Great Southern Wood Preserving, Inc. v. American Home Assurance Co.

505 F. Supp. 2d 1287, 2007 U.S. Dist. LEXIS 61822
CourtDistrict Court, M.D. Alabama
DecidedAugust 21, 2007
DocketCivil Action 1:06cv708-CSC
StatusPublished
Cited by2 cases

This text of 505 F. Supp. 2d 1287 (Great Southern Wood Preserving, Inc. v. American Home Assurance Co.) is published on Counsel Stack Legal Research, covering District Court, M.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Great Southern Wood Preserving, Inc. v. American Home Assurance Co., 505 F. Supp. 2d 1287, 2007 U.S. Dist. LEXIS 61822 (M.D. Ala. 2007).

Opinion

MEMORANDUM OPINION

CHARLES S. COODY, United States Chief Magistrate Judge.

In 2005, Hurricane Katrina wreaked havoc in New Orleans and along the Louisiana, Mississippi and Alabama gulf coasts. This lawsuit is part of Katrina’s unwanted legacy. The plaintiff, Great Southern Wood Preserving, Inc., brings claims of breach of contract and bad faith concerning the denial of insurance coverage for the loss of lumber shipments at the Port of Gulfport, Mississippi during Katrina on August 29, 2005. The defendants are American Home Assurance Company, AIG, American International Underwriters Corporation, and American International Marine Agency. The parties have consented to a United States Magistrate Judge conducting all proceedings in this case and ordering the entry of final judgment, pursuant to 28 U.S.C. § 636(c)(1) and M.D. Ala. L.R. 73.1.

Now pending before the court is the defendants’ motion for summary judgment. (Doc. No. 21.) The court has carefully considered the motion, the supporting and opposing evidentiary materials and the arguments of counsel heard on August 14, 2007. The court concludes that the motion for summary judgment is due to be granted.

I. THE FACTS

Great Southern Wood Preserving, Inc., (“Great Southern Wood”) is in the business of treating lumber which it then markets as “Yella Wood” to customers such as Home Depot and local hardware stores. (Doc. No. 22-2, Goffs Dep., p. 11.) 1 Great Southern Wood acquires most of its lumber domestically; however, ten to fifteen percent of its lumber is imported. (Id.)

In June 2005, American Home Assurance Company issued a marine open cargo policy to Great Southern Wood. (Doc. No. 1, Pi’s Ex. 1.) The policy insured “lawful goods and/or merchandise suitably packed for export, consisting principally of UNFURNISHED LUMBER....” (Id., p. 3.) 2 The policy included a shore clause, which provided:

*1289 Unless broader terms and conditions have been provided for in Clause 17 or elsewhere herein; where this insurance by its terms covers while on docks, wharves, or elsewhere on shore, and/or during land transportation, it shall include the risks of collision, derailment, overturning or other accident to the conveyance, fire, lightning, sprinkler leakage, cyclones, hurricanes, earthquakes, floods (meaning the rising of navigable waters) and/or collapse or subsidence of docks or wharves, even though the insurance be otherwise Free of Particular Average.

(Id., p. 6.)

The policy also included a Warehouse to Warehouse Clause, providing as follows:

This insurance attaches from the time the goods leave the Warehouse and/or Store at the place named in the Declaration and/or Certificate for the commencement of the transit and continues during the ordinary course of transit, including customary transshipment, if any, until the goods are discharged over-side from the overseas vessel at the final port. Thereafter the insurance continues whilst the goods are in transit and/or awaiting transit until delivered to the final warehouse destination named in the policy or until the expiry of 15 days (or 30 days, if the destination to which the goods are insured is outside the limits of port) whichever shall first occur. The time limits referred to above to be reckoned from midnight of the day on which the discharge overside of the goods hereby insured from the overseas vessel is completed. Held covered at a premium to be agreed in the event of transshipment, if any, other than as above and/or in the event of delay in excess of the above time limits arising from circumstances beyond the control of the ASSURED.

(Id., p. 8.) In addition, a marine extension clause provided that the “insurance attaches from the time the goods leave the Warehouse at the place named in the Policy, Certificate or Declaration for the commencement of transit and continues until the goods are delivered to the final Warehouse at the destination named in the Policy, Certificate or Declaration....” (Id.)

During the period of coverage, several ships transported wood purchased by Great Southern Wood from South America to various ports along the Gulf of Mexico. Generally, after the wood was discharged from the vessel, it was placed in a warehouse at a designated port. Trucks owned and operated by Great Southern Wood then hauled the lumber to the company’s treating facilities or, on rare occasions, transported the untreated wood directly to a customer from a port warehouse. 3 Generally, all ports along the Gulf of Mexico provide thirty (30) days of free space to transport shipped products out of port warehouses. (Id., p. 29.) However, due to “inland logistics,” Great Southern Wood was “always under pressure to get the amount of cargo ... out of ... [the] small port” of Gulfport, Mississippi. 4 (Id., p. 30.) Great Southern Wood discussed this problem with Mississippi Port Authority officials and asked for additional time to move its cargo from the port. (Id.) After their discussion on August 1, 2005, Great Southern Wood and the Mississippi Port Authority entered into a “Space Assignment Agreement.” (Doc. No. 22-5.)

*1290 The agreement specified that the Mississippi Port Authority would provide an assigned space which would accommodate the storage of up to 3,000 tons of cargo per month and that, “[i]n consideration of this space, Great Southern Wood Preserving [would] guarantee a three month volume of 3,000 short tons of lumber at a wharfage rate of $1.70 per short ton.” (Id.) In addition, the Mississippi Port Authority agreed to provide “[f[ree time ... in the amount of forty-five (45) days from the date of receipt of each shipment from vessel.” (Id.) The agreement stated that Great Southern Wood’s assigned space would “only be used for the receipt and short-term storage of lumber and related products in support of the cargo operations of the Customer at the Port of Gulfport.” 5 (Id.) (Emphasis in original.) After entering into the space assignment agreement, Great Southern Wood continued receiving shipments of lumber in Gulfport.

The Vessel Kestrel Arrow delivered approximately 3850 bundles or packages of lumber to Gulfport on August 3, 2005, and completed discharge of her cargo on August 6, 2005. (Doc. No. 26, Ex. G; Goffs Dep., p. 85.) The following day, the United States Department of Agriculture (“USDA”) approved the release of the lumber. (Goffs Dep., p. 85.) At that time, Great Southern Wood’s trucks began picking up the lumber from the warehouse and delivering the wood to its various treating plants. Approximately 73 units of lumber were trucked per day. (Id., p. 93.) (Id.)

On August 23, 2005, a tropical storm over the Bahamas was gradually developing into Hurricane Katrina.

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Bluebook (online)
505 F. Supp. 2d 1287, 2007 U.S. Dist. LEXIS 61822, Counsel Stack Legal Research, https://law.counselstack.com/opinion/great-southern-wood-preserving-inc-v-american-home-assurance-co-almd-2007.