United States Court of Appeals
For the First Circuit
No. 08-1244
FIRST SPECIALTY INSURANCE CORPORATION,
Plaintiff, Appellee,
v.
AMERICAN HOME ASSURANCE CO.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Margaret J. Kravchuk, U.S. Magistrate Judge]
Before
Torruella, Boudin, and Howard,
Circuit Judges.
Robert J. Murphy, with whom Holbrook & Murphy, was on brief
for appellant.
Elizabeth C. Sackett, with whom Barbara O'Donnell and Robinson
& Cole, LLP, were on brief for appellee.
February 27, 2009
TORRUELLA, Circuit Judge. In this insurance case,
American Home Assurance Co. ("American") seeks to recover pursuant
to an insurance policy that First Specialty Insurance Corporation
("First Specialty") issued to Maine Coast Marine Construction, Inc.
("MCMC"). The case presents us with two questions: (1) whether a
"watercraft" exclusion in the policy First Specialty issued to MCMC
applies to a barge being pulled by a tug and (2) whether Maine law
would bar all recovery if the barge is excluded, even though the
tug is not excluded. The district court found the exclusion barred
all recovery and granted summary judgment to First Specialty.
After careful consideration, we affirm.
I. Background
For the purposes of summary judgment, the facts are as
follows. Fore River Dock & Dredge, Inc. ("FRDD") hired MCMC to
deliver a construction barge, the DS64, to a site on the Merrimack
River in Newburyport, MA, using a tug, the Seawind II. On
December 11, 2002, Guy Splettstoesser, an employee and part-owner
of MCMC, set out from Gloucester, MA, using the tug to push the
barge. On account of deteriorating weather conditions,
Splettstoesser went from pushing the DS64 with the Seawind II to
towing it using a cable. As he attempted to maneuver the tug and
barge to enter the Merrimack River, strong winds pushed the barge
alongside the tug and then pushed both out of the channel,
grounding them on Plum Island.
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First Specialty had issued an insurance policy to MCMC,
the company that was actually operating the Seawind II as it towed
the DS64. American had issued an insurance policy to FRDD, the
company that hired MCMC to deliver the barge. As a result of a
settlement with FRDD, American has incurred expenses of
approximately $372,000. In response, American obtained a
settlement from MCMC and Splettstoesser in a subrogation suit that
American brought on behalf of FRDD. MCMC and Splettstoesser agreed
to judgment being entered in favor of American against themselves
in the amount of approximately $372,000, providing, however, that
American would seek to collect the money from First Specialty,
MCMC's insurer. First Specialty then sought declaratory relief
against American to the effect that it was not liable for these
damages.
Through this procedural history, American now stands in
the shoes of MCMC and seeks to recover on MCMC's insurance policy
with First Specialty. This policy obliges First Specialty to pay
damages that MCMC is legally obligated to pay because of "bodily
injury" or "property damage" resulting from an "occurrence." An
"occurrence" is defined in the policy as "an accident, including
continuous or repeated exposure to substantially the same general
harmful conditions." The policy contains the following exclusion:
2. Exclusions
This insurance does not apply to:
...
g. Aircraft, Auto or Watercraft
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"Bodily injury" or "property damage" arising
out of the ownership, maintenance, use or
entrustment to others of any aircraft, "auto"
or watercraft owned or operated by or rented
or loaned to any insured. Use includes
operation and "loading or unloading".
This exclusion does not apply to:
(1) A watercraft while ashore on premises you
own or rent;
(2) A watercraft you do not own that is:
(a) Less than 26 feet long; and
(b) Not being used to carry persons or
property for a charge[.]
The tug, the Seawind II, is 25.5 feet long, and it is
undisputedly not excluded. The barge, the DS64, is 150 feet long.
The DS64 served as a floating platform for marine construction
projects, similar to floating docks common at marinas. The DS64
traveled through the water to arrive where it was needed.
Thereafter, it served as a floating work platform. The DS64 had no
motorized propeller or means of self-propulsion, but relied on
tugboats to move and position it. Furthermore, the DS64 had no
means of steering or navigating, no crew, and was not required to
be, nor was it, inspected by or registered with the United States
Coast Guard. Neither the tug nor the barge were used to ferry
persons or property for a charge.
II. Discussion
On appeal of grants of summary judgment, we apply de novo
review to any legal issues and to the question of whether there
exists a genuine dispute of material fact requiring a trial. New
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Eng. Surfaces v. E.I. du Pont de Nemours & Co., 546 F.3d 1, 8 (1st
Cir. 2008).
Though a shipwreck figures in this case, the policy at
issue is a general commercial liability policy and the case comes
before us under our diversity jurisdiction, not under our maritime
jurisdiction. There is no dispute that we must apply Maine law to
resolve the two issues in this appeal.
A. Does the watercraft exclusion apply to the DS64?
Maine law on insurance policy interpretation can be set
forth as follows:
Whether a given insurance contract is
ambiguous is a question of law for the court.
"The language of a contract of insurance is
ambiguous if it is reasonably susceptible of
different interpretations." In addition, "[a]
policy is ambiguous if an ordinary person in
the shoes of the insured would not understand
that the policy did not cover claims such as
those brought . . . ." Nevertheless, "the
court must interpret unambiguous language in a
contract according to its plain and commonly
accepted meaning." Finally, in determining
whether an insurance contract is ambiguous,
the long-standing rule in Maine requires an
evaluation of the instrument as a whole.
A contract of insurance, like any other
contract, is to be construed in accordance
with the intention of the parties, which is to
be ascertained from an examination of the
whole instrument. All parts and clauses must
be considered together that it may be seen if
and how far one clause is explained, modified,
limited or controlled by the others.
Apgar v. Commercial Union Ins. Co., 683 A.2d 497, 498 (Me. 1996)
(quoting Me. Drilling & Blasting, Inc. v. Ins. Co. of N. Am., 665
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A.2d 671, 674-75 (Me. 1995)) (alterations in original) (citations
omitted).
1. The DS64 is a watercraft.
The first question we must confront is the meaning of the
term "watercraft." First, it cannot be reasonably questioned that
a watercraft is a craft for use in or on water. And we can see no
reason to disagree with the district court's conclusion, made after
consultation with the Oxford English Dictionary, that "craft," in
this context, refers to vessels of all kinds for water carriage.
First Specialty Ins. Corp. v. Me. Coast Marine Constr., Inc., 532
F. Supp. 2d 188, 196 n.5 (D. Me. 2008) (citing 3 Oxford English
Dictionary 1104, "craft" meaning V (2d ed. 1989) [hereinafter
OED]); see also 19 OED 992, "watercraft" def. 2 (defining the term
as a "vessel that plies on the water; such vessels collectively").
Under this definition, it would be plain and commonly accepted that
the DS64, which is a vessel for use in the water, and which moved
across water to reach its destination, was a watercraft. See 19
OED 574, "vessel" def. 4 (defining "vessel" as "[a]ny structure
designed to float upon and traverse the water for the carriage of
persons or goods; a craft or ship of any kind, now usually one
larger than a rowing-boat and often restricted to sea-going craft
or those plying upon the larger rivers or lakes.").
Though no Maine case addresses the meaning of this term,
persuasive precedent from other jurisdictions supports this
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conclusion. See, e.g., Terra Res., Inc. v. Lake Charles Dredging
& Towing, Inc., 695 F.2d 828, 831 n.7 (5th Cir. 1983) (noting that
a watercraft "exclusion clearly applies to the movements of the
barges themselves," but allowing recovery on other grounds); Pa.
Nat'l Mut. Cas. Ins. Co. v. S. State, Inc., No. 07-2989, 2008 U.S.
Dist. LEXIS 98456, at *22-23 (D.N.J. Dec. 3, 2008) (holding, on
summary judgment, that "[a]lthough a work-barge is not used in the
same way as most other watercraft, and although it serves important
mining functions in addition to water transport, it is nonetheless
clearly within the meaning of 'watercraft' contemplated by the
insurance policy."); Henry v. S. La. Sugars Coop., Inc., 957 So. 2d
1275, 1278-79 (La. 2007) (finding, on summary judgment, no coverage
under a watercraft exclusion for a docked barge); Sloan Steel
Erectors & Equip. Rental, Inc. v. Ill. Union Ins. Co., 551 N.Y.S.2d
136, 136 (N.Y. App. Div. 1990) (per curiam) ("[A]
12-foot-by-31-foot barge is a 'watercraft.'"); see also Illinois v.
Kentucky, 500 U.S. 380, 386 (1991) (concluding that Kentucky's
evidence of taxation "of barges and other watercraft" failed to
establish its territorial claims against Illinois).
Cases suggesting otherwise are easily distinguishable in
that they involve the land-based use of a barge or its equipment.
See Consol. Am. Ins. Co. v. Mike Soper Marine Servs., 951 F.2d 186,
189 (9th Cir. 1991) (finding "ambiguity in the word watercraft" in
the context of deciding that a watercraft exception did not apply
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when a barge-mounted crane amputated an arm); Ison v. Roof, 698
F.2d 294, 298 (6th Cir. 1983) (finding coverage despite a
watercraft exclusion where a pleasure boat struck a work barge
docked at a coal conveyor facility, since the policy showed it was
intended to cover the work done at such a facility and since the
barge "was used as a base for the conveyor and was not intended to
be used and was not being used as a transportation vessel"); Ayers
v. C&D Gen. Contractors, 237 F. Supp. 2d 764, 770 (W.D. Ky. 2002)
(relying on the above two cases to find coverage where a crane
mounted on a barge collapsed, reasoning "[t]he barge was not used
for transportation during Ayers's employment, it merely enabled
work underneath the docks").
American argues that a watercraft must have its own means
of propulsion. But we see nothing in that term's plain meaning
that suggests such a limitation. Further, the cases American
points to are inapposite. American first relies on a nineteenth
century British case, which it argues holds that a barge is not a
vessel under a particular British law. Blanford v. Morrison,
(1850) 117 Eng. Rep. 633, 634-35 (Exch. Ch.). But, the British law
at issue regulated deliveries by a "lighter, vessel, barge, or
other craft" and the opinion simply dealt with whether delivery by
coal brig met that definition. Id. Thus, this case does not speak
to whether a barge is considered a watercraft.
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American next relies on a Louisiana case in which the
court found a barge was not a "vessel" under the relevant tax code.
Mallard Bay Drilling, Inc. v. Kennedy, 914 So. 2d 533, 545-49 (La.
2005). But, in that case, the statute dictated that result by
applying one subsection to "ships, vessels, or barges" and the next
only to "ships or vessels," thereby suggesting a deliberate
omission of barges. Id. In fact, that decision made clear that
its resolution of tax law was specialized and bore little relation
to "general provisions of the law." Id. at 549.
Finally, American points to a unpublished case from
Michigan to argue that a means of propulsion is required for
something to be a watercraft. Russian Am. Ass'n of Detroit v.
Hastings Mut. Ins. Co., No. 206086, 1999 Mich. App. LEXIS 1599, at
*5 (Mich. Ct. App. Apr. 6, 1999). There, in concluding that a
rowboat accident was excluded under a watercraft exclusion, the
court noted:
The dictionary definition of "watercraft" is
"a boat or ship." A "boat" is "a vessel for
transport by water, propelled by rowing,
sails, or a motor." Random House Webster's
College Dictionary, (1997). A rowboat is
clearly a watercraft within the common
definition of that term.
Id. As is evident from this quotation, that court simply noted
that some boats have a source of propulsion. That court easily
concluded that a rowboat was a watercraft and never considered the
problem of a barge. Rather, it simply took one definition of
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"boat" that met the facts in that case. It is by no means clear
that to be a boat a vessel must be "propelled by rowing, sails, or
a motor." Further, though "boats or ships" fit the definition of
"watercraft," as we have described above, that term plainly also
includes vessels. And so, if we felt the need to analogize to
other terms and contexts in order to reach a result, we need look
no further than the Supreme Court, which has rejected the idea that
a lack of propulsion prevents a barge from being considered a
vessel. Norton v. Warner Co., 321 U.S. 565, 571 (1944) (finding
that where "vessel" is defined as "every description of watercraft
or other artificial contrivance used, or capable of being used, as
a means of transportation on water", "[a] barge is a vessel within
the meaning of the [Longshoremen's and Harbor Workers' Compensation
Act] even when it has no motive power of its own, since it is a
means of transportation on water."), overruled on other grounds by
McDermott Int'l, Inc. v. Wilander, 498 U.S. 337 (1991). Thus, we
reject American's arguments that the broad term "watercraft" is
limited to vessels with a means of propulsion or is ambiguous.
American raises several other logical and evidentiary
arguments, which we address in turn. First, American points to the
district court's acknowledgment that "there might be some room to
quibble over whether a float or a barge tied to a dock or mooring
might fairly be regarded as a watercraft." First Specialty, 532 F.
Supp. 2d at 196. American argues that since it would not make
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sense for a barge to move in and out of coverage, an unmoored barge
must also not be a watercraft. We reject this argument. As our
above distinctions with Consolidated American, Ison, and Ayers
suggest, there may be valid reasons for concluding certain moored
barges being used for industrial purposes are not watercraft under
an insurance policy where an injury results from a purely land-
based industrial use of the barge or its equipment. But this does
not establish that all barges cease being watercraft when docked.
Thus, American's fear that barges will routinely move in and out of
coverage is not realized, and we have no need to abandon the plain
meaning of the term "watercraft."
American next points to two pieces of deposition
testimony to argue for its interpretation. Specifically, American
relies on the testimony of Roger Hale, an owner of FRDD, and John
Naughton, an alleged agent of First Specialty. But, "[t]he
interpretation of an unambiguous contract 'must be determined from
the plain meaning of the language used and from the four corners of
the instrument without resort to extrinsic evidence.'" Am. Prot.
Ins. Co. v. Acadia Ins. Co., 814 A.2d 989, 993 (Me. 2003) (quoting
Portland Valve Inc. v. Rockwood Sys. Corp., 460 A.2d 1383, 1387
(Me. 1983)). Thus, we need not consider this testimony. American
contends that we should nonetheless consider the testimony of Mr.
Naughton to be a significant admission against interest. American
claims that Naughton stated that "watercraft" referred to floating
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objects that had a means of propulsion. But American has
mischaracterized the record. In the relevant excerpt, Naughton
states that he "would say a watercraft is any waterborne vessel,
flotation device, probably should have them propulsion of some
kind, or able to be propelled in some way, but it's got to be
something that's used on the water" (emphasis added). Thus, even
if Naughton was First Specialty's agent, a proposition which is
disputed, he did not admit that a watercraft must have its own
means of propulsion, but only that it must be able to be propelled.
The DS64 clearly can be propelled, and was so propelled through
force applied to it by the Seawind II.
Finally, American contends that a question on the
insurance application reveals that watercraft are distinct from
floats, since that application asks the insured to identify all
"watercraft . . . and floats." But this conjunctive phrasing does
not indicate that the terms are exclusive and does not overcome the
unambiguous meaning we have described above.
2. Splettstoesser was operating the DS64.
Having established that the DS64 was a watercraft, we
must ask whether it was a "watercraft owned or operated by or
rented or loaned to" the insured. It is undisputed that MCMC did
not own the DS64, and First Specialty has not contended that MCMC
rented or was loaned the barge. Thus, we must decide whether
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moving the barge by application of force created by the Seawind II
constituted operation.
Relying on the plain meaning of the term, we conclude
that Splettstoesser was operating the DS64 using the Seawind II.
"Operation" plainly includes manipulation by application of an
exterior force. For example, definitions of "operate" in the
Oxford English Dictionary include "exercise force or influence,
produce an effect, act, work," "[t]o bring force or influence to
bear on or upon," "[t]o effect or produce by action or the exertion
of force or influence; to bring about, accomplish, work," and "[t]o
direct the working of, to manage, conduct, work (a railway,
business, etc.)". See 10 OED 847-48, "operate" defs. 1, 2, 5, and
7 (emphasis in original). There is no ambiguity here since it can
fairly and plainly be said that Splettstoesser was exercising force
to produce an effect on the DS64 and direct its functioning. In
fact, Splettstoesser's deposition establishes that he maneuvered
the Seawind II in such a manner as to allow the DS64 to properly
turn behind him.
American argues that one would not say that pulling a
waterskier or a log constitutes operation. But a waterskier is
distinguishable by virtue of the fact that his or her functioning
is also controlled by independent volition. Further, we do believe
that pulling a log constitutes operating on the log, just as
pulling a trailer using a truck would be operating the trailer.
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American also points to a federal statute that regulates tugboat
operators, noting that it imposes no restriction based on what is
pulled. See 46 U.S.C. § 8904(a). But it was never disputed that
a tugboat pilot is operating the tugboat. That such operation is
regulated by statute, whereas operation of pulled vessels is not
regulated, does not establish that pulling a vessel is not
operating that vessel. Thus, we see no ambiguity in the term
"operated by" and conclude that Splettstoesser was operating the
DS64.
In light of these holdings regarding the plain meaning of
the terms "watercraft" and "operated by," we need not take recourse
to guessing the intent of the parties. Nonetheless, we pause to
note that this holding comports with such likely intent, as
ascertained from an examination of the whole policy, as is
permitted by Maine law. The purpose of the policy was not to
provide blanket coverage of the tugboat, but rather to provide
general commercial liability insurance in the event of certain
accidents. The clear purpose of a watercraft exclusion is to limit
the scope of the risk of such insurance, so as to avoid the greater
financial risk arising from accidents involving larger watercraft.
Though the operation of a tug alone might not entail such risks,
the risks of financial loss from a maritime accident clearly
increased when the tug and barge were joined and operated together.
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Thus, our reading of these contested terms comports with the likely
intent of the policy.
For all these reasons, we conclude that MCMC's operation
of the barge fits within the watercraft exclusion of the policy.
B. Can American recover under the theory that the
Seawind II was responsible for the loss?
American argues that even if the barge is excluded, the
fact that the tug is not excluded means that some recovery should
be had for any and all damages that were caused by operation of the
tugboat. But this argument misreads the language of the exclusion.
The exclusion provides that insurance does not apply to bodily
injury or property damage caused by an occurrence arising from the
operation of a watercraft. It is true that the exclusion does not
apply to certain watercraft, including the Seawind II. American
argues that this exception to the exclusion means that "all
property damage arising out of . . . the use and operation of the
Seawind II is covered by the Policy." This is plainly illogical.
Simply because accidents arising from the use of the Seawind II are
not excluded does not mean that any accident involving the Seawind
II is automatically covered. Rather, if such an accident also
arose from the use of the DS64, it would not be covered.
The question we must ask then is whether the wreck arose
out of the operation of the DS64. In evaluating this question, the
district court concluded, "[i]n operating the tugboat Mr.
Splettstoesser operated the barge as well and this incident would
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not have occurred but for the presence of the barge and the peril
created by Mr. Splettstoesser's attempt to convey it down the
channel into the Merrimack River." First Specialty, 532 F. Supp.
2d at 197. Though American argues that this is an improper test of
causation in this circumstance, we see it instead as a conclusion
that the accident arose out of the joint operation of the Seawind
II and the DS64. For the reasons stated above, we agree with this
conclusion. The record shows that Splettstoesser navigated the
tug with concern for its effect on the barge, that he lost control
of the barge, and that both vessels were then grounded. Thus,
American is not entitled to recover for damages to the Seawind II,
the DS64, or the cleanup costs, as all of these arose from the
accidental occurrence involving the operation of the DS64.
American attempts to avoid this conclusion by encouraging
us to apply the efficient proximate cause doctrine. "The efficient
proximate cause rule operates to permit coverage when an insured
peril sets other excluded perils into motion which 'in an unbroken
sequence and connection between the act and final loss, produce the
result for which recovery is sought.'" Kish v. Ins. Co. of N. Am.,
883 P.2d 308, 311 (Wash. 1994) (quoting Graham v. Pub. Employees
Mut. Ins. Co., 656 P.2d 1077, 1081 (Wash. 1983)). "In such a
situation, the insured peril is considered the 'proximate cause' of
the entire loss and the loss is covered despite the fact that the
other perils contributing to the loss were excluded." Id.
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(footnote omitted); see also Fajardo Shopping Ctr., S.E. v. Sun
Alliance Ins. Co., 167 F.3d 1, 7-8 (1st Cir. 1999).
Under this doctrine, American argues that the operation
of the tugboat was, as a matter of law, the efficient proximate
cause of the occurrence, or, in the alternative, that a jury should
be permitted to so find. American further contends that the
district court erred by (1) analyzing "but for" causation rather
than proximate causation and (2) effectively concluding that the
barge was the sole cause of the accident. We disagree.
First, it is not clear that Maine courts apply this
doctrine or that the doctrine is even applicable to the kind of
general liability insurance at issue. But we need not decide these
questions of law since we agree with the district court's
conclusion that application of the doctrine would not save
American. The efficient proximate cause doctrine is only
applicable where the causes are independent. Tento Int'l, Inc. v.
State Farm Fire & Cas. Co., 222 F.3d 660, 662 n.2 (9th Cir.
2000)("For the efficient proximate cause theory to apply, . . .
there must be two separate or distinct perils which 'could each,
under some circumstances, have occurred independently of the other
and caused damage.'" (quoting Pieper v. Commercial Underwriters
Ins. Co., 69 Cal. Rptr. 2d 551, 557 (Cal. Ct. App. 1997))); Kish,
883 P.2d at 311. Here, the undisputed facts show that
Splettstoesser was operating the tug and barge together,
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maneuvering the tug in such a way as to achieve the desired effect
on the barge. There is no way in which his operation of the tug
and his operation of the barge could be thought of as independent
causes of the accident. Cf. Terra Res., 695 F.2d at 831 (finding
for the insured owners of a barge where a defective mooring caused
damage, concluding that the damage would still have occurred
independent of the fact that the insured owned the barge). The
district court's conclusion that the accident would not have
occurred "but for" the presence of the barge is just another way of
stating this conclusion. Thus, though the efficient proximate
cause doctrine might be applicable in other circumstances, it does
not apply on these facts. Nor is there a question for the jury.
If some independent cause, say a lightning strike to the tugboat,
had caused damage, the jury might be called on to parse which cause
was primarily responsible for the occurrence. But here, the record
indisputably shows that the joint operation of the tug and barge
led to the wreck, which caused all damages for which American now
seeks to recover.
III. Conclusion
For the foregoing reasons, the summary judgment entered
in favor of First Specialty against American is affirmed.
Affirmed.
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