MARKEL AMERICAN INS. CO. v. PAJAM FISHING CORP.

691 F. Supp.2d 260

MARKEL AMERICAN INS. CO., Plaintiff, v. PAJAM FISHING CORP., Defendant.

Civil Action No. 08-10707-JGD.

United States District Court, D. Massachusetts.

January 27, 2010.

Steven E. Goldman, Brookline, MA, Brad W. Graham, Craig R. Waksler, McGivney & Kluger, Boston, MA, for Plaintiff.

Kevin J. Kiely, Gloucester, MA, for Defendant.

MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

DEIN, United States Magistrate Judge.

I. INTRODUCTION

The plaintiff, Markel American Insurance Company ("Markel"), provided an "all risk" marine insurance policy to the defendant, Pajam Fishing Corporation ("Pajam"), which insured the fishing vessel "MISS SONYA" for "accidental, direct, physical loss or damages ... from an external cause or from a Latent Defect" in the vessel's hull or machinery. The Miss Sonya sank on March 25, 2008 off the shore of Gloucester, Massachusetts, and cannot be examined. Markel has brought a complaint for declaratory judgment seeking a declaration that it has no obligation for damages sustained as a result of the sinking.

This matter is presently before the court on "Plaintiff's Motion for Summary Judgment" (Docket No. 18), by which Markel contends that it is entitled to judgment as a matter of law because Pajam cannot explain the sinking and, therefore, cannot demonstrate that the sinking of the Miss Sonya was the result of an accident and thereby covered under the policy. As detailed below, this court finds that Pajam has put forth sufficient facts to establish that the sinking was accidental to survive summary judgment. Therefore, the motion for summary judgment is DENIED.

II. STATEMENT OF FACTS¹

Unless otherwise noted, the facts are undisputed for the purposes of the motion for summary judgment. The record is viewed in the light most favorable to Pajam. See O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir.1993).

The Policy

Markel is a corporation that writes and issues marine insurance polices on small commercial and private vessels. (PF ¶ 1). Pajam is a corporation, solely owned by Corrado Buccheri ("Buccheri").² (Id.). Pajam owns the fishing vessel "Miss Sonya," which it purchased in or about March 2006. (Id. ¶ 2; see Buccheri Dep. at 21-22). On or about December 17, 2007, Markel issued a "Commercial Watercraft Insurance Policy," affording Hull & Machinery coverage in the amount of $148,000.00 for the Miss Sonya. (See Policy Cover at 1; Compl. ¶ 6, Amended Answer ¶ 6). Section III of the Policy, which describes the "Watercraft and Equipment Coverage" provides:

1. COVERAGE

If a premium charge is made for Watercraft and Equipment Coverage on the Declarations Page and if not specifically excluded under this Policy, We will pay for accidental, direct, physical loss or damage to the Insured Watercraft from an external cause or from Latent Defect in the Insured Watercraft's hull or machinery (excluding in all cases the cost of repairing or replacing the defective part) provided such loss or damage did not result from the want of due diligence by You.

(Policy at 6 (emphasis added)). The Policy contains several exclusions, none of which include "unexplained loss."³ (See Policy at 7-8). The Policy also includes a list of definitions in Section I, including, but not limited to, the terms "bodily injury;" "insured person;" "insured watercraft;" and "latent defect." (Id. at 2). However, the terms "accidental physical loss" and "accident" are not defined by the Policy.

Condition of the Miss Sonya and the Incident

Pajam submitted evidence that throughout its ownership of the vessel, Miss Sonya was well-maintained, seaworthy, and had never been involved in an accident or any other incident which would have presaged its sinking. (See Buchierri Dep. at 43-45). On March 24, 2008, the skipper, Matteo Ferrara ("Ferrara"), and crew member, Giuseppe Lucido ("Lucido"), departed from Gloucester on the Miss Sonya. (PF ¶¶ 6-7, 10). Ferrara and Lucido had been fishing for approximately 20-24 hours and had gone out to the Middle Bank, approximately ten to twelve miles offshore, before deciding to return between 4:30 and 5:00 a.m. on the morning of March 25, 2008. (Id. ¶¶ 10, 12).

Roughly a mile and a half from the Gloucester breakwater, the two men realized that there was a problem. (Id. ¶ 12). Several video cameras had been installed in different areas of the Miss Sonya, allowing those areas to be viewed from the vessel's wheelhouse. (Id. ¶ 13). One camera was in the lazaret, a compartment located at the stern of the vessel. (Id. ¶ 14). Having previously noticed that the stern of the Miss Sonya seemed low, Ferrara and Lucido decided to check the video monitor of the lazaret, and saw water splashing about in that compartment. (Id. ¶¶ 14-15). Neither man attempted to determine where the water was coming from or why water was entering the compartment, but they radioed the Coast Guard. (Id. ¶¶ 15, 16). They then followed the Coast Guard's instructions and abandoned the rapidly sinking vessel. (Id. ¶ 16). While Markel describes the conditions at that time as "calm seas and fair weather" (PF ¶ 4), this is disputed by Pajam. (DF ¶ 4). Rather, Pajam contends that the wind was 20-30 knots, with 3 to 5 feet high swells. (See Buchierri Aff. at ¶ 11).

Both Ferrara and Lucido have no idea what caused the Miss Sonya to sink. (See PF ¶¶ 16(2)-19). The two men did not feel or perceive any impact while they were at sea. (Id. ¶ 16). However, Pajam has submitted evidence that the weather conditions would have greatly reduced the crew's ability to notice any impact with any object, since "one's ability to feel a collision in calm conditions is dramatically different than when the boat is pitching and rolling in rough seas." (Buchierri Aff. at ¶ 11). In addition, Pajam has submitted an affidavit from its expert opining that the weather may have caused the rudder to "wrack" from side to side and, given the rudder's design, that may have created "sufficient torque to create a crack in the rudder stock tube, below the waterline causing the lazarette to fill with water." (Brindamour Aff. ¶¶ 4-6).

On April 22, 2008, Markel sent Pajam a letter stating that, following an investigation, it had determined that the unexplained sinking of the Sonya was not covered under the Policy. (See Markel Letter 1-2). Pajam denies that a complete investigation was done by Markel. (See DF at Part II, ¶ 1). Markel commenced this declaratory judgment action against Pajam on April 28, 2008, asserting that Pajam cannot meet its burden of establishing that there is coverage under the Policy. There is no contention that Pajam intentionally sank the ship, or otherwise engaged in intentional conduct that caused the Miss Sonya to sink.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "A dispute is `genuine' if the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party." Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.1996) (internal quotations and citations omitted). A material fact is one which has "the potential to affect the outcome of the suit under the applicable law." Id. (internal quotations and citations omitted).

The moving party bears the initial burden of establishing that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If that burden is met, the opposing party can avoid summary judgment only by providing properly supported evidence of disputed material facts that would require trial. See id. at 324, 106 S.Ct. at 2553. The court must view the record in the light most favorable to the non-moving party and indulge all reasonable inferences in that party's favor. See O'Connor, 994 F.2d at 907. "If, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate." Walsh v. Town of Lakeville, 431 F.Supp.2d 134, 143 (D.Mass.2006).

Applying this standard compels the conclusion that the motion for summary judgment be denied.

B. Insurance Contract Interpretation

"An insured generally bears the burden of proving that a particular claim falls within a policy's coverage, while an insurer has the burden of proving the applicability of a particular exclusion." Allmerica Fin. Corp. v. Certain Under-writers at Lloyds', London, 449 Mass. 621, 628, 871 N.E.2d 418, 425 (2007) (internal citation omitted). "An insurance contract is to be interpreted according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed." Id. (internal quotation omitted). The court "must construe the words of the policy in their usual and ordinary sense." Boston Gas Co. v. Century Indem. Co., 454 Mass. 337, 355, 910 N.E.2d 290, 304 (2009) (internal quotation omitted). When construing an insurance policy, it is appropriate for courts "to consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered." Hazen Paper Co. v. U.S. Fid. & Guar. Co., 407 Mass. 689, 700, 555 N.E.2d 576, 583 (1990). Moreover, "any ambiguities in the language of an insurance contract are interpreted against the insurer who used them and in favor of the insured." Allmerica Fin. Corp., 449 Mass. at 628, 871 N.E.2d at 425.

In the instant case, the policy does not contain any definition of "accidental physical loss." "The term `accident' is to be broadly construed in a policy insuring against damage by accident. In its common signification the word means an unexpected happening without intention or design." Beacon...