Court Opinion

ID: 9468854
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:25:28.182668+00
Date Added: 2024-06-11T17:41:05.377445
License: Public Domain

FARRIS, Circuit Judge,
concurring:
I concur in parts II and III of the opinion but I believe some expansion of the rationale of part I is at least desirable.
Edinburgh challenges the legal criteria applied by the district court in determining whether or not the Gatto was an actual total loss. Two factors control our review. First, the court’s factual conclusions can be set aside only if they are clearly erroneous. Fed.R.Civ.P. 52(a); United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948); Lund-gren v. Freeman, 307 F.2d 104, 113 (9th Cir. 1962). The district court made extensive findings of fact regarding the physical condition of the Gatto. After reviewing evidence on the Gatto’s condition, including an underwater video tape survey of the damage to the rig, the court concluded that:
*1264After the Gatto suffered the January 1976 casualty, it was without significant value. It was no longer an off-shore drilling platform. It was a dispersed mass of scrap, a wreck. The Gatto had broken up. The Gatto as such was destroyed.
Edinburgh Assurance Co. v. R. L. Burns Corp., 479 F.Supp. 138, 149 (C.D.Cal.1979).1 In arriving at this conclusion the court considered the Gatto’s commercial value as well as physical being. There is substantial evidence in the record to support these conclusions. They are therefore not clearly erroneous.
Second, we must consider the legal criterion applied by the court in concluding that the Gatto was an actual total loss. Conclusions of law may be overturned if they are in error. Edinburgh argued initially that a thing is an actual total loss only when it is not within the scope of present technology to recover and repair it, no matter what the cost. The insured, on the other hand, argued that a thing is an actual total loss when as a practical business matter repair would not be prudent. The district court wisely rejected both positions.
As English law was to be applied in defining actual total loss, the district court properly looked to the British Marine Insurance Act of 1906. Section 57(1) of the Act provides:
Where the subject matter insured is [1] destroyed, or [2] so damaged as to cease to be a thing of the kind insured, or [3] where the assured is irretrievably deprived thereof, there is an actual total loss.2
The district court held that only one of the three tests must be satisfied and any of the three parts of the definition may be applied to a vessel like the Gatto. Id. at 155; (citing George Cohen, Sons & Co. v. Standard Marine Insurance Co., 21 Lloyds List L.R. 30 (K.B.1925) and Kemp v. Halliday, 122 Eng.Rep. 1361, 1363 (Q.B.1866)).
Carefully applying the test to the undisputed facts, the court concluded that the Gatto was not an actual total loss under the third test — whether the subject insured was irretrievably lost — because it was technologically possible to salvage and repair it. The court concluded however, that the sal-vageability and repair criteria are only applicable to the third test and have no applicability to the first two tests.
It next applied the first two tests, whether the thing insured is “destroyed” or is “so damaged as to cease to be a thing of the kind insured.” In interpreting the first two tests, the court recognized that actual total loss embodied both physical and value oriented concepts. 479 F.Supp. at 156. The court pointed out that to place undue emphasis on either concept would yield inequitable results and would blur the distinction between actual total loss and constructive total loss. Support for the consideration of both physical and value oriented concepts is found in English case law which recognizes that the subject matter of insurance may cease to be a thing of the kind insured, or be destroyed, and hence be an actual total loss even though there still exists significant, accessible physical remains.3 I agree.
The district court finally utilized three standards in determining when the subject-matter is “destroyed” or is “so damaged as to cease to be a thing of the kind insured.” 4 *1265Based on the district court’s findings of fact, the Gatto is an actual total loss under the first and second tests of the British Marine Insurance Act. Therefore, we need not decide the merits of the court’s three standards. I join my colleagues in affirming.

. The trial court also stated in its findings of fact that the Gatto was an actual total loss. 479 F.Supp. at 149. I interpret the court to be referring to actual total loss in its non-legal sense since the opinion subsequently goes to great length to determine its meaning under English law.

. 479 F.Supp. at 154.

. 479 F.Supp. at 156. See Sailing Ship Blairmore Co. v. Macredie, (1898) A.C. 593 at 603 (House of Lords); Levy & Co. v. The Merchants Marine Insurance Co., 5 Asp.M.L. 407 at 409 (Q.B.1885); St. Margaret’s Trust v. Navigator’s & General Insurance Co., Ltd., 82 Lloyd’s List L.R. 752 (K.B.1949); George Cohen, Sons & Co. v. Standard Marine Insurance Co., 21 Lloyd’s List L.R. 30 (K.B.1925).

. The three standards developed by the district court were:
[F]irst is the standard of reasonable salvage and/or engineering effort....
*1265A second standard is whether the refurbishing effort is so extensive as not reasonably to be characterized as repair. ...
A third standard is whether the cost of recovering and refurbishing the thing insured is so out of proportion to the value of the resulting operational entity that the thing must reasonably be considered an actual total loss.
479 F.Supp. at 158.