Court Opinion

ID: 8976661
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:04:07.327103+00
Date Added: 2024-06-11T17:10:34.777396
License: Public Domain

CYNTHIA HOLCOMB HALL, Circuit Judge,
concurring in part and dissenting in part:
I concur in sections I and II of the majority opinion. I cannot join the part of section III, however, that holds Fireman’s Fund has waived its right of subrogation *512against the barge. I would remand to the district court Fireman’s Fund’s claim that its waiver of its right to subrogation against the barge is inoperable.
The opinion acknowledges that pursuant to The Barnstable, 181 U.S. 464, 467, 21 S.Ct. 684, 685, 45 L.Ed. 954 (1901), Fireman’s Fund has a valid in rem action unless shown to have been waived. The opinion, however, rejects Fireman’s Fund’s argument that the source of its waiver is ineffectual because the waiver was procured by fraud. Fireman’s Fund did not endorse Hvide as an assured until the vessel was five days into its journey. By this time, Fireman’s Fund argues that Hvide was well-aware of the serious problems on board, but nonetheless failed to disclose the vessel’s unseaworthiness.
The opinion concedes that Hvide had a duty to disclose to Fireman’s Fund the vessel’s unseaworthiness, and that Hvide may very well have breached this obligation. As Fireman’s Fund correctly points out in its brief, this court held in Pacific Queen Fisheries v. Symes, 307 F.2d 700 (9th Cir.1962), cert. denied, 372 U.S. 907, 83 S.Ct. 721, 9 L.Ed.2d 717 (1963), that a maritime insurance contract is voidable where the insured fails to disclose a material fact that increases the risk. This may be just such a case, but the opinion concludes that the barge should benefit from the alleged fraudulent waiver.
Pursuant to our Pacific Queen decision, Fireman’s Fund cannot be bound by a clause in a contract induced by fraud.1 The general rule is that Fireman’s Fund may sue the vessel unless it has waived that right. Fireman’s Fund’s argument is merely that the waiver is inoperable and thus its in rem claim valid. In other words, Fireman’s Fund raises fraud as a rebuttal to Pacific’s defense that the in rem claim is waived. The opinion allows Pacific to use the contract as a shield, while tying Fireman’s Fund’s hands to motion that the shield is a fraud.

. The majority’s citation to the Florida Supreme Court decision in Everglades Marina, Inc. v. American Eastern Dev. Corp., 374 So.2d 517 (Fla. 1979), is unavailing. In Everglades Marina, the owner of a marina intentionally set it afire and destroyed both the marina and many vessels. The vessel owners filed claims with their insurers, which then brought a subrogation action against the marina’s insurer. The marina’s insurer defended this action on the grounds that it would not have to pay a claim filed by the insured because of the insured’s intentional criminal misconduct. The Everglades Marina court held that the public policy prohibiting the recovery by an insured through criminal misconduct did not bar an action by third party beneficiaries of the insurance contract with no connection to the misconduct.
The majority apparently reasons that it is generally appropriate to distinguish between the rights of an insured and third party beneficiaries where the latter is not alleged to have been involved in the misconduct. “Hvide’s breach of good faith should not be imputed to the barge which became a third party beneficiary by virtue of the waiver of subrogation.” Opinion at 511. The barge in the instant case, however, is hardly the innocent the majority paints it to be. ”[T]he ship itself is to be treated in some sense as a principle, and as personally liable for the negligence of any one who is lawfully in possession of her, whether as owner or charterer.” The Barnstable, 181 U.S. at 467, 21 S.Ct. at 685. As Hvide’s principal, therefore, the barge must answer for Hvide’s misconduct.