IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 96-30216
WILLIAM S. SMITH,
Plaintiff-Appellant,
versus
INDEMNITY MARINE ASSURANCE
CO., LTD., ET AL.,
Defendants-Appellees.
PAUL HUNT, ETC.,
Third Party Plaintiff-Appellee,
versus
GREAT AMERICAN BOAT COMPANY, INC.,
Third Party Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
(94-CV-1904)
October 23, 1996
Before JONES and WIENER, Circuit Judges, and FURGESON,* District
Judge.
*
District Judge for the Western District of Texas,
sitting by designation.
PER CURIAM**:
Plaintiff-Appellant Williams S. Smith appeals the summary
judgment in favor of Defendants-Appellees Indemnity Marine
Assurance Co., Ltd., et al. (Collectively, the Insurers),
dismissing Smith’s action as the putative insured under the Lloyd’s
of London Hull and Machinery policy originally issued in 1983 to
“Great American Boat Company, Inc.” That policy had been renewed
continually until the only ship covered by the policy, the MV/GREAT
AMERICA (the Vessel), was virtually destroyed by fire in 1994 while
laid up, as it had been for several years. After conducting our de
novo review of the district court’s rulings, including the denial
of Smith’s motion to reconsider, we are satisfied that the summary
judgment of dismissal was providently granted and should be
affirmed.
I
FACTS AND PROCEEDINGS
The corporation known as Great American Boat Company was
formed in 1981. It was owned by Smith and his two sons. The
corporation acquired the Vessel and renamed it MV/GREAT AMERICA.
The corporation had the Vessel insured under a standard of Lloyd’s,
London policy which was renewed without interruption and with
relatively minor modifications until the fire of February 19, 1994.
**
Pursuant to Local Rule 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in Local Rule
47.5.4.
2
The only new documentation that accompanied the several renewals
were so-called cover notes or “cover sheets,” commonly referred to
as renewal certificates. The summary judgment evidence
nevertheless makes clear that the same Lloyd’s, London policy had
remained in effect continuously since its inception; no new policy
was ever physically issued, even when the independent agent or
broker for the policy changed from Vessel Coverages, Ltd. to the
Hartson Agency, which was owned and principally operated by Smith’s
close friend, Maurice Hartson.
During the course of the dozen years in which the policy was
kept in effect by renewals, “Great American Boat Company” was the
designated ship owner on every cover sheet with the exception of
the last renewal —— the one in effect at the time of the fire —— on
which the word “Company” was inexplicably omitted. At no time,
however, did Smith’s name appear on any of the insurance
documentation, whether as vessel owner or otherwise; neither was
there ever any indication that Great American Boat Company (or
Great American Boat) was a proprietorship of Smith or that he was
doing business in that name; nor was the party insured ever listed
as MV/GREAT AMERICAN. The summary judgment evidence is equally
clear that Smith never notified the Insurers or any independent
agent or broker that any person, natural or juridical, other than
Great American Boat Company was the owner of the Vessel or the
insured under the policy.
Crucial to the instant analysis is the fact that Great
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American Boat Company filed for protection under Chapter 11 of the
Bankruptcy Code in August 1983, and that the Vessel was listed as
an asset of the corporate debtor. Equally central to the case are
the undisputed facts that (1) the Vessel was sold at bankruptcy
auction in September 1988, (2) the buyer was Smith, (3) neither the
debtor corporation, as named insured, nor anyone on its behalf or
on behalf of Smith as the purchaser and new owner, ever reported
the sale and purchase to the Insurers or to any agents or brokers
of the coverage, and (4) the designation of Great American Boat
Company as the named insured on the policy was never changed.
Also undisputed is the conclusion that —— despite remaining as the
named insured under the policy —— the bankrupt corporation, Great
American Boat Company, had no insurable interest in the Vessel at
the time of the fire; neither had it had such an interest for over
five years prior to the fire.
From the inception, the policy and all renewals were subject
to the following provision:
In the event of any change, voluntary or otherwise, in
the ownership or flag of the vessel . . . the policy
shall automatically terminate at the time of such change
of ownership. . . . This insurance shall not inure to
the benefit of any transferee or charterer of the vessel.
. . .
After Smith acquired the Vessel he had it documented
(registered) in his name by the U.S. Coast Guard, but neither
copies of the documentation nor the fact of its existence were ever
conveyed to the Insurers or to any insurance agents or brokers.
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Renewal premiums were remitted to the Hartson Agency using checks
signed by Smith and bearing the initials of the Great American Boat
Company, the word “insurance,” and Smith’s name. This cryptic
information, printed on the checks, is vague and ambiguous; it
could not have put payees or other recipients on notice that Smith
was the owner of the Vessel or that he was doing business in the
name of Great American Boat or Great American Boat Company.
Moreover, those checks were never forwarded to the Insurers;
rather, they were negotiated by the insurance agency, which in turn
issued its own drafts for the net amount of the premiums, i.e.,
gross premiums less commissions, and sent those drafts on to the
Insurers. Such drafts were the only form of disbursement ever
received in London.
II
ANALYSIS
As he did to the district court, Smith has proffered a number
of arguments to this court, both in his brief and in oral argument
by his able counsel. Without reiterating those arguments just to
knock them down, however, it suffices that neither singly nor in
combination can they carry the day. They neither establish the
existence of a genuine issue of material fact sufficient to defeat
summary judgment nor provide a basis in fact or law sufficient to
defeat the Insurer’s entitlement to rely on the above-quoted
automatic termination provision of the policy. Smith must be held
to knowledge of the existence of the contents of the policy,
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including the plain and unambiguous language of the automatic
termination provision, which is triggered by any change of
ownership. Indeed, Smith has never claimed ignorance of that
provision.
The Insurers’ repeated renewal of the policy and acceptance of
the net premiums funneled to them through Smith’s friend Hartson
and his agency cannot establish insurance by estoppel, waiver, or
any other such theory. Of Smith’s diverse theories, we are least
impressed with the sophistry embodied in the flawed syllogism that
(1) under Louisiana law, a renewed insurance policy is a new
policy, (2) the change of ownership took place in 1988, so only the
“new” renewal policy then in effect was invalidated by such
ownership change [Smith proffered no explanation of just how a
policy that is terminated ipso facto upon change of ownership
during the policy term could somehow be “renewed” to create a new
policy months later], and (3) thus there was no change of ownership
to effect a termination of the “new” policy, which was in effect at
the time the fire occurred in 1994 (when the name of the insured
was shown as “Great American Boat,” which, insists Smith, was his
“d/b/a”); ergo, a new policy was in effect when the fire occurred,
so the proceeds are payable to Smith doing business as Great
American Boat. The speciousness of that argument is too apparent
to justify more than an out-of-hand rejection by this court.
III
CONCLUSION
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For essentially the same reasons given by the district court
for (1) granting the motion for summary judgment of Defendant-
Appellee Indemnity Marine Assurance Co., Ltd., et al., to dismiss
the action of Plaintiff-Appellant William S. Smith, and (2) denying
Smith’s motion for reconsideration, the rulings of the district
court are, in all respects,
AFFIRMED.
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