Month: January 2024

Sunday, January 7, 2024

Markel Am. Ins. Co. v. McRae (M.D. North Carolina – January 5, 2024)

The court addressed the doctrine of umberrimae fidei.

Under federal maritime law, an insurer can be excused from paying on a policy if the insured party has misrepresented or failed to disclose relevant facts. This duty of utmost good fiath, known as uberrimae fidei, is only found in maritime law. 

The key inquiry is whether the insured disclosed to the insurer all known circumstances that materially affect the risk being insured. In other words, would the omitted information have reasonably affected the insurer’s determine to underwrite the risk. If the insured misrepresents a material fact in any way, they have breached their duty, even if the misrepresentation was unintentional, or due to negligence, mistake, accident, or voluntary ignorance. Any such misrepresentation results in a determination that the policy never attached and is void. 

Markel alleged that the McRaes made several misrepresentations including that Mr. McRaie did not have a previous conviction, Mr. McRae’s license had not been suspended, the vessel had been prior insured, and that another insurance company had not refused to underwrite the vessel. The court found Mrs. McRae’s lack of knowledge regarding the alleged misrepresentations or belief that the statements were not relevant, did not excuse the misrepresentation.  The court also found that the statements were material in that they were part of the insurer’s eligibility analysis. The court held that the doctrine of umberrimae fidei voided the underlying insurance policy and excused the insurers obligation to honor the policy.

Sunday, January 7, 2024

What Hurts, LLC v. Volvo Penta of the Ams., LLC (E.D. Virginia – January 5, 2024)

The court addresses whether a breach of express warranty claims falls within the court admiralty jurisdiction.

Federal courts have original and exclusive jurisdiction over any civil case of admiralty or maritime jurisdction. Contract disputes fall within admiralty jurisdiction if the nature or subject matter of the contract is maritime. 

Contracts for repair, alteration, or reconstruction of a vessel which, before such work, was actively engaged in maritime commerce or navigation, generally are considered maritime contracts. However, contracts to build a ship, or contracts involving work performed on a non-maritime object, are not maritime. Uncertainty between the two are resolved in favor of admiralty jurisdiction. 

The court found that the vessel was built before the underlying Release, that gave rise to the express warranty claim, was signed. Thus, the Release was a contract for the modification of a vessel and was properly considered a maritime contract. 

Plaintiff’s claim, however, was for breach of an express warranty and warranty claims generally do not fall within a federal court’s original admiralty jurisdictoin because they are grounded in nonmaritime contracts, such as contracts for the sale of a vessel. But because the parties agreed in the Release to create a new limited warranty as part of their agreement to alter the vessel’s engines, the limited warranty was grounded in a maritime contract and the express warranty claim was held to fall within the court’s original admiralty jurisdiction.