Lloyd's Maritime and Commercial Law Quarterly


Martin Davies *


276. Clear Spring Property and Casualty Co v Viking Power LLC 1

Marine insurance—choice of law—breach of warranty—materiality standard for uberrima fides doctrine re pre-contractual misrepresentation
The defendant claimed on its hull insurance policy after its vessel Miss Dunia was damaged by fire. The plaintiff insurers denied cover on the grounds that the defendant had breached warranties in relation to fire-suppression equipment and survey compliance, and also that it had misrepresented its compliance with recommendations made as a result of a pre-contractual survey. The plaintiffs filed suit in the US District Court for the Southern District of Florida, seeking a declaration that the defendant was not entitled to coverage for losses that resulted from the fire. The defendant moved to dismiss the plaintiffs’ claim.
Decision: Motion to dismiss denied.
Held: (1) The insurance policy contained a choice of law clause providing that any disputes about coverage should be adjudicated “according to well established, entrenched principles and precedents of substantive United States federal admiralty law and practice” and, in the absence of any such well-established federal principles, by New York law.
(2) The US Court of Appeals for the Eleventh Circuit has recently held that federal maritime law does not require strict compliance with all marine insurance warranties, and that the proper approach is to look to see whether the specific warranty is (or should be) the subject of a uniform or entrenched federal admiralty rule.2 As there is no firmly established federal maritime precedent governing fire-suppression or survey-compliance warranties, the effect of the defendant’s alleged breaches of warranty should therefore be governed by New York law.
(3) New York law requires strict compliance with insurance warranties, whether or not there is any causal connection between the breach and the assured’s loss.3 The plaintiffs’ complaint sufficiently alleged facts that would plausibly constitute breach of both the fire-suppression and the survey-compliance warranties, which is all that is required to survive a motion to dismiss.4

US Maritime Law


The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.