National Union Fire Insurance Company of Pittsburgh, P.A. v. Vinardell Power Systems, Inc.

UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF FLORIDA

Miami Division

Case Number: 19-20093-CIV-MORENO

NATIONAL UNION FIRE INSURANCE

COMPANY OF PITTSBURGH, P.A.,

Plaintiff,

VS.

VINARDELL POWER SYSTEMS, INC.,

Defendant.

eee

ORDER ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT

THIS CAUSE came before the Court upon the parties’ cross-motions for partial summary

judgment (D.E. 27 & 39). THE COURT has considered the motions, the responses, and the

replies, as well as argument presented by counsel at oral argument. Being otherwise fully advised,

it is ADJUDGED that, for the reasons below, plaintiff's motion for partial summary judgment is

GRANTED, and defendant’s motion for partial summary judgment is DENIED.

I. BACKGROUND

The instant case deals with the interpretation and application of a certain maritime

insurance contract.! Plaintiff National Union Fire Insurance Company of Pittsburgh, P.A.

(“National Union”) seeks a declaratory judgment concerning whether certain equipment possibly

damaged on the high seas was covered by a marine cargo insurance policy between it and the

defendant Vinardell Power Systems, Inc. (“Vinardell”). National Union is a Pennsylvania

' For this reason, the Court has subject matter jurisdiction. See Geico Ins. Co. v. Shackleford, 945

F.3d 1135, 1139 (11th Cir. 2019) (“Marine insurance contracts qualify as maritime contracts, which fall

within the admiralty jurisdiction of federal courts and are governed by maritime law.”).

corporation with its principal place of business in New York. It is an insurer licensed and regulated

by the State of Florida. Vinardell, meanwhile, is a Florida corporation with its principal place of

business in Florida. It is an international distributor of electrical supplies.

Sometime in 2017, Vinardell contracted with FocusCargo, Inc., a freight forwarder, to

facilitate the storage and transportation of twenty-five Siemens circuit breakers from Miami,

Florida to Acajutla, El Salvador. Either before or while the circuit breakers were en route to El

Salvador, twenty-three of them were damaged by water.” Vinardell had originally purchased the

breakers to sell them to a customer “for an electrical infrastructure project in El Salvador.”

Prior to shipping the breakers, Vinardell also purchased, through its shipping agent

FocusCargo, marine cargo insurance from National Union’s underwriting agent, Aktiv Assekuranz

(USA), Inc. While contested, the insurance policy at issue is comprised of at least two documents:

a two-page certificate of insurance (titled “Certificate (Policy) of Marine Insurance”),? and a much-

longer master insurance policy (titled “MARINE OPEN CARGO POLICY NO. 15910854”). The

certificate summarizes the kind of insurance purchased, explaining that the coverage was for

“S.T.C. Electrical equipment,” which would be provided “from warehouse to warehouse, in

accordance with Clause 5 of the German General Rules of Marine Insurance, Special Conditions

for Cargo.” Below, the certificate has a section titled “Conditions,” with an “x” mark immediately

* None of the parties, in their cross-motions for summary judgment, contest the fact that what

primarily damaged the circuit breakers was water.

3 A certificate of insurance is “a document evidencing that an insurance policy has been written and

includes a statement of the coverage of the policy in general terms.” Certificate of Insurance, BLACK’S

LAW DICTIONARY (11th Ed. 2019). Federal and Florida courts typically hold that both the certificate and

the master insurance policy form the terms of the insurance contract. See, e.g., Perzy v. Intercargo Corp.,

827 F. Supp. 1365, 1370 (N.D. Ill. 1993); Rucks v. Old Republic Life Ins. Co., 345 So. 2d 795, 796 (Fla.

4th DCA 1977). As detailed later, since there were two separate shipments of the circuit breakers to El

Salvador, there are two certificates for each shipment. For purposes of this Order, the certificates are treated

one and the same as they are nearly identical in nature.

adjacent to the following relevant conditions: “German General Rules of Marine Insurance,

Special Conditions for Cargo,” “Form to cover (see overleaf): FULL COVER,” and “Covering all

risk from seller warehouse to buyer warehouse.” On the overleaf, the certificate provides: “Full

Cover (unless otherwise agreed)” and “Stranding Cover (where agreed).”

Relevant to the cross-motions for summary judgment at hand, the certificate summarizes

full cover, detailing that “[t]he insurance covers irrespective of percentage, loss or damage to the

goods insured as a consequence of a risk insured against.” As for stranding cover, it is a specific

type of insurance covering discrete forms of risk, including “stranding,” “accident to another

means of conveyance carrying the goods,” “collapse of storage buildings,” “natural catastrophes,”

“jettison, washing overboard or being lost overboard,” “sacrifice of goods,” and “discharge,

intermediate storage and loading of the goods at a port of refuse on account of a risk insured

against.” The certificate lastly provides that “the risk attaches when goods are removed from the

place of their last storage at the place of shipment for conveyance on the insured voyage.”

As for the master insurance policy, it contains a “Schedule of Endorsements,” where the

first endorsement contains the German General Rules of Marine Insurance. Turning to those

German Rules a few pages later, the policy provides that the German Rules form part of policy

number 15910854, that full cover applies “unless otherwise agreed,” and that stranding cover

applies “where agreed.” Next, clause 1 of the German Rules states that “[t]he insurance covers all

tisks to which the goods are exposed during the currency of the insurance.” Later, in clause 1.3,

titled “Special Cases,” the policy contains an exclusion for “[dJeck cargo.” The policy states that

“(flor goods loaded on deck with the consent of the Insured, Stranding cover only shall apply.

Goods carried in closed containers or in barges carried by ocean-going vessels are insured on deck

on the same conditions as in the hold.” Like the certificate, the master policy provides, in clause

five of the German Rules, that “(t]he insurance attaches when the goods are removed from the

place of their last storage at the place of shipment for conveyance on the insured voyage.”

While the parties do not dispute the above provisions for the most part, they do dispute

how twenty-three of the circuit breakers were damaged. Neither party contests the preliminary

fact that, sometime in August 2017, the circuit breakers arrived at Miami Crating & Delivery, Inc.

and that, upon arrival, Vinardell took title of the breakers. Both parties also agree that at the end

of September 2017, the breakers were loaded onto nine open-top containers* at Miami Crating,

and that there would be two separate shipments occurring in October 2017: one consisting of eight

open-top containers containing twenty-two breakers, and another consisting of one open-top

container containing the rest of the breakers. The parties even agree that the circuit breakers were

placed on the deck of each ship for conveyance. But, both parties dispute what happened next.

National Union contends, in numerous filings and in its original denial letter issued December 11,

2018, that rain from Hurricane Irma likely damaged the breakers as they sat outside Miami Crating

in September 2017 awaiting shipment. Vinardell, meanwhile, argues that they were damaged en

route to El Salvador. Upon review, evidence seems to support each theory.°

Regardless of how the breakers were ultimately damaged, the only issue now pending

4 An open-top container is exactly as it sounds like: “a container with a floor and side walls but no

roof that is often used for cargo which is too tall for the container, or over-height.” English Elec. Valve Co.

v. M/V Hoegh Mallard, 637 F. Supp. 1448, 1450 (S.D.N.Y. 1986), abrogated on other grounds by 81 F.2d

84 (2d Cir. 1987). Most likely, open-top containers were used in this case given the enormous size of the

circuit breakers: each weighed approximately 7,800 pounds, with a height of approximately eleven feet.

> Specifically, National Union points to its expert on liability, James McCrory, who opines that rain

from Hurricane Irma would have caused flooding and damage to the circuit breakers while they were stored

in the parking lot at Miami Crating prior to shipment. National Union also relies on an expert meteorologist,

Joseph Spain, who estimated that around twenty inches of rain would have fallen during that time. Vinardell

disagrees, and contends that “[t]here has never been any flooding at Miami Crating.” It relies on the

deposition testimony of Eugenio Navarro, a part owner of Miami Crating, and Emilio Garcia, president of

Vinardell, who claim to have inspected the circuit breakers right as they were being loaded into the open-

top containers, and do not remember seeing water damage.

before the Court is what type of insurance coverage applies should the Court find, at trial, that the

insurance policy attaches. The parties starkly disagree on whether full cover or stranding cover

applies. In National Union’s motion for partial summary judgment, it argues that stranding cover

does, given that the contract contains an on deck, open-top container exclusion. Vinardell,

meanwhile, disputes stranding cover, and argues in its respective motion that full cover applies.

While Vinardell recognizes that the policy provides for stranding cover in certain circumstances,

the rest of the policy, and relevant bill of lading, provides for full cover.

Below, the Court details the parties’ motions for partial summary judgment, and ultimately

finds, based on a plain reading of the insurance policy, that stranding cover applies to the circuit

breakers at issue (should it be later found at trial that the insurance policy does, in fact, attach).

Il. THE CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT

A, Summary Judgment Standard

“Summary judgment pursuant to [Federal Rule of Civil Procedure] 56[a] is appropriate

when there exists no genuine issue as to any material fact and a decision may be rendered as a

matter of law.” Howard v. BP Oil Co., 32 F.3d 520, 524 (11th Cir. 1994). Relevant to the issue

before the Court, “summary judgment is an appropriate vehicle for interpretation of an insurance

contract as a question of law.” Max Specialty Ins. Co. v. A Clear Title & Escrow Exch., LLC, 114

F. Supp. 3d 1191, 1194 (MLD. Fla. 2013) (citing Tech. Coating Applicators, Inc. v. U.S. Fid. &

Guar., Co., 157 F.3d 843, 844 (11th Cir. 1998)). “The policy, however, must contain clear and

unambiguous wording to resolve the issue as a matter of law.” Jd. at 1194-95.

° A bill of lading is a “[a] document acknowledging the receipt of goods by a carrier or by the

shipper’s agent and the contract for the transportation of those goods; a document that indicates the receipt

of goods for shipment and that is issued by a person engaged in the business of transporting or forwarding

goods.” Bill of Lading, BLACK’S LAW DICTIONARY (11th ed. 2019). Just as there are two certificates of

insurance due to the separate shipments of the open-top containers, there are two bills of lading. The bills

of lading are also treated as one and the same given that they are substantially similar in content.

B. Analysis

In its motion for partial summary judgment, National Union contends that the unambiguous

language of the insurance policy provides that only stranding cover applies to the damaged circuit

breakers. It points to a part of the master insurance policy that includes the “German General

Rules of Marine Insurance,” Clause 1.3 of those rules, titled “Special Cases” provides in full that

“(flor goods loaded on deck with the consent of the Insured, Stranding Cover only shall apply.

Goods carried in closed containers or in barges carried by ocean-going vessels are insured on deck

on the same conditions as in the hold.” Here, because there is no dispute that the circuit breakers

were stored in open-top containers, stranding cover applies. National Union also points to the bill

of lading that was issued. There, the bill notes that the subject shipment was not “containerized.”

The fact was further confirmed by Vinardell’s president, Emilio Garcia, who agreed that the

breakers “were loaded into the open top containers.” National Union also includes a picture

obtained in discovery showing the circuit breakers aboard the ship in open-top containers.

Vinardell, in its motion for partial summary judgment, disagrees with National Union’s

contention that the insurance policy at issue provides for stranding cover.’ It agrees that the policy

is unambiguous, but for the opposite result: providing full cover. First, it points to the plain

representation on the first page of the certificate of insurance, stating: “Forms to cover (see

overleaf): FULL COVER.” Then, lower on that same page, it points to the phrase “[c]overing all

risk from seller warehouse to buyer warehouse.” This last sentence, Vinardell argues, is

particularly compelling as National Union, in email correspondence, explicitly agreed to include

it in the certificate of insurance as the parties were contracting. Vinardell then points to the

7 Since Vinardell in its motion for partial summary judgment largely rehashes many of the same

arguments that it makes in response to National Union’s respective motion, for purposes of brevity, this

Order only recounts the arguments made in Vinardell’s motion for partial summary judgment.

overleaf of the certificate of insurance, where the certificate states that the contract would be for

“Full Cover (unless otherwise agreed).” Vinardell next argues that the master insurance policy

(and its German Rules) do not form the terms of the relevant insurance policy as they were not

incorporated by the certificate. Instead, the certificate only incorporates the relevant bill of lading,

which also makes clear that the type of coverage provided was full. Since the certificate

incorporates the bill of lading, which in turn stated that the cargo was stored in open-top containers,

“(t]his fact alone precludes Plaintiff's theory for declination of coverage.” Concluding, Vinardell

contends that if the Court does not find the policy unambiguous in its favor, it at least find the

policy ambiguous—in which case the policy should be construed in its favor as the insured.

Ultimately, the Court finds that after review of the applicable insurance policy, stranding

cover applies to the circuit breakers. As a preliminary matter, federal courts routinely apply

Florida law to govern the manner of interpretation of a maritime contract. See Geico Marine Ins.

Co. v. Shackleford, 945 F.3d 1135, 1139-40 (11th Cir. 2019) (applying Florida law to interpret a

maritime insurance contract). “Under Florida law, we first look to the text of the policy to construe

the policy ‘in accordance with [its] plain language.’” Jd. (alteration in original) (quoting Swire

Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003)). Furthermore, “in

construing insurance policies, courts should read each policy as a whole, endeavoring to give every

provision its full meaning and operative effect.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d

29, 34 (Fla. 2000) (citing Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d

938, 941 (Fla. 1979)). “[I]fthe relevant policy language is susceptible to more than one reasonable

interpretation, one providing coverage and the another limiting coverage, the insurance policy is

considered ambiguous.” /d. Such an ambiguous policy is “interpreted liberally in favor of the

insured and strictly against the drafter who prepared the policy.” Jd. However, “[o]nly when a

genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to ordinary rules

of construction is the rule apposite.” Swire, 845 So. 2d at 165 (alteration in original) (quoting State

Farm Mut. Auto. Ins. Co. v. Pridgen, 498 So. 2d 1245, 1248 (Fla. 1986)).

Here, looking to the text of the policy and reading the policy as a whole, and endeavoring

to give each provision of the policy its full meaning and operative effect, the Court concludes that

the contract signed between the parties initially provides for full cover—but that certain exclusions

apply in certain circumstances. The text of the maritime insurance policy makes this evident. The

certificate literally states that as a condition of the policy, the German Rules would apply (as

marked by an “x”’). Further supporting that the rules apply is the specific mention that “insurance

has been granted under the above Open Cover [No. 015910854]” (which is the master policy

containing the German Rules), and statement that the insurance would cover the cargo “in

accordance with Clause 5 of the German General Rules.” As for the German Rules themselves,

they specifically include the on deck, open-top container exclusion in clause 1.3. Reading the

entire exclusionary clause makes clear that open-top containers placed on deck are afforded

stranding cover, while all other cargo stored in closed containers is afforded full cover.

There is no ambiguity, as the insurance policy in this case is no different than any

homeowner’s insurance contract in Florida that provides for “all-risk” coverage. Such contracts,

on their face, state that they cover all risks, but then, elsewhere in the same contract, contain

“exclusionary” provisions for specific perils not subject to coverage. See, e.g., Jones v. Federated

Nat’l Ins. Co., 235 So. 3d 936, 940-41 (Fla. 4th DCA 2018). In Fayad v. Clarendon National

Insurance Co., 899 So. 2d 1082 (Fla. 2005), the Florida Supreme Court all but recognized this

structural layout of an all-risk homeowner’s policy. Jd. at 1085-86. While the court noted that an

all-risk policy might seem to provide, on its face, coverage for all perils, “an ‘all-risk’ policy is not

an ‘all loss’ policy, and thus does not extend coverage for every conceivable loss.” Jd. at 1086.

The reason, the Court explained, was because such policies “expressly exclude[] [certain] loss

from coverage.” Id. at 1085. See also Mejia v. Citizens Prop. Ins. Corp., 161 So. 3d 576, 580 (Fla

2d DCA 2014) (Altenbernd, J., concurring) (recognizing that all-risk insurance policies are never

actually construed in Florida as all-risk policies “if one defines ‘all risks’ literally’’).

The same is true here. While the certificate of insurance, as Vinardell contends, does state

that “FULL COVER” applies, in the line before (thus, in the very first operative line of the

certificate of insurance), the certificate states that the “German General Rules of Marine

Insurance” also apply. There is a mark (an “x”) immediately next to those rules showing that the

parties agreed they would apply. And, besides these German Rules being incorporated in the

certificate of insurance itself, the rules are explicitly included in the master policy of insurance.

Akin to the all-risk homeowner’s insurance policy discussed above, the German Rules begin by

stating that the insurance at issue was full cover: “The insurance covers all risks to which the goods

are exposed during the currency of the insurance.” However, in clause 1.3, titled “Special Cases,”

exclusions are found—which are not subject to full cover. Specifically, the contract provides, in

relevant part, that “[f]or goods loaded on deck with the consent of the Insured, Stranding Cover

only shall apply.” Vinardell zealously argues that it never agreed to application of stranding cover

to its cargo that was loaded on deck. It points to the certificate of insurance, which states that

stranding cover only applies “where agreed.” While true, Vinardell’s arguments are vitiated by

the same certificate of insurance it relies on to make its argument. Again, the “x” mark next to the

German Rules shows that both parties agreed to stranding cover in certain situations.

While no case is on point, federal and Florida courts generally recognize that like in the

homeowner’s insurance context, all-risk maritime insurance policies cover all risks subject to the

terms and conditions of the policy. For instance, in Great Lakes Reinsurance (UK) PLC v. Kan-

Do, Inc., 639 F. App’x 599 (11th Cir. 2016), the Eleventh Circuit wrote that, “[i]n broad terms,

all-risk [maritime] insurance policies cover all ‘fortuitous’ losses, ‘unless the policy contains a

specific provision expressly excluding the loss from coverage.’” Jd. at 601 (quoting Dow Chem.

Co. v. Royal Indem. Co., 635 F.2d 379, 386 (Sth Cir. 1981)). The court went on to explain that

typically, “[o]nce the insured meets the light burden of establishing that a loss occurred due to

some fortuitous event or circumstance, the burden shifts to the insurer to show that the loss is

excluded by some language set out in the policy.” Jd. Here, while Vinardell carries its initial

burden of demonstrating there was a loss, National Union has satisfied its respective burden by

pointing to the existence of the open-top container exclusion in clause 1.3 of the German Rules.

Florida courts interpret all-risk maritime contracts the same way. See, e.g., B & S Assocs., Inc. v.

Indem. Cas. & Prop., Ltd., 641 So. 2d 436, 437 (Fla. 4th DCA 1994) (“Once the insured establishes

a loss apparently within the terms of an all-risk [maritime] policy, the burden shifts to the insurer

to prove that the loss arose from a cause which is excepted.” (quoting Hudson v. Prudential Prop.

& Cas. Ins. Co., 450 So. 2d 565, 568 (Fla. 2d DCA 1984)).

The uncanny resemblance between this maritime cargo insurance contract and that of a

homeowner’s all-risk insurance contract cannot be overstated. The certificate and German Rules

both directly use the words “all risk” just like in a homeowner’s insurance contract. The fact that

both the certificate of insurance (stating in one section it provides full cover, then in another section

that the German Rules apply), and the German Rules themselves (stating in one section that full

cover applies, then in another section that stranding cover applies for on deck, open-top containers)

are structured similarly—consistent with the form of an all-risk homeowner’s insurance contract—

illustrates that the parties intended for the policy to be an all-risk one, subject to certain exclusions

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(i.e., the open-top container provision). Lending further credence to the parties’ intent is the fact

that all-risk maritime insurance contracts are indeed interpreted by federal and Florida courts to

generally cover all risks, except those subject to the terms and conditions of the policies.

In sum, the cumulative effect of reading both the certificate and master policy in pari

materia, in such a way as to give each provision of the insurance policy its full meaning and

operative effect, leads to the ineluctable conclusion that the parties’ sought to have full cover apply

for all cargo on board except for cargo specifically loaded on deck in open-top containers. In

interpreting the provisions this way, the Court need not read the open-top container exclusion (and

with it, the German Rules) out of the policy. See ANTONIN SCALIA & BRYAN A. GARNER, READING

LAW: THE INTERPRETATION OF LEGAL TEXTS 167-69, 174-79 (2012) (discussing the whole-text

canon, which requires considering “the entire text, in view of its structure and of the physical and

logical relation of its many parts,” and the rule against surplusage, which requires that “every word

and every provision .. . be given effect”); accord Geico Marine Ins., 945 F.3d at 1141.

As a final note, Vinardell spends much of its time arguing that only the certificate of

insurance and relevant bill of lading form the insurance policy at issue. Those arguments are

misplaced. The certificate only incorporates the master policy (which, in turn, contains the

German Rules) by specifically stating that “insurance has been granted under the above Open

Cover.” Looking above, the open cover number provided (“015910854”) corresponds to the

master policy (titled: “MARINE OPEN CARGO POLICY NO. 15910854”). As such, the

certificate not only references the master policy, but also shows the parties’ clear intent to be bound

by its terms. See Microsoft Corp. v. Big Boy Distribution LLC, 589 F. Supp. 2d 1308, 1319 (S.D.

Fla. 2008) (“A document may be incorporated by reference in a contract if the contract specifically

describes the document and expresses the parties’ intent to be bound by its terms.”).

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But, while the certificate incorporates the master policy, it does not incorporate the relevant

bill of lading. The reason is because the certificate only references the bill in passing (merely

citing to the bill by providing the cargo’s booking/document number) and details nothing about

the parties’ intent to bind themselves to the terms of the bill. “[T]he doctrine [of incorporation by

reference] requires that there must be some expression in the incorporating document . . . of an

intention to be bound by the collateral document. ... A mere reference to another document is not

sufficient to incorporate that other document into a contract, particularly where the incorporating

document makes no specific reference that it is ‘subject to’ the collateral document.” Temple

Emanu-El of Greater Fort Lauderdale v. Tremarco Indus., Inc., 705 So. 2d 983, 984 (Fla. 4th

DCA 1998) (second, third, and fourth alterations in original) (quoting Kantner v. Boutin, 624 So.

2d 779, 781 (Fla. 4th DCA 1993)). Regardless, the Court finds the analysis a mostly futile exercise.

Even if the bill were somehow incorporated into the insurance policy, nothing in the bill seems to

speak to the type of insurance provided to the cargo on board.

Ill. CONCLUSION

Based on the foregoing, National Union’s motion for partial summary judgment is

GRANTED, and Vinardell’s respective motion is DENIED. Reading the policy as a whole and

endeavoring to give each provision its full meaning and operative effect, the instant maritime

insurance contract is an all-risk one containing an on deck, open-top container exclusion. The

policy is not ambiguous just because it may seem, at first glance, that the terms full cover and

stranding cover are mutually exclusive. Instead, the policy purposefully includes both terms as it

is modeled like an all-risk homeowner’s insurance contract (where the policy may state in one

section that it is an all-risk one, but state in a separate section that certain exclusions apply). That

both the certificate and master policy (which form the entirety of the subject insurance policy) are

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similarly structured in this way reinforces the Court’s holding, and shows that the use of both types

of coverage was not a mutual mistake, but rather the parties’ deliberate intent to have full cover

apply to all cargo except that which was loaded on deck in open-top containers.

Having found that stranding cover applies, the case proceeds to trial. A genuine issue of

material fact remains concerning when the circuit breakers were damaged. Determination of this

issue will decide whether the insurance policy attaches to the breakers in the first instance, as the

certificate and master policy provide that coverage attaches when the goods “are removed from

the place of their last storage at the place of shipment for conveyance on the insured voyage.”

DONE AND ORDERED in Chambers at Miami, Florida, this _/ of March 2020.

UNITED SFATES DISTRICT JUDGE

Copies furnished to:

Counsel of Record

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