Court Opinion

ID: 10613
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:55:41+00
Date Added: 2024-06-11T15:04:36.192802
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT

                             No. 96-30216

WILLIAM S. SMITH,

                                               Plaintiff-Appellant,

                                versus

INDEMNITY MARINE ASSURANCE
CO., LTD., ET AL.,

                                               Defendants-Appellees.

PAUL HUNT, ETC.,

                                     Third Party Plaintiff-Appellee,

                                versus

GREAT AMERICAN BOAT COMPANY, INC.,

                                     Third Party Defendant-Appellant.

          Appeal from the United States District Court
              for the Eastern District of Louisiana
                           (94-CV-1904)

                         October 23, 1996
Before JONES and WIENER, Circuit Judges, and FURGESON,* District
Judge.

           *
               District Judge for the Western District of Texas,
sitting by designation.
PER CURIAM**:

     Plaintiff-Appellant Williams S. Smith appeals the summary

judgment    in   favor   of    Defendants-Appellees            Indemnity   Marine

Assurance    Co.,   Ltd.,     et    al.       (Collectively,    the    Insurers),

dismissing Smith’s action as the putative insured under the Lloyd’s

of London Hull and Machinery policy originally issued in 1983 to

“Great American Boat Company, Inc.”              That policy had been renewed

continually until the only ship covered by the policy, the MV/GREAT

AMERICA (the Vessel), was virtually destroyed by fire in 1994 while

laid up, as it had been for several years.            After conducting our de

novo review of the district court’s rulings, including the denial

of Smith’s motion to reconsider, we are satisfied that the summary

judgment    of   dismissal    was   providently       granted    and   should    be

affirmed.

                                          I

                         FACTS AND PROCEEDINGS

     The corporation known as Great American Boat Company was

formed in 1981.      It was owned by Smith and his two sons.                    The

corporation acquired the Vessel and renamed it MV/GREAT AMERICA.

The corporation had the Vessel insured under a standard of Lloyd’s,

London policy which was renewed without interruption and with

relatively minor modifications until the fire of February 19, 1994.

            **
            Pursuant to Local Rule 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in Local Rule
47.5.4.

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The only new documentation that accompanied the several renewals

were so-called cover notes or “cover sheets,” commonly referred to

as   renewal     certificates.         The     summary     judgment      evidence

nevertheless makes clear that the same Lloyd’s, London policy had

remained in effect continuously since its inception; no new policy

was ever physically issued, even when the independent agent or

broker for the policy changed from Vessel Coverages, Ltd. to the

Hartson Agency, which was owned and principally operated by Smith’s

close friend, Maurice Hartson.

     During the course of the dozen years in which the policy was

kept in effect by renewals, “Great American Boat Company” was the

designated ship owner on every cover sheet with the exception of

the last renewal —— the one in effect at the time of the fire —— on

which the word “Company” was inexplicably omitted.                    At no time,

however,   did    Smith’s     name    appear   on    any    of   the    insurance

documentation, whether as vessel owner or otherwise; neither was

there ever any indication that Great American Boat Company (or

Great American Boat) was a proprietorship of Smith or that he was

doing business in that name; nor was the party insured ever listed

as MV/GREAT AMERICAN.        The summary judgment evidence is equally

clear that Smith never notified the Insurers or any independent

agent or broker that any person, natural or juridical, other than

Great American Boat Company was the owner of the Vessel or the

insured under the policy.

     Crucial     to   the   instant   analysis      is   the   fact    that   Great

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American Boat Company filed for protection under Chapter 11 of the

Bankruptcy Code in August 1983, and that the Vessel was listed as

an asset of the corporate debtor.      Equally central to the case are

the undisputed facts that (1) the Vessel was sold at bankruptcy

auction in September 1988, (2) the buyer was Smith, (3) neither the

debtor corporation, as named insured, nor anyone on its behalf or

on behalf of Smith as the purchaser and new owner, ever reported

the sale and purchase to the Insurers or to any agents or brokers

of the coverage, and (4) the designation of Great American Boat

Company as   the named insured on the policy was never changed.

Also undisputed is the conclusion that —— despite remaining as the

named insured under the policy —— the bankrupt corporation, Great

American Boat Company, had no insurable interest in the Vessel at

the time of the fire; neither had it had such an interest for over

five years prior to the fire.

     From the inception, the policy and all renewals were subject

to the following provision:

     In the event of any change, voluntary or otherwise, in
     the ownership or flag of the vessel . . . the policy
     shall automatically terminate at the time of such change
     of ownership. . . . This insurance shall not inure to
     the benefit of any transferee or charterer of the vessel.
     . . .

     After   Smith   acquired   the    Vessel   he   had   it   documented

(registered) in his name by the U.S. Coast Guard, but neither

copies of the documentation nor the fact of its existence were ever

conveyed to the Insurers or to any insurance agents or brokers.

                                   4
Renewal premiums were remitted to the Hartson Agency using checks

signed by Smith and bearing the initials of the Great American Boat

Company, the word “insurance,” and Smith’s name.               This cryptic

information, printed on the checks, is vague and ambiguous; it

could not have put payees or other recipients on notice that Smith

was the owner of the Vessel or that he was doing business in the

name of     Great   American   Boat   or   Great   American   Boat   Company.

Moreover, those checks were never forwarded to the Insurers;

rather, they were negotiated by the insurance agency, which in turn

issued its own drafts for the net amount of the premiums, i.e.,

gross premiums less commissions, and sent those drafts on to the

Insurers.     Such drafts were the only form of disbursement ever

received in London.

                                      II

                                 ANALYSIS

     As he did to the district court, Smith has proffered a number

of arguments to this court, both in his brief and in oral argument

by his able counsel.     Without reiterating those arguments just to

knock them down, however, it suffices that neither singly nor in

combination can they carry the day.           They neither establish the

existence of a genuine issue of material fact sufficient to defeat

summary judgment nor provide a basis in fact or law sufficient to

defeat the Insurer’s entitlement to rely on the above-quoted

automatic termination provision of the policy.          Smith must be held

to knowledge of the existence of the contents of the policy,

                                      5
including the plain and unambiguous language of the automatic

termination   provision,    which       is    triggered    by   any   change   of

ownership.    Indeed, Smith has never claimed ignorance of that

provision.

     The Insurers’ repeated renewal of the policy and acceptance of

the net premiums funneled to them through Smith’s friend Hartson

and his agency cannot establish insurance by estoppel, waiver, or

any other such theory.     Of Smith’s diverse theories, we are least

impressed with the sophistry embodied in the flawed syllogism that

(1) under Louisiana law, a renewed insurance policy is a new

policy, (2) the change of ownership took place in 1988, so only the

“new” renewal    policy    then    in    effect   was     invalidated   by   such

ownership change [Smith proffered no explanation of just how a

policy that is terminated ipso facto upon change of ownership

during the policy term could somehow be “renewed” to create a new

policy months later], and (3) thus there was no change of ownership

to effect a termination of the “new” policy, which was in effect at

the time the fire occurred in 1994 (when the name of the insured

was shown as “Great American Boat,” which, insists Smith, was his

“d/b/a”); ergo, a new policy was in effect when the fire occurred,

so the proceeds are payable to Smith doing business as Great

American Boat.   The speciousness of that argument is too apparent

to justify more than an out-of-hand rejection by this court.

                                        III

                                  CONCLUSION

                                         6
     For essentially the same reasons given by the district court

for (1) granting the motion for summary judgment of Defendant-

Appellee Indemnity Marine Assurance Co., Ltd., et al., to dismiss

the action of Plaintiff-Appellant William S. Smith, and (2) denying

Smith’s motion for reconsideration, the rulings of the district

court are, in all respects,

AFFIRMED.

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