Court Opinion

ID: 2965111
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:35:34.170978+00
Date Added: 2024-06-11T11:43:05.352498
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ____________________

        No. 97-1817

                             DRAKE FISHING, INC., ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                          CLARENDON AMERICAN INSURANCE CO.,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Reginald C. Lindsay, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________

                            Aldrich, Senior Circuit Judge,
                                     ____________________

                              and Boudin, Circuit Judge.
                                          _____________

                                 ____________________

            John A. Birknes, Jr. for appellants.
            ____________________
            Thomas  J. Muzyka  with whom  Clinton  & Muzyka  was on  brief for
            _________________             _________________
        appellee.

                                 ____________________

                                  February 20, 1998
                                 ____________________

                      ALDRICH,  Senior Circuit  Judge.    The F/V  DRAKE,
                                _____________________

            dragging for scallops on February 28, 1995, "hung" her dredge

            on  the bottom.   She was unable to  free by maneuvering, and

            ended up  with the wire  at 90 degrees (downward),  her stern

            quarter   into  the  wind,   and  seas  splashing   into  the

            lazarettes, the hatch  covers having come  off, and the  crew

            unable  to replace them.   The  hydraulic winch  jammed, and,

            because of the  rain and weather, the crew could  not light a

            torch to cut the wire.  Meanwhile, the seas were  filling the

            lazarettes  faster than  the bilge  pumps  could handle.   In

            response to  a May Day  call, another vessel arrived  and the

            crew was  saved, but  the DRAKE was  lost.   This action  was

            brought to recover  the agreed value, on  defendant Clarendon

            American Insurance Company's hull policy.  On the basis of an

            unsatisfied condition  precedent, plaintiffs-appellants  lost

            on summary judgment in the district court.  We affirm.

                      When the  DRAKE put to  sea on this voyage,  it had

            various  minor  deficiencies,  including  no lazarette  bilge

            alarm warning  lights and  no  required spare  communications

            battery  in  the pilot  house.    The audible  bilge  alarms,

            however, were working,  and the crew  was obviously aware  of

            the water.  The battery's  absence was also irrelevant to the

            loss.   Accordingly,  Mass.  G.L. ch.  175,   186  might have

            precluded either of these defects, or a number of other minor

            ones, from giving  rise to a successful  misrepresentation or

                                         -2-

            breach of warranty  defense on the policy,1 but  this was not

            the   set-up.    Defendant   had  a  stronger   defense,  the

            Massachusetts law of condition precedent.

                      Conformance with stated  conditions that are agreed

            to  govern  the  attachment  of  the  policy  is  obligatory,

            regardless  of their  irrelevancy to  the actual  loss.   See
                                                                      ___

            Charles, Henry & Crowley Co. v. Home Ins. Co., 349 Mass. 723,
            ____________________________    _____________

            724-25,  212 N.E.2d  240 (1965);  see also Edmonds  v. United
                                              ___ ____ _______     ______

            States, 492  F. Supp.  970, 974 (D.  Mass. 1980),  aff'd, 642
            ______                                             _____

            F.2d 877 (1st Cir. 1981).   It is enough that the  statements

            relate essentially  to the insurer's  intelligent decision to

            issue  the policy.   See  Charles, Henry  & Crowley  Co., 349
                                 ___  ______________________________

            Mass. at 726.  This question is an objective one:   would the

            matter be considered  of importance by a  reasonable insurer.

            See Krause  v. Equitable Life  Ins. Co., 333 Mass.  200, 204,
            ___ ______     ________________________

            129 N.E.2d 617 (1955); Lopardi v. John Hancock Mut. Life Ins.
                                   _______    ___________________________

            Co.,  289 Mass.  492, 496,  194  N.E. 706  (1935); Kravit  v.
            ___                                                ______

            United  States Cas.  Co., 278  Mass. 178,  180, 179  N.E. 399
            ________________________

            (1932); see also Edmonds, 642 F.2d at 883.
                    ___ ____ _______

                      Involved  here, among  others,  were the  following

            conditions.  The DRAKE was  to undergo and pass an inspection

            by the  United States  Coast Guard  and display  a compliance

            sticker.   There  was  to  be a  back-up  radio battery  with

                                
            ____________________

            1.  It  is  agreed that,  though  this was  a  marine policy,
            Massachusetts law governs.  See generally Wilburn Boat Co. v.
                                        ___ _________ ________________
            Fireman's Fund Ins. Co., 348 U.S. 310 (1955).
            _______________________

                                         -3-

            associated  charging equipment.   And, the DRAKE  was to have

            both audible and visual bilge alarms in the lazarettes, wired

            to  the  pilot  house.     All  are  conceded  to  have  been

            unsatisfied  at the  relevant  times.    The  district  court

            focussed on  the first, finding  that "as  a matter of  law a

            reasonable maritime  insurer would  have wanted  to know  and

            would  not as  a matter of  law, not fact,  have issued th[e]

            policy  had  it  known that  there  wasn't  that  Coast Guard

            sticker."  We agree.  Cf. Edmonds, 642 F.2d at 883 & n.2 (FAA
                                  ___ _______

            biennial flight review requirement).

                      There  is   a  further  question   raised  by   the

            plaintiffs:  were these matters truly expressed as conditions

            precedent.  Whether a policy term is a condition precedent or

            a warranty is a question of law.  See Shaw v. Commercial Ins.
                                              ___ ____    _______________

            Co., 359 Mass. 601, 605-06, 270 N.E.2d 817 (1971).  Here, the
            ___

            requirement  that  the words  "condition precedent"  or their

            equivalent be  used was  met.  See  Charles, Henry  & Crowley
                                           ___  _________________________

            Co.,  349  Mass.   at  726.     The  Fishing  Vessel   Safety
            ___

            Requirements Clause, expressly attached to and forming a part

            of the policy, stated,

                      It  is  a  condition  precedent  of  this
                      coverage that these  requirements must be
                      complied  with  prior to  the  attachment
                      date  of this policy and as proof of such
                      compliance  this  Fishing  Vessel  Safety
                      Requirements Clause must be signed by the
                      Assured   and   be   returned   to   this
                      company . . . .

                                         -4-

            The  listed "requirements"  included the  inspection sticker,

            the battery, and the bilge alarms.  The captain of the DRAKE,

            who was also the  son of its owner, signed the  clause as the

            assured, one month before the final voyage.2  

                      Plaintiffs attempt to save their case by contending

            that  valid conditions  precedent must  appear,  initially at

            least,  in the  application  for  insurance.    Although  the

            language in  Charles, Henry  & Crowley Co.  might be  read to
                         _____________________________

            support this, see 349 Mass. at 726 ("[A] statement made in an
                          ___

            application  for a policy of insurance may become a condition

            of the policy rather than remain a warranty or representation

            if . . . ."),  other cases reveal a broader view, see Shurdut
                                                              ___ _______

            v. John Hancock Mut.  Life Ins. Co., 320  Mass. 728, 731,  71
               ________________________________

            N.E.2d  391  (1947)  (application  for  reinstatement   after

            lapse); Lopardi,  289 Mass.  at 495  (provisions in  policy);
                    _______

            Kravit, 278 Mass. at 179 (policy schedule); see also Edmonds,
            ______                                      ___ ____ _______

            492 F. Supp. at  972-73 (amendments added in connection  with

            renewal).

                      There  can be no  dispute here that  plaintiffs had

            notice  of  the  conditions,  or that  they  related  to  the

            insurer's decision to  take the risk.  Cf.  Edmonds, 642 F.2d
                                                   ___  _______

                                
            ____________________

            2.  Although  the insured's  signature  is dated  January 27,
            1994 rather  than 1995, it  is clear  that this was  simply a
            mistake.  Despite a later,  and feeble, effort to cast doubt,
            plaintiffs-appellants essentially admitted  as much.  In  any
            event,  plaintiffs-appellants can  make  no  claim  that  the
            Fishing Vessel Safety  Requirements Clause was not  a part of
            the policy or that they had no notice.

                                         -5-

            at 882.  Clarendon reinstated the policy on February 2, 1995,

            after issuing notice  of cancellation, only after  plaintiffs

            had separately  executed  and submitted  the  Fishing  Vessel

            Safety Requirements Clause  days earlier.3  The  DRAKE had no

            inspection sticker at that time, nor later that month when it

            left  harbor.     Considering  the  facts  and  circumstances

            surrounding  the  issuance  of  the policy,  as  we  may, see
                                                                      ___

            Massachusetts  Mun. Wholesale Elec.  Co. v. Town  of Danvers,
            ________________________________________    ________________

            411 Mass. 39, 45-46, 577 N.E.2d 283 (1991), we think it clear

            that plaintiffs' argument  fails.  Cf. Shurdut, 320  Mass. at
                                               ___ _______

            731  (resumption of  obligation  after lapse  made  expressly

            conditional   upon  the  truth  of  statements  made  in  the

            application for reinstatement).

                      Affirmed.
                      _________

                                
            ____________________

            3.  A simultaneous basis for  cancellation was non-payment of
            the premium,  also remedied before  reinstatement.   Although
            its owners  had never before  had the Drake inspected  by the
            Coast Guard for  purposes of obtaining a  compliance sticker,
            they requested  such an  inspection in February  1995 at  the
            behest of their  insurance brokers.  The Drake  did not pass,
            and no sticker was issued.  The reasons are immaterial to the
            loss. Cf. Edmonds.
                  ___ _______

                                         -6-