Chartis Property Casualty Co. v. Inganamort, 953 F.3d 231 (3d Cir. 2020). Yesterday, the Third Circuit issued its first published opinion in nearly two weeks. The ruling, authored by Judge Jordan, involved the question of whether defendants were entitled to coverage under their all-risk insurance policy with plaintiff when defendants’ 65-foot fishing vessel sank “enough to sustain serious damage.” The plaintiff insurer filed a declaratory judgment action seeking a ruling that there was no coverage. On cross-motions for summary judgment, the District Court ruled for the insurer. Defendants appealed, but the Third Circuit affirmed after applying de novo review.
The vessel in question was named “Three Times a Lady” (yes, fans of ’80’s music, that was the title of a Lionel Richie song, to which Judge Jordan adverted in a footnote). The question was “whether the vessel’s partial submersion was a loss of the kind covered by an all-risk policy, specifically, whether it was a fortuitous loss.”
Judge Jordan stated that an all-risk insurance policy “is not synonymous with ‘all loss.'” There must be proof that the loss was fortuitous in order for there to be coverage.
It was first necessary to determine which party had the burden of proof as to fortuity. Every other Circuit Court to have considered that issue (the First, Second, Fifth, and Eleventh Circuits) placed the burden on the insured. Judge Jordan and the panel agreed. “That burden is not heavy, but it is more than negligible.” The Third Circuit agreed with the District Court that defendants had not carried that burden.
Defendants had claimed that the loss to Three Times a Lady resulted from heavy rainfall. But the insurer’s statement of undisputed material facts noted the absence of any evidence of heavy rainfall. Defendants failed to respond to that statement, so the panel took the insurer’s statement as true. But Judge Jordan observed that even if the court went beyond the statement of undisputed material facts, there was no evidence in the record of heavy rainfall at the relevant time. Even defendants’ expert could not “say with assurance” that there had been any such heavy rain.
As a result, defendants did not carry their burden of proving that the loss to Three Times a Lady (I’ve now used that name “once, twice, three times,” as the song says) was fortuitous. The panel therefore affirmed the District Court.