2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 5-27-2009 

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T he D i s t r i ctC our tent er ed s um m aryj udgm enti n favorof A ce Capi t ol , et a l., in su re rs, a n d a g a in st V a ra d a m F o u n d a tio n a n d Ja im e Ja life , o w n e rs, f in d in g th a t a2

n a v ig a tio n a l c la u s e in a m a ri n e in s u ra n c e p o lic yb a rr e d c o v e ra g e f o r d a m a g e to a v e s s e l. T h e p a rties a re f

a m ili a r w ith th e f

a c tu a l b a c k g ro u n d a n d th e leg a l issu e s, a n d b e c a u se th is is a n o t p re c e d e n tia l o p in io n , w e w ill n o t d is c u s s th e m a tte rs in d e ta il.

Fora numberof y ear s the ow ner s ’ ves s el , the “M amm a M i a, ” w as i ns ur ed to c o v e r c e rt a in o p e ra tio n s , in tera lia , i n t he ea s tand w es tcoas t s of M exi co. O n M ay23, 20 05 , t he insur ers senta qu ote t o F redr i c A . S i l berm an o f A l l i ance M ari ne R i sk M anage r s , t he ow ner s ’ br oker , bas ed on navi gat i onal l i m i t s l i s t i ng var i ous geogr aphi cal ar eas , buts t at i ng, “W arr ant ed nots outh of the Tropi c of Cancerbetw een 1s tJ une and 31s tO ct oberi ncl us i ve. ” O n M ay24, 2005, a pol i cyw as i s s ued thatdi d notm ent i on t he T ro p ic o f

C a n c e r. O n M ay26, 2005, Si l berm an r eques t ed amendm ent s t o t he pol i cy . T he next d a y , ins u re rs, v ia f

a c sim ile, a c k n o w led g e d S ilb e rm a n ’s c o m m u n ica tio n a n d sta ted th e ir under s t andi ng t hatow ner s w oul d fi nd the “a t t ache d endor s ement. . . t o be i n or der ” and t hati ns ur er s w oul d “now pr oces s form al endor s ementacc or di ngl y . ” The i ns ur er s ’ fax cl os ed w i t h, “[w ] i l l t her efor e aw ai ty ourfur t heradvi ces i n due cour s e. ” The at t ache d endor s ementi ncl uded the Tropi c of Cancerl i m i t at i on.

Si l berm an advi s ed the ow ner s ’ l ocal i ns ur ance agenti n M exi co of the i ns ur er s ’ comm uni cat i on on t he s ame day , M ay27, 2005, not i ng the cha nges t o t he navi gat i onal cl aus e.3 O n M ay31, 2005, i ns ur er s i s s ued a “ m odi fi ed” pol i cyw i t h t he Tropi c of C a n c e r l im ita tio n in c lu d e d .

O n Ju n e 5 , 2 0 0 5 , the M a m m a M ia w a s d a m a g e d w h e n it ran a g ro u n d a t it s hom e por tof Puer t o A ventur as , s out h of the Tropi c of Cancer . I ns ur er s deni ed cove r age beca us e the ac ci dentoccurr ed i n a l ocat i on out s i de the w arr ant ed ar ea. I ns ur er s and ow ners bot h fil ed d ecl arat oryact i on s.

T he D i s t r i ctC our tgr ant ed s um m aryj udgm enti n favorof i ns ur er s , r ej ect i ng the o w n ers’ co n tention that there w as a n o n -bin d ing u n il ateral m o d ifi ca ti o n . T h e C o u rt h e ld th a t th e ter m s o f

th e p o licyw e re se t o u t in th e M a y2 3 , 2 0 0 5 , q u o te f ro m in su re rs to w h ich o w n e rs h a d a g re e d in th e ir M a y2 6 , 2 0 0 5 , fa x . A d d iti o n a lly , the C o u rt re f u se d to acc eptt he ow ner s ’ t heoryt hatt he modi fi ed pol i cyw as a ca ncel l at i on, a pr emi s e that w oul d have gr ant ed the ow ner s ext ended c over age.

O n appea l , ow ner s cont end that , w hen i nt erpr et ed underD el aw ar e l aw , t he pol i cyperm i t s a part i al canc el l at i on and thatthe “modi fi ed” pol i cyact ed as a part i al canc el l at i on. C ons equent l y , t he ow ner s cl ai m thattheyw er e ent i t l ed t o a t en- day ext ens i on of cove r age w hi ch w oul d i ncl ude the dat e the M amm a M i a r an agr ound. I n the al t ernat i ve, t he ow ner s as s er tt hatt he pol i cy ’ s canc el l at i on pr ovi s i on i s ambi guous and un der D el aw are l aw m ustbe co nst rued ag ai nstthe insur ers .

W e h a v e c a re f

u llyre v iew e d th e o w n e rs’ c o n ten tio n s a n d c o n c lu d e th a t a comm on- s ens e r eadi ng of the pol i cyr evea l s thatthe ent i r e contr actm us tbe ca ncel l ed4

befor e the t en- dayext ens i on t akes eff ect . See N ew C as t l e C ount y , D el . v. N at ’ l U ni on Fi r e I ns . C o. of Pi t t s bur gh, Pa. , 243 F. 3d 744, 749- 50 ( 3d C i r . 2001) ( “D el aw ar e l aw r equi r es us t o i nt erpr eti ns ur ance contr act s ‘ i n a comm on s ens e manner ’ . . . [and t o] e x a mi n e t h e d i s p u t e d l a n g u a g e i n t h e c o n t e x to f th e e n t i r e p o l i c y ” ( c i t a t i o n o mi t t e d ) ) . No s u c h c a n c e lla tio n o c c u rr e d h e re .

W e al s o fi nd no ambi gui t yi n the ca ncel l at i on pr ovi s i on. See i d. at750 ( ambi gui t yexi s t s w her e the pr ovi s i on i s “r eas onabl yorfai r l ys us cept i bl e of di ffe r ent interpre tat ion s o r m ayh av e tw o o r m o re d iffe ren t m ea n ing s” (c it ati o n o m itted)).

A ccor di ngl y , t he ow ner s ’ ar gum ent s fai l , and w e w i l l aff i r m the J udgm ent o f th e D istric t C o u rt.