Cosmopolitan Shipping CO., Inc. v. Continental Insurance Company

Background

Cosmopolitan sought to establish insurance coverage using secondary evidence because the policy could not be found, except for three endorsements. The court stated that New York law requires an insured to demonstrate a diligent but unsuccessful search for a missing policy before relying on secondary evidence to prove the policy’s existence and terms.

The court explained that this diligence requirement comes from the “best evidence” rule in Federal Rule of Evidence 1004. Whether the search was sufficiently diligent is a preliminary question about the admissibility of evidence for the court to decide.

Searches and Arguments

Cosmopolitan submitted an affidavit from Granville T. Conway, who was the son of Cosmopolitan’s former president and a former shareholder and employee. The affidavit described an investigation begun in 1995 to locate insurance policies relevant to claims by former seamen. A second search nearly a decade later also found no relevant policies. Around 2016, Cosmopolitan directed its counsel to subpoena insurance companies it believed might have records of lost policies issued to Cosmopolitan, including the Fulton Syndicate, Continental Insurance Company, the American Club, and Fireman’s Fund. Those subpoenas did not produce a relevant policy. Cosmopolitan also searched various archives.

Continental argued that the search was not sufficiently diligent because Cosmopolitan did not ask the four subpoenaed entities to search for policies issued to UNRRA, did not subpoena possible foreign insurers, and did not have its expert conduct an independent search.

Ruling

Judge Lorna G. Schofield found that Cosmopolitan had shown a diligent search for policies issued to Cosmopolitan, but had not yet shown a diligent search for Policy C-4893 issued to UNRRA. The three endorsements supplied many important policy terms but omitted other important terms that would have to be proved, if at all, through secondary evidence.

The court ordered Cosmopolitan to file, by January 5, 2021, a letter proposing how it intended to show that it had conducted or would conduct a diligent search for the remaining portions of Policy C-4893, and explaining why it should be allowed to do so. Continental was ordered to file a response by January 12, 2021. The clerk was directed to strike the order at Docket No. 205. The opinion does not resolve whether the claimed insurance coverage exists.