Uberrimae Fidei is an Entrenched Doctrine of Maritime Law

Uberrimae Fidei is an Entrenched Doctrine of Maritime Law

By: Forrest Guedry

Edited by: Tiffany Morales

New York Marine and General Insurance Company v. Continental Cement Company, LLC, No. 13-2313, 2014 WL 3824226 (8th Cir. 2014).Continental Cement owned a barge insured by New York Marine and General Insurance Company (herein Starr Indemnity). When Continental Cement’s barge sank near St. Louis in the Mississippi River, Continental Cement made a claim against its insurers for the loss of their barge and the cost of removing the wreck. After Starr Indemnity investigated why the barge sank, it declined coverage when the insurer discovered a previous survey that was done to determine the fitness of the nearly 100-year-old barge. This survey was conducted three years prior to the barge sinking and showed signs that the barge was not watertight. However, Continental Cement failed to disclose the survey to Starr Indemnity, despitebeing asked to do so when it applied for insurance coverage. Starr Indemnity argued that the policies were void because Continental Cement had breached its duty of utmost good faith, or uberrimae fidei, for withholding the survey that would have raised a “serious issue of seaworthiness” in the mind of the insurers.The trial judge denied Continental Cement’s partial motion for summary judgment which argued that the Eighth Circuit did not recognize the defense of utmost good faith in maritime insurance cases. The district court disagreed, finding that the defense was indeed entrenched in federal maritime law. Thus, the case advanced to trial where, despite Continental Cement’s arguments that Missouri state law should apply, the jury returned a general verdict in favor of Starr Indemnity.Subsequently, Continental Cement filed a timely appeal arguing that the Fifth Circuit’s decision in Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir. 1991) should be followed in the present action. However, the Fifth Circuit is the only circuit which does not recognize the doctrine of utmost good faith as “entrenched maritime law.” Accordingly, the Eighth Circuit affirmed the district court’s judgment in favor of Starr Indemnity citing a variety of circuit court decisions (Second, Third, Ninth and Eleventh Circuits) which have accepted the rule of uberrimae fidei as an entrenched principle of marine insurance.