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

Background

This was an insurance coverage dispute arising from 47 asbestos lawsuits brought against Cosmopolitan by seamen who had sailed on its ships in the 1940s. In 2017, Cosmopolitan settled those claims by agreeing to entry of a $4,582,500 consent judgment. Cosmopolitan sought a declaration that Continental Insurance Company, referred to as CIC, had to defend and indemnify it under Protection and Indemnity Policy No. C-4893, issued to the United Nations Relief and Rehabilitation Administration, or UNRRA.

Most of Policy C-4893 could not be found. Only three endorsements remained. The parties agreed that the court would hold an evidentiary hearing to decide whether CIC had issued a policy covering Cosmopolitan and, if so, what the policy terms were. Judge Schofield issued findings of fact and conclusions of law under Federal Rule of Civil Procedure 52 after reviewing the hearing testimony, exhibits, and written submissions.

Use of Secondary Evidence

Applying New York law, the court held that Cosmopolitan had made a diligent but unsuccessful search for the missing portions of the policy. The search included Cosmopolitan’s records, the records of its former insurance broker, archives likely to contain UNRRA documents, subpoenas to possible insurers, and discovery from CIC. Cosmopolitan could therefore use secondary evidence—evidence other than the original policy—to prove the policy’s existence and terms.

The court did not decide whether New York law required proof by a preponderance of the evidence or by clear and convincing evidence. It found that the evidence met the higher clear-and-convincing standard for showing that CIC issued Policy C-4893 to UNRRA, but did not meet even the preponderance standard for proving the policy’s material terms.

Findings About the Policy and Covered Ships

The court found that CIC was the only insurer shown to have provided Protection and Indemnity coverage to UNRRA from at least May 1946 through August 1, 1947. The three endorsements supported the existence of Policy C-4893, its open-cover structure, and coverage during that period. An open-cover policy, as described in the opinion, could automatically cover vessels operating during the policy period without separately naming each vessel in advance.

The evidence showed that Cosmopolitan chartered ships for UNRRA and that UNRRA intended to obtain insurance for vessels operating on its behalf. The court found that five identified Cosmopolitan-chartered ships operated for UNRRA: the S.S. CARROLL VICTORY, S.S. JOAQUIN MILLER, S.S. MICHAEL MORAN, S.S. WILLIAM LYON PHELPS, and S.S. THOS. W. MURRAY.

The court also found by clear and convincing evidence that four of the asbestos plaintiffs sailed on those ships during the relevant period: John P. Orchard, Leroy Kimbrough, Pearl E. Wafer, and Howard Wyman. The court did not find sufficient evidence that the other Cosmopolitan vessels carrying asbestos plaintiffs operated for UNRRA.

Missing Material Terms

Despite finding evidence of the policy’s existence and some covered vessels, the court held that Cosmopolitan had not proved the material terms of Policy C-4893. Most importantly, the evidence did not establish the amount of insurance CIC agreed to provide, such as a limit per vessel or per occurrence. Without that information, the court could not determine the extent of any available coverage.

Cosmopolitan relied on other marine insurance policies as examples of Policy C-4893’s terms. The court found those policies insufficient because they contained inconsistent limits, time restrictions, and premium provisions, and because none was directly connected to Policy C-4893. One policy was issued by CIC to Cosmopolitan nearly a decade earlier; another was a wartime policy issued by a group of insurers, including CIC, to the United States. No witness had personal knowledge of Policy C-4893’s terms, and the policy was not shown to be a renewal policy adopting terms from an earlier policy.

Disposition

Judge Schofield declared that Cosmopolitan had not established the terms of Policy C-4893 by a preponderance of the evidence. The court further declared that CIC could not be found to afford coverage to Cosmopolitan for the underlying asbestos claims. The opinion does not state that the case or claims were dismissed, and it does not award damages or fees.