FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SENTRY SELECT INSURANCE 

COMPANY; LLOYDS SYNDICATES 588,

861 AND 1209; KELLY-RYAN INC.,

Plaintiffs-Appellants, No. 05-35323

v.  D.C. No.

ROYAL INSURANCE COMPANY OF CV-01-01956-RSM

AMERICA; ALASKA NATIONAL

INSURANCE COMPANY,

Defendants-Appellees. 

SENTRY SELECT INSURANCE 

COMPANY; LLOYDS SYNDICATES 588,

861 AND 1209; KELLY-RYAN INC.,

Plaintiffs-Appellees,

v. No. 05-35354

ROYAL INSURANCE COMPANY OF D.C. No.  AMERICA, CV-01-01956-RSM

Defendant-Appellant, OPINION

and

ALASKA NATIONAL INSURANCE

COMPANY,

Defendant. 

Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, District Judge, Presiding

Argued and Submitted

October 17, 2006—Seattle, Washington

3893
Filed April 6, 2007

Before: Dorothy W. Nelson, David R. Thompson, and

Richard A. Paez, Circuit Judges.

Opinion by Judge Thompson

3894 SENTRY SELECT INS. v. ROYAL INSURANCE
COUNSEL

Donald K. McLean, Seattle, Washington, for the plaintiffsappellants/appellees. 

Michael D. Helgren, Seattle, Washington, for the defendantsappellees/appellants. 

OPINION

THOMPSON, Senior Circuit Judge: 

Appellants and cross-appellees Kelly-Ryan, Inc., Sentry

Select Insurance Company, and Lloyd’s Syndicates 588, 861,

and 1209 (collectively, “Kelly-Ryan and the P&I Underwriters”) appeal the district court’s summary judgment in favor of

appellee and cross-appellant Royal Insurance Company

(“Royal”). The district court held that Kelly-Ryan is not entitled to indemnity from Royal under the Marine Coverage

Endorsement (“MEL”) to the Big Shield Commercial Catastrophe Liability Insurance Policy (“Big Shield policy”) issued

by Royal, because Kelly-Ryan breached its duty of uberrimae

fidei (utmost good faith) to Royal under federal maritime law.

Kelly-Ryan sought indemnification from Royal after settling a Jones Act suit, 46 U.S.C. § 30104(a) (formerly codified as 46 U.S.C. § 688(a)), with one of its maritime

employees who was electrocuted during the delivery of a prefabricated house in remote Alaska. The district court held

that, under federal maritime law, the doctrine of uberrimae

fidei required Kelly-Ryan to disclose to Royal the material

fact that employees covered under the MEL endorsement routinely worked with electrical power lines. Kelly-Ryan had not

made that disclosure. 

Kelly-Ryan and the P&I Underwriters contend that the

Royal Big Shield policy and the MEL endorsement do not

SENTRY SELECT INS. v. ROYAL INSURANCE 3897
constitute marine insurance over which we may exercise

admiralty jurisdiction, and as a result the uberrimae fidei doctrine does not apply to bar indemnification from Royal. We

agree, but affirm the district court’s summary judgment in

favor of Royal on the ground that Royal is not obligated to

provide indemnity for the injured seaman’s injuries because

those injuries did not occur in an accident covered by the

MEL endorsement. 

We do not reach the question whether the injured seaman’s

injuries were covered under the Alaska State Workers’ Compensation Act; whether covered or not under that Act, Royal

is not obligated to provide indemnity for them under the facts

of this case. 

We have jurisdiction under 28 U.S.C. § 1291 and we affirm

the district court’s summary judgment in favor of Royal.

I. BACKGROUND

This litigation arises out of an accident which occurred on

land in Napakiak, Alaska during the movement of a modular

prefabricated house from a barge to a remote construction

site. Kelly-Ryan, a construction company based in Seattle,

Washington, shipped prefabricated houses from Washington

and installed them in various Native Alaskan villages under

a contract with the federal government. When the barge carrying the houses reached Alaska, the houses were unloaded

from the barge onto “house movers,” which were large

treaded vehicles used to carry the houses to the construction

sites. 

On September 27, 2000, James Okada, a maritime

employee of Kelly-Ryan working on the tugboat Casey

Marie, was electrocuted while he was helping a Kelly-Ryan

shore-based crew deliver a prefabricated house to a building

site located approximately one and a half miles from the

shore. The shore-based crew enlisted Okada to stand on top

3898 SENTRY SELECT INS. v. ROYAL INSURANCE
of the house and lift up what were supposed to be de-powered

electrical power lines so that the house and the house mover

could pass underneath. Unfortunately, the high voltage electrical power line running into Napakiak from another village

had not been de-powered, and Okada was electrocuted, suffering severe injuries. 

Although Okada normally worked as a “seaman,” on the

day of the accident a Kelly-Ryan shore-based crew “borrowed” Okada to help them deliver the houses. For his work

with the shore-based crew, Kelly-Ryan paid Okada “cargo

time” or “lashing pay” in addition to his daily rate as a seaman. Okada sued Kelly-Ryan for negligence under the Jones

Act, 46 U.S.C. § 30104(a) (formerly codified as 46 U.S.C.

§ 688(a)), and eventually obtained a settlement in excess of

$5.2 million. 

When the accident occurred, Kelly-Ryan had several insurance policies in place covering multiple aspects of its operations. Sentry Select and Lloyd’s insure Kelly-Ryan’s vessel

operations and crewmembers under a Marine Protection and

Indemnity policy (“P&I policy”). Alaska National insures

Kelly-Ryan for various shore-based risks, including

employee-related injuries. Part One of the Alaska National

policy covers Washington and Alaska State workers’ compensation, unemployment, and disability claims, as well as claims

under the Longshore and Harbor Workers’ Compensation

Act, 33 U.S.C. § 901, et seq. Part Two of the Alaska National

policy, the employers’ liability portion, provides coverage for

bodily injuries arising out of and in the course of employment, but excludes “any obligation imposed by a workers

compensation . . . law.” 

Royal is the excess/umbrella insurer for Kelly-Ryan; its Big

Shield policy provides excess coverage over Part Two of the

Alaska National policy, Kelly-Ryan’s automobile insurance,

and Kelly-Ryan’s Commercial General Liability (“CGL”)

policy with Alaska National. The Big Shield policy does not

SENTRY SELECT INS. v. ROYAL INSURANCE 3899
provide excess coverage over claims under Part One of the

Alaska National policy or the P&I policies, and contains a

workers’ compensation exclusion excepting from coverage

“[a]ny obligation of the insured under a workers compensation . . . law.” At the time of the accident, Kelly-Ryan paid

a flat yearly premium of $17,000 for the Royal Big Shield

policy. 

In 1995, Kelly-Ryan obtained from Royal an MEL

endorsement to Part Two of the Alaska National policy

(employers’ liability) and the Royal Big Shield policy. The

MEL endorsement extended coverage for bodily injuries suffered by a “master or member of the crew of any vessel” performing work “necessary or incidental” to the following tasks:

“Painting and/or scraping of decks of tugs or barges, and

loading and unloading as applicable in Washington and Alaska.” The coverage limit on the MEL endorsement to the

employers’ liability insurance with Alaska National is $1 million; any liability in excess of $1 million, so far as applicable

in this case, is covered by the Royal Big Shield policy. 

After the accident, Kelly-Ryan, on behalf of Okada, filed

a claim for Alaska workers’ compensation benefits under Part

One of the Alaska National policy. Although Alaska National

initially processed the claim and paid benefits, it notified

Kelly-Ryan on November 9, 2000 that it was controverting

the claim because Okada was a “Jones Act crewman” whose

claim was covered under the P&I policy. Kelly-Ryan contested Alaska National’s denial of coverage under Part One of

the policy. However, rather than challenge the loss of workers’ compensation benefits, Okada in July 2001 filed suit in

the Western District of Washington against Kelly-Ryan for

damages under the Jones Act, 46 U.S.C. § 30104(a), and general maritime law. 

In May 2001, the P&I Underwriters entered an agreement

with Kelly-Ryan to defend and indemnify Kelly-Ryan for

Okada’s claim in the event Alaska National denied coverage.

3900 SENTRY SELECT INS. v. ROYAL INSURANCE
The P&I Underwriters also agreed to waive two coverage limitations that could have operated to exclude Okada’s claim. In

return, Kelly-Ryan assigned to the P&I Underwriters any and

all causes of action it had against Alaska National. 

On December 3, 2001, Kelly-Ryan and the P&I Underwriters filed the instant suit against Alaska National, requesting a

declaratory judgment on coverage and allocation of liability.

Kelly-Ryan and the P&I Underwriters later stipulated to

Okada’s “seaman” status1 at the time of his injury. On April

18, 2002, Kelly-Ryan and the P&I Underwriters moved for

summary judgment, asking the court to determine that coverage for Okada’s injuries fell under Part Two of the Alaska

National policy, the employers’ liability provision, rather than

under the P&I policies. The district court issued an order on

July 11, 2002 directing Alaska National to defend the claim

because Kelly-Ryan was “entitled to look to [Alaska National’s] MEL policy for defense and indemnification.” The court

also awarded Sentry Select attorney fees “based on the

Court’s determination that coverage for Okada’s claims are

1Okada’s status as a “seaman” working aboard the Casey Marie at the

time the accident occurred is important because the Jones Act provides a

cause of action in negligence for “any seaman” injured “in the course of

his employment.” 46 U.S.C. § 30104(a) (formerly codified as 46 U.S.C.

§ 688(a)). “Under general maritime law prevailing prior to the statute’s

enactment, seamen were entitled to ‘maintenance and cure’ from their

employer for injuries incurred ‘in the service of the ship’ and to recover

damages from the vessel’s owner for ‘injuries received by seamen in consequence of the unseaworthiness of the ship,’ but they were ‘not allowed

to recover an indemnity for the negligence of the master, or any member

of the crew.’ ” Chandris, Inc. v. Latsis, 515 U.S. 347, 354 (1995) (quoting

The Osceola, 189 U.S. 158, 175 (1903)). However, with the passage of the

Jones Act, a seaman could elect to bring a suit seeking civil damages and

a jury trial under federal maritime law, even if the situs of the tort was on

land. This is because jurisdiction under the Jones Act “depends ‘not on the

place where the injury is inflicted . . . but on the nature of the seaman’s

service, his status as a member of the vessel, and his relationship as such

to the vessel and its operation in navigable waters.’ ” Chandris, 515 U.S.

at 359-60 (alteration in original) (quoting Swanson v. Marra Bros., Inc.,

328 U.S. 1, 4 (1946)). 

SENTRY SELECT INS. v. ROYAL INSURANCE 3901
properly under the Alaska National policy.” The district court

further clarified that although liability had not yet been found,

liability would implicate Kelly-Ryan as the employer of

Okada, and therefore the P&I policy would not cover Okada’s

claims because that policy covered Kelly-Ryan only “as

owner” of the vessel Casey Marie. 

Alaska National then moved for reconsideration, arguing

that the district court’s order failed to separate the duty to

defend from the duty to indemnify. The district court denied

the motion for reconsideration, but clarified that the previous

order held only that Alaska National had a duty to defend.

The district court further held it would not look to extrinsic

evidence of the parties’ intent to determine if the Alaska

National policy covered Okada’s claim. Alaska National

sought interlocutory review from our court and on October

14, 2003, we affirmed the district court’s decision. Sentry

Select Ins. Co. v. Alaska Nat. Ins. Co., 72 Fed. Appx. 602,

2004 A.M.C. 1801 (9th Cir. 2003). 

In the meantime, on August 23, 2002, Okada settled his

claims against Kelly-Ryan for $5,276,630.47. Following the

settlement, on December 5, 2002, Kelly-Ryan and the P&I

Underwriters moved to amend their complaint to add Royal

as a defendant. They then immediately moved for summary

judgment, asking the court to determine that Alaska National

and Royal were in breach of their policies to the extent that

those insurers “are obligated to defend and/or indemnify

plaintiffs pursuant to their policy of marine insurance” and

sought “a declaration of their rights with respect to the policies of marine insurance identified above.” On January 24,

2003, the district court issued a stay pending a ruling on the

interlocutory appeal. 

The district court lifted the stay on October 27, 2003, and

the plaintiffs again moved for summary judgment, asking the

court to determine the individual insurers’ respective obligations for reimbursement for the Okada settlement. The district

3902 SENTRY SELECT INS. v. ROYAL INSURANCE
court denied the motion on March 4, 2004, and granted the

parties additional time for discovery. 

Alaska National filed a motion for partial summary judgment on September 28, 2004, seeking a declaration that Part

One of the Alaska National policy, the workers’ compensation provision, did not cover Okada’s claims. Royal opposed

Alaska National’s motion for summary judgment, arguing that

Okada’s claims were properly covered under the Alaska

National workers’ compensation provision and that the workers’ compensation exclusion in its Big Shield policy precluded liability by Royal for “[a]ny obligation of the insured

under a workers’ compensation . . . or any similar laws.”

Royal filed a motion for summary judgment on October 26,

2004, asserting that: (1) Okada’s claims did not fall within the

MEL endorsement of Part Two of the Alaska National policy;

(2) the May 2001 agreement between Kelly-Ryan and the P&I

Underwriters created other excess coverage and the P&I

Underwriters waived their rights to collect from Royal; and

(3) the MEL endorsement was void ab initio because KellyRyan violated the federal maritime doctrine of uberrimae

fidei, the duty of utmost good faith, because it failed to disclose to Royal several material facts prior to the issuance of

the MEL. Kelly-Ryan and the P&I Underwriters also filed a

motion for summary judgment on October 27, 2004, but the

district court struck the motion as untimely. 

On January 13, 2005, the district court granted Alaska

National’s motion for partial summary judgment, ruling that

the Okada settlement was not covered by Alaska workers’

compensation laws because the Okada settlement settled a

Jones Act negligence claim and not a workers’ compensation

claim. The district court stated that “it is well settled that

‘[w]here an action settles prior to trial . . . the duty to indemnify must be determined on the basis of the settlement, i.e.,

the undisputed facts set forth in the underlying complaint and

those known to the parties.’ ” (alterations in original) (quoting

Enron Oil Trading & Transp. Co. v. Underwriters of Lloyd’s

SENTRY SELECT INS. v. ROYAL INSURANCE 3903
of London, 47 F. Supp. 2d 1152, 1161 (D. Mont. 1996), aff’d

in part, rev’d in part sub nom. Enron Oil Trading & Transp.

Co. v. Walbrook Ins. Co., 132 F.3d 526 (9th Cir. 1997)). 

The district court acknowledged that Royal had alleged

there had been collusion between Sentry Select, Lloyd’s, and

Alaska National which led to the joint stipulation in the first

lawsuit that Okada was a seaman, but found that this was “beside the point at this stage in the litigation.” The district court

further noted that “[t]hose arguments go to the reasonableness

of the settlement, which cannot be relitigated” and stated that

the proper time for Royal to have raised the issue of the workers’ compensation exclusion in its Big Shield policy would

have been at the time of the settlement, when it should have

sought to apportion the settlement funds. The court found that

the “parties settled a Jones Act negligence claim, not a workers’ compensation claim, and therefore, the Workers Compensation portion of the Alaska National policy is not implicated

in the allocation of the underlying settlement fund.” Finally,

the court found that the settlement was not intended to include

any potential workers’ compensation monies and that the

clause in the settlement releasing any such claims did not

indicate an actual settlement of such a claim. 

The district court issued a separate order on January 13,

2005, granting in part and denying in part Royal’s motion for

summary judgment. The court denied Royal’s motion insofar

as it rejected Royal’s contention that Okada’s injuries fell outside the scope of the MEL endorsement. The district court

first found that the terms “loading and unloading” in the MEL

endorsement are ambiguous, and that Washington law

required it to “give effect to the reasonable interpretation most

favorable to the insured.” Because the terms “loading and

unloading” appeared in a clause relating to coverage rather

than exclusion of coverage, the court found that a broad interpretation was appropriate. The court then adopted a definition

of the terms under the “complete operation theory,” which

defines “loading and unloading” as “the entire process

3904 SENTRY SELECT INS. v. ROYAL INSURANCE
involved in the movement of the article, thereby omitting any

distinction between ‘loading’ and preparatory activities or

‘unloading’ and ‘delivery.’ ” (citing Transamerica Ins. Group

v. United Pac. Ins. Co., 92 Wn. 2d 21, 25, 593 P.2d 156

(1979), overruled on other grounds by State v. Olson, 126

Wn. 2d 315, 893 P.2d 629 (1995)). 

The court next determined that Okada’s employment was

“incidental” to “loading and unloading,” referencing the definition in the Merriam-Webster online dictionary which

defined incidental as “being likely to ensue as a chance or

minor consequence.” The court then stated: “There is no question that part of Mr. Okada’s employment duties was to assist

the shore-based crew move [sic] houses from the tug boat to

the construction site. The Court has already determined that

he was in the process of ‘unloading’ the house at the time he

was injured.” Therefore, the court reasoned, Okada’s claims

fell within the MEL endorsement. 

The district court granted Royal’s motion for summary

judgment on uberrimae fidei because it found that Kelly-Ryan

failed to disclose material facts about what type of work its

vessel employees performed. The district court found “disingenuous” Kelly-Ryan and the P&I Underwriters’ contention

that the federal maritime law of uberrimae fidei was inapplicable because Kelly-Ryan brought the suit in admiralty and

initially argued that the Big Shield policy was marine insurance. 

The district court then rejected Kelly-Ryan and the P&I

Underwriters’ argument that, even if federal maritime law

applied, Kelly-Ryan did not have a duty to disclose that its

employees would be handling high-voltage power lines

because it knew only that they would be working with lowvoltage lines. The district court found that this excuse “mischaracterizes the real issue,” reasoning that “any reasonable

person knows that when handling power lines, whether low

voltage or high voltage, there is a risk of handling a wire that

SENTRY SELECT INS. v. ROYAL INSURANCE 3905
has not been de-powered and injury could occur.” Accordingly, the court determined that Kelly-Ryan had violated the

duty of utmost good faith and that “Royal may void its excess

liability policy as to Mr. Okada’s injuries pursuant to the

uberrimae fidei doctrine.” Finally, because the district court

granted summary judgment in favor of Royal on the issue of

uberrimae fidei, it did not address Royal’s second contention

that the P&I Underwriters waived Royal’s obligation to provide coverage in excess of the MEL portion when they agreed

to defend and indemnify Kelly-Ryan. 

Kelly-Ryan and the P&I Underwriters timely appeal to this

court the district court’s summary judgment in favor of Royal

on uberrimae fidei. Royal timely cross-appeals the district

court’s summary judgment in favor of Alaska National on the

question of workers’ compensation coverage, and in favor of

Kelly-Ryan and the P&I Underwriters on coverage for

Okada’s injuries under the MEL endorsement. 

II. STANDARD OF REVIEW

We review de novo whether the district court had subject

matter jurisdiction, and we must accept the district court’s

factual findings on jurisdiction unless they are clearly erroneous. Reebok Int’l, Ltd. v. Marnatech Enters., Inc., 970 F.2d

552, 554 (9th Cir. 1992). 

“A grant of summary judgment is reviewed de novo. Our

review is governed by the same standard used by the district

court under Fed. R. Civ. P. 56(c).” Certain Underwriters at

Lloyd’s v. Montford, 52 F.3d 219, 221-22 (9th Cir. 1995)

(citation omitted). Under Federal Rule of Civil Procedure

56(c), “[t]he judgment sought shall be rendered forthwith if

the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of law.”

3906 SENTRY SELECT INS. v. ROYAL INSURANCE
We review de novo the district court’s analysis of contractual language and its application of principles of contract

interpretation. Miller v. Safeco Title Ins. Co., 758 F.2d 364,

367 (9th Cir. 1985).

III. DISCUSSION

A. Jurisdiction

1. Admiralty Jurisdiction

Royal argues that Kelly-Ryan either waived or is estopped

from raising the argument that the Big Shield policy is not

marine insurance because it brought this action in admiralty,

initially claiming that the policy is a marine insurance contract over which we have admiralty jurisdiction. Royal also

points out that Kelly-Ryan and the P&I Underwriters cannot

have it “both ways”— they cannot simultaneously argue that

the Big Shield policy is not maritime insurance and that it

covers Okada’s Jones Act claim. 

[1] We disagree. Although Kelly-Ryan and the P&I Underwriters did not challenge admiralty jurisdiction until later in

the course of the litigation, their failure to challenge the district court’s subject matter jurisdiction earlier did not waive

such a challenge. See Attorneys Trust v. Videotape Computer

Prods., Inc., 93 F.3d 593, 594-95 (9th Cir. 1996). A “disappointed plaintiff” may attack subject matter jurisdiction for

the first time on appeal, id. at 595, and may raise a jurisdictional issue even though it is not of “constitutional magnitude.” Clinton v. City of New York, 524 U.S. 417, 428 (1998).

It is inconsequential to our jurisdictional analysis whether

Kelly-Ryan at one point claimed that the policy was a marine

insurance policy, because even a joint stipulation cannot cure

a jurisdictional defect. See Rains v. Criterion Sys., Inc., 80

F.3d 339, 342 (9th Cir. 1996); see also Galt G/S v. HapagLloyd AG, 60 F.3d 1370, 1373 (9th Cir. 1995) (“[W]e inquire

sua sponte whether admiralty or diversity jurisdiction proSENTRY SELECT INS. v. ROYAL INSURANCE 3907
vided the district court with an independent basis for federal

subject matter jurisdiction . . . .”). 

[2] We thus turn to the question whether admiralty jurisdiction exists over Kelly-Ryan’s claim against Royal. Admiralty

jurisdiction hinges on whether the Big Shield insurance policy

with the MEL endorsement is a maritime insurance contract.

See Insurance Co. v. Dunham, 78 U.S. (11 Wall.) 1, 35-36

(1870) (holding that admiralty jurisdiction extends to maritime insurance contracts). If the Big Shield policy is maritime,

“and the dispute is not inherently local, federal law controls

the contract interpretation.” Norfolk S. Ry. Co. v. Kirby, 543

U.S. 14, 23 (2004) (citing Kossick v. United Fruit Co., 365

U.S. 731, 735 (1961)). 

Unfortunately, it is often difficult to determine whether a

contract is maritime because there are few “clean lines

between maritime and non-maritime contracts,” Norfolk S. Ry.

Co., 543 U.S. at 23, and the separation between the two is

“conceptual rather than spatial,” Kossick, 365 U.S. at 735.

The conceptual boundary is defined by the purpose of the

jurisdictional grant — “the protection of maritime commerce.” Exxon Corp. v. Cent. Gulf Lines, Inc., 500 U.S. 603,

608 (1991) (internal quotation marks omitted). 

[3] To ascertain whether an insurance policy is maritime,

we must examine the “nature and subject-matter” of the contract, Exxon Corp., 500 U.S. at 611, and “the true criterion is

whether it has reference to maritime service or maritime

transactions,” Norfolk S. Ry. Co., 543 U.S. at 23-24 (internal

quotation marks omitted). Under the old and now outdated

rule, admiralty jurisdiction was said to be reserved to “contracts, claims, and services purely maritime,” Rea v. The

Eclipse, 135 U.S. 599, 608 (1890) (emphasis added). We have

recognized two exceptions to this “purely maritime” rule. 

First, admiralty may take jurisdiction of an entire

contract if the nonmaritime obligations are merely

3908 SENTRY SELECT INS. v. ROYAL INSURANCE
incidental to the primary maritime nature of the contract. Second, if the nonmaritime obligations are substantial, admiralty may take jurisdiction over any

maritime obligations that can be severed from the

nonmaritime obligations and separately adjudicated

without prejudice to the parties.

Simon v. Intercontinental Transp. (ICT) B.V., 882 F.2d 1435,

1442 (9th Cir. 1989) (citations omitted); see also La Reunion

Francaise SA v. Barnes, 247 F.3d 1022, 1025 (9th Cir. 2001).

The Supreme Court’s later decision in Norfolk Southern

Railway Co. v. Kirby, 543 U.S. 14, undercuts the continuing

force of these two exceptions by our court. See Miller v. Gammie, 335 F.3d 889, 899-900 (9th Cir. 2003) (en banc) (holding

that a three-judge panel may depart from circuit precedent

that has not been “expressly overruled” when an intervening

en banc or Supreme Court decision has “undercut the theory

or reasoning underlying the prior circuit precedent in such a

way that the cases are clearly irreconcilable”). 

[4] The dispute in Norfolk centered on whether a “through”

bill of lading, a single bill of lading under which “cargo owners can contract for transportation across oceans and to inland

destinations in a single transaction,” was a maritime contract

despite providing for significant land transit by rail. Norfolk

S. Ry. Co., 543 U.S. at 26. The sea leg of the journey was successful, but the train carrying the cargo inland derailed en

route, causing approximately $ 1.5 million in damage to the

cargo. Id. at 21. The Supreme Court held that although the

accident occurred during the land portion of the journey, the

entire bill of lading was nonetheless a maritime contract over

which admiralty jurisdiction extended. The Court explained

that courts cannot simply ask “whether a ship or other vessel

was involved in the dispute,” or focus solely on “the place of

the contract’s formation or performance.” Id. at 23-24. Rather,

the dispositive inquiry must be “whether the principal objective of [the] contract is maritime commerce.” Id. at 25. 

SENTRY SELECT INS. v. ROYAL INSURANCE 3909
In articulating the “primary objective test,” the Norfolk

Court explicitly rejected the spatial approach adopted by some

lower federal courts, which had determined whether a contract was maritime by assessing whether its land components

were “incidental” to its maritime components. Id. at 26. The

Court reasoned that “it seems to us imprecise to describe the

land carriage required by an intermodal transportation contract as ‘incidental’; realistically, each leg of the journey is

essential to accomplishing the contract’s purpose.” Id. at 26-

27. The Court then found the “incidental” test inconsistent

with the conceptual approach and overruled it “to the extent

. . . that [it] depends solely on geography.” Id. at 27. In finding that the “through” bill of lading was a maritime contract

governed by federal law, the Court explained that its “primary

objective [was] to accomplish the transportation of goods by

sea from Australia to the eastern coast of the United States.”

Id. at 24. The Court emphasized that the bill of lading’s “character as a maritime contract is not defeated simply because it

also provides for some land carriage” and that

“[c]onceptually, so long as a bill of lading requires substantial

carriage of goods by sea, its purpose is to effectuate maritime

commerce—and thus it is a maritime contract.” Id. at 27. 

Here, Royal argues that the Big Shield policy is a maritime

insurance contract because the maritime obligations contained

in the MEL endorsement can be severed from the Big Shield

policy. However, we find that our “severability” exception

collapses in the wake of the Norfolk Court’s conceptuallybased “primary objective” test. First, severing the maritime

components from the non-maritime components is inconsistent with the Court’s directive that we look to whether the

“principal objective of a contract is maritime commerce.” Id.

at 25. Second, although the Court in Norfolk rejected a purely

spatial approach, the Court stated that “[g]eography [ ] is useful . . . only in a limited sense: [i]f a bill’s sea components are

insubstantial, then the bill is not a maritime contract.” Id. at

27 (emphasis in original). The severability exception incorrectly focuses on the severability of the sea components, not

3910 SENTRY SELECT INS. v. ROYAL INSURANCE
on whether they are insubstantial in comparison to the land

components. Third, if the Court had wished to recognize a

severability exception, then there could not have been a better

context in which to fashion this exception than the intermodal

shipment context — the Court could have treated the ocean

shipping leg as maritime and severed the non-maritime land

leg of the bill of lading. Yet instead, the Court employed a

“primary objective” test which examined the contract as a

whole to determine whether its primary purpose was to protect or affect maritime commerce. 

In rejecting the lower courts’ piecemeal approach, the Norfolk Court undermined the viability of our “severability”

exception. Id. at 27; see also Folksamerica Reinsurance Co.

v. Clean Water of New York, 413 F.3d 307, 315 (2d Cir. 2005)

(re-working the Second Circuit’s “incidental exception” such

that it focuses “on whether the principal objective of a contract is maritime commerce, rather than on whether the nonmaritime components are properly characterized as more than

‘incidental’ or ‘merely incidental’ to the contract,” and holding that “admiralty jurisdiction will exist over an insurance

contract where the primary or principal objective of the contract is the establishment of policies of marine insurance”

(internal quotation marks and citations omitted)). Therefore,

we decline to apply the “severability” exception and focus

instead on whether the “primary objective” of the Big Shield

policy was to provide insurance coverage for maritime commerce. See Miller, 335 F.3d at 899-900. 

[5] When considered as a whole, the Big Shield policy,

even as amended by the MEL endorsement, fails the Norfolk

Court’s “primary objective” test because the principal purpose

of the policy is to provide umbrella coverage in excess of

Kelly-Ryan’s “shore-side” insurance policies, not to protect

Kelly-Ryan’s maritime commerce operations. 

Consistent with most shore-side commercial general liability (“CGL”) insurance contracts, the Big Shield policy

SENTRY SELECT INS. v. ROYAL INSURANCE 3911
excludes traditional marine risks such as pollution and contains a Watercraft Limitation. The Watercraft Limitation limits liability for any bodily injury or property damage arising

out of “ownership, maintenance, operation, use, loading or

unloading of any watercraft” to that covered by the underlying insurance; the underlying Alaska National policy excludes

“bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use [including loading or unloading] or

entrustment to others of any aircraft, auto or watercraft owned

or operated by or rented or loaned to any insured.” See 9

Couch on Insurance § 127:37 (3d ed. 2006) (stating that typical CGL policies “exclude coverage for damages arising out

of the ownership, maintenance, use, loading, or unloading of

a watercraft”). 

The only portion of the Big Shield policy relating to maritime commerce is the MEL endorsement, which Royal considered so insignificant that it did not charge an increased

premium when the endorsement was added. While the MEL

endorsement extends coverage for bodily injury to a master or

member of the crew of a vessel, the description of the work

covered under the MEL is confined to the typical shore-side

activities of “[p]ainting and/or scrubbing of decks of tugs or

barges, and loading and unloading as applicable in Washington and Alaska.” Moreover, Royal itself argued that it never

imagined that the MEL endorsement would cover Jones Act

crewmen or insure against maritime risks because Kelly-Ryan

consistently represented that its marine-related risks were

insured through others. Furthermore, Kelly-Ryan obtained

separate P&I coverage through the P&I Underwriters to cover

personal injury to Kelly Ryan’s crew members, vessels, and

maritime operations. 

[6] When considered as a whole, the “sea components [of

the Big Shield policy, even with the MEL endorsement,] are

insubstantial,” Norfolk S. Ry. Co., 543 U.S. at 27, and lack the

“genuinely salty flavor” of a marine insurance contract, id. at

22 (quoting Kossick, 365 U.S. at 742). Moreover, the linkage

3912 SENTRY SELECT INS. v. ROYAL INSURANCE
between the employers’ liability policy and maritime commerce is “too tenuous to justify classifying the insurance . . .

as a maritime obligation or interest sufficient to bring the policies . . . within the pale of admiralty jurisdiction.” Simon, 882

F.2d at 1443. Neither the primary interests insured nor the

principal risks insured against in the Big Shield policy, even

considering as well the MEL endorsement, are fundamentally

maritime in nature; thus, Kelly-Ryan’s claim for indemnity

under the Big Shield policy for the cost of the Okada settlement is not a maritime insurance contract claim over which

we may exercise admiralty jurisdiction. 

2. Supplemental Jurisdiction

Although admiralty jurisdiction does not extend to the Big

Shield policy, the district court had supplemental jurisdiction

over Kelly-Ryan’s claim against Royal under 28 U.S.C.

§ 1367. As required under section 1367, the district court had

original jurisdiction in admiralty over the suit because the initial suit sought a declaratory judgment, in part, on policies of

marine insurance issued by the P&I Underwriters. The district

court had supplemental jurisdiction over Kelly-Ryan and the

P&I Underwriters’ claim against Royal because that claim

was “so related to claims in the action within such original

jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28

U.S.C. § 1367(a). 

B. Application of State Law 

[7] Because admiralty jurisdiction does not extend to KellyRyan’s claim for indemnity against Royal, federal admiralty

law does not apply. See Norfolk S. Ry. Co., 543 U.S. at 23

(“[F]or federal common law to apply in these circumstances,

this suit must also be sustainable under the admiralty jurisdiction. Because the grant of admiralty jurisdiction and the

power to make admiralty law are mutually dependent, the two

are often intertwined in our cases.” (citation omitted)). ThereSENTRY SELECT INS. v. ROYAL INSURANCE 3913
fore, we do not apply the federal maritime doctrine of uberrimae fidei. 

[8] Applying Washington State law instead, we conclude

that the Big Shield policy and the MEL endorsement are not

void for misrepresentation or for the failure to disclose material facts because Kelly-Ryan did not have the requisite intent

to deceive. Under Washington law, “no oral or written misrepresentation or warranty made in the negotiation of an

insurance contract, by the insured or in his behalf, shall be

deemed material or defeat or avoid the contract or prevent it

attaching, unless the misrepresentation or warranty is made

with the intent to deceive.” Wash. Rev. Code § 48.18.090(1);

see also Cutter & Buck, Inc. v. Genesis Ins. Co., 306 F. Supp.

2d 988, 1004 (W.D. Wash. 2004), aff’d, 144 Fed. Appx. 600

(9th Cir. 2005). In addition, Royal’s bare allegation that

Kelly-Ryan made false or misleading statements during the

course of negotiations regarding coverage for Jones Act

claims under the MEL endorsement is not sufficient for us to

conclude that Kelly-Ryan knowingly made false material

statements giving rise to the presumption of “intent to

deceive” under Washington law. See Wilburn v. Pioneer Mut.

Life Ins. Co., 8 Wash. App. 616, 620, 508 P.2d 632 (1973).

C. Liability under the MEL Endorsement 

[9] Applying Washington State law to the question whether

Royal is obligated to provide indemnity for the Okada settlement, we hold that Royal is not so obligated because Okada’s

injuries did not result from an accident covered by the MEL

endorsement. 

[10] The MEL endorsement extended insurance coverage

by Royal for bodily injury suffered by a “master or member

of the crew” of a Kelly-Ryan vessel when such person was

performing work “necessary or incidental” to “Painting and/or

scraping of decks of tugs or barges, and loading and unloading as applicable in Washington and Alaska.” The injured per3914 SENTRY SELECT INS. v. ROYAL INSURANCE
son in the present case, Okada, was not injured during the

performance of any of these tasks. 

Kelly-Ryan contends, and the district court concluded, that

Okada was injured while “unloading” the prefabricated house

from the barge to the house mover, which included delivery

of the house to the construction site. We disagree. 

Although the district court correctly determined that the

term “loading and unloading” is ambiguous under Washington law, the court erred in failing to consider the definition of

“loading and unloading” contained in the CGL policy as

extrinsic evidence of the parties’ intent. The CGL policy contains a definition of “loading or unloading,” and that policy

was relevant extrinsic evidence because the Big Shield policy,

to which the MEL endorsement applied, was an umbrella policy of insurance in excess of both the CGL and employers’

liability policy. The nature of this umbrella policy “as an

additional layer of excess coverage suggests the parties

intended to provide the same coverage as the underlying [ ]

policy.” Pub. Util. Dist. No. 1 v. Int’l Ins. Co., 124 Wn.2d

789, 799, 881 P.2d 1020 (1994). 

To determine the intent of the parties in the face of ambiguity, we look first to “evidence of the situation and relations of

the parties, the subject matter of the transaction, preliminary

negotiations and statements made therein, usages of trade, and

the course of dealing between the parties.” Berg v. Hudesman,

115 Wn.2d 657, 668, 801 P.2d 222 (1990) (quoting Restatement (Second) of Contracts § 212 cmt. b (1981)). Accord

Pub. Util. Dist. No. 1, 124 Wn.2d at 799 (applying rule of

Berg to interpret a marine insurance contract). 

[11] We may examine the underlying CGL policy as evidence of the parties’ intent under Washington law because it

is an “[a]greement[ ] . . . contemporaneous with the adoption

of a writing [that is] admissible in evidence to establish . . .

the meaning of the writing, whether or not integrated.” Berg,

SENTRY SELECT INS. v. ROYAL INSURANCE 3915
115 Wn.2d at 668 (first and fifth alterations in original) (quoting Restatement (Second) of Contracts § 214(c)). The CGL

policy’s definition of “loading or unloading” clearly does not

encompass the delivery of a house on a house mover to a construction site: 

11. “Loading or unloading” means the handling of

property

. . .

c. While it is being moved from an aircraft, watercraft or “auto” to the place

where it is finally delivered;

but “loading or unloading” does not

include the movement of property by

means of mechanical device, other than

a hand truck, that is not attached to the

aircraft, watercraft or “auto.”

In addition, under the Big Shield policy, the house mover

would be a piece of “mobile equipment” because it is a

“[v]ehicle[ ] that travel[s] on crawler treads” as defined by the

Big Shield policy. Considering both of these definitions, we

conclude that the house mover is a piece of “mobile equipment” under the Big Shield policy and under the CGL policy

it is a “mechanical device . . . that is not attached to the . . .

watercraft.” This strongly supports Royal’s contention that the

parties never intended “unloading” to encompass the movement of a house on a house mover to a construction site. 

Furthermore, if any ambiguity remains after resort to the

foregoing extrinsic evidence, the district court should have

looked to evidence of trade usage to assess the reasonableness

of the parties’ interpretations. See Pub. Util. Dist. No. 1, 124

Wn.2d at 799 (“To determine the parties’ intent, the court first

will view the contract as a whole, examining its subject matter

. . . and the reasonableness of [the parties’] respective inter3916 SENTRY SELECT INS. v. ROYAL INSURANCE
pretations.”); Berg, 115 Wn.2d at 668 (court may look to

usages of trade). Under Washington law, “the general rule is

that such language [technical or terms of art] is to be given its

technical meaning when used in a transaction within its technical field.” Berg, 115 Wn.2d at 666 (citing Keeton v. Dep’t

of Soc. & Health Servs., 34 Wash. App. 353, 361, 661 P.2d

982 (1983); Restatement (Second) of Contracts § 202(3)(b)

(1981)). 

Expert testimony was presented in this case on the definition of “unloading” in the maritime context. Experts from

both of the P&I Underwriters answered in the affirmative

when asked if “in the industry generally, unloading cargo is

deemed to mean offloading it from the vessel onto another

dock, wharf or another vessel.” In addition, Alaska National’s

underwriter testified that he too understood the transportation

of the houses on the house movers to be outside the scope of

“unloading” coverage under the MEL. 

The district court, however, erroneously borrowed a definition of “unloading” from the automobile context, defining

“unloading” under a “complete operations theory” as “the

entire process involved in the movement of the article,

thereby omitting any distinction between ‘loading’ and preparatory activities or ‘unloading’ and ‘delivery.’ ” Transamerica

Ins. Group, 92 Wn.2d at 25. The district court should not have

adopted this definition of “unloading” wholesale from the

automobile insurance context. Coverage under an automobile

insurance policy generally turns on whether an accident arises

out of “operation, maintenance and use” of a vehicle, which

clearly shapes the definition of “loading and unloading.” See

6B-184 Appleman on Insurance Law & Practice § 4322 (1st

ed. 2006) (“[E]ach case must be treated according to the facts

involved, taking into consideration the connection between

the unloading or loading and the operation, maintenance and

use of the vehicle, construing such coverage as an extension

of, rather than a limitation upon, the operation, maintenance,

and use clause.”). 

SENTRY SELECT INS. v. ROYAL INSURANCE 3917
Moreover, the Washington State cases on which the district

court relied2 were decided prior to the Washington Supreme

Court’s decision in Berg, 115 Wn.2d at 668-70, in which the

Court adopted the Second Restatement’s context rule that

ambiguities are to be construed in light of extrinsic evidence

of the parties’ intent. The ambiguous use of “unloading” in

this case is resolved by the applicable extrinsic evidence as to

the parties’ intent. The term “unloading” does not include

delivery of the prefabricated house to its construction site, a

mile and a half inland from the wharf where the house was

unloaded from the barge onto the house mover. Therefore,

Okada was not injured during the “unloading” of the house.3

Kelly-Ryan also argues that Okada’s work atop the house

mover fell within the MEL endorsement’s requirement that an

accident occur during work which is “necessary or incidental”

to “unloading.” We disagree. Moving a house on a house

mover over a mile inland is clearly not “necessary” to complete the “unloading” of the house from the barge. KellyRyan’s contention that delivery to a remote construction site

is “incidental” to “unloading” from the barge is also unpersuasive because it leads to an unreasonable and strained construction of the word “incidental.” Transcontinental Ins. Co.

v. Wash. Pub. Utils. Dists. Util. Sys., 111 Wn.2d 452, 457,

2McDonald Indus., Inc., 95 Wn.2d at 914; Transamerica Ins. Group, 92

Wn.2d at 25; Fiscus Motor Freight, Inc. v. Universal Sec. Ins. Co., 53

Wash. App. 777, 770 P.2d 679 (1989). 

3The Washington Supreme Court has acknowledged that there exists a

“a split of authority as to whether ‘loading and unloading’ extends coverage to include that time when the goods are ‘at rest’ or until there is a

completed operation.’ ” McDonald Indus., Inc. v. Rollins Leasing Corp.,

95 Wn. 2d 909, 914, 631 P.2d 947 (1981); see also Transamerica Ins.

Group, 92 Wn.2d at 25. The district court erred in adopting a definition

most favorable to the insured because we do not apply the contra-insurer

rule of interpretation where the insured or its broker has drafted the ambiguous language, which was what occurred in this case. See Travelers

Indem. Co. v. United States, 543 F.2d 71, 74 (9th Cir. 1976) (stating that

the rule of strict construction “has no applicability when the language is

supplied by the insured, his agent or his broker”). 

3918 SENTRY SELECT INS. v. ROYAL INSURANCE
760 P.2d 337 (1988) (“[A] policy should be given a practical

and reasonable interpretation rather than a strained or forced

construction that leads to an absurd conclusion, or that renders

the policy nonsensical or ineffective.”). 

Kelly-Ryan’s suggested definition of “incidental” is also

inconsistent with the ordinary meaning of that term. Black’s

Law Dictionary defines “incidental” as “[d]epending upon or

appertaining to something else as primary, something necessary, appertaining to, or depending upon another, which is

termed the principal; something incidental to the main purpose.” Black’s Law Dictionary 686 (5th ed. 1979). Webster’s

similarly defines “incidental” as “[s]ubordinate, nonessential,

or attendant in position or significance: as a: occurring merely

by chance or without intention or calculation . . . b: being

likely to ensue as a chance or minor consequence.” Webster’s

Third New International Dictionary 1142 (1986). The activities subsequent to the transfer of the prefabricated house to

the house mover — driving the house mover over a mile

inland, dispatching a crew to accompany the mover and

secure the route, coordinating the depowering of multiple

power lines, and unloading the house from the house mover

to the construction site — cannot possibly be considered

“chance or minor consequence[s]” dependent upon or incidental to the “main purpose” of the transfer of the house from

the barge to the house mover. 

IV. CONCLUSION

Because the Big Shield policy, even with the MEL endorsement, is not a marine insurance policy over which admiralty

jurisdiction extends, we reverse the district court’s summary

judgment in favor of Royal on uberrimae fidei. Federal law

does not apply to Kelly-Ryan’s claim for indemnity against

Royal. Applying Washington State law, we decline to void

the MEL endorsement because Royal has failed to demonstrate that Kelly-Ryan acted with the requisite “intent to

deceive” in negotiating and applying for that endorsement.

SENTRY SELECT INS. v. ROYAL INSURANCE 3919
However, Royal is not obligated to provide indemnity for

Okada’s injuries because the accident that caused those injuries was not an event covered by the MEL endorsement or by

the Big Shield policy. 

The parties shall each bear their own costs for this appeal.

The district court’s summary judgment in favor of Royal is 

AFFIRMED. 

3920 SENTRY SELECT INS. v. ROYAL INSURANCE