Found this new-er marine insurance case from the Fifth Circuit Court of Appeals (ok, I'm cleaning out the in-tray). The case name is Great Lakes Reinsurance (UK) PLC v. Durham Auctions Inc., and the official opinion can be found here.
At issue in this case is a choice of law provision of a marine insurance policy.
Facts: An insurance company brought suit against its insured following a marine casualty following the loss of a motor yacht. The insurer was a United Kingdom non-admitted surplus lines insurer that had issued a hull and protection and indemnity policy for the vessel. The insurer alleged that the policy was void at inception because of misrepresentations in the insurance application and failure to disclose the vessel's loss history and repair status. The insured was a resident of Mississippi but the insurance contract had a New York choice of law provision.
Issue: whether New York law or federal law (particularly uberrimae fidei) applied versus the forum law, i.e. Mississippi.
Discussion: In the marine insurance context, an insurer may rely upon the doctrine of uberrimae fidei which requires the utmost good faith by both parties to the contract. Basically, it puts an affirmative duty on the insured to disclose "every fact within his knowledge." Op. at 4 n.2. If there is a non-disclosure, then the insurance contract is void. This is unique to the admiralty context as compared to traditional insurance which provides greater protections to insureds. Under Fifth Circuit precedent, see Albany Ins. Co. v. Kieu, 927 F.2d 882 (5th Cir. 1991), however, uberrimae fidei is not entrenched federal precedent and therefore, state law governs. There have been recent developments in this doctrine in the Second, Third, Ninth and Eleventh Circuits that hold otherwise. [Watch this issue for Supreme Court review someday].
The inquiry did not end with the position that federal law did not apply. The contract had an express choice of law provision requiring application of New York state law to the interpretation of the contract. Absent some overarching public policy reason not to apply the choice of law provision, it governed the dispute. The court, finding no such reason, found that pursuant to the choice of law provision, New York law governed.
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