Cruise Ship Law

NEW HAMPSHIRE INSURANCE CO., Plaintiff-Appellee, v. C'EST MOI, INC., Defendant-Appellant.

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
2008 U.S. App. LEXIS 5836
March 20, 2008, Filed

PROCEDURAL POSTURE: Defendant insured, a corporation that owned a vessel, appealed from a judgment of the United States District Court for the Central District of California, which granted summary judgment in favor of plaintiff insurer, holding that uberrimae fidei applied and that the insured misrepresented material facts on its insurance application.



OVERVIEW: The insured obtained marine coverage for a yacht from the insurer. Subsequently, the yacht sank in calm waters while docked. The insurer determined that the likely cause was a malfunctioning bilge pump. It then sued the insured to rescind the insurance policy, and the district court granted summary judgment in favor of the insurer. On appeal, the court held that uberrimae fidei was a well-entrenched doctrine that protected not merely the insurer but also the integrity of the risk pool. Only an unambiguous statement in the policy, purporting to supersede the doctrine in express terms would be sufficient to accomplish that purpose. There was no such clause in the policy at issue. Affirming, the court held that the district court correctly found that there was no factual dispute as to whether the insured made material misrepresentations in the insurance policy application. The fact that the insurer demanded answers to specific questions in the application was sufficient to establish materiality as a matter of law. The application asked for the yacht's purchase price and present insurer and the insured misrepresented both facts.



OUTCOME: The court affirmed the district court's judgment