Certain Underwriters v. Inlet Fisheries Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CERTAIN UNDERWRITERS AT LLOYDS, 
LONDON,
Plaintiff-Appellee,
v.
INLET FISHERIES INCORPORATED; No. 06-35383
INLET FISH PRODUCERS
INCORPORATED,  D.C. No.
CV-04-00058-JWS
Defendants-Appellants,
OPINION
v.
TOTEM AGENCIES INCORPORATED;
AMERICAN E&S INSURANCE
BROKERS CALIFORNIA INCORPORATED,
Third-party-defendants-Appellees.

Appeal from the United States District Court
for the District of Alaska
John W. Sedwick, District Judge, Presiding

Argued and Submitted
December 5, 2007—Seattle, Washington

Filed February 11, 2008

Before: M. Margaret McKeown and Richard R. Clifton,
Circuit Judges, and William W Schwarzer,* District Judge.

Opinion by Judge McKeown

*The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.

1857
1860 CERTAIN UNDERWRITERS v. INLET FISHERIES

COUNSEL

John A. Treptow, Dorsey & Whitney LLP, Anchorage,
Alaska, for the defendant-appellants.

Christopher W. Nicoll, Nicoll Black Misenti & Feig PLLC,
Seattle, Washington, for the plaintiff-appellee.

OPINION

McKEOWN, Circuit Judge:

This case involves the interplay between an ancient legal
doctrine and contemporary vessel pollution insurance. Histor-
ically, all insurance policies were contracts uberrimae fidei,
meaning that both parties were held to the highest standard of
good faith in the transaction. The doctrine of uberrimae fidei
was grounded both in morality and efficiency; insureds were
considered morally obligated to disclose all information mate-
rial to the risk the insurer was asked to shoulder, but such a
principle was also an economic necessity where insurers
had no reasonable means of obtaining this information
efficiently, without the ubiquity of telephones, email, digital
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1861
photography, and air travel. See, e.g., Stecker v. Am. Home
Fire Assurance Co., 84 N.E.2d 797, 799 (N.Y. 1949) (“The
reasons which brought into being the strict marine insurance
law doctrine as to disclosures, go far back into the early days
of marine insurance, when sailing ships in faraway seas were
insured in London by underwriters who could get no informa-
tion except from the shipowners.”); McLanahan v. Universal
Ins. Co., 26 U.S. 170, 176 (1828) (“The contract of insurance,
is one of mutual good faith; and the principles which govern
it, are those of an enlightened moral policy.”). Today, uberri-
mae fidei has been displaced in most insurance contexts. Nev-
ertheless, the doctrine enjoys continuing vitality in the world
of marine insurance.

Although maritime insurance has its roots in pre-Roman
times, its modern incarnation can be traced to a sixteenth-
century coffee shop. The mariners who gathered there became
tired of individually shouldering the plethora of risks inherent
in their trade, and decided to band together to share those
risks. The coffee shop was owned by the eponymous Edward
Lloyd. Out of the coffee shop conversation grew the develop-
ment of the modern marine insurance market, with Lloyd’s of
London at its helm. THOMAS J. SCHOENBAUM, ADMIRALTY AND
MARITIME LAW § 17-1 (4th ed. 2004) (Hornbook Series)
(“SCHOENBAUM”).

Lloyd’s of London became a force not only in the tradi-
tional maritime insurance industry but also in emerging and
specialized marine insurance markets. With the advent of sig-
nificant environmental legislation in the 1970s, coupled with
a number of high profile disasters involving oil tankers, liabil-
ity of shipowners for environmental damages was expanded,
culminating, at the federal level, with the Oil Pollution Act of
1990 (“the OPA”). SCHOENBAUM § 16-2. The “OPA
increase[d] substantially both the regulation and pollution lia-
bilities of entities engaged in the transportation and produc-
tion of oil within the . . . United States.” Id. “[I]n part because
of the enactment of the [OPA],” “[p]ollution insurance, which
1862 CERTAIN UNDERWRITERS v. INLET FISHERIES
traditionally had been part of P&I coverage, has emerged as
a separate coverage in the United States.” ADMIRALTY &
MARITIME LAW 185, 187, Federal Judicial Center (2004). This
stand-alone pollution coverage is often referred to as ‘vessel
pollution insurance,’ and Lloyd’s of London is currently the
second-largest provider of such policies. The question we
consider is whether the doctrine of uberrimae fidei applies to
vessel pollution insurance policies covering statutory environ-
mental liabilities. We answer that query in the affirmative,
and affirm the district court’s grant of summary judgment in
favor of the Lloyds’ underwriters.

BACKGROUND

Inlet Fisheries, Inc. and Inlet Fish Producers, Inc. (together
“Inlet”) are Alaska-based fish buying and processing busi-
nesses, both owned by Vincent Goddard. Inlet owns a number
of vessels, including the YUKON II, FORT YUKON,
MAREN I, HARVESTER BARGE (“HB”), and the QANIR-
TUUQ PRINCESS (“QP”).

The underwriters that are parties to this case are those syn-
dicates at Lloyd’s of London that agreed to underwrite a
stand-alone pollution insurance policy issued to Inlet in
August 2000.1 For convenience, we refer to both these under-
writers and Lloyd’s of London as simply “Lloyds.”

In August of 2000, Water Quality Insurance Syndicate
(“WQIS”), Inlet’s then-provider of stand-alone vessel pollu-
tion insurance, sent notice that it was cancelling Inlet’s policy.
The stated and most immediate reasons for the cancellation
1
Lloyd’s of London itself does not actively underwrite insurance.
Instead, it oversees a market in which individual agencies, known as “syn-
dicates,” compete to underwrite individual policies. Each syndicate is
managed by an agent, and individual members of the syndicate, called
“names,” provide the capital. See Richards v. Lloyd’s of London, 135 F.3d
1289, 1291-92 (9th Cir. 1998).
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1863
were Inlet’s failures to conduct a survey of its vessels as
requested by WQIS and to pay its premiums. WQIS’s request
for a survey arose after the MAREN I, a vessel owned by
Inlet and insured by WQIS, hit a sandbar in Steamboat Slough
in Alaska and sank, with 3000 gallons of diesel oil on board.
The same vessel had been involved in a “pollution incident”
the week before, and the QP, another vessel owned by Inlet,
was at the time reportedly listing at the city dock “with the
potential of turning turtle.”

The day after WQIS sent notice of the cancellation, another
of Inlet’s vessels, the HB, spilled approximately 55 gallons of
oil at the city pier in Bethel, Alaska. Because that oil came
originally from the MAREN I, Inlet included the cost of
cleaning up this spill in its claim to WQIS for the sinking of
the MAREN I.

After receiving WQIS’s notice of cancellation, but before
its effective date, Inlet, through its broker, sought vessel pol-
lution insurance from Lloyds for the FORT YUKON,
YUKON II, HB, and QP. The information Inlet provided on
this application forms the basis of the current dispute. In the
space calling for Inlet’s current pollution insurance carrier,
Inlet put “Water Quality Ins. Syndicate.” In response to a
request for “pollution loss history,” Inlet wrote “None.” Inlet
did not supply, and the application did not request, informa-
tion about the condition of Inlet’s vessels, Inlet’s financial sta-
tus, or the fact of, or reason for, WQIS’s cancellation of
Inlet’s previous policy.

In August 2002, one of Inlet’s vessels, the QP, spilled oil
and pollutants when it sank in Steamboat Slough, near Bethel,
Alaska. After salvage attempts were unsuccessful, the vessel
was eventually towed out to sea and scuttled. Inlet made a
claim to Lloyds under its vessel pollution policy, at which
point Lloyds commenced an investigation into both that inci-
dent and Inlet generally.
1864 CERTAIN UNDERWRITERS v. INLET FISHERIES
Upon learning additional information about Inlet, including
its failure to disclose the MAREN I and HB incidents, the
poor condition of its vessels, and its pending bankruptcy, and
after Inlet refused to cooperate with Lloyds’ investigation,
Lloyds filed suit seeking a declaratory judgment that it had
the right to void the policy ab initio under the doctrine of
uberrimae fidei. Inlet counterclaimed and argued that Alaska
state law, rather than federal maritime law, applied, and that
Lloyds never asked for the allegedly material information. On
cross-motions for summary judgment, the district court
granted Lloyds’ motion, and ruled that uberrimae fidei
applied and that Lloyds was entitled to void the policy.

ANALYSIS

[1] The doctrine of uberrimae fidei imposes a duty of
utmost good faith, SCHOENBAUM § 17-14, and “requires that an
insured fully and voluntarily disclose to the insurer all facts
material to a calculation of the insurance risk.” HIH Marine
Servs., Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000).
Whether the doctrine applies here is particularly important,
because Lloyds claims that Inlet failed to disclose material
information, and Inlet argues that Lloyds never asked for the
information it now regards as material. Under uberrimae fidei,
however, Inlet would have been obligated to disclose all
material information, regardless of a request by Lloyds.
SCHOENBAUM § 17-14.

The application of the doctrine can have dramatic conse-
quences. For example, in Cohen, Friedlander & Martin Co.
v. Massachusetts Mutual Life Insurance Co., 166 F.2d 63 (6th
Cir. 1948), the court held a life insurance policy void under
the doctrine of uberrimae fidei because the insured failed to
disclose two heart attacks that occurred between the date of
his application and the effective date of the policy. Id. at 66.
The court reasoned that even though the representations in the
application were correct when it was submitted, uberrimae
fidei required the insured to disclose any material facts of
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1865
which he became aware before the policy became effective.
Id.

Similarly, in the maritime context, the Fifth Circuit invali-
dated an insurance policy under uberrimae fidei for the
insured’s failure to disclose the poor condition of his boat.
Gulfstream Cargo, Ltd. v. Reliance Ins. Co., 409 F.2d 974,
983 (5th Cir. 1969). There, the insured notified the insurance
company that his boat was undergoing repairs, but failed to
disclose the full extent of the problems with the vessel. Id. at
978. In fact, the boat was literally falling apart. Id. The ship-
owner argued he had given the company sufficient notice of
the repairs and that it could have inquired about their extent,
had it found that fact material. Id. at 981-82. The court dis-
agreed, reasoning that while the insurance company was
aware that repairs were taking place, it had no reason to
expect the vessel was unseaworthy. Id. at 982. Under uberri-
mae fidei, the court held the insured was required to advise
the insurance company of this material information. Id.

[2] Marine insurance has always occupied a unique place
in the legal universe, straddling federal and state regulatory
jurisdiction. See Red Cross Line v. Atl. Fruit Co., 264 U.S.
109, 124-25 (1924) (holding that states can regulate maritime
insurance provided the regulations do not “conflict with any
essential feature of the general maritime law”). It was not
until 1870 that the Supreme Court even recognized marine
insurance contracts as within the federal courts’ maritime
jurisdiction. See New Eng. Mut. Marine Ins. v. Dunham, 78
U.S. 1 (1870); see also Md. Cas. Co. v. Cushing, 347 U.S.
409, 430 (1954) (Black, J., dissenting). In the years between
Dunham and the Court’s watershed decision in 1955 in Wil-
burn Boat, both states and the federal government, through
statutes and judicial decisions, regulated marine insurance,
with state laws yielding to federal laws whenever they were
deemed to “enter an area of maritime jurisdiction withdrawn
from the States[.]” Cushing, 347 U.S. at 413.
1866 CERTAIN UNDERWRITERS v. INLET FISHERIES
[3] In Wilburn Boat, the Supreme Court signaled a major
shift in the approach to marine insurance cases. Wilburn Boat
Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310 (1955). Before
Wilburn Boat, we would have simply looked to our admiralty
precedent; absent a clear rule, the Supreme Court directed us
to look to English law, because of “special reasons for keep-
ing in harmony with the marine insurance laws of England,
the great field of this business.” Queen Ins. Co. of Am. v.
Globe & Rutgers Fire Ins. Co., 263 U.S. 487, 493 (1924);
Gen. Ins. Co. of Am. v. Link, 173 F.2d 955, 956 (9th Cir.
1949); SCHOENBAUM § 17-6. Following Wilburn Boat, if extant
federal admiralty law does not contain an applicable rule,
courts are instructed to look to state law, rather than fashion-
ing a new federal admiralty rule or adopting one from British
law. Thus, the Supreme Court acknowledged the leading role
of states in governing insurance policies, including marine
insurance policies.

Wilburn Boat arose when fire consumed a small houseboat
used for commercial carriage of passengers on Lake Texoma,
an artificial inland lake between Texas and Oklahoma. Wil-
burn Boat, 348 U.S. at 311. The insurer of the boat refused
to pay for the damage, because title to the boat had been
transferred without the insurer’s permission, contrary to a pro-
vision of the policy. The insured argued that Texas state law
should apply, which would void the policy only if the breach
contributed to the loss. Id. at 311-12. The Supreme Court
agreed with the insured, reasoning that, while state law cannot
override federal statutory or common law admiralty rules, in
the absence of an established federal maritime rule, state law
controls. Because the only case establishing the rule champi-
oned by the insurance company did not involve marine insur-
ance and pre-dated Erie Railroad Co. v. Tompkins, 304 U.S.
64 (1938), the rule could not be considered an established part
of federal admiralty law. Id. at 314-16.

The Supreme Court reiterated that courts should look first
to federal admiralty law: “Wilburn Boat does not change the
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1867
initial inquiry of the courts in interpreting a policy of marine
insurance to determine whether there is an established federal
maritime law rule.” SCHOENBAUM § 17-6. Accordingly, in
determining whether federal admiralty law or Alaska state law
is applicable to the current dispute, we consider as a threshold
matter whether federal admiralty law contains an established,
applicable rule.

It is tempting to look to state law to see if, in the end, the
outcome of the case turns on which law is chosen. For
instance, here, each party has argued that it should prevail,
whether federal maritime law or Alaska state law applies. We
are reluctant, however, to construe Alaska state law unneces-
sarily where Alaska’s own courts are much better suited to the
task. Just as significantly, Wilburn Boat directs us to look to
federal law first, as does precedent in our circuit. Wilburn
Boat, 348 U.S. at 314; Bohemia, Inc. v. Home Ins. Co., 725
F.2d 506, 509-10 (9th Cir. 1984). Finally, such an approach
perpetuates uncertainty within our circuit about whether fed-
eral or state law applies. See Mitchell J. Popham & Chau Vo,
Misrepresentation and Concealment in Marine Insurance
Contracts: An Analysis of Federal and State Law within the
Ninth Circuit, 11 U.S.F. MAR. L.J. 99, 124 (1998-1999)
(“Popham”). Accordingly, we first examine federal admiralty
law.

I. THE ENTRENCHMENT OF UBERRIMAE FIDEI

[4] In looking to federal law, we ask whether uberrimae
fidei is “a judicially established federal admiralty rule govern-
ing [this policy].” Wilburn Boat, 348 U.S. at 314. Inlet argues
both that uberrimae fidei is not an established admiralty rule,
and that even if it were, it does not apply to this vessel pollu-
tion issuance policy. We disagree on both counts.

A. UBERRIMAE FIDEI AS AN ESTABLISHED FEDERAL
ADMIRALTY RULE

[5] Wilburn Boat itself provides limited direction on how
we are to determine whether a rule is “judicially established.”
1868 CERTAIN UNDERWRITERS v. INLET FISHERIES
In Bohemia, we fleshed out our approach, explaining that
“state law will control the interpretation of a marine insurance
policy only in the absence of a federal statute, a judicially
fashioned admiralty rule, or a need for uniformity in admiralty
practice.” 725 F.2d at 510. In the Ninth Circuit, we require
that the rule be sufficiently longstanding and accepted within
admiralty law that it can be said to be “established.” Putting
a slightly different spin on Wilburn Boat, the Fifth Circuit
requires an admiralty rule be “entrenched federal precedent.”
See Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 (5th
Cir. 1991). Under either gloss, however, we have little doubt
that the application of uberrimae fidei to marine insurance fits
the bill.

[6] Uberrimae fidei was first recognized in 1766 by Lord
Mansfield, and was codified in English law in 1906. SCHOEN-
BAUM § 17-14, n.1; English Mar. Ins. Act 1906. Writing for
the Court, Justice Story incorporated the rule into American
maritime insurance law in 1828: “The contract of insurance,
is one of mutual good faith; and the principles which govern
it, are those of an enlightened moral policy. The underwriter
must be presumed to act upon the belief, that the party procur-
ing insurance, is not, at the time, in possession of any fact
material to the risk, which he does not disclose.” McLanahan,
26 U.S. at 176. The roots of the uberrimae fidei doctrine,
then, are deeply embedded in American law, having had
almost 200 years to take hold.

Not only is uberrimae fidei longstanding, but at the time
Wilburn Boat was decided, few maritime insurance doctrines
were more uniformly accepted in admiralty law. Wilburn Boat
did nothing to change the standing of this doctrine. Notably,
the Supreme Court in Wilburn Boat expressed a reluctance for
federal courts to fashion new admiralty rules, not a desire to
do away with existing ones.

[7] Following Wilburn Boat, we have never directly
addressed whether uberrimae fidei or state insurance law
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1869
applies in marine insurance cases. Nonetheless, we have
repeatedly acknowledged uberrimae fidei as part of admiralty
law. See, e.g., Sentry Select Ins. Co. v. Royal Ins. Co. of Am.,
481 F.3d 1208, 1220 (9th Cir. 2007) (“Because admiralty
jurisdiction does not extend to [this case] . . . . we do not
apply the federal maritime doctrine of uberrimae fidei.”);
Cigna Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159
F.3d 412, 420, n.3 (9th Cir. 1998) (“[U]berrimae fidei exists
under both California insurance law, and federal admiralty
law.”) (internal citation omitted). Indeed, because uberrimae
fidei has been incorporated into the laws of several of the
states within this circuit, whether to apply federal or state law
often makes no difference. For example, as noted in Cigna
Property, California has codified the doctrine. See Cigna
Prop., 159 F.3d at 420, n.3. Oregon and Alaska also have
enacted provisions exempting most traditional marine insur-
ance from their statutes governing standards for other types of
insurance. See OR. REV. STAT. § 742.001; ALASKA STAT.
§ 21.42.010.

Other circuits have noted the continuing vitality of uberri-
mae fidei following Wilburn Boat.2 For example, the Second
Circuit has repeatedly applied the doctrine. In Ingersoll Mill-
ing Machine Co. v. M/V Bodena, 829 F.2d 293 (2d Cir. 1987),
the court considered whether an insurance policy was void-
able under uberrimae fidei where the shipper hired by the
insured breached his contract by improperly stowing the
insured cargo. The court held that under uberrimae fidei, there
2
The First Circuit has considered and twice declined to formally decide
whether uberrimae fidei applies in light of Wilburn Boat. See Commercial
Union Ins. Co. v. Pesante, 459 F.3d 34, 38 (1st Cir. 2006) (declining to
formally decide whether uberrimae fidei was an established admiralty
rule, because even under state law, the facts of the case made the policy
voidable); Windsor Mt. Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54
(1st Cir. 1995) (concluding it was not necessary to decide whether uberri-
mae fidei is “an established rule of maritime law . . . applicable to the dis-
pute at bar,” because even under that doctrine, given the facts of the case,
the insurer would have had no basis for voiding the policy).
1870 CERTAIN UNDERWRITERS v. INLET FISHERIES
was no duty for the insured to notify the insurer, because there
was no change to the circumstances affecting the risk. Id. at
308. In voiding a marine insurance policy for failure to dis-
close the cancellation of a prior policy, the court in Knight v.
U.S. Fire Insurance Co., 804 F.2d 9 (2d Cir. 1986), said “[i]t
is well-established under the doctrine of uberrimae fidei that
the parties to a marine insurance policy must accord each
other the highest degree of good faith.” Id. at 13; see also
Puritan Ins. Co. v. Eagle S.S. Co., 779 F.2d 866 (2d Cir.
1985) (holding uberrimae fidei applicable to marine insurance
policies).

The Eleventh Circuit is in accord and has succinctly stated
that “[i]t is well-settled that the marine insurance doctrine of
uberrimae fidei is the controlling law of this circuit.” HIH
Mar. Serv., 211 F.3d at 1362; see also King v. Allstate Ins.
Co., 906 F.2d 1537 (11th Cir. 1990) (holding that parties can
contract around uberrimae fidei).

Until 1991, the Fifth Circuit, too, fit neatly within this pat-
tern. On remand in Wilburn Boat, the court of appeals —
although not using the term uberrimae fidei — held that
“[n]othing is better established in the law of marine insurance
than that ‘a mistake or commission material to a marine risk,
whether it be wilful or accidental, or result from mistake, neg-
ligence or voluntary ignorance, avoids the policy. And the
same rule obtains, even though the insured did not suppose
the fact to the [sic] material.’ ” Fireman’s Fund Ins. Co. v.
Wilburn Boat Co., 300 F.2d 631, 646 (5th Cir. 1962)
(“Wilburn Boat II”) (citing 3 Couch Insurance at 2568).
Because Texas law also appeared to embrace the principle,
the court assumed that the doctrine applied without formally
deciding the choice of law question, but noted:

[t]here is good reason behind appellant’s argument
that federal maritime law, rather than state law, gov-
erns [the] issue. Appellant contends, and we agree,
that [Wilburn Boat] merely held that state law is to
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1871
be applied in the field of marine insurance only
where ‘entrenched federal precedent is lacking’ with
respect to a specific issue. . . . Since the above stated
rule of concealment in marine insurance is solidly
entrenched in our body of federal maritime law [cit-
ing McLanahan], it would seem that this rule should
apply in the instant case.

Id. at 647 n.12.

The Fifth Circuit came to the same conclusion just seven
years later in Gulfstream. Again, declining to decide the issue,
because Florida state law embraced the same rule, the court
held “[w]ith much ground for echoing the Court’s conclusion
. . . expressed [in Wilburn Boat II], we again find it unneces-
sary to resolve the point further.” Gulfstream, 409 F.2d at
981. The court went on to observe that “[a]ll the precedents
agree with the general rule as stated above.” Id. (citing Corpus
Juris Secundum, Black’s Law Dictionary, and numerous trea-
tises).

Then, in 1991, the Fifth Circuit abruptly changed course,
disclaiming this overwhelming body of precedent both within
and without its own circuit. In Anh Thi Kieu, the court con-
cluded, “albeit with some hesitation, that the uberrimae fidei
doctrine is not ‘entrenched federal precedent’ ” and held that
while “[p]erhaps the doctrine was ‘entrenched federal prece-
dent’ at the time of the [Wilburn Boat II] and [Gulfstream]
decisions, . . . the uberrimae fidei doctrine is entrenched no
more.” Anh Thi Kieu, 927 F.2d at 889-90. Ironically, were it
not for the Anh Thi Kieu decision itself, there would be little
cause at all to doubt that uberrimae fidei is indeed firmly
entrenched maritime law.

To determine whether uberrimae fidei controlled, the Fifth
Circuit applied a three-factor test of its own creation: “(1)
whether the federal maritime rule [in that case, uberrimae
fidei] constitutes ‘entrenched federal precedent’; (2) whether
1872 CERTAIN UNDERWRITERS v. INLET FISHERIES
the state has a substantial and legitimate interest in the appli-
cation of its law; [and] (3) whether the state’s rule is materi-
ally different from the federal maritime rule.” Id. at 886. After
determining that Texas state insurance law was not materially
different from uberrimae fidei3 and finding that Texas had a
material interest in application of its law,4 the court finally
turned to whether uberrimae fidei was an entrenched federal
precedent, and held it was not. Id. at 887-890. With all three
3
Unlike the doctrine of uberrimae fidei, Texas law required the insurer
to show the insured’s misrepresentations and omissions were intended to
deceive. Nonetheless, the court decided “[t]he fundamental nature of both
laws . . . is the same,” because “Texas insurance law shares the concern
of federal maritime law that an assured should not profit from her material
misrepresentations to the underwriter.” Anh Thi Kieu, 927 F.2d at 887.
While both laws do share this concern — as do most, if not all, insurance
laws — the ways in which they address it are materially different, and the
Fifth Circuit has been criticized for not acknowledging this point. Popham
at 110-11 (“With regard to the third factor, the Fifth Circuit erroneously
equated the standards of ‘materially different’ and ‘reasonably similar’ in
finding that Texas law applied.”).
4
By explicitly taking the state’s interest in applying its own law into
account in determining whether federal law is entrenched, the Fifth Cir-
cuit’s test inevitably tips the scales in favor of applying state law, as this
factor almost always weighs in favor of state law. This factor appears to
be derived from Kossick v. United Fruit Co., in which the Supreme Court
held that state law ought to be applied to maritime contracts where its
application “would not disturb the uniformity of maritime law.” 365 U.S.
731, 738 (1961). In that case, however, the Supreme Court specifically
distinguished the inquiry from that under Wilburn Boat, saying “[n]or is
[Wilburn Boat] apposite. The application of state law in that case was jus-
tified by the Court on the basis of a lack of any provision of maritime law
governing the matter there presented.” Id. at 742. At most, then, Kossick
sets forth an exception to Wilburn Boat’s general rule for instances where
an application of a peculiarly local rule would have no effect on the uni-
formity of maritime law in general. See Bohemia, 725 F.2d at 510 (“Our
decisions rely on Wilburn Boat and Kossick which, when read together,
hold that state law will control . . . only in the absence of a federal statute,
a judicially fashioned admiralty rule, or a need for uniformity in admiralty
practice.”) (citations omitted). Notably, in Kossick, the Supreme Court
decided that New York’s statute of frauds was not such a rule and that
admiralty law applied.
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1873
factors weighing in favor of state law, the court applied Texas
law. Id. at 890.

The Fifth Circuit’s analysis of whether uberrimae fidei is
widely entrenched federal precedent is not persuasive. First,
the court admitted that the question of entrenchment “is trou-
blesome.” Id. at 888. The court went on to state that “the sole
remaining substantial vestige of the doctrine is in maritime
insurance law,” recited that the doctrine “is a rule which this
Court has recognized but never applied,” noted that there
were few cases discussing the availability of the doctrine
post-Wilburn Boat, but acknowledged that those few confi-
dently asserted the doctrine to be “well-recognized” in federal
law, and then with “some hesitation” concluded “the uberri-
mae fidei doctrine is not ‘entrenched federal precedent.’ ” Id.
at 888-89 (emphasis changed). This recitation of the long his-
tory of the rule of uberrimae fidei in maritime law bears out
why the Fifth Circuit’s conclusion is indeed more than “trou-
blesome.”

The logic chain is not a comfortable fit. Despite nearly uni-
versal acceptance in maritime insurance law, the Fifth Circuit
threw the doctrine overboard because of its “spotty applica-
tion” in recent years. At least one commentator has suggested
that this void in the case law reflected “[uberrimae fidei’s]
unquestioned acceptance, rather than its abandonment.”
Popham at 111. It does violence to the meaning of the term
‘entrenched’ to reason that because few cases have disputed
the application of uberrimae fidei, it has somehow become
unmoored or “unentrenched.” And, even the Fifth Circuit did
not think its new rule should necessarily apply outside the
context of that particular case. Anh Thi Kieu, 927 F.2d at 890,
n.7 (“We need not at this time explore all of the situations in
which application of the uberrimae fidei doctrine might be
proper.”).

[8] Not surprisingly, no other circuit has followed Anh Thi
Kieu in the sixteen years since it was decided. In our view, in
1874 CERTAIN UNDERWRITERS v. INLET FISHERIES
the face of 200 years of precedent, it takes more than a single
circuit case and spotty citation in recent years to uproot an
entrenched doctrine.

[9] Whatever traction it might have, Anh Thi Kieu does not
undermine our conclusion that “no rule of marine insurance
is better established tha[n] the utmost good faith rule.”
Thomas J. Schoenbaum, The Duty of Utmost Good Faith in
Marine Insurance Law: A Comparative Analysis of American
and English Law, 29 J. MAR. L. & COM. 1, 11 (1998). Follow-
ing the framework of Wilburn Boat, we hold that the long-
standing federal maritime doctrine of uberrimae fidei, rather
than state law, applies to marine insurance contracts.

The parties offer a number of policy arguments for and
against application of uberrimae fidei to marine insurance.
Our role is not, however, to decide on the “best” rule for effi-
cient and fair administration of marine insurance markets. In
fact, it was precisely to avoid this sort of federal judicial
policy-making that the Supreme Court in Wilburn Boat cau-
tioned against the creation of new maritime rules by the
courts. Our only task is to determine whether uberrimae fidei
is already an established rule of federal maritime law or not.
Because we hold that it is, we now look at its application in
the context of this case.

B. VESSEL POLLUTION INSURANCE AS MARINE INSURANCE

[10] We next address whether marine insurance includes
vessel pollution insurance and this policy in particular.
Marine insurance is, simply, insurance against “the losses
incident to the marine adventure.” SCHOENBAUM § 17-1 (quot-
ing the British Marine Insurance Act, Edw. 7, ch. 41 § 1); see
also Dunham, 78 U.S. at 30. Marine insurance generally has
three “central conceptual elements:” (1) “it is a contract of
indemnity against loss;” (2) “the indemnity . . . is only trig-
gered by an accident or fortuity;” and (3) “the ‘adventure’ or
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1875
peril insured against must be specifically maritime in charac-
ter.” SCHOENBAUM § 17-2.

[11] One type of insurance typifying marine insurance is
protection and indemnity (“P&I”) insurance, which insures
the shipowner against claims by third parties. Id. P&I insur-
ance historically included pollution liability, but the expan-
sion of such liability by modern statutes led many P&I
insurers to exclude coverage for pollution damages and the
Coast Guard to demand more insurance than P&I policies can
provide. 9A COUCH ON INSURANCE 3D § 137:101 (Lee R. Russ
& Thomas F. Segalla eds., 2005) (1995); Robert T. Lemon,
Allocation of Marine Risks: An Overview of the Marine Insur-
ance Package, 81 TUL. L. REV. 1467, 1486 (2007).

[12] Vessel pollution policies mirror P&I policies in their
general terms, but cover liability under the OPA and other
environmental statutes. Id. at 1486-87. That vessel pollution
insurance covers new statutory liabilities, occasioned by mod-
ern environmental legislation, does not alter the fact that the
risks of incurring that liability stem from the same vagaries of
marine life that have shaped maritime insurance law for cen-
turies. Like traditional P&I insurance, vessel pollution insur-
ance, or at least the policy in this case, covers vessel owners’
liabilities to third parties for marine incidents, namely pollu-
tion.

Finally, it bears noting that vessel pollution insurance fits
well within the general conception of marine insurance, as it
is a contract of indemnity triggered by an event that is mari-
time in character. The policy language in this case best illus-
trates the maritime nature of the coverage. Coverage under the
policy extends to “[l]iability . . . [under the OPA, the Compre-
hensive Environmental Response, Compensation and Liability
Act of 1980 (“CERCLA”), and similar statutes] for a dis-
charge of oil . . . into or upon the navigable waters or adjoin-
ing shorelines . . . of the United States,” provided that “the
discharge, substantial threat of discharge, or release . . . was
1876 CERTAIN UNDERWRITERS v. INLET FISHERIES
[among other requirements] sudden and was unintended and
unexpected by the Assured . . . .”

Inlet attempts to distinguish vessel pollution insurance from
marine insurance by reference to Port of Portland v. WQIS,
796 F.2d 1188 (9th Cir. 1986). That case dealt with whether
a policy offering “coverage tailored to liabilities created by
the Federal Water Pollution Control Act (FWPCA), 33 U.S.C.
§§ 1251-1376 (1982),” qualified as “wet marine” or “general
marine” insurance under an Oregon statute. Port of Portland,
796 F.2d at 1191, 1195-96. Although the categories overlap,
generally speaking, wet marine insurance relates to marine
vessels, whereas general marine insurance, as defined in the
statute and despite its name, covers losses associated with
transportation generally, whether over land or water. Id. at
1196; see also OR. REV. STAT. § 731.194 (1985); OR. REV.
STAT. § 731.174 (1985).

[13] Inlet’s argument fails for two reasons. Significantly,
our case does not concern the statutory classification of vessel
pollution insurance under state law. Rather, the issue here is
whether vessel pollution insurance falls within the boundaries
of marine insurance in federal admiralty law, a question not
resolved by reference to a state statutory scheme. Second, the
policy Inlet purchased is very different from the one at issue
in Port of Portland, where we made a point of distinguishing
the specific policy from traditional P&I insurance, noting that
“[t]raditional P&I policies cover oil pollution damage to third
persons. [This] policy contains that coverage but the Port did
not purchase it.” Port of Portland, 796 F.2d at 1196, n.4. That
distinction is not, of course, an issue in Inlet’s coverage. For
purposes of applying uberrimae fidei, we hold that the vessel
pollution insurance policy issued to Inlet is appropriately
characterized as marine insurance.

II. APPLICATION OF UBERRIMAE FIDEI TO THIS POLICY

[14] Finally, we turn to the application of uberrimae fidei
to the policy at hand. “The doctrine of uberrimae fidei
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1877
requires a marine insurance applicant even if not asked, to
reveal every fact within his/her knowledge that is material to
the risk.” Cigna Prop., 159 F.3d at 418, n.1 (internal quota-
tions omitted). “An insurer may rescind an insurance contract
if it can show either intentional misrepresentation of a fact,
regardless of materiality, or nondisclosure of a fact material
to the risk, regardless of intent.” Id. at 420 (internal quotations
omitted). Although the parties dispute what information the
Lloyds application solicited from Inlet, that disagreement
obscures the real issue, because uberrimae fidei rests on dis-
closure, not solicitation. What continues to be relevant, how-
ever, is whether Inlet knew of material information that it
failed to disclose. “A non-disclosed fact is material if it would
have affected the insurer’s decision to insure at all or at a par-
ticular premium.” N.Y. Mar. & Gen. Ins. Co. v. Tradeline, 266
F.3d 112, 123 (2d Cir. 2001) (citation omitted).

Lloyds claims that a number of facts not disclosed by Inlet
were material to its decision: the MAREN I sinking; the HB
spill; the fact of, and reason for, WQIS’s cancellation of
Inlet’s previous policy; the condition of the QP, which three
months before Inlet applied for insurance had been “listing at
the city dock with the potential of turning turtle;” and Inlet’s
financial troubles.

[15] Lloyds produced overwhelming and unrefuted evi-
dence that any of these undisclosed facts would have affected
its decision to offer the policy were it known.5 Case law also
supports Lloyds’ position that loss history is relevant. See
Certain Underwriters at Lloyd’s v. Montford, 52 F.3d 219,
222 (9th Cir. 1995).

Despite this evidence, Inlet argues that Lloyds’ behavior in
renewing Inlet’s policy demonstrates the opposite. The facts
5
Inlet’s effort to contest this point rests solely on a declaration that was
excluded by the district court in a ruling that was not appealed.
1878 CERTAIN UNDERWRITERS v. INLET FISHERIES
are not in dispute. Instead we consider the legal significance
of Lloyds’ actions.

The QP sank two days before the renewal deadline on
Inlet’s policy. Lloyds’ agent was informed the next day, but
because of the time difference, Lloyds did not receive notice
of the spill until the day Inlet’s policy was due to be renewed.
Lloyds had quoted a renewal price to Inlet weeks before. On
the day it learned of the QP sinking, some of the employees
of Lloyds’ agent were reporting — in their words, unsubstan-
tiated hearsay — that the Coast Guard had received numerous
complaints about Inlet, that Inlet had had a previous spill, and
that Inlet had filed for bankruptcy. It is unclear what, if any,
confirmed information Lloyds possessed when it decided to
honor its quoted price and renew the policy.

While Inlet argues that this sequence of events demon-
strates Lloyds considered this information immaterial, Inlet
overlooks a few important facts: First, Lloyds conditioned its
renewal on Inlet providing accurate information on a newly
requested application. In addition, Lloyds immediately com-
menced an investigation into Inlet’s history and the condition
of its vessels. Finally, once Lloyds obtained sufficiently sound
information, despite considerable stonewalling by Inlet, it
filed this suit.

[16] Inlet’s argument also overlooks that uberrimae fidei is
a duty applicable to marine insurance generally, not just to the
party seeking marine insurance. SCHOENBAUM § 17-14
(“Marine insurance is a contract ‘uberrimae fidei’, requiring
the utmost good faith by both parties to the contract.”). As
such, Lloyds was also bound by the duty of utmost good faith
toward its insured. Lloyds’ uncontested evidence demon-
strates that it was concerned that by refusing to renew the pol-
icy based on unsubstantiated rumors, it would expose itself to
allegations that it had violated its duty of uberrimae fidei. The
facts undisclosed by Inlet were material to the insurance risk
 CERTAIN UNDERWRITERS v. INLET FISHERIES 1879
undertaken by Lloyds and these circumstances warrant void-
ing of the insurance contract by Lloyds.

AFFIRMED.