Opinion ID: 472582
Heading Depth: 1
Heading Rank: 3

Heading: lexington's liability

Text: 6 Lexington's first argument for reversal is that the district court erred in finding that the alleged misrepresentations made by the insured did not void the policy. 7 Nothing is better established in the law of marine insurance than that a mistake or commission material to a marine risk, whether it be wilful or accidental, or result from mistake, negligence or voluntary ignorance, avoids the policy. And the same rule obtains, even though the insured did not suppose the fact to be material. 8 Fireman's Fund Insurance Co. v. Wilburn Boat Co., 300 F.2d 631, 646 (5th Cir.), cert. denied, 370 U.S. 925, 82 S.Ct. 1562, 8 L.Ed.2d 505 (1962) (emphasis in original) (citation omitted); see also Gulfstream Cargo, Ltd. v. Reliance Insurance Co., 409 F.2d 974, 980 (5th Cir.1969). A material fact is any fact, 'the knowledge or ignorance of which would naturally influence an insurer in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of insurance.'  300 F.2d at 640 (citations omitted). 9 Lexington claims that Hall & Co., Austin's broker, misrepresented Austin's maritime experience by stating that Austin had owned and operated the AMAZON TRADER for twelve years, that Austin owned numerous other maritime interests including twenty fishing vessels, and that Austin was contemplating the purchase of two new vessels, when in fact Austin had just purchased the AMAZON TRADER, had previously owned only one other vessel, an oilfield supply boat, and was not contemplating the purchase of additional vessels. Lexington further claims that the alleged misrepresentations were material to its determination of the risk. 10 Lexington cites the testimony of one witness, Niels Aaskov, an employee of Lexington's underwriting agent, Southeastern Risk Specialists, to support its contentions. Aaskov testified, based on a worksheet prepared at the time, that an employee of Hall & Co., Frank Sioli, informed him that the owner of the AMAZON TRADER had owned and operated the vessel for twelve years, that the owner owned numerous other vessels, and that the owner was contemplating the purchase of two other vessels. Later, on cross-examination, Aaskov testified that, in addition to gathering information on the current owner, he also compiled information concerning the previous owner. The previous owner of the vessel, Hines Worbs, had operated the vessel for twelve years, owned numerous other vessels, and was contemplating the purchase of two new vessels. 11 The district court also had before it the testimony of several other witnesses concerning the alleged misrepresentations. Sioli, the agent who contacted Aaskov concerning coverage for the AMAZON TRADER, testified that he met with Austin before contacting Aaskov and that he knew Austin owned the vessel. He further testified that he knew that the previous owner had not retained any ownership interest or managerial involvement with the vessel and that nothing in Hall & Co.'s files reflected that Sioli ever told Aaskov otherwise. Austin also testified that he told Sioli and the president of Hall & Co. that he owned the vessel. Furthermore, Lexington issued the policy to: Aulemic, Inc. and Mr. James D. Austin, c/o Mr. James D. Austin. 12 We do not believe the district court's finding that no material misrepresentation occurred is clearly erroneous, see Fed.R.Civ.P. 52, as it is plausible in light of the record viewed in its entirety. Anderson v. City of Bessemer City, 470 U.S. 564, ----, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518, 528 (1985). Based on the testimony before it, the district court easily could have decided that Sioli provided Aaskov with the correct information and that Aaskov somehow confused the past owner's experience with the present owner's experience. Since the district court's finding is plausible, we cannot disturb it. 4
13 Lexington next contends that the policy was void from its inception because Austin allowed the vessel to sail in an unseaworthy condition. 14 A warranty of seaworthiness by the owner is implied in every hull insurance policy unless expressly waived. The warranty is a continuing obligation that the owner, from bad faith or neglect, will not knowingly permit the vessel to break ground in an unseaworthiness condition.... The consequence of a violation of this 'negative' burden is merely a denial of liability for loss or damage caused proximately by such unseaworthiness. 15 Insurance Co. of North America v. Board of Commissioners, 733 F.2d 1161, 1165 (5th Cir.1984) (citations omitted); see also D.J. McDuffie, Inc. v. Old Reliable Fire Insurance Co., 608 F.2d 145, 147 (5th Cir.1979), cert. denied, 449 U.S. 830, 101 S.Ct. 97, 66 L.Ed.2d 35 (1980); Saskatchewan Government Insurance Office v. Spot Pack, Inc., 242 F.2d 385, 388 (5th Cir.1957). The law presumes that every vessel is seaworthy until the contrary is proved, and the burden of proving unseaworthiness lies with the insurance company. Hanover Fire Insurance Co. v. Holcombe, 223 F.2d 844, 845-46 (5th Cir.), cert. denied, 350 U.S. 895, 76 S.Ct. 154, 100 L.Ed. 787 (1955). 16 Lexington contends that the AMAZON TRADER was unseaworthy in two respects: (1) various mechanical deficiencies rendered the vessel unseaworthy and (2) the incompetence of the crew rendered the vessel unseaworthy. Lexington relies on the testimony of two expert witnesses to the effect that the vessel was unseaworthy due both to mechanical deficiencies and crew incompetence; however, the record also contains testimony to the opposite effect. At least five witnesses attested to the seaworthiness of the vessel, and one expert witness testified that the entire crew was competent. Since ample testimony supported the district court's finding that the vessel was not unseaworthy, the district court's finding is clearly plausible in light of the evidence, and we therefore refuse to set aside its finding. See Fed.R.Civ.P. 52; Anderson v. City of Bessemer City, 470 U.S. at ----, 105 S.Ct. at 1512, 84 L.Ed.2d at 528; United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746, 766 (1948).