Dairy America, Inc. v. New York Marine and General Ins. Co.
(E.D. Cal. June 11, 2009)
Plaintiff secured an ocean cargo policy from the insurer which included a clause stating that insurance “attaches to all shipments commencing on or after August 11, 2005 and prior to October 1, 2006, both days at 12:01 A.M. local standard time at place of insurance.” The binder, however, lacked such an attachment clause.
Plaintiff assembled several dozen loads of milk powder for shipment to Havana, Cuba. On August 29, 2005, 59 loads of the milk powder located in the warehouse and awaiting shipment were destroyed by Hurricane Katrina. The 59 loads were comprised of 36 loads that had been shipped after the August 11, 2005 policy coverage inception and 23 loads shipped prior to August 11, 2005. The insurer denied coverage for the 23 loads as they were shipped prior to the policy's effective date.
Plaintiff commenced an action against the insurer for breach of contract claiming that the parties intentions were to cover the loads. In this recent ruling, the court upheld the insurer's decision denying coverage for the 23 loads shipped prior to August 11, 2005 by explaining that it was not reasonable for plaintiff to expect coverage for loads shipped prior to August 11, 2005 based on the binder. The binder covered the risk it contemplated pursuant to industry standards, not plaintiff’s unwritten expectations. As a result, the breach of contract claim was dismissed.
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By Joanna M. Roberto and Toni L. Frain
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