Court of Appeal Affirms Summary Judgment in Insurance and Marine Law Case

May 13, 2013

The Fourth District Court of Appeal affirmed in full the Orange County Superior Court's granting of Essentia Insurance Company's Motion for Summary Judgment. Carolyn A. Mathews handled the Motion for Summary Judgment and the opposition to the appeal, and Maria A. Starn handled the oral argument.

Essentia Insurance Company (OneBeacon) issued a classic boat insurance policy on Ashoff's 1958 classic Chris Craft Continental 18-foot wood boat, the "Amore," effective July 17, 2010 to July 17, 2011 that insured Ashoff against "accidental direct physical loss or damage except as specifically excluded." The policy excluded from coverage loss or damage caused by or resulting from neglect, wear and tear, defect, deterioration, weathering and inherent vice.

On November 17, 2010, Ashoff reported to Essentia's agent, Hagerty Class Marine Insurance Agency, that the Amore sank where it was berthed. Ashoff said he had last used the boat on November 14, 2010, there were no recent repairs or issues with the boat and he did not hit any submerged object.

Hagerty hired Charles Reininga, a marine surveyor, who inspected and surveyed the boat five days after it sank. He found the hull in good condition except for "a visible gap between the hull plans and the transom on the port side of the keel." On December 2, 2010, Reininga performed a float test on the boat and found "a visible water leak into the vessel at the lower portion of the interior transom … and observed that water was pooling at the stern at a fast rate. Reininga concluded that the vessel sank due to wear, tear and fatigue of the hull planking and seal joints in the transom area, and Hagerty denied coverage on that basis.

Ashoff filed suit against Essentia for breach of contract and bad faith. Ashoff testified he took the Amore out on Sunday, two days before it sank. According to Ashoff, he and his girlfriend just putted around the harbor. He said he did not impact anything and nothing impacted him.

Ashoff's February 14, 2012 opposition to Essentia's Motion for Summary Judgment was accompanied by Ashoff's declaration in which he stated, for the first time, that, when he took the Amore out on Sunday, November 14, he and his girlfriend went out of the harbor and cruised beyond the Newport breakwater. A large ship went by the Amore causing a large wake that hit the Amore straight on and hard. The Amore's bow went up into the air and the Amore slapped so hard against the ocean water that the windshield fasteners broke and the windshield came lose. The engine died a few minutes later, requiring a jump from the harbor sheriff.

Ashoff engaged a marine surveyor, who performed a float test 14 months after the boat sank and was removed from the water, and, in reliance on Ashoff's representations about hitting the large wake of the ship, he opined that the Amore did not sink due to wear, tear and fatigue of the hull.

On Essentia's behalf, we argued that the doctrine of uberrimae fidei and California Insurance Code Section 1900 required Ashoff to communicate all material information in his possession regarding the risk and the whole truth in relation to all matters relating to the claim.

The Court of Appeal found that Ashoff's whole story changed when he opposed Essentia's Motion for Summary Judgment, and, since the new evidence directly contradicted Ashoff's earlier sworn deposition testimony, the trial court was free to disregard it. The court stated that "admissions or concessions made during the course of discovery govern and control over contrary declarations lodged at a hearing on a motion for summary judgment."