Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-14-01346/USCOURTS-ca2-14-01346-0/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 

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Nos.  14‐1346‐cv(L)       

Fireman’s Fund Ins. Co. et al. v. Great Am. Ins. Co. et al.

1 In the 

2 United States Court of Appeals 

3 For the Second Circuit 

4

5 August Term, 2014

6 Nos. 14‐1346‐cv(L)  

7 FIREMANʹS FUND INSURANCE COMPANY, ONE BEACON INSURANCE

8 COMPANY, NATIONAL LIABILITY AND FIRE INSURANCE COMPANY, QBE

9 MARINE & ENERGY SYNDICATE 1036,

10 Plaintiffs – Counterclaim‐Defendants – Appellants,

11 v.

12 GREAT AMERICAN INSURANCE COMPANY OF NEW YORK,

13 Defendant – Crossclaim‐Defendant –  

14 Counter‐Claimant – Appellee,

15

16 MAX SPECIALTY INSURANCE COMPANY,

17 Defendant – Crossclaim‐Defendant –  

18 Counter‐Claimant – Appellee,

19

20 v.

21

22 SIGNAL INTERNATIONAL, LLC,

23 Defendant – Crossclaim‐Defendant –  

Cross‐Claimant.

 24

25

                                              

 The Clerk of the Court is directed to amend the official caption to conform to

the above.  Signal International, LLC is no longer a party to the appeal.  

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1 Appeals from the United States District Court

2 for the Southern District of New York.

3 No. 10‐cv‐1653 ― J. Paul Oetken, Judge.

4

5

6 ARGUED: JUNE 24, 2015

7 DECIDED: MAY 20, 2016

8

9

10 Before: CABRANES, POOLER, and DRONEY, Circuit Judges.

11

12

13 Fireman’s Fund Insurance Company (“Fireman’s Fund”) and

14 Signal International, LLC (“Signal”) appealed from judgments of the

15 United States District Court for the Southern District of New York

16 (Oetken, J.), granting summary judgment to Great American

17 Insurance Company of New York (“Great American”) and Max

18 Specialty Insurance Company (“MSI”).    Fireman’s Fund, Great

19 American, and MSI underwrote insurance policies that included

20 coverage for a dry dock that Signal owned.  After the dry dock sank,

21 Signal and Fireman’s Fund sought contribution for losses and

22 cleanup costs from Great American and MSI.    Fireman’s Fund

23 initiated this action to resolve disputes regarding coverage.   

24

25 The district court held that the Great American and MSI

26 policies were void because (1) Great American’s pollution insurance

27 policy was a marine insurance contract subject to the doctrine of

28 uberrimae fidei, and Signal’s failure to disclose that the dry dock had

29 deteriorated and that repairs recommended over several years had

30 not been made violated its duty of utmost good faith under that

31 doctrine, and (2) Signal materially misrepresented the dry dock’s

32 condition when it applied for coverage from MSI.  We AFFIRM.   

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1

2 JOHN A.V. NICOLETTI (Robert A. Novak, William

3 M. Fennell, on the brief), Nicoletti Hornig &

4 Sweeney, New York, NY, for Plaintiffs‐Appellants.

5 GEORGE R. ZACHARKOW (Stephen J. Galati,

6 Christian T. Johnson, on the brief), Mattioni, Ltd.,

7 Philadelphia, PA, for Defendant‐Appellee Great

8 American Insurance Company of New York.

9

10 STEPHEN D. STRAUS, Traub Lieberman Straus &

11 Shrewsberry LLP, Hawthorne, NY, for Defendant‐

12 Appellee Max Specialty Insurance Company.

13

14 DRONEY, Circuit Judge:

15 Plaintiffs‐Appellants are Firemanʹs Fund Insurance Company,

16 One Beacon Insurance Company, National Liability and Fire

17 Insurance Company, and QBE Marine & Energy Syndicate 1036

18 (collectively “Fireman’s Fund”), insurance companies that provided

19 marine general liability and marine excess liability policies to

Defendant–Appellant Signal International, LLC (“Signal”).1 20   

                                              

1 Fireman’s Fund Insurance Company and One Beacon Insurance Company each

agreed to cover fifty percent of the total amount insured under the marine

general liability policy.    Firemanʹs Fund Insurance Company and National

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1 Fireman’s Fund and Signal appealed from a judgment of the United

2 States District Court for the Southern District of New York (Oetken,

3 J.), granting summary judgment to Defendants‐Appellees Great

4 American Insurance Company of New York (“Great American”) and

5 Max Specialty Insurance Company (“MSI”).   

6 Fireman’s Fund, Great American, and MSI issued insurance

7 policies that provided various coverages for a dry dock in Port

8 Arthur, Texas owned by Signal.   After the dry dock sank in 2009,

9 Signal and Fireman’s Fund sought contributions from Great

10 American and MSI for the loss of the dry dock and resulting

11 environmental cleanup costs.    The district court ruled in

12 adjudicating a number of summary judgment motions that the Great

13 American and MSI policies were void in light of Signal’s failure to

                                              

Liability and Fire Insurance Company each agreed to cover thirty‐four percent of

the total amount insured under the marine excess liability policy, and QBE

Marine & Energy Syndicate 1036 agreed to cover the remaining thirty‐two

percent.    The premiums for these two policies were also divided among the

respective insurers.  In this opinion, we refer to both the marine general liability

policy and marine excess liability policy as issued by Fireman’s Fund.  

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1 disclose when it applied for those policies that the dry dock had

2 significantly deteriorated and that repairs recommended by a

3 number of consultants and engineers over several years had not

4 been made.

5 After submission of this appeal, MSI and Signal reached a

6 settlement and obtained a dismissal of the case between them.  

7 Therefore, Signal no longer appeals the grant of summary judgment

8 to MSI.  Nonetheless, Fireman’s Fund asserts that it may still pursue

9 appeal of the issues relating to the policy issued to Signal by MSI

10 based on our decision in Maryland Cas. Co. v. W.R. Grace & Co.  See

11 218 F.3d 204, 211 (2d Cir. 2000) (“[T]he contract of settlement an

12 insurer enters into with the insured cannot affect the rights of

13 another insurer who is not a party to it. Instead, whatever

14 obligations or rights to contribution may exist between two or more

15 insurers of the same event flow from equitable principles.”).  

16 Fireman’s Fund was granted summary judgment below against MSI

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1 on a contribution claim based on MSI’s policy, and we assume

2 without deciding that Fireman’s Fund is correct that it may pursue

3 this appeal of the district court’s decision finding the MSI policy

4 void, based on Fireman’s Fund’s interest in the unappealed

5 summary judgment decision on contribution.   

6 We agree with the district court’s orders.   We hold that the

7 Great American policy was a marine insurance contract subject to

8 the doctrine of uberrimae fidei and that Signal’s nondisclosure

9 violated its duty under that doctrine, permitting Great American to

10 void the policy.  We further hold that MSI’s policy was governed by

11 Mississippi law; that, under that law, Signal materially

12 misrepresented the dry dock’s condition; and that MSI was entitled

13 to void the policy on that basis.  Accordingly, we AFFIRM.   

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1 BACKGROUND

2 I. Factual Background

3 A. The Operation and Loss of the Dry Dock

4 Signal is a marine construction firm involved principally in

5 building and repairing ocean‐going structures such as offshore

6 drilling rigs, platforms, and barges.   In 2003, Signal purchased six

7 facilities—two in Mississippi and four in Texas—for use in its

8 business of repairing, upgrading, and converting offshore drilling

rigs.2 9     One of the Texas facilities was a dockyard in Port Arthur,

10 Texas.  In acquiring that facility, Signal assumed an existing lease of

11 a dry dock (“the dry dock”) located along the Sabine‐Neches

                                              

2 These rigs included jack‐ups, semi‐submersibles, and mobile offshore

production units.  “A jack‐up is a rig that is towed to a location, where the legs

are ‘jacked’ down to the ocean floor allowing the work area to be raised about 50

feet above the water level.”    1 Thomas J. Schoenbaum, Admiralty and Maritime

Law § 3‐9, at 169 n.8 (5th ed. 2011).    “A semi‐submersible is a cross between a

submersible and a barge . . . [that] is submerged about 50 feet after which special

anchors are lowered to complete the mooring of the rig.”  Id.  A mobile offshore

production unit is “a jackup rig that has been converted to an offshore

production platform” and “can be moved and is reusable.”    Norman J. Hyne,

Dictionary of Petroleum Exploration, Drilling & Production 327 (2d ed. 2014).  

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Waterway near the Gulf of Mexico.3 1   The dry dock was built in 1944

2 at the direction of the United States Navy to repair Navy ships.  In

3 early 2005, Signal accepted an offer from the lessor to purchase the

4 dry dock, which Signal had been using in its operations since it

5 assumed the lease.  

6 Throughout its lease and ownership of the dry dock, Signal

7 received a number of reports on the dry dock’s deteriorated

8 condition.  These included the following:

9  The Heger Reports:  The dry dock engineering firm Heger Dry

10 Dock, Inc. (“Heger”) of Holliston, Massachusetts, periodically

11 inspected the dry dock between 2002 and 2009.    In 2002,

12 Freide Goldman Offshore—the operator of the dry dock

13 before Signal—asked Heger to inspect the dry dock in order to

provide an estimate of its fair market value.4 14   In a December

                                              

3 A dry dock is a large structure used to lift ships and other ocean‐going vessels

out of water for repairs and construction.  The dry dock is lowered into the water

by flooding its pontoons with water, and then, after an object is loaded onto the

dry dock, it is raised by pumping water out of the pontoons.  

4 Although the 2002 Heger Report was created before Signal assumed the dry

dock lease, Freide Goldman Offshore’s President of Texas Operations, John

Haley—who became Signal’s Senior Vice President of Texas Operations when

Signal acquired the Port Arthur dockyard—received a copy of the report in

December 2002, and Haley shared this report with other employees at Signal by

(at the latest) January 2005.  

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1 2002 appraisal, Heger described “the dry dock [as being] . . . in

2 fair to good condition, with the exception of the pontoon

3 deck . . . , which [was] in poor condition and should be

4 replaced, and section H, which showed markedly more

corrosion internally . . . .”5 5   J.A. 4215.  Heger estimated that the

6 dry dock would have “10 years of remaining useful life if the

7 pontoon deck [was] completely repaired,” but the costs of

8 making these “extensive repairs” in the United States

rendered the dry dock’s value “below zero.”6 9   J.A. 4215, 4216.  

10 In a series of subsequent reports from 2007 through 2009

11 commissioned by Signal to assist it in prolonging the existing

12 life of the dry dock, Heger found that the dry dock had

13 continued to deteriorate and that long‐term repairs had not

14 been made.    Instead, Signal had simply patched damaged

areas with “doublers.”7 15     J.A. 688.    Heger provided

16 recommendations for extensive repairs that would be required

17 for the dry dock to continue to operate safely.    However,

18 Heger repeatedly advised that “the expected life extension for

                                              

5 The dry dock consisted of eight pontoons designated “A” through “H.”   

6 Alternatively, assuming that the dry dock was transported for repairs abroad,

Heger estimated that the dry dock’s fair market value would be approximately

$800,000.  

7 “Doublers,” or doubler plates, are steel plates that “offer a temporary solution

for steel plate damage” on marine structures.   Ibrahim A. Assakkaf, Reliability

Design of Doubler Plates for Sea Tankers, in Advances in Civil Engineering and

Building Materials 823, 823 (Shuenn‐Yih Chang et al. eds. 2013).    The plates

provide “an inexpensive method of repairing corroded plating, cracked plates, or

defective welds.”   Id.   Doubler plates are “added [on] top of [a] defective area

and welded around the plate’s perimeter.”  Id.  “This temporary repair method

[is intended to] maintain structural integrity until . . . permanent repairs [are]

made to the original corroded structure.”  Id.     

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1 the dock . . . [would] only be a few years” and therefore “the

2 cost, time and effort to perform this work [was] not

3 economically justifiable.”    J.A. 689.    Heger also provided

4 Signal with plans for converting the dry dock to a seven‐

5 pontoon configuration (by removing Pontoon H) but warned

6 that “the dry dock structure . . . should be satisfactorily

7 restored before using the dock or proceeding with any

8 modifications.”  J.A. 4513‐14.    

9  The ABS Audits:    Auditor ABS Consulting (“ABS”) of

10 Houston, Texas, a maritime risk management firm, was

11 designated by the Port of Port Arthur to review and report on

12 Signal’s maintenance and repair programs at the dry dock.  In

13 2003, ABS observed “the rapidly increasing rate of overall

14 deterioration” of the dry dock, which was “largely due to the

15 drydock’s age . . . , and . . . lack of adequate maintenance

16 and/or repair.”    J.A. 4166.    ABS noted that, although it had

17 notified the dry dock’s owners and operators in January 2000

18 of the “advanced state of . . . deterioration,” they had “made

19 no apparent efforts” to implement ABS’s recommended

20 repairs.    J.A. 4168.    Instead, “more than a hundred doubler

21 plates ha[d] been welded over severely

22 wasted/holed . . . platings.”  J.A. 4167.  Six months later, ABS

23 reported that Pontoon H was “leaking severely,” and

24 Pontoons E and G were “leaking significantly” as well.   J.A.

25 4161.   ABS concluded that “it appeared that unsafe drydock

26 operations were being conducted” and recommended that

27 “additional drydockings [not be conducted] until substantial

28 hull repairs [were] made to ‘H’ pontoon and the repairs [were]

29 verified.”  J.A. 4162 (emphases omitted).   

30  Internal Staff Study: In April 2003, Signal conducted an

31 internal “staff study” to determine whether to purchase the

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1 leased dry dock from the Port Commission of Port Arthur.  

2 The study found that, “without major renewal costs,” the dry

3 dock’s remaining useful life was “only 3 to 5 years.”  J.A. 4188.  

4 The study concluded that it would cost $21.88 million to

5 extend the life of the dry dock’s pontoons “for maybe 10 to 15

6 years.”    J.A. 4186‐87.    The study ultimately advised against

7 purchasing the dry dock in light of its “relatively short

8 remaining useful life and extreme costs of renewal/life

9 extension.”  J.A. 4188.

10  The DLS Surveys:    The marine appraiser, surveyor, and

11 consulting firm Dufour, Laskay & Strouse, Inc. (“DLS”) of

12 Houston, Louisiana, and Florida was hired to inspect and

13 appraise Signal’s Texas and Mississippi facilities “for the

14 purpose of asset allocation and financial review” by GE

15 Commercial Finance, Signal’s financing company.    J.A. 526.  

16 Between 2005 and 2007, DLS observed that the dry dock “had

17 significant water in most compartments . . . [that] require[d]

18 pumping and trimming every four hours,” which was

19 “indicative of some wastage holes in the bottom.”   J.A. 551,

20 4437; see also J.A. 5314.  Each year, DLS noted that “[t]he deck

21 plating . . . ha[d] significant doubler plates where plating

22 ha[d] either wasted or separated from internal framing” and

23 that “there was . . . a 12ʹ  long tear in the plating extending

24 along a transverse frame” that “reportedly . . . w[ould] be

25 fitted with a proper doubler in the near future.”    J.A. 551,

26 4437, 5314.  In 2007, DLS concluded that the dry dock was in

27 “fair to good condition” but recommended that its pontoons

28 be dry‐docked and repaired “[a]s soon as practical within the

29 succeeding eighteen months . . . to render [it] in good stable

30 operating condition and provide a life extension.”  J.A. 4437.   

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1  The 2009 Heller Property Risk Assessment Report:    Stephen

2 Heller & Associates Inc. (“Heller”) of Houston—a loss

3 prevention consulting firm—was hired by Signal in 2008 to

4 conduct a risk review of Signal’s Mississippi and Texas

5 facilities in order to “assist [insurance] underwriters in

6 evaluating the exposures, operations, and loss prevention” for

7 those facilities.    J.A. 2267.    In a January 2009 report, Heller

8 rated the Mississippi and Texas facilities “[o]verall” as “Above

9 Average,” meaning that they met “[a]cceptable standards

10 including some industry best practices.”    J.A. 2270.    Heller

11 found that “[t]he maximum foreseeable loss (MFL) or worst

12 case scenario for these facilities [included] a sinking or

13 structural collapse of [the] dry dock at . . . Port Arthur.”  J.A.

14 2269. The maximum foreseeable loss was described as “one of

15 extremely low probability and frequency based on previous

16 industry experience.”  J.A. 2298‐99.  

17 Signal never replaced the dry dock’s pontoons or pontoon

18 decks.  Instead, Signal continued to use inserts and doublers to patch

19 holes in the decks.  

20 In 2009, Signal decided to implement the seven‐pontoon

21 configuration by removing Pontoon H.    On August 20, 2009, it

22 attempted to remove that pontoon, but during that procedure the

23 entire dry dock sank.  

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1 Shortly after the sinking, Signal notified the Texas General

2 Land Office (“GLO”), which regulates pollution affecting Texas

3 shoreline waters, about what had occurred. In September 2009, the

4 GLO advised Signal to “initiate immediate action to recover

the . . . dry dock from Texas coastal waters.”8 5     J.A. 3516.    In June

6 2010, Signal hired Weeks Marine, Inc., to manage removal of the

7 sunken dry dock and cleanup of the site.    Removal and cleanup

8 efforts were not completed until March 2012 and resulted in

9 $12,395,026 in costs.  

10 B. The Insurance Policies Covering the Dry Dock

11 Signal had obtained five insurance policies that insured

12 against risks related to the dry dock at the time of its sinking: (1) a

13 marine general liability policy issued by Firemanʹs Fund; (2) a

14 marine excess liability policy issued by Firemanʹs Fund; (3) a

15 pollution policy issued by Great American (the “Pollution Policy”);

                                              

8 The dry dock contained substantial amounts of asbestos and related

contaminants.   

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1 (4) a primary property insurance policy ( the “PPI Policy”) issued by

2 Westchester Surplus Lines Insurance Company (“Westchester”); and

3 (5) an excess property insurance policy issued by MSI, which

4 provided coverage in excess of the PPI Policy (the “EPI Policy”).  

5 Only the Great American Pollution Policy and the MSI EPI Policy

6 are at issue here.  

7 Great American first underwrote the Pollution Policy in 2004

8 and renewed it annually through 2009.  To obtain the renewal of the

9 policy for 2009, Signal completed and submitted Great American’s

10 standard “Vessel Pollution Liability Application” along with a

11 “Schedule of Vessels,” which included the dry dock and

12 approximately twenty‐five tugboats and barges owned by Signal.  

13 The Pollution Policy insured Signal against losses of up to $5 million

14 for each property in the Schedule resulting from pollution

15 discharges into navigable waters.    The policy specifically insured

16 against claims under the “Oil Pollution Act of 1990, . . . 33 U.S.C.

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1 [§] 2701 et seq.” (“OPA”), the “Comprehensive Environmental

2 Response, Compensation[,] and Liability Act, 42 U.S.C. [§] 9601, et

3 seq.” (“CERCLA”), and the “Federal Water Pollution Control Act

4 Amendments of 1972, 33 U.S.C. [§] 1321, et seq.” (“FWPCA”), and the

5 costs of “on‐water removal of materials of a non‐OPA and non‐

6 CERCLA nature which has been mandated by an authorized public

7 authority and [was] the result of a defined single, sudden and

8 accidental event.”    J.A. 737.    An endorsement to the policy also

9 extended coverage to “all Vessels while under repair, alteration,

10 construction, conversion or rebuilding” within 100 miles of the Port

11 Arthur dockyard.  J.A. 738. 

12 MSI underwrote the EPI Policy in January 2009.  To apply for

13 the policy, Signal submitted its “2009‐2010 Property Insurance

14 Submission.” This document included a “Statement of Values” that

15 described the dry dock’s value as $13.6 million and the 2009 Heller

16 Report, but it did not include other information—such as the Heger

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1 reports, the ABS audits, or the DLS surveys—suggesting that the dry

2 dock was in need of repair.  The EPI Policy insured against loss of or

3 damage to properties listed in the Statement of Values, as well as

4 business interruption costs and “[e]xtra [e]xpense[s]” associated

5 with the loss of those properties.   The policy provided $15 million

6 coverage for losses in excess of the underlying PPI Policy, which

7 covered losses up to $10 million.   

8 C. Post‐Loss Insurance Claims

9 In January 2010, Westchester paid Signal its total coverage

10 amount of $10 million pursuant to the PPI Policy for losses related to

11 the dry dock.    MSI paid Signal $3.6 million of its total coverage

12 amount of $15 million under the EPI Policy based on the $13.6

13 million value of the dry dock, as represented in the Statement of

14 Values.   Great American refused to make any payments under its

15 Pollution Policy.   

16 In meetings between Signal and its insurers in early 2010, MSI

17 and Great American argued that their policies did not cover the

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1 costs of removing the dry dock from the Sabine‐Neches Waterway

2 and cleaning up the site.    Fireman’s Fund agreed to fund Signal’s

3 removal and cleanup efforts but reserved its right to seek

4 reimbursement later from MSI and Great American.  

5 II. Procedural Background

6 On March 2, 2010, Fireman’s Fund commenced this action

7 against Signal, Great American, and MSI, seeking a declaration as to

8 the obligations of Signal and its insurers for losses associated with

9 the sinking of the dry dock.  MSI asserted cross‐claims against Signal

10 for the $3.6 million it had paid, and also sought to void the EPI

11 Policy on the ground of misrepresentation after discovery revealed

12 the various reports on the dry dock’s poor condition that Signal had

13 not provided to MSI when applying for the policy.    Signal cross‐

14 claimed against MSI for cleanup and removal costs and additional

15 damages.  Great American filed claims against Signal and Fireman’s

16 Fund, seeking a declaration that the Pollution Policy was void under

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1 the maritime doctrine of uberrimae fidei, which imposes a duty of

utmost good faith on the insured, 2 9 or alternatively under the policy’s

“Misrepresentation” clause.10 3    

4 On October 15, 2010, Signal assigned to Fireman’s Fund its

5 rights under the Great American Pollution Policy, and Fireman’s

6 Fund continued to pursue coverage against Great American. Both

7 Signal and Fireman’s Fund maintained their claims against MSI;

8 Signal opposed MSI’s efforts to obtain from Signal the $3.6 million it

9 had already paid, and both Signal and Fireman’s Fund sought

10 additional payments from MSI under its EPI Policy.  

11 This appeal arises out of eight motions that were filed after the

12 close of discovery.    Fireman’s Fund, Signal, Great American, and

                                              

9 The doctrine of uberrimae fidei is discussed in more depth later in this opinion.   

10 The Pollution Policy’s “Misrepresentation” clause provides that “[a]ny

concealment or misrepresentation by [the insured] of any material fact . . . will

void this policy completely . . . , whether such concealment or misrepresentation

is deliberate, negligent, inadvertent, innocent, or otherwise.”  J.A. 727.   

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1 MSI moved or cross‐moved on the coverage issues for the Pollution

Policy and EPI Policy.11 2    

3 On March 25, 2013, the district court granted partial summary

4 judgment, holding that under the EPI Policy, MSI was required to

5 contribute to the payments that Fireman’s Fund had made to Signal.  

6 Firemanʹs Fund Ins. Co. v. Great Am. Ins. Co. of New York, No. 10 Civ.

7 1653 (JPO), 2013 WL 1195277, at *8‐9 (S.D.N.Y. Mar. 25, 2013).  

8 However, on March 31, 2014, the district court ruled—also on

9 summary judgment—that the Great American Pollution Policy and

10 the MSI EPI Policy were void ab initio because of Signal’s failure to

11 disclose the dry dock’s deteriorated state.  See Fireman’s Fund Ins. Co.

12 v. Great Am. Ins. Co. of New York, 10 F. Supp. 3d 460, 466 (S.D.N.Y.

13 2014).  The court concluded that the Great American Pollution Policy

                                              

11 Fireman’s Fund and Signal jointly moved for summary judgment against Great

American, and Great American cross‐moved for summary judgment against

them, on Great American’s cross‐claims and counterclaims.  Fireman’s Fund also

moved for summary judgment, and Great American cross‐moved for summary

judgment, as to whether cleanup and removal costs were covered by the

Pollution Policy.    Signal moved for partial summary judgment against MSI,

seeking a declaration that the EPI Policy was not void.    MSI cross‐moved for

summary judgment against Signal on the same issue.   

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1 was a marine insurance contract subject to the doctrine of uberrimae

2 fidei and that Signal had breached its duty of utmost good faith to

3 Great American by withholding material information about the dry

4 dock’s condition when it applied for coverage.  See id. 476‐93.  The

5 district court also held that the EPI Policy was void under

6 Mississippi law because Signal had materially misrepresented the

7 dry dock’s condition in its 2009‐2010 Property Insurance

8 Submission.   Id. at 494‐503.    The court therefore denied Fireman’s

9 Fund’s and Signal’s motions for summary judgment and partial

10 summary judgment, granted MSI’s and Great American’s motions

11 for summary judgment declaring the policies void, and denied the

12 remaining motions, including MSI’s motion for reconsideration of

13 the March 25, 2013 decision on contribution.  Id. at 493 & n.19, 503‐04

14 & n.25.  Fireman’s Fund and Signal appealed.

15 After submission of this appeal, MSI and Signal reached a

16 settlement and obtained dismissal of the case between them.    We

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1 still must address the validity of the EPI policy, however, because,

2 notwithstanding the recent settlement between Fireman’s Fund and

3 Signal, the EPI policy is still the basis for Fireman’s Fund’s claim for

4 contribution against MSI.

5

6 DISCUSSION12

7 I. Great American’s Pollution Policy

8 Fireman’s Fund argues that Great American’s Pollution Policy

9 is not subject to the doctrine of uberrimae fidei.  It further argues that,

                                              

12 A district court’s grant of summary judgment is reviewed de novo.  See Aulicino

v. N.Y.C. Dep’t of Homeless Servs., 580 F.3d 73, 79 (2d Cir. 2009).    Summary

judgment should be granted “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter

of law.”  Fed. R. Civ. P. 56(a).  A fact is material if it might affect the outcome of

the case under governing law.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).  A dispute is genuine “if the evidence is such that a reasonable jury could

return a verdict for the nonmoving party.”  Id.  In making this determination, the

Court “must ‘construe the facts in the light most favorable to the non‐moving

party and must resolve all ambiguities and draw all reasonable inferences

against the movant.’”    Beyer v. Cty. of Nassau, 524 F.3d 160, 163 (2d Cir. 2008)

(quoting Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir. 2003)).  

Where “parties file[] cross‐motions for summary judgment[,] . . . each partyʹs

motion must be examined on its own merits, and in each case all reasonable

inferences must be drawn against the party whose motion is under

consideration.”  Morales v. Quintel Entmʹt, Inc., 249 F.3d 115, 121 (2d Cir. 2001).    

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1 even if the doctrine applies, Signal did not breach its duty to Great

2 American because it provided all information that Great American

3 requested about the dry dock on its insurance application.   

4 A. Admiralty Jurisdiction and the Doctrine of           

5 Uberrimae Fidei

6 Great American argues—and the district court concluded—

7 that the Pollution Policy is void under the maritime doctrine of

8 uberrimae fidei.    For the doctrine to apply, Fireman’s Fund’s suit

9 against Great American “must . . . be sustainable under the [court’s]

10 admiralty jurisdiction.”   Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 23

11 (2004) (emphasis omitted).  This is because federal courts’ “authority

12 to make decisional law for the interpretation of maritime contracts

13 stems from the Constitution’s grant of admiralty jurisdiction to

14 federal courts.”  Id.; see U.S. Const. art. III, § 2, cl. 1 (providing that

15 the federal judicial power “shall extend . . . to all Cases of admiralty

16 and maritime Jurisdiction”).    Thus, “the grant of admiralty

17 jurisdiction and the power to make admiralty law are mutually

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1 dependent.”  Kirby, 543 U.S. at 23.

2 “Title 28 U.S.C. § 1333(1) grants federal district courts the

3 power to entertain ‘[a]ny civil case of admiralty or maritime

4 jurisdiction.’”  Atl. Mut. Ins. Co. v. Balfour Maclaine Intʹl Ltd., 968 F.2d

5 196, 199 (2d Cir. 1992).  “[T]his grant includes jurisdiction ‘over all

6 contracts which relate to the navigation, business, or commerce of

7 the sea.’”  Id. (ellipsis omitted) (quoting DeLovio v. Boit, 7 F. Cas. 418,

8 444 (C.C.D. Mass. 1815)).  

9 “[T]here are few ‘clean lines between maritime and non‐

10 maritime contracts.’”   Folksamerica Reinsurance Co. v. Clean Water of

11 N.Y., Inc., 413 F.3d 307, 311 (2d Cir. 2005) (quoting Kirby, 543 U.S. at

12 23).    “The boundaries of admiralty jurisdiction over contracts are

13 conceptual rather than spatial, and defined by the purpose of the

14 jurisdictional grant—to protect maritime commerce.”   Id. (citations

15 omitted).    “[W]hether a contract is a maritime one . . . ‘depends

16 upon the nature and character of the contract,’ and the true criterion

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1 is whether it has ‘reference to maritime service or maritime

2 transactions.’”  Kirby, 543 U.S. at 23‐24 (ellipsis omitted) (quoting N.

3 Pac. S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119,

4 125 (1919)).   Our inquiry focuses on “whether the principal objective

5 of a contract is maritime commerce.”    Id. at 25.    “Therefore, the

6 contract’s subject matter must be our focal point.”  Folksamerica, 413

7 F.3d at 312.

8 “[A]dmiralty jurisdiction will exist over an insurance contract

9 where the primary or principal objective of the contract is the

10 establishment of ‘policies of marine insurance.’”  Id. at 315 (quoting

11 Ins. Co. v. Dunham, 78 U.S. (11 Wall.) 1, 35 (1870)).    “[W]hether an

12 insurance policy is marine insurance depends on ‘whether the

13 insurer assumes risks which are marine risks.’”  Id. at 316 (quoting

14 Jeffcott v. Aetna Ins. Co., 129 F.2d 582, 584 (2d Cir. 1942)).    “[A]n

15 insurance policy’s predominant purpose, as measured by the

16 dimensions of the contingency insured against and the risk

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1 assumed, determines the nature of the insurance.”    Id. at 317

2 (quoting Acadia Ins. Co. v. McNeil, 116 F.3d 599, 603 (1st Cir. 1997)).  

3 Thus, “[u]ltimately, coverage determines whether a policy is ‘marine

4 insurance,’ and coverage is a function of the terms of the insurance

5 contract and the nature of the business insured.”  Id.  

6 The question of whether an insurance contract is subject to the

7 court’s admiralty jurisdiction “ha[s] implications beyond conferring

8 federal jurisdiction.”  Id. at 310.  In particular, “[w]hen a contract is a

9 maritime one, and the dispute is not inherently local, federal law

10 controls the contract interpretation.” Kirby, 543 U.S. at 22‐23.

11 Under federal law, a marine insurance contract is subject to

12 “the federal maritime doctrine of uberrimae fide, or utmost good

13 faith.”   Folksamerica, 413 F.3d at 310; see also Knight v. U.S. Fire Ins.

14 Co., 804 F.2d 9, 13 (2d Cir. 1986) (“[T]he substantive law governing

15 marine insurance . . . . [includes the] well‐established [principle that]

16 under the doctrine of uberrimae fidei . . . the parties to a marine

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1 insurance policy must accord each other the highest degree of good

2 faith.”).    The doctrine is a recognition that “the [insured] is more

3 likely to be aware of . . . information” that “materially affects the risk

4 being insured,” N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266

5 F.3d 112, 123 (2d Cir. 2001), and that “[o]ften the insurer lacks the

6 practicable means to verify the accuracy or sufficiency of facts

7 provided by the insured for purposes of establishing the contractual

8 terms,” 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 19‐

9 14, at 404‐05 (5th ed. 2011).   For example, the vessel to be insured

10 may be at some great distance on the high seas, impossible to inspect

11 at the time the application for insurance is filed.    See Warren J.

12 Marwedel & Stephanie A. Espinoza, Dagger, Shield, or Double‐Edged

13 Sword?: The Reciprocal Nature of the Doctrine of Uberrimae Fidei, 83

14 Tul. L. Rev. 1163, 1168‐69 (2009).

15 Accordingly, under the doctrine, “the party seeking insurance

16 is required to disclose all circumstances known to it which

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1 materially affect the risk.”  Folksamerica, 413 F.3d at 311 (quoting Atl.

2 Mut. Ins. Co. v. Balfour MacLaine Int’l Ltd. (In re Balfour MacLaine Intʹl

3 Ltd.), 85 F.3d 68, 80 (2d Cir. 1996)); see also Knight, 804 F.2d at 13

4 (“Since the [insured] is in the best position to know of any

5 circumstances material to the risk, he must reveal those facts to the

6 underwriter, rather than wait for the underwriter to inquire.”).  “If

7 [the insured] acquires material information after having applied for

8 insurance, he is required to communicate that information to the

9 proposed insurer” as well.  Puritan Ins. Co. v. Eagle S.S. Co. S.A., 779

10 F.2d 866, 870 (2d Cir. 1985).    Thus, “[t]he [insured] is bound,

11 although no inquiry be made, to disclose every fact within his

12 knowledge that is material to the risk.”  2 Schoenbaum, supra, § 19‐

13 14, at 405‐06. “The standard for disclosure is an objective one, that

14 is, whether a reasonable person in the [insured’s] position would

15 know that the particular fact is material.”  Knight, 804 F.2d at 13.  

16 “Failure by the [insured] to disclose all available information

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1 will allow the insurer to avoid the policy,” regardless of “whether

2 such omission is intentional or results from mistake, accident,

forgetfulness, or inadvertence.”13 3     2 Schoenbaum, supra, § 19‐14, at

4 406; see Sun Mut. Ins. Co. v. Ocean Ins. Co., 107 U.S. 485, 510 (1883)

5 (“The concealment, whether intentional or inadvertent, . . . avoids

6 the policy . . . . In respect to the duty of disclosing all material

7 facts, . . . [t]he obligation . . . is one uberrimae fidei. The duty of

8 communication, indeed, is independent of the intention, and is

9 violated by the fact of concealment even where there is no design to

10 deceive.”); Puritan Ins. Co., 779 F.2d at 870‐71; see also Catlin

11 (Syndicate 2003) at Lloydʹs v. San Juan Towing & Marine Servs., Inc.,

                                              

13   The district court concluded that, under uberrimae fidei, the Pollution Policy

was void ab initio, “meaning that there was never an enforceable contract to

begin with.”  Catlin (Syndicate 2003) at Lloydʹs v. San Juan Towing & Marine Servs.,

Inc., 778 F.3d 69, 83 n.19 (1st Cir. 2015).  However, we agree with the First Circuit

that, “as the Supreme Court has described it, . . . uberrimae fidei renders a marine

insurance contract voidable—the contract is deemed valid until being voided at

the election of the insurer.”  Id. (emphasis in original); see Stipcich v. Metro. Life

Ins. Co., 277 U.S. 311, 316 (1928) (noting that, for insurance policies subject to the

doctrine of uberrimae fidei, “a failure by the insured to disclose conditions

affecting the risk, of which he is aware, makes the contract voidable at the

insurer’s option”).    As Great American seeks a declaration that the Pollution

Policy is void, the distinction makes no practical difference here.  

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1 778 F.3d 69, 83 (1st Cir. 2015) (“Under uberrimae fidei, when the

2 marine insured fails to disclose to the marine insurer all

3 circumstances known to it and unknown to the insurer which

4 ‘materially affect the insurer’s risk,’ the insurer may void the marine

5 insurance policy at its option.” (emphasis in original) (quoting

6 Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 55 (1st Cir.

7 1995))).  However, “[t]he principle of uberrimae fidei does not require

8 the voiding of the contract unless the undisclosed facts were

9 material and relied upon.”  Puritan, 779 F.2d at 871.  

10 B. The Pollution Policy is a Marine Insurance Contract  

11 1. The “Threshold Inquiry”:                                             

12 The Maritime Nature of the Dispute

13 In determining whether a contractual dispute falls within our

14 admiralty jurisdiction, “[s]everal of our cases . . . [have] require[d]

15 that, prior to inquiring into the subject matter of the contract, we

16 first make a ‘threshold inquiry’ into the subject matter of the

17 dispute.”    Folksamerica, 413 F.3d at 312.    Those cases hold that “a

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1 federal court must initially determine whether the subject matter of

2 the dispute is so attenuated from the business of maritime commerce

3 that it does not implicate the concerns underlying admiralty and

4 maritime jurisdiction.”  Id. (quoting Balfour, 968 F.2d at 200).   

5 “[S]ome uncertainty [exists] as to the extent to which this

6 Court’s ‘threshold inquiry’ test survives the Supreme

7 Court’s . . . decision [in Kirby] . . . . [where,] [f]ocusing on the

8 contract subject matter, the [Kirby] Court found admiralty

9 jurisdiction.”    Id. at 313.    “[T]he absence of any discussion by the

10 Supreme Court [in Kirby] of a ‘threshold inquiry’ akin to that found

in our precedents is notable.”14 11   Id. at 314.   

                                              

14 “The Supreme Court introduced [Kirby] as ‘a maritime case about a train

wreck.’”    Folksamerica, 413 F.3d at 313 (quoting Kirby, 543 U.S. at 18).    “That

decision involved a contract for the transportation of goods from Australia to

Alabama.”  Id. (citation omitted).  “The dispute concerned a railroadʹs liability for

machinery damaged during a train derailment.    The machinery had been

transported by ship from . . . Australia, to Savannah, Georgia, and was en route

from Savannah to Huntsville, Alabama, when the train derailed.”   Id. (citation

omitted).    “The Court focused entirely on the underlying contract . . . . [in]

f[inding] admiralty jurisdiction.”  Id.

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1 However, we need not resolve that uncertainty here.  

2 Assuming the continued vitality of the “threshold inquiry” into the

3 subject matter of the dispute, this case survives it.  The dispute over

4 the Pollution Policy concerns insurance coverage for the costs of

5 removing the dry dock and the pollutants it produced upon sinking

6 in navigable waters.  The sinking of the dry dock created potential

7 dangers to public health and safety and the environment—matters

8 that would directly impact those who conducted maritime

9 commerce in those waters.   

10 Moreover, the parties’ dispute here concerns information

11 provided to an insurer for pollution coverage for a structure used in

12 vessel repair and maintenance.    These questions directly implicate

13 the business of maritime commerce.  See Folksamerica, 413 F.3d at 313

14 (“The business of ship maintenance has long been recognized as

15 maritime . . . .”); id. at 321 (“Pollution coverage is widely recognized

16 as marine in nature.”); cf. Sirius Ins. Co. (UK) Ltd. v. Collins, 16 F.3d

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1 34, 36 (2d Cir. 1994) (“There are few objects—perhaps none—more

2 essentially related to maritime commerce than vessels.”).  

3 Thus, “the insurance claim [here] . . . has more than a

4 ‘speculative and attenuated’ connection with maritime commerce.”  

5 Folksamerica, 413 F.3d at 313 (quoting Balfour, 968 F.2d at 200).  

6 Assuming that the threshold inquiry survives Kirby, the dispute here

7 is sufficiently maritime in nature to withstand that inquiry.

8 2. The Maritime Nature of the Pollution Policy

9 Our next inquiry is whether the Pollution Policy itself is

10 sufficiently “marine” to warrant application of federal maritime law,

11 including the doctrine of uberrimae fidei.   

12 Fireman’s Fund urges us to consider only the policy’s

13 coverage of the dry dock in determining whether the contract is

14 marine insurance.  It maintains that such a “fixed structure drydock”

15 is not a vessel, and thus pollution coverage for the dry dock is not

16 subject to maritime jurisdiction.    Fireman’s Fund Br. at 17.  

17 Fireman’s Fund argues that this coverage is severable from the

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1 policy’s coverage of other structures and vessels, as evidenced by

2 the fact that each object listed in the policy’s Schedule of Vessels is

3 subject to a separate premium.   

4 Prior to Kirby, this Court had held that admiralty jurisdiction

5 was limited to “contracts, claims, and services [that were] purely

6 maritime.”  Folksamerica, 413 F.3d at 314 (quoting Rea v. The Eclipse,

7 135 U.S. 599, 608 (1890)).    “A ‘mixed’ contract, i.e., a contract that

8 contain[ed] both admiralty and non‐admiralty obligations [was],

9 therefore, usually not within admiralty jurisdiction.”    Transatlantic

10 Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 109 (2d

11 Cir. 1997).    “[T]he general rule that ‘mixed’ contracts f[e]ll outside

12 admiralty jurisdiction” was subject to two exceptions: (1) cases

13 where the “claim [arose] from a breach of maritime obligations that

14 [were] severable from the non‐maritime obligations of the contract”

15 (“the severability exception”), and (2) cases “where the non‐

16 maritime elements of a contract [were] merely incidental to the

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1 maritime ones” (“the incidental exception”).   Folksamerica, 413 F.3d

2 at 314 (citations and internal quotation marks omitted).  

3 After Kirby, however, we “amended our jurisprudence on

4 maritime contracts.”  Williamson v. Recovery Ltd. Pʹship, 542 F.3d 43,

5 49 (2d Cir. 2008).    We held that “[i]n applying what we have

6 previously called the ‘incidental’ exception, we should focus ‘on

7 whether the principal objective of a contract is maritime commerce,’

8 rather than on whether the non‐maritime components are properly

9 characterized as more than ‘incidental’ or ‘merely incidental’ to the

10 contract.”    Folksamerica, 413 F.3d at 315 (citation omitted) (quoting

11 Kirby, 543 U.S. at 25).  

12 We have not yet addressed the impact of Kirby on the

severability exception.15 13     The Ninth Circuit has held that the

14 exception “collapses in the wake of the [Kirby] Court’s conceptually‐

15 based ‘primary objective’ test.”  Sentry Select Ins. Co. v. Royal Ins. Co.

                                              

15 In Folksamerica, the plaintiff did not assert that the severability exception

applied.  See Folksamerica, 413 F.3d at 314.

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1 of Am., 481 F.3d 1208, 1218 (9th Cir. 2007).  We need not to resolve

2 the issue here, however.    Assuming arguendo that the Pollution

3 Policy is severable and that its coverage of the dry dock should be

4 viewed in isolation, we nonetheless find that the policy is a maritime

5 contract.  

6 To reach this conclusion, we consider whether “the primary or

7 principal objective of the [Pollution Policy’s dry dock coverage] is

8 the establishment of policies of marine insurance,” which “depends

9 on whether the insurer assumes risks which are marine risks.”  

10 Folksamerica, 413 F.3d at 315, 316 (citations and internal quotation

11 marks omitted).    This requires consideration of “the terms of the

12 insurance contract and the nature of the business insured.”   Id. at

13 317.

14 As it pertains to the dry dock, the Pollution Policy insures

15 against liability for “accidental discharge or substantial threat of a

16 discharge” from the dry dock “into the navigable waters of the

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1 United States.”  J.A. 724.  Coverage includes liability arising under

the OPA16 and the FWPCA,17 2 statutes that hold parties responsible

3 for the release of pollutants into navigable waters.  See 33 U.S.C. §§

4 1321(b)(3), 2702(a).    It also extends to “the on‐water removal of

5 materials . . . [as] mandated by an authorized public authority.”  J.A.

6 737.   

7 In addition to emissions from the dry dock itself, the policy

8 insures against liability for emissions from “all Vessels while under

9 repair” within “a 100 nautical mile radius” of the Port Arthur

10 dockyard.  J.A. 738. Thus, the policy provides coverage for vessels

11 located at the dry dock in connection with Signal’s repair business—

                                              

16 The OPA holds parties that are responsible for “a vessel or a facility from

which oil is discharged, or which poses the substantial threat of a discharge of

oil, into or upon the navigable waters or adjoining shorelines” liable for

“removal costs and damages.”  33 U.S.C. § 2702(a).

17 The provision of the FWPCA cited in the Great American Pollution Policy

prohibits “[t]he discharge of oil or hazardous substances . . . into or upon the

navigable waters of the United States, adjoining shorelines, or into or upon the

waters of the contiguous zone . . . in such quantities as may be harmful.”    33

U.S.C. § 1321(b)(3).   

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1 the type of business which has “long been recognized as

maritime.”18 2     Folksamerica, 413 F.3d at 313.    There is no indication

3 that coverage for vessels located at the dry dock was obtained

4 through the payment of separate premiums.   Rather, coverage for

5 such vessels is an extension of the policy’s coverage of the dry dock.  

6 See Sirius, 16 F.3d at 37 (noting that the existence of “separately

7 calculated premiums” is relevant in determining severability of

8 insurance contract provisions).    We therefore cannot agree with

9 Fireman’s Fund that the policy’s provisions related to the dry dock

10 “did not provide coverage for any potential liabilities associated

with the actual repair or maintenance of vessels.”19 11   Fireman’s Fund

                                              

18  Fireman’s Fund argues that Signal’s dry dock operations should be considered

non‐maritime because, in 2009, sixty percent of Signal’s revenue came from ship

construction, a non‐maritime activity.  See Kossick v. United Fruit Co., 365 U.S. 731,

735 (1961) (“[A] contract to repair or to insure a ship is maritime, but a contract to

build a ship is not.” (citations omitted)).    However, Christopher Scott

Cunningham, Signal’s Chief Financial Officer, testified that Signal’s construction

projects took place at sites other than Port Arthur, and Fireman’s Fund has cited

no evidence to the contrary.   

19 We are also not persuaded by Fireman’s Fund’s argument that the Pollution

Policy is not marine insurance because the dry dock bore no relation to a vessel

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1 Br. 20.

2 We conclude that the primary object of the Pollution Policy’s

3 coverage of the dry dock was to insure against the risk of liability for

4 pollutants emitted during Signal’s ship repair and maintenance

5 operations there.    Insurance policies protecting against such risks

6 have long been considered marine in nature.    See Folksamerica, 413

7 F.3d at 321 (finding pollution coverage provisions to be marine,

8 given that “[p]ollution coverage is widely recognized as marine in

9 nature,” marine insurance contracts often include pollution

10 coverage, and “[t]he insured’s business operations in oil and cargo

11 transportation render[ed] pollution coverage potentially

12 significant”); see also Certain Underwriters at Lloyds v. Inlet Fisheries

13 Inc., 518 F.3d 645, 654 (9th Cir. 2008) (“One type of insurance

                                              

or to maritime commerce.  Kirby makes clear that the involvement of a vessel (or

lack thereof) is not dispositive in determining whether a contract is marine.  See

Kirby, 543 U.S. at 23 (“To ascertain whether a contract is a maritime one, we

cannot look to whether a ship or other vessel was involved in the dispute, as we

would in a putative maritime tort case.”).  Moreover, given its use in repairing

and maintaining vessels, the dry dock itself bore a significant relationship to

vessels and to maritime commerce.  

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1 typifying marine insurance is protection and indemnity (‘P & I’)

2 insurance . . . . P & I insurance historically included pollution

3 liability . . . . Vessel pollution policies mirror P & I policies in their

4 general terms, but cover liability under the OPA and other

5 environmental statutes.  That vessel pollution insurance covers new

6 statutory liabilities . . . does not alter the fact that the risks of

7 incurring that liability stem from the same vagaries of marine life

8 that have shaped maritime insurance law for centuries.” (citation

9 omitted)).  We hold that the Pollution Policy is a marine insurance

10 policy, subject to our admiralty jurisdiction and federal maritime

law, including the doctrine of uberrimae fidei.

20 11    

                                              

20 We also conclude that the Great American Pollution Policy is not so

“inherently local” as to require the application of state law.  Kirby, 543 U.S. at 22‐

23 (citing Kossick, 365 U.S. at 735).  This analysis asks “whether . . . the application

of state law would . . . disturb the uniformity of maritime law.”  Kossick, 365 U.S.

at 738.  The Supreme Court has recognized that in contract cases, which implicate

parties’ voluntary agreements, local interests are generally minimized.  See id. at

741.    Moreover, application of state law here would disturb the uniformity of

maritime law by upsetting parties’ expectations that marine insurance policies

are subject to the doctrine of uberrimae fidei.    This expectation has significant

implications for how both insurers and insureds negotiate such policies and

conduct themselves for the duration of those policies.  Cf. Jeremy A. Herschaft,

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1 C. Signal Violated Its Duty of Utmost Good Faith by

2 Failing To Disclose the Dry Dock’s Condition  

3 We turn next to the questions of whether Signal violated its

4 duty of utmost good faith under the doctrine of uberrimae fidei and

5 whether this breach permits Great American to void the Pollution

6 Policy.  Under the doctrine, Signal was “bound, although no inquiry

7 be made, to disclose every fact within [its] knowledge that [was]

8 material to the risk [insured against].”  2 Schoenbaum, supra, § 19‐14,

9 at 405‐06; see Puritan, 779 F.2d at 870.   

                                              

Not Your Average Coffee Shop: Lloydʹs of London—A Twenty‐First‐Century Primer on

the History, Structure, and Future of the Backbone of Marine Insurance, 29 Tul. Mar.

L.J. 169, 180‐81 (2005).  The doctrine provides insurers with assurances that the

party in the best position to provide information material to the risk—the

insured—will bear the burden of providing such information.  See Tradeline, 266

F.3d at 123 (“Uberrimae fidae . . . requires an [insured] to disclose any information

that materially affects the risk being insured, because the [insured] is more likely

to be aware of such information.”); 2 Schoenbaum, supra, § 19‐14, at 404‐05

(“Often the insurer lacks the practicable means to verify the accuracy or

sufficiency of facts provided by the insured for purposes of establishing the

contractual terms.”).    The interest in uniform application of the doctrine is

especially strong given that marine insurance policies, like the Great American

Pollution Policy, frequently provide coverage for properties located in various

states and throughout the world.    See Kirby, 543 U.S. at 29 (“Confusion and

inefficiency will inevitably result if more than one body of law governs a given

contract’s meaning.”).    Because here “state interests cannot be accommodated

without defeating a federal interest [in the uniformity of maritime law], . . .

federal substantive law should govern.”  Id. at 27.

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1 We have held that the doctrine “does not require the voiding

2 of the contract unless the undisclosed facts were material and relied

3 upon.”  Puritan, 779 F.2d at 871.  While both parties acknowledge the

4 materiality requirement, they disagree as to whether reliance is an

5 independent requirement and whether that requirement should

6 apply here.  Great American notes that reliance has not been widely

7 discussed in this Circuit since Puritan.  It also contends that, to the

8 extent reliance may be required in some circumstances, it should not

9 be required here, because this case involves a “complete non‐

10 disclosure,” as opposed to a partial, misleading disclosure.  14‐1346‐

11 cv Dkt. No. 264.  

12 Citing our decision in Puritan, the Eighth Circuit recently held

13 that materiality and reliance are “distinct elements,” both of which

14 must be proven for the doctrine to apply.  See St. Paul Fire & Marine

15 Ins. Co. v. Abhe & Svoboda, Inc., 798 F.3d 715, 720‐22 (8th Cir. 2015).  

16 “[M]ateriality examines whether a fact would have influenced the

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1 judgment of a reasonable and prudent underwriter,” id., in deciding

2 whether “to insure at all or at a particular premium,” Tradeline, 266

3 F.3d at 123; see also Sun Mut. Ins. Co., 107 U.S. at 509‐10 (holding that

4 nondisclosure permitted avoidance of the contract where, “[h]ad

5 [the undisclosed information] been known, it [was] reasonable to

6 believe that a prudent underwriter would not have accepted the

7 proposal as made”).    Reliance, however—according to the Eighth

8 Circuit—requires “a causal connection between the

9 misrepresentation or concealment of that material fact and the actual

10 underwriter’s decision to issue the policy.”  St. Paul Fire, 798 F.3d at

11 722; see Puritan, 779 F.2d at 871 (“[A] marine insurance policy

12 ‘cannot be voided for misrepresentation where the alleged

13 misrepresentation was not relied upon and did not in any way

14 mislead the insurer.’” (quoting Rose & Lucy, Inc. v. Resolute Ins. Co.,

15 249 F. Supp. 991, 992 (D. Mass. 1965))).

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1 We need not decide here whether subjective reliance is

2 required in all cases in order for the doctrine to apply.    Even

3 assuming that it is, we find that Signal breached its duty to Great

4 American and that no genuine disputes of fact exist as to either the

5 materiality of Signal’s non‐disclosures or Great American’s reliance.  

6 In applying for the 2009‐2010 Pollution Policy, Signal’s

7 insurance broker submitted only Great American’s standard “Vessel

8 Pollution Liability Application” along with a “Schedule of Vessels,”

9 which listed the dry dock.   It appears that the only information in

10 those materials related to the dry dock’s condition was that it was

11 built in 1945, that it was constructed from steel, and that its gross

12 tonnage was less than 27,000 tons; neither Signal nor Fireman’s Fund

13 has argued otherwise.  Signal did not provide any surveys to Great

14 American when it applied for coverage for the dry dock.   

15 Notwithstanding the paucity of relevant information

16 furnished by Signal to Great American, it is undisputed that by 2009

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1 Signal had in its possession numerous surveys and reports

2 concluding that the dry dock had substantially deteriorated and that

3 necessary long‐term repairs were not being made.    At least one

4 survey estimated that the dry dock’s value was “below zero.”  J.A.

5 4216.    Signal’s own internal documents and communications with

6 the Heger engineering firm demonstrate its awareness of these

7 concerns.  Nevertheless, Signal did not disclose this information to

8 Great American.  

9 This undisclosed information was clearly material—that is, it

10 “would have influenced the judgment of a reasonable and prudent

11 underwriter.” St. Paul Fire, 798 F.3d at 722 (emphasis omitted).  That

12 multiple engineers and Signal’s own internal staff study described

13 considerable deterioration of the dry dock and Signal’s failure to

14 make recommended repairs over several years was precisely the

15 type of information that would have affected a reasonable insurer’s

16 decision “to insure [the dry dock] at all or [at least] at a particular

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1 premium.”  Tradeline, 266 F.3d at 123.  If disclosed, this information

2 would have raised significant concerns about the likelihood of

3 pollutant emissions from the dry dock.    Given the nature and

4 abundance of this information and the high likelihood that it would

5 have impacted coverage, there can be no genuine dispute that “a

6 reasonable person in [Signal’s] position would [have] know[n] that

7 [these] particular fact[s] [were] material” and that Signal therefore

8 had a duty to disclose them.  Knight, 804 F.2d at 13; see Catlin, 778

9 F.3d at 82 (“[A] hull inspector who surveyed the [drydock] testified

10 that he found ‘heavy wastage’ in the drydockʹs hull during

11 an . . . inspection. . . . [The insured’s] failure to disclose . . . the

12 [drydock’s] level of deterioration [when it applied for

13 insurance] . . . [is a] material fact[], the nondisclosure of which

14 violates uberrimae fidei.”).   

15 There is also no genuine dispute that in “decid[ing] to issue

16 the policy,” St. Paul Fire, 798 F.3d at 720, the underwriters at Great

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1 American in fact relied upon the absence of this undisclosed

2 information from Signal’s application materials.  Cindy Stringer, the

3 Great American underwriter who evaluated the Pollution Policy

applications from 2005 to 2010,21 4 testified at her deposition that, “had

5 I been able to read [the] [undisclosed] surveys, I definitely would

6 have been concerned . . . . If I had known [the dry dock] was in bad

7 shape, and Signal told me they were going to fix it up, . . . more than

8 likely, I would have told them I didn’t want to cover that vessel until

9 they completed all the recommendations.”   J.A. 6440.    She further

10 stated that, “[i]f I knew that the wing walls were in poor condition, I

11 definitely [would have] want[ed] to know what was being done

12 about it.”  J.A. 6445.   

13 Stringer’s testimony also established that, in agreeing to

14 underwrite the policy, she was acting on the understanding that

                                              

21 Another underwriter, Charles Dillon, underwrote the original Pollution Policy

in 2004.  Stringer took over the account when Dillon left Great American in 2005.   

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1 Signal was complying with its duty of utmost good faith.    She

2 testified as follows:

3 If the insured had information that could materially

4 affect our policy, it would be their obligation to furnish

5 us with that information. . . . [F]or example, if you were

6 to read a survey that said that you had a vessel that was

7 about ready to collapse or something like that, that

8 would be something that you should bring to the

9 attention of your broker, who would then bring it to our

10 attention.

11 J.A. 6443.  She also opined that “it would be common sense if you

12 had a vessel that was about ready to collapse or in danger of sinking

13 or something like that, you would definitely want to let somebody

14 know about it,” because “if a prudent insured [is] aware of a

15 condition that would put a vessel in jeopardy, . . . they owe the duty

16 to let underwriters know of that condition.”  J.A. 6444.   

17 Reese Lever, an underwriter who worked with Stringer on the

2009 renewal of the Pollution Policy,22 18 similarly testified that, if

19 Signal was “doing repairs on a vessel, . . . if they’re major repairs, it’s

                                              

22 According to Stringer, Lever compiled the renewal and Stringer approved it.   

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1 something we’d want to know about,” and that “it’s common sense

2 you’d want to let your insurers know that you’re repairing these

3 vessels.”  J.A. 6431.  Lever explained that, in his view, “it goes back

4 to the duty of utmost good faith.    If there are vessels that have

5 problems, the underwriter should be aware of it.”  J.A. 6431.   

6 Fireman’s Fund argues that Signal did not have an obligation

7 to provide the undisclosed information because Great American did

8 not request surveys or additional information about the dry dock’s

9 condition as part of its underwriting criteria or application.  

10 However, under the doctrine of uberrimae fidei, Great American was

11 not obligated to request such information.  See Knight, 804 F.2d at 13

12 (“Since the [insured] is in the best position to know of any

13 circumstances material to the risk, he must reveal those facts to the

14 underwriter, rather than wait for the underwriter to inquire.” (emphasis

15 added)).  Instead, Great American was entitled make its decision to

16 underwrite the policy based on the information that Signal

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1 provided, secure in the knowledge that Signal was under a duty of

2 utmost good faith that required it to disclose all information

3 material to the risk insured against.  See Tradeline, 266 F.3d at 123; 2

4 Schoenbaum, supra, § 19‐14, at 404‐06.   

5 Fireman’s Fund also argues that a genuine dispute exists as to

6 whether the undisclosed information was material because Great

7 American agreed to insure another dry dock owned by Signal (“the

8 Bender dry dock”) under the Pollution Policy after the Port Arthur

9 dry dock sank, despite receiving a survey that “raised concerns”

10 about the Bender dry dock’s condition.    J.A. 6019.    For several

11 reasons, we are not persuaded.  First, although Lever testified that

12 he considered several points in the Bender dry dock survey

significant to his underwriting analysis, 13 23 none of those conditions

14 rose to the level of extensive dilapidation described in the

15 undisclosed reports regarding the Port Arthur dry dock.  Moreover,

                                              

23 The survey of the Bender dry dock does not appear in the record.  The only

evidence of its contents is Lever’s deposition testimony.  

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1 unlike the Bender dry dock, the available information regarding the

2 Port Arthur dry dock’s condition was not limited to an isolated

3 survey.  Rather, the undisclosed information at issue here consisted

4 of reports by multiple engineers and risk management professionals

5 (and Signal itself) over a period of more than seven years that

6 contained corroborating accounts of extensive dry dock

7 deterioration and Signal’s continued failure to make recommended

8 long‐term repairs.    In light of these significant distinctions, Great

9 American’s decision to insure the Bender dry dock does not raise

10 any genuine dispute as to whether the undisclosed information

11 regarding the Port Arthur dry dock was material and relied upon.  

12 We conclude that Signal breached its duty of utmost good

13 faith by failing to disclose information about the dry dock’s

14 condition to Great American.    Because this information was both

15 material and relied upon, Great American is entitled to void the

16 Pollution Policy.  See Puritan, 779 F.2d at 871; see also Catlin, 778 F.3d

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1 at 83 (“[T]he evidence conclusively shows that [the insured] failed to

2 disclose material information about the [dry dock’s] actual value

3 and preexisting deteriorated condition prior to [the insurer]

4 determining whether it would accept the risk.    [The insurer] was

5 free, therefore, to void the policy.”).   We affirm the district court’s

6 grant of Great American’s motion for summary judgment and its

7 denial of Fireman’s Fund and Signal’s cross‐motions.  

8 II. MSI’s Excess Property Insurance Policy  

9 We next consider the EPI Policy issued by MSI.  The district

10 court held that the EPI Policy was not a maritime contract, Firemanʹs

11 Fund Ins. Co. v. Great Am. Ins. Co. of New York, No. 10 Civ. 1653 (JPO),

12 2013 WL 311084, at *5 (S.D.N.Y. Jan. 25, 2013), a conclusion that is

not challenged on appeal.24 13   Nevertheless, the court found that the

                                              

24 The district court concluded that the dry dock was not a “vessel” under Lozman

v. City of Riviera Beach, ‐‐ U.S. ‐‐, 133 S. Ct. 735 (2013), see Fireman’s Fund, 2013 WL

311084, at *3‐5, and that “the vessel status of the Drydock was relevant [to the

question of whether the EPI Policy was a marine insurance contract] because it

informed the primary purpose of the PPI and EPI Policies[] and . . .

was dispositive because the Drydock was ‘by far’ the largest piece of property

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1 policy was void under Mississippi law for material

2 misrepresentation.  Fireman’s Fund, 10 F. Supp. 3d at 503.  

3 Fireman’s Fund argues that the district court erred in holding

4 that the EPI Policy was governed by Mississippi law rather than

5 Texas law.   Alternatively, it contends that, even if Mississippi law

6 applies, the court erred in its application of that state law.  For the

7 reasons below, we reject both arguments.

                                              

insured” under those policies, Fireman’s Fund, 10 F. Supp. 3d at 479.  The court

did not find the dry dock’s status to be similarly dispositive of the question of

whether the Great American Pollution Policy was a marine insurance contract.  

See id.   

We need not review the district court’s conclusion that the EPI Policy was a non‐

maritime contract.  Although MSI originally filed a cross‐appeal challenging that

conclusion, MSI later moved to withdraw its cross‐appeal without prejudice to

re‐filing if we ordered a remand in the appeals considered here.  We granted the

motion, and therefore the question of whether the EPI Policy is a maritime

contract is not before us.   

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1 A. Mississippi Law Governs the EPI Policy

2 1. New York Choice of Law Rules

3 “We review the district court’s choice of law de novo.”    Fin.

4 One Pub. Co. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 331 (2d

5 Cir. 2005).

6 “A federal court sitting in diversity . . . must apply the choice

7 of law rules of the forum state.”   Rogers v. Grimaldi, 875 F.2d 994,

8 1002 (2d Cir. 1989).    “Generally, [New York] courts will enforce a

9 choice‐of‐law clause so long as the chosen law bears a reasonable

10 relationship to the parties or the transaction.”  Welsbach Elec. Corp. v.

11 MasTec N. Am., Inc., 859 N.E.2d 498, 500 (N.Y. 2006) (citation

12 omitted).  This is because “[a] basic precept of contract interpretation

13 is that agreements should be construed to effectuate the parties’

14 intent.”  Id. (citations omitted).

15 Where a choice of law clause is not dispositive, “[t]he first

16 step . . . is to determine whether there is an actual conflict between

17 the laws of the jurisdictions involved.”  In re Allstate Ins. Co. (Stolarz),

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1 613 N.E.2d 936, 937 (N.Y. 1993); see 28 Glen Banks, New York Practice

2 Series: New York Contract Law § 8:4 (2015) (“If the contract has no

3 choice‐of‐law clause and the laws of different jurisdictions could

4 apply, New York courts may undertake a choice‐of‐law analysis.  

5 The first step in any case presenting a potential choice‐of‐law issue is

6 to determine whether there is an actual conflict between the laws of

7 the jurisdictions involved.”).  If an actual conflict exists, New York

8 applies “[t]he ‘center of gravity’ or ‘grouping of contacts’ choice of

9 law theory.”  Stolarz, 613 N.E.2d at 939.  

10 [A]pplication of the “grouping of contacts” theory to

11 choice‐of‐law disputes “gives . . . the place having the

12 most interest in the problem paramount control over

13 the legal issues arising out of a particular factual

14 context, thus allowing the forum to apply the policy of

15 the jurisdiction most intimately concerned with the

16 outcome of the particular litigation[.]”   

17 In re Liquidation of Midland Ins. Co., 947 N.E.2d 1174, 1179 (N.Y. 2011)

18 (quoting Auten v. Auten, 124 N.E.2d 99, 102 (N.Y. 1954)).    “[B]y

19 stressing the significant contacts, [this analysis] enables the court,

20 not only to reflect the relative interests of the several jurisdictions

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1 involved, but also to give effect to the probable intention of the

2 parties and consideration to ‘whether one rule or the other produces

3 the best practical result[.]’”    Auten, 124 N.E.2d at 102 (citations

4 omitted) (quoting Swift & Co. v. Bankers Trust Co., 19 N.E.2d 992, 995

5 (N.Y. 1939)).   

6 “Under this approach, the spectrum of significant contacts—

7 rather than a single possibly fortuitous event—may be

8 considered[.]” Stolarz, 613 N.E.2d at 939 (citation omitted).  “[T]he

9 New York Court of Appeals has endorsed the following

10 factors (identified in the Restatement [(Second) of Conflict of Laws]):

11 ‘the places of negotiation and performance; the location of the

12 subject matter; and the domicile or place of business of the

13 contracting parties.’”  Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135,

14 151‐52 (2d Cir. 2008) (quoting Zurich Ins. Co. v. Shearson Lehman

15 Hutton, Inc., 642 N.E.2d 1065, 1068 (N.Y. 1994)).

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1 “Critical to a sound analysis, however, is selecting the contacts

2 that obtain significance in the particular contract dispute.”  Stolarz,

3 613 N.E.2d at 939.    The New York Appellate Divisions have

4 repeatedly recognized that “‘where the insured risk is scattered

5 throughout multiple states, [New York] courts . . . deem the risk to

6 be located principally in one state,’ namely, in the state of the

7 insured’s domicile at the time the policy was issued,” and thus have

8 held that “the state of the insuredʹs domicile should be regarded as a

9 proxy for the principal location of the insured risk.”    Certain

10 Underwriters at Lloydʹs v. Foster Wheeler Corp., 822 N.Y.S.2d 30, 35, 36

11 (App. Div. 1st Dep’t 2006) (emphasis added) (quoting Md. Cas. Co. v.

12 Contʹl Cas. Co., 332 F.3d 145, 153 (2d Cir. 2003)), aff’d, 876 N.E.2d 500

(N.Y. 2007).25 13     These courts have noted that “[t]he state of the

                                              

25 Accord Jimenez v. Monadnock Constr., Inc., 970 N.Y.S.2d 577, 580‐81 (App. Div. 2d

Dep’t 2013) (“Where the covered risks are spread over multiple states, ‘the state

of the insured’s domicile should be regarded as a proxy for the principal location

of the insured risk[.]’” (quoting Midland, 947 N.E.2d at 1179)); FC Bruckner

Assocs., L.P. v. Firemanʹs Fund Ins. Co., 944 N.Y.S.2d 84, 85 (App. Div. 1st Dep’t

2012) (“[A]s we noted in Foster Wheeler with respect to a choice‐of‐law analysis

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1 insured’s domicile is a fact known to the parties at the time of

2 contracting, and . . . application of the law of that state is most likely

3 to conform to their expectations.”  Id. at 34‐35.

4 2. Choice of Law Governing the EPI Policy

5 Fireman’s Fund argues that the district court erred by treating

6 “the state of the insured’s domicile [as] determinative” of the choice

7 of law analysis, Fireman’s Fund, 10 F. Supp. 3d at 496, and by

8 alternatively holding that the grouping‐of‐contacts analysis favors

application of Mississippi law over Texas law. 26 9     

                                              

for insurance policies covering multistate risks, ‘[t]he state of the insured’s

domicile is a fact known to the parties at the time of contracting, and (in the

absence of a contractual choice‐of‐law provision) application of the law of that

state is most likely to conform to their expectations[.]’” (quoting Foster Wheeler,

822 N.Y.S.2d at 34‐35)); Liberty Surplus Ins. Corp. v. Natʹl Union Fire Ins. Co. of

Pittsburgh, Pa., 888 N.Y.S.2d 35, 36 (App. Div. 1st Dep’t 2009); Travelers Cas. &

Sur. Co. v. Honeywell Intʹl, Inc., 880 N.Y.S.2d 66, 67 (App. Div. 1st Dep’t 2009);

Appalachian Ins. Co. v. Riunione Adriatic Di Sicurata, 875 N.Y.S.2d 57, 58 (App. Div.

1st Dep’t 2009); cf. Lapolla Indus., Inc. v. Aspen Specialty Ins. Co., 566 F. App’x 95,

97 (2d Cir. 2014) (summary order) (citing Foster Wheeler, 822 N.Y.S.2d at 34, 37);

Midland, 947 N.E.2d at 1179.  

26 The district court found that Mississippi law and Texas law are in conflict

regarding the circumstances under which a contract may be voided for

misrepresentation.  Fireman’s Fund, 10 F. Supp. 3d at 494‐95.  We agree.  Compare

Carroll v. Metro. Ins. & Annuity Co., 166 F.3d 802, 805 (5th Cir. 1999) (“Under

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1 As a preliminary matter, we must determine if the district

2 court looked to the wrong “insured” in its choice of law analysis.  

3 Signal claimed that its subsidiary, Signal International Texas L.P.

4 (“Signal‐Texas”), which is domiciled in Texas, owned and operated

5 the dry dock, so the relevant domicile of the insured is therefore

6 Texas.  

7 However, contrary to this claim, there is no genuine dispute

8 that Signal International, LLC, was the relevant insured under the

9 EPI Policy.  Signal’s consultant and former Senior Vice President of

10 Texas Operations, John Haley, stated in his affidavit that “Signal

11 International, L.L.C. . . . was the owner and operator of the AFDB‐5

12 Drydock.”    J.A. 1852.    Furthermore, the EPI Policy itself names

                                              

Mississippi law, if an applicant for insurance is found to have made a

misstatement of material fact in the application, the insurer that issued a policy

based on the false application is entitled to void or rescind the

policy. . . . Whether the misrepresentation was intentional, negligent, or the

result of mistake or oversight is of no consequence.”), with Mayes v. Mass. Mut.

Life Ins. Co., 608 S.W.2d 612, 616 (Tex. 1980) (“It is now settled law in this state

that . . . before [an] insurer may avoid a policy because of the misrepresentation

of the insured . . . [the insurer must prove] the intent to deceive on the part of the

insured in making [the representation] . . . .”).  

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1 “Signal International, LLC” as the “Insured[],” with an address in

2 Pascagoula, Mississippi.  J.A. 168.  Although the PPI Policy identifies

3 “[t]he First Named Insured” as “Signal International, LLC and any

4 owned . . . subsidiary,” J.A. 283, the PPI Policy identifies only Signal

5 International, LLC, by name and lists a Mississippi address for the

6 First Named Insured.    Both the EPI Policy and the PPI Policy

7 therefore evince the parties’ understanding that the insured was

8 Signal International, LLC, which was domiciled in Mississippi.   

9 Moreover, an analysis that would look to a subsidiary of the

10 insured based on the particular loss that triggered coverage would

11 be at odds with New York’s choice of law rules.  Under New York

12 law, “barring extraordinary circumstances, only one state’s law

13 should govern an insurance agreement.”   Md. Cas. Co., 332 F.3d at

14 153.    New York courts have declined to look to the location of an

15 insured’s subsidiaries in determining choice of law, because

16 “applying multiple states’ laws to the enforcement of a single

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1 insurance policy ‘defies the law as well as the traditional concerns of

2 judicial economy and uniformity.’”  See FC Bruckner Assocs., L.P. v.

3 Firemanʹs Fund Ins. Co., 944 N.Y.S.2d 84, 85‐86 (App. Div. 1st Dep’t

4 2012) (ellipses omitted) (quoting Wausau Bus. Ins. Co. v. Horizon

5 Admin. Servs. LLC, 803 F. Supp. 2d 209, 216 (E.D.N.Y. 2011)).   

6 We therefore conclude that, in determining what law governs

7 the EPI Policy, the relevant insured is Signal International LLC, and

its domicile is Mississippi.27 8   

9 Fireman’s Fund argues that the district court erred by treating

10 the insured’s domicile as dispositive of the choice of law analysis.  

                                              

27 Fireman’s Fund claims that Signal was domiciled both in Mississippi—“its

principal office” at the time of contracting—and Delaware, “its place of

incorporation.”    Fireman’s Fund Br. at 57.    However, where “the state of [a

corporate insured’s] principal place of business [and] the state of its

incorporation . . . are not the same state[,] . . . the state of the principal place of

business takes precedence over the state of incorporation” for the choice of law

analysis.    Foster Wheeler, 822 N.Y.S.2d at 36; see Honeywell, 880 N.Y.S.2d at 67

(“[F]or [choice of law] purposes, a corporate insured’s domicile is the state of its

principal place of business, not the state of its incorporation.” (citations

omitted)); cf. Certain Underwriters at Lloyds of London v. Ill. Nat’l Ins. Co., 553 F.

App’x 110, 111‐12 (2d Cir. 2014) (summary order) (citing Foster Wheeler and

applying law of the insured’s principal place of business); Restatement (Second)

of Conflict of Laws § 188 cmt. e (1971) (“At least with respect to most issues, a

corporation’s principal place of business is a more important contact than the

place of incorporation . . . .”).

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1 To the contrary, though, under New York law, the law of Signal’s

2 domicile governs the EPI Policy since the policy covers risks spread

3 across multiple states.    See, e.g., Lapolla, 566 F. App’x at 97; Foster

4 Wheeler, 822 N.Y.S.2d at 34‐36; cf. Midland, 947 N.E.2d at 1179.   

5 Nevertheless, even if the totality of the relevant contacts is

6 considered, the result is the same.  The EPI Policy’s “Declarations”

7 page states that “[t]his Insurance policy is issued pursuant to

8 Mississippi law covering surplus lines insurance.”   J.A. 168.     The

9 same page contains information specific to the Signal policy,

10 including the insured, the covered property, and the policy

premium.28 11     Signal’s 2009‐2010 Property Insurance Submission also

                                              

28 Fireman’s Fund argues that another page of the EPI Policy supports the

application of Texas law.  The page states that “[t]his insurance contract is with

an insurer not licensed to transact insurance in this state and is issued and

delivered as surplus line coverage under the Texas Insurance statutes.”  J.A. 166.  

“Surplus lines insurance allows a person who seeks to insure a Texas risk but is

unable to obtain that insurance from a Texas‐licensed insurer to seek the

insurance from an insurer who is not licensed in Texas but is an ‘eligible’ surplus

lines insurer.”    Strayhorn v. Lexington Ins. Co., 128 S.W.3d 772, 775 (Tex. App.

2004) (quoting Tex. Ins. Code Ann. § 981.001), aff’d, 209 S.W.3d 83 (Tex. 2006).  “A

surplus lines insurer is, by definition, not authorized to issue insurance in Texas.

[However,] Texas law permits surplus line insurers to provide insurance in Texas

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1 listed Mississippi as the choice of law for the property policies.  In

2 addition, in its preliminary claim statement for coverage after the

3 dry dock sank, Signal stated that the EPI Policy was “issued to a

4 Mississippi insured,” ” delivered to Signal’s offices in Mississippi,”

5 and “subject to Mississippi law and jurisdiction.”  J.A. 6462.  These

6 documents demonstrate the parties’ understanding that Mississippi

7 law would apply to the policy.  

8 The balance of the other choice of law factors does not clearly

9 favor the law of one state over another.    The EPI Policy was

10 negotiated in Virginia and New York.  Performance of the contract

11 was to take place in Texas and Mississippi, and the value of the

12 assets insured by the EPI Policy was split almost evenly between

                                              

if the insurer . . . meets certain requirements” under the Texas Insurance Code.  

Chandler Mgmt. Corp. v. First Specialty Ins. Corp., 452 S.W.3d 887, 893 (Tex. App.

2014) (citations omitted).  The fact that Signal was able to obtain the EPI Policy as

surplus lines insurance from MSI in accordance with Texas law does not answer

the question of what state’s law the parties intended to govern the substance of

the policy itself.  The designation of Mississippi law on the “Declarations” page

of the policy, combined with Signal’s designation of Mississippi as the applicable

choice of law in its 2009‐2010 Property Insurance Submission and preliminary

claim statement after the loss of the dry dock, demonstrates that the parties

intended Mississippi law to govern the policy.   

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1 those two states.    Signal is domiciled in Mississippi, and MSI is

2 domiciled in Virginia.  

3 The mere presence of the dry dock in Texas does not give

4 Texas an overriding interest in having its law govern the policy.  

5 “[T]his is merely a dispute over who—[the insured or the insurer]—

6 must bear the cost[s]” related to the loss of the dry dock.  Md. Cas.

7 Co., 332 F.3d at 155.    “[T]he interest [of a state in which a covered

8 item is located] diminishes when the question is not whether

9 someone will or can pay for the cleanup but rather who will pay.”  

10 Id. (internal quotation marks omitted).  

11 Because the parties’ understanding and the insured’s domicile

12 favor application of Mississippi law, while the other choice of law

13 factors do not favor the law of any one particular state, Mississippi

14 has the “most significant relationship to the transaction and the

15 parties,” such that Mississippi law governs the EPI Policy.  Midland,

16 947 N.E.2d at 1179 (quoting Zurich Ins. Co., 642 N.E.2d at 1068).  

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1 B. MSI Was Entitled to Void the EPI Policy under

2 Mississippi Law

3 Fireman’s Fund next argues that, even if Mississippi law

4 governs the EPI Policy, the district court’s grant of summary

5 judgment to MSI was error.  It contends that MSI failed to show that

6 the requirements to void a contract for material misrepresentation

7 were met, or that, at the very least, genuine disputes of fact preclude

8 summary judgment.   

9 1. Material Misrepresentation under              

10 Mississippi Common Law

11 “Under Mississippi law, if an applicant for insurance is found

12 to have made a misstatement of material fact in the application, the

13 insurer that issued a policy based on the false application is entitled

to void or rescind the policy.”29 14   Carroll v. Metro. Ins. & Annuity Co.,

                                              

29 Although the district court and several courts applying Mississippi law have

concluded that material misrepresentation renders a contract void ab initio, see

Fireman’s Fund, 10 F. Supp. 3d at 465, 495; Republic Fire & Cas. Ins. Co. v. Azlin,

No. 4:10‐CV‐037‐SA‐JMV, 2012 WL 4482355, at *6 (N.D. Miss. Sept. 26, 2012);

Dukes v. S.C. Ins. Co., 590 F. Supp. 1166, 1169 (S.D. Miss. 1984), affʹd, 770 F.2d 545

(5th Cir. 1985), the Mississippi Supreme Court has recently stated that “the

longstanding, well‐established law of this State renders voidable a policy issued

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1 166 F.3d 802, 805 (5th Cir. 1999).    Thus, “[i]n making . . .

2 underwriting decisions, insurers have the right to rely on the

3 information supplied in the application.”  Id. at 805‐06.  “To establish

4 that, as a matter of law, a material misrepresentation has been made

5 in an insurance application, (1) it must contain answers that are

6 false, incomplete, or misleading, and (2) the false, incomplete, or

7 misleading answers must be material to the risk insured against or

8 contemplated by the policy.”  Id. at 805 (emphasis omitted).   

9 “Whether the misrepresentation was intentional, negligent, or

10 the result of mistake or oversight is of no consequence.”  Id.   

11 If the applicant for insurance undertakes to make a

12 positive statement of a fact, if it be material to the risk,

13 such fact must be true.    It is not sufficient that he

14 believes it true, but it must be so in fact, or the policy

15 will be avoided, provided, always, that the

16 misstatement be about a material matter.   

17

                                              

as a result of material misrepresentations,” Jones‐Smith v. Safeway Ins. Co., 174 So.

3d 240, 242 (Miss. 2015).  As MSI sought a declaration that the EPI Policy is void,

the distinction makes no practical difference here.   

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1 Prudential Ins. Co. of Am. v. Estate of Russell, 274 So. 2d 113, 116 (Miss.

2 1973) (emphasis omitted) (quoting Fid. Mut. Life Ins. Co. v. Miazza, 46

3 So. 817, 819 (Miss. 1908)); see also Miazza, 46 So. at 819 (“If the

4 misstatement is material, it can make no difference as to whether or

5 not it was made in good faith.”).  

6 “A misrepresentation in an insurance application is material if

7 knowledge of the true facts would have influenced a prudent

8 insurer in determining whether to accept the risk.”  Carroll, 166 F.3d

9 at 805.    “Stated differently, a fact is material if it might have led a

10 prudent insurer to decline the risk, accept the risk only for an

11 increased premium, or otherwise refuse to issue the exact policy

12 requested by the applicant.”  Id.    

13 2. The EPI Policy’s Concealment Clause Did Not

14 Require MSI to Prove “Intent to Deceive”

15 Fireman’s Fund argues that, in order to void the EPI Policy,

16 MSI was required to prove that Signal intended to deceive MSI

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1 when it applied for insurance, regardless of whether Mississippi

2 common law would require such intent.  We disagree.   

3 The EPI policy’s “Concealment, Misrepresentation or Fraud”

4 clause (“the concealment clause”) provides that “[t]his Coverage

5 Part is void in any case of fraud by the Insured as it relates to this

6 Coverage Part at any time.  It is also void if the named insured or

7 any other insured, at any time, intentionally conceal or misrepresent

8 a material fact . . . .”  J.A. 172 (emphasis added).   

9 However, although the policy’s concealment clause permits

10 the insurer to void the policy where concealment or

11 misrepresentation is intentional, it does not state that this is the

12 exclusive ground upon which the contract may be voided.    Under

13 Mississippi law, “[w]hether the misrepresentation was intentional,

14 negligent, or the result of mistake or oversight is of no consequence”

15 in determining whether an insurer may void a policy for

16 misrepresentation or concealment.  Carroll, 166 F.3d at 805.  Nothing

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1 in the EPI Policy indicates that the concealment clause was intended

2 to foreclose MSI’s right to void a policy for material

3 misrepresentation as provided under Mississippi law, and we

4 decline to read such a limitation into the policy.  Cf. Ivison v. Ivison,

5 762 So. 2d 329, 336 (Miss. 2000) (“It is fundamental in contract law

6 that courts cannot make a contract where none exists, nor can they

7 modify, add to, or subtract from the terms of a contract already in

existence.”).30 8   We therefore conclude that MSI was not required to

9 prove that Signal intended to deceive it in order to void the policy.  

10 3. MSI Was Not Required To Request “Answers”

11 on an “Application” To Void the Policy for

12 Material Misrepresentation

13 Fireman’s Fund next argues that MSI could not void the EPI

14 Policy on grounds of material misrepresentation because MSI did

15 not demonstrate that Signal made any false or misleading “answers”

                                              

30 We note that at least one court applying Mississippi law, when confronted with

a concealment clause nearly identical to the clause present here, permitted the

insurer to seek to void the insurance policy under alternative theories of material

misrepresentation and breach of the concealment clause, while recognizing that

the latter required the statements to be “knowingly and willfully made” and the

former did not.  See Azlin, 2012 WL 4482355, at *5‐12.  

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1 on an insurance “application.”  See, e.g., Carroll, 166 F.3d at 805 (“To

2 establish that . . . a material misrepresentation has been made in an

3 insurance application, . . . it must contain answers that are false,

4 incomplete, or misleading . . . .”).  It argues that MSI did not receive

5 any false “answers” from Signal, since it did not require Signal to

6 complete a standard application in order to obtain the policy.  

7 Instead, Signal provided a property insurance submission of its own

8 creation (the 2009‐2010 Property Insurance Submission), which

9 included the 2009 Heller Report and a “Statement of Values.”  The

10 Statement of Values described the dry dock’s value as $13.6 million,

11 and the Heller Report described the possibility of the dry dock

12 sinking as a “worst case scenario” “of extremely low probability.”  

13 J.A. 2269, 2298‐99.    Fireman’s Fund claims that Signal had no

14 affirmative duty to provide further information about the dry dock

15 in the absence of a request from MSI.   

16 We are not persuaded by these arguments.  While Mississippi

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1 has frequently addressed the doctrine of material misrepresentation

2 in the context of traditional insurance applications, the Mississippi

3 Supreme Court has recognized that the doctrine arises from “a

4 principle of general application”—“the universal rule that any

5 contract induced by misrepresentation or concealment of material

6 facts may be avoided by the party injuriously affected thereby.”  

7 Prudential, 274 So. 2d at 116 (emphasis omitted) (quoting Miazza, 46

8 So. at 819); cf. Dukes v. S.C. Ins. Co., 590 F. Supp. 1166, 1169 (S.D.

9 Miss. 1984) (“[T]he Plaintiff’s suit must fail in that the policy of

10 insurance should be declared void ab initio [for material

11 misrepresentation under Mississippi law].  This is simply a general

12 principal of contract law which the special nature of insurance contracts

13 does not alter.” (emphasis added)), affʹd, 770 F.2d 545 (5th Cir. 1985).  

14 “The omission or concealment of material facts can constitute a

15 misrepresentation, just as can a positive, direct assertion.”  Davidson

16 v. Rogers, 431 So. 2d 483, 484‐85 (Miss. 1983).   

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1 It would be inconsistent with these principles to hold—as

2 Fireman’s Fund suggests—that Signal could not misrepresent the

3 dry dock’s condition simply because MSI accepted a submission of

4 Signal’s own creation in agreeing to underwrite the policy.  

5 Although MSI did not require Signal to complete a standardized

6 application, Signal nonetheless made affirmative representations

7 about the dry dock (by providing MSI with the Statement of Values

and the 2009 Heller Report) in order to induce MSI to insure it.31 8   

9 When Signal provided this information, it was required to do so in a

10 way that was not misleading, because “[i]n making [its]

11 underwriting decision[], [MSI] ha[d] the right to rely on the

12 information supplied.”  Carroll, 166 F.3d at 805; see also Golden Rule

13 Ins. Co. v. Hopkins, 788 F. Supp. 295, 301 (S.D. Miss. 1991) (“[T]he

                                              

31 This case is therefore distinguishable from those cited by Fireman’s Fund

which hold that, under Mississippi law, an “[insurance] company has no right to

rescind [a] policy because there was information, not asked for on the application

and not volunteered by the applicant, the knowledge of which would have caused

the company to refuse to insure.”  Mattox v. W. Fid. Ins. Co., 694 F. Supp. 210, 216

(N.D. Miss. 1988) (emphasis added).  Here, although it was not requested on a

standardized application, Signal volunteered information about the dry dock’s

condition.

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1 ‘innocent misrepresentation’ standard [under Mississippi

2 law] . . . operates to the benefit of the misinformed insurance

3 company.”); cf. Prudential, 274 So. 2d at 116 (“If the applicant for

4 insurance undertakes to make a positive statement of a fact, if it be

5 material to the risk, such fact must be true.” (emphasis omitted)

6 (quoting Miazza, 46 So. at 819)).   

7 By providing MSI with the Statement of Values and only the

8 2009 Heller Report, Signal represented (1) that the dry dock was

9 valued at $13.6 million, (2) that Signal was operating its facilities—

10 including the Port Arthur dockyard—in accordance with

11 “[a]cceptable standards including some industry best practices,” J.A.

12 1318, and (3) that the likelihood of the dry dock sinking was a

13 “worst‐case scenario . . . of extremely low probability,” J.A. 2298‐99.  

14 Signal made these representations despite knowing that (1) multiple

15 engineers—and its own employees—had concluded over several

16 years that the dry dock was in poor condition, in need of extensive

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1 and costly repairs, and nearing the end of its useful life, (2) several

2 engineers had concluded that the dry dock was not operating safely

3 and that extensive repairs would be required before Signal could

4 attempt to reconfigure the dry dock to extend its life, and (3) Signal

5 was not undertaking the long‐term repairs that these engineers had

6 recommended.   By selectively providing only positive information

7 about the dry dock’s condition, while failing to disclose the

8 substantial and multiple sources of information in its possession that

9 called these positive reports into question, Signal’s representations

10 to MSI amounted to a misrepresentation of the dry dock’s

condition.32 11     See Davidson, 431 So. 2d at 484‐85.    If material, this

                                              

32 Fireman’s Fund argues that the 2009‐2010 Property Insurance Submission was

sufficient to put MSI on notice that it should inquire about possible deficiencies

in the dry dock’s condition.  See Mass. Mut. Life Ins. Co. v. Nicholson, 775 F. Supp.

954, 960 (N.D. Miss. 1991) (“[T]he insurance company has the right to rely on the

information contained in the application, as long as the insurance company did

not have ‘sufficient indications that would have put a prudent man on notice.’”

(citation omitted) (quoting N.Y. Life Ins. Co. v. Strudel, 243 F.2d 90, 93 (5th Cir.

1957))).    We disagree.    Nothing in Signal’s submission suggested that the dry

dock was dilapidated, that repairs were not being made, or that it was nearing

the end of its useful life.  The Heller Report’s reference to the sinking of the dry

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1 misrepresentation provided a basis for MSI to void the policy under

2 Mississippi law.

3 4. Signal’s Misrepresentation Was Material and

4 Induced MSI To Issue the EPI Policy

5 Fireman’s Fund argues that MSI failed to show that any

6 misrepresentation that Signal might have made regarding the dry

7 dock was material or relied upon in MSI’s decision to underwrite the

8 EPI Policy.  It also argues that, at the very least, there are genuine

9 disputes of fact that should have precluded summary judgment on

10 these issues.   

11 We disagree.    The EPI Policy insured against business

12 interference and extra expenses resulting from the loss of specific

13 properties, including the dry dock.   Information that the dry dock

14 had been appraised as having a negative value, had been described

15 as dilapidated and nearing the end of its useful life, and had not

16 undergone long‐term repairs (despite the recommendations of

                                              

dock as a worst case scenario did not put MSI on notice of the need to inquire

more fully about its condition before agreeing to underwrite the policy.   

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1 multiple engineers over several years) would be highly relevant to a

2 “prudent insurer[’s]” decision to underwrite the policy, since such

3 information—if investigated and discovered to be true—would

4 indicate an increased risk of loss.  See Carroll, 166 F.3d at 805.   

5 Signal’s experience in applying for hull insurance prior to

6 applying for the EPI Policy also demonstrates the materiality of the

7 undisclosed information and Signal’s knowledge that it was

8 material.  In 2005, Signal’s insurance broker, Willis of Alabama, Inc.,

9 applied for hull insurance for the dry dock by submitting the 2002

10 Heger Report to two insurance providers—Fireman’s Fund

11 Insurance Company (“FFIC”) and Trident Marine (“Trident”).  The

12 FFIC underwriter inquired as to what repairs had been made,

13 observing that “[t]he [a]ppraisal [in the 2002 Heger report] reflects

14 an ‘Inside the United States’ net value of ($1,150,00) less than zero”

15 and that he was “going have a tough time convincing anybody” to

16 provide the requested insurance.   J.A. 4251.   Trident’s underwriter

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1 similarly questioned whether any repairs had been made, noting

2 that, according to the 2002 Heger report, “the pontoon deck of all

3 sections was found to be in poor condition and should be replaced”

4 and “Section H was also in poor condition.”    J.A. 4253.    The

5 underwriter stated that Trident “would need confirmation from the

6 [insured] that this was taken care of before [Trident] could commit

7 to cover [the dry dock].”    Id.    Thus, in both instances, the

8 underwriters considered the 2002 Heger Report’s documented

9 concerns about the dry dock significant to their underwriting

10 decisions.    Signal’s disclosure of the report permitted these

11 insurers—unlike MSI—to undertake a further investigation of the

12 dry dock’s condition before agreeing to underwrite the policy and at

13 a particular premium.   

14 We therefore find that there is no genuine dispute that

15 Signal’s misrepresentation to MSI—which presented only positive

16 information regarding the dry dock’s condition while omitting

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1 contrary information like the 2002 Heger Report—was material.  See

2 Carroll, 166 F.3d at 805; cf. King v. Aetna Ins. Co., 54 F.2d 253, 254‐55

3 (2d Cir. 1931) (“[The insured’s broker] was informed . . . by [another

4 insurer] that he must ascertain what [the insured] paid for the boat,

5 and, when [the broker] reported that [the insured] would not say, he

6 was told by [the other insurer] that [it] would not place the

7 insurance.    If this information was material to the [other insurer],

8 [the broker] must have appreciated that it would be equally material

9 to the [insurer that issued the policy].”).  

10 There is also no genuine dispute that MSI was, in fact,

11 induced to underwrite the policy based on this misrepresentation.  

12 See Carroll, 166 F.3d at 805 (“[T]he insurer that issued a policy based

13 on the false application is entitled to void or rescind the policy.”

14 (emphasis added)); see also Republic Fire & Cas. Ins. Co. v. Azlin, No.

15 4:10‐CV‐037‐SA‐JMV, 2012 WL 4482355, at *6 (N.D. Miss. Sept. 26,

16 2012) (“[M]isstatements of material fact in an application for

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1 insurance provide grounds for declaring a policy issued in reliance

2 thereon void ab initio.” (emphasis added) (quoting GuideOne Mut.

3 Ins. Co. v. Rock, No. 1:06‐CV‐218‐SA‐JAD, 2009 WL 1854452, at *2

4 (N.D. Miss. June 29, 2009))).   

5 James F. Morano, III, the MSI underwriter responsible for the

6 EPI Policy, testified at his deposition that MSI “relied upon the

7 [2009] Heller report,” which “gave a favorable overview of the

8 condition of the properties,” for information regarding the dry

9 dock’s condition.    J.A. 3241.    He further testified that, if other

10 surveys had “told [him] information that was different from the

11 information that was being provided to [him], [he] would like to see

12 it” when making his underwriting decision.    J.A. 3264.    In

13 particular, “if [Signal] had surveys to indicate [the dry dock’s]

14 deteriorated condition, [or] repairs that ha[d] been done, that would

15 be helpful.”   Id.   In a sworn declaration, Morano further stated as

16 follows:

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1 Had the conflicting information regarding the condition

2 of the drydock been provided to [MSI] before the Policy

3 was issued, I would have either declined to bind

4 coverage, or offered coverage that expressly excluded

5 claims arising out of the drydock, because the full

6 picture regarding the condition of the drydock, as

7 revealed in the many [undisclosed] engineer

8 reports . . . , portrayed a material risk of imminent

9 catastrophic failure.  

10 J.A. 5629.  Having reviewed Morano’s account and the remainder of

11 the record, we conclude that there is no genuine dispute that

12 Signal’s misrepresentation regarding the dry dock in its 2009‐2010

13 Property Insurance Submission induced MSI to underwrite the EPI

14 Policy.  

15 Because there is no genuine dispute that Signal induced MSI

16 to underwrite the EPI Policy by materially misrepresenting the dry

17 dock’s condition when it applied for coverage, the district court

18 correctly held that MSI was entitled to void the EPI Policy under

19 Mississippi law.  Consequently, Fireman’s Fund may not succeed on

20 its claim for equitable contribution against MSI that it was granted

21 on summary judgment below, as the validity of the EPI policy is a

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1 prerequisite to such a claim.

2 CONCLUSION

3 We hold that Great American’s Pollution Policy is a marine

4 insurance contract and that Great American was entitled to void the

5 policy under the doctrine of uberrimae fidei due to Signal’s failure to

6 disclose material information indicating that the dry dock was in a

7 deteriorated condition and that recommended long‐term repairs

8 were not being made.  We also hold that MSI was entitled to void

9 the EPI Policy under Mississippi law because Signal materially

10 misrepresented the dry dock’s condition when it disclosed to MSI

11 only reports reflecting positively on the dry dock, while failing to

12 disclose numerous other reports indicating that the dry dock was in

13 a dilapidated state and nearing the end of its useful life.  Because no

14 genuine disputes of fact exist as to these issues, the district court

15 properly granted Great American’s and MSI’s motions for summary

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1 judgment.    Accordingly, the judgments of the district court are

2 AFFIRMED.   

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