOTION FOR SUMMARY JUDGMENT 

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party. At this stage, a court “does not assess credibility or weigh the evidence, but simply 

determines whether there is a genuine factual issue for trial.”11 Initially, the moving party bears the 

burden to show that no genuine issue of material fact exists.12 If this burden is met, the burden 

shifts to the non-moving party.

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III. 

First, Underwriters seeks summary judgment on Nanolab’s breach of contract claim based 

on the doctrine of uberrimae fidei14 which, Underwriters argues provides for complete rescission of 

the underlying contract. “The doctrine of uberrimae fidei requires a marine insurance applicant 

even if not asked, to reveal every fact within his/her knowledge that is material to the risk.”15 

Essential to this dispute, then, is whether the insurance contract at issue is properly considered a 

marine insurance contract for the purposes of uberrimae fidei. Nanolab argues that marine 

insurance can only insure against losses that are “specifically maritime in character”16 and that 

because the entire journey at issue occurred over land by truck, the contract cannot possibly be a 

 

11 House v. Bell, 547 U.S.518, 559-60 (2006). 

12 See Celotex Corp. v. Caltrett, 477 U.S. 317, 323-24 (1986). 

13 See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 630, 630 (9th Cir. 1987). 

14 Nanolab objects to the late introduction of the uberrimae fidei defense because it was never 

pleaded in Underwriters’ answer. Underwriters contends that it was not aware of the facts 

substantiating the defense until earlier this year and could not have pleaded it any earlier. Nanolab

further objects that allowing such a defense at this late stage in the case is unduly prejudicial 

because Nanolab would have taken discovery into the underwriting process had it known about the 

defense. But the court finds that all discovery relevant to uberrimae fidei is encompassed by the 

concealment defense, which was timely pleaded. As such, and without more specificity as to

exactly what discovery Nanolab would have taken if the new defense had been pleaded earlier, the 

court finds that excluding the defense is unnecessary. To the extent that the court needs to consider 

leave to amend Underwriters’ affirmative defenses to add uberrimae fidei, leave is GRANTED.

15 Certain Underwriters at Lloyd’s, London v. Inlet Fisheries, Inc., 518 F.3d 645, 655 (9th Cir. 

2008) (citation omitted) (emphasis in original); see Cal. Ins. Code § 1900 (“In marine insurance, 

each party is bound to communicate . . . (a) All the information which he possesses and which is 

material to the risk . . . (b) The exact and whole truth in relation to all matters that he represents or, 

upon inquiry assumes to disclose.”); Certain Underwriters at Lloyds v. Montford, 52 F.3d 219, 222 

(9th Cir. 1995) (“[T]he insured is bound, even if not asked, to reveal every fact within his/her 

knowledge that is material to the risk.”).

16 Inlet Fisheries, Inc., 518 F.3d at 654. 

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ORDER DENYING MOTION FOR SUMMARY JUDGMENT 

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marine contract. But under California law, marine insurance specifically contemplates the 

transportation of all goods “in connection with any and all risks or perils of navigation, transit, or 

transportation, including war risks, on or under any seas or other waters, on land or in the air.”17 

By the plain language of the statute, there can be no question that transportation over land is 

covered in a marine insurance contract. And by virtue of the policy itself, which is titled “Marine 

Open Cargo Policy,” Nanolab cannot make a colorable argue that it was not on notice of the fact 

that marine insurance would apply.18

That being said, the court finds that there is a genuine question of material fact as to 

whether Nanolab violated its duty under uberrimae fidei that should properly be decided by a jury. 

Under uberrimae fidei, the insurer may rescind the insurance contract “if it can show either 

intentional misrepresentation of a fact, regardless of materiality, or nondisclosure of a fact material 

to the risk, regardless of intent.”19 To be material, the fact “must be something which would have 

 

17 Cal. Ins. Code § 103: 

Marine insurance includes insurance against any and all kinds of loss of or damage to: 

(a) Vessels, craft, aircraft, cars, automobiles and vehicles of every kind (excluding aircraft 

and automobiles operating under their own power or while in storage not incidental to 

transportation), as well as all goods, freights, cargoes, merchandise, effects, disbursements, 

profits, money, bullion, securities, choses in action, evidences of debt, valuable papers, 

bottomry and respondentia interest and all other kinds of property, and interests therein, in 

respect to, appertaining to it in connection with any and all risks or perils of navigation, 

transit, or transportation, including war risks, on or under any seas or other waters, on land 

or in the air, or while being assembled, packed, crated, cabled, compressed or similarly 

prepared for shipment or while awaiting the same, or during any delays, storage, 

transshipment, or reshipment incident thereto including marine builder’s risks, and all 

personal property floater risks. 

(b) Person or to property in connection with or appertaining to a marine, inland marine, 

transit or transportation insurance including liability for loss of or damage arising out of or 

in connection with the construction, repair, maintenance or use of the subject matter of 

such insurance (but not including life insurance or surety bonds); but except as herein 

specified, shall not mean insurances against loss by reason of bodily injury to the person. 

Inland marine insurance shall be deemed to include hull insurance on water pleasure craft 

no used for commercial purposes of a size and type to be determined by the commissioner. 

18 See Docket No. 41-10. 

19 Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 420 (9th Cir. 1998) 

(internal quotation marks and citations omitted).

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controlled the underwriter’s decision to accept the risk.”20 If, but for the undisclosed fact, the 

insurer would not have underwritten the policy or disclosure of the fact would have affected the 

insurer’s decision to insure at a particular premium, the fact is material.21

Underwriters claims that by withholding the fact that the spectrometer would be transported 

across Mexico City in a non-air-ride van before it would be transferred to the disclosed air-ride 

truck with an ultimate destination of Milpitas, California, Nanolab violated its duty of disclosure. 

Underwriters argues that this information was essential to its decision about whether to insure the 

journey and at what rate. In other words, had Underwriters known about the use of a non-air-ride 

van, Underwriters may well have refused to issue a policy or would have varied the terms. 

The evidence in the record supports the notion that Nanolab was aware that two different 

trucks would be used to transport the spectrometer, that Underwriters did not learn of this until 

after the policy had been issued and that Underwriters did not learn until recently that Nanolab had 

long since known that more than one truck would be used on the journey. While a reasonable 

person could conclude that specific details of transport are material to an insurance contract, the 

record shows that Underwriters’ own insurance quote indicated nothing more specific than 

“truck.”22 There was no mention of an air-ride requirement or that only one truck could be used to 

complete the entire journey. Notably, the only requirement in the quote that was specific to the 

journey itself was that “whenever available, all haulers in Mexico are to utilize the toll road 

systems.”23 If Underwriters really needed to know more information in order to decide whether to 

insure the trip, a reasonable jury could conclude that they would not have been able to provide a 

 

20 Washington Int’l Ins. Co. v. Mellone, 773 F. Supp. 189, 191 (C.D. Cal. 1990). 

21 See Trinh v. Metro. Life Ins. Co., 894 F. Supp. 1368, 1372 (N.D. Cal. 1995); Inlet Fisheries, Inc., 

518 F.3d at 655. 

22 See Docket No. 46 at Exhs. A-C. The Certificate of Service and Marine Cargo Policy also lack

specific restrictions based on the number of trucks or the types of trucks used suggesting that this 

kind of information might not have been material to the underwriting process. See Docket Nos. 41-

10, 41-11. 

23 Docket No. 46 at Exh. C.

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