United States Court of Appeals For the First Circuit
No. 19-1503
QBE SEGUROS,
Plaintiff, Appellee,
v.
CARLOS A. MORALES-VÁZQUEZ,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. Bruce J. McGiverin, U.S. Magistrate Judge]
Before
Barron and Selya, Circuit Judges, and Katzmann, Judge.
Alberto J. Castañer, with whom Castañer & Cía P.S.C., Juan Rafael González-Muñoz, and González Muñoz Law Offices, PSC were on brief, for appellant. Manuel Sosa-Báez, with whom Ian P. Carvajal and Saldaña, Carvajal & Vélez-Rivé, P.S.C. were on brief, for appellee.
January 19, 2021
Of the United States Court of International Trade, sitting by designation. SELYA, Circuit Judge. This appeal involves a dispute
between a boat owner (who purchased a policy of marine insurance
without disclosing, among other things, a prior grounding) and his
insurance company. Resolving the appeal requires us to revisit
the doctrine of uberrimae fidei — an entrenched principle of
maritime law that imposes a duty of utmost good faith on the
parties to marine insurance contracts. Concluding, as we do, that
the district court faithfully applied this doctrine, we affirm the
entry of judgment in favor of the insurer.
I. BACKGROUND
We briefly rehearse the relevant facts and travel of the
case. In 2011, defendant-appellant Carlos Morales-Vázquez
(Morales) purchased an insurance policy for his forty-foot Riviera
yacht (the Riviera Policy) from Optima Insurance Company, an entity
later acquired by another insurance company, plaintiff-appellee
QBE Seguros (QBE). As part of his application for this insurance
policy, Morales left blank the spaces provided for answers to
questions asking him to describe his prior boating history and all
accidents related to any vessel he had previously owned,
controlled, and/or operated. Morales renewed this policy (with
QBE) in both 2012 and 2013.
In March of 2014, Morales applied for a separate
insurance policy for his forty-eight-foot Cavileer yacht (the
Cavileer Policy). Section seven of the application required
- 2 - Morales to disclose any accidents or losses sustained in connection
with any vessel he had owned, controlled, and/or operated. This
time, Morales indicated that he had been involved in an accident
some eleven years earlier, explaining that the accident was a
"propeller strike" and that "[p]ropellers were replaced [and]
shaft and rudders rectified." But Morales did not see fit to
mention that in January of 2010 he had grounded a forty-foot
Riviera Offshore yacht in Fajardo, Puerto Rico.
The omission of the earlier grounding was not Morales's
only oversight. Section six of the application for the Cavileer
Policy required Morales to recount his boat-ownership and boat-
operating history. When responding, Morales listed only two of
the seven boats that he previously had owned and/or operated (a
forty-foot Riviera Offshore yacht and a forty-foot Riviera Sport
Fisherman). He omitted the remaining information called for by
section six even though the application form plainly stated that
"[i]f incorrect answers are provided (either by error, omission or
neglect), I will be in breach of this warranty and the policy, if
issued, will be void from inception."
Morales submitted the application for the Cavileer
Policy to an insurance broker, who contacted an underwriter at
QBE. The broker indicated that the putative insured wanted to
obtain a quote the same day. Thirty-six minutes after receiving
the application, the underwriter quoted a premium to the broker.
- 3 - In pricing the quotation, the underwriter relied, among other
things, on the information contained in the applications for both
the Riviera Policy and the Cavileer Policy, as well as Morales's
"more than 15 years" of nautical "owner experience." QBE Seguros
v. Morales-Vázquez, No. 15-2091, 2018 WL 3763305, at *1-3 (D.P.R.
Aug. 7, 2018). She later testified at trial that she had evaluated
the paperwork thoroughly before authorizing the issuance of the
policy. The net result of the dealings between the broker and the
underwriter was that, as of March 7, 2014, Morales's Cavileer yacht
was insured by QBE for the ensuing year in the face amount of
$550,000.
On October 24, 2014, the Cavileer yacht sustained
appreciable damage from a fire. Morales reported the loss to QBE,
and QBE retained an independent adjustor to work with its own
employees toward resolving Morales's claim. Following a number of
surveys, QBE made a settlement offer in December of 2014: it
offered to pay Morales $63,774.10 in satisfaction of the loss.
Morales rejected the offer.
Negotiations between the parties continued over the next
few months, and Morales rejected several other settlement offers
from QBE. The tectonic plates shifted, though, in May of 2015,
when QBE became aware of Morales's 2010 grounding. QBE exercised
its right to question Morales under oath, and Morales admitted
that he had not disclosed the 2010 grounding — nor had he disclosed
- 4 - (in his application for the Cavileer Policy) the existence of five
vessels that he previously had owned and/or operated.
With Morales's admissions in hand, QBE repaired to the
federal district court in mid-2015. Invoking the court's admiralty
jurisdiction, see 28 U.S.C. § 1333, QBE sought a declaratory
judgment voiding the policy on the grounds that Morales had failed
to honor his duty of utmost good faith (known as "uberrimae fidei"
in maritime law) in acquiring the Cavileer Policy and, in the
bargain, had breached the warranty of truthfulness contained in
the Cavileer Policy. Morales answered QBE's complaint, denied
that QBE was entitled to the relief that it sought, asserted
affirmative defenses of waiver and estoppel, and counterclaimed
for damages arising out of QBE's alleged bad faith. The parties
consented to proceed before a magistrate judge, see 28 U.S.C.
§ 636(c); Fed. R. Civ. P. 73, and — following preliminary motion
practice and extensive pretrial discovery — they cross-moved for
full or partial summary judgment. The district court denied both
motions, but noted the relevance of the doctrine of uberrimae fidei
and QBE's corresponding right to void the Cavileer Policy if
Morales had made a material omission or misrepresentation.
A six-day bench trial ensued. The district court
reserved decision, entertained post-trial briefing, and decided
the case in a thoughtful rescript. The court concluded that QBE
was entitled to void the policy for two independently sufficient
- 5 - reasons: Morales had breached not only the duty of uberrimae fidei
but also the policy's warranty of truthfulness. See QBE, 2018 WL
3763305, at *16. In connection with the latter holding, the court
rejected Morales's affirmative defenses. See id. at *12-14. This
timely appeal followed.
II. ANALYSIS
In this venue, Morales propounds four arguments. First,
he asks that we hold the doctrine of uberrimae fidei inapplicable
because of recent legal developments in the United Kingdom.
Second, he says that even if the doctrine applies generally, the
district court made no finding that QBE actually relied on his
omissions and, thus, erred in holding that he had breached the
duty. Third, he argues that the district court erred in finding
that he breached the warranty of truthfulness. And finally, he
argues that his affirmative defenses trump any right that QBE may
have had to void the Cavileer Policy. The first two arguments are
obviously related, and we discuss them together. As matters turn
out, the resolution of those arguments suffices to lay this appeal
to rest.
Given the thrust of Morales's first argument, we think
it useful to start by sketching the evolution of the doctrine of
uberrimae fidei. The Latin phrase "uberrimae fidei" loosely
translates as "utmost good faith." See Black's Law Dictionary
(10th ed. 2014). As relevant here, the doctrine requires parties
- 6 - to a marine insurance contract to disclose all known facts or
circumstances material to an insurer's risk. See Windsor Mount
Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54-55 (1st Cir. 1995).
Under the doctrine, an insurer may void a marine insurance policy
if its insured fails to disclose "all circumstances known to [the
insured] and unknown to the insurer" that materially impact the
insurer's risk calculus. Caitlin at Lloyd's v. San Juan Towing &
Marine Servs., Inc., 778 F.3d 69, 83 (1st Cir. 2015) (emphasis in
original); cf. Stipcich v. Metro. Life Ins. Co., 277 U.S. 311, 316
(1928) (holding to like effect with respect to certain contracts
outside marine insurance context).
The origins of the doctrine can be traced back to
eighteenth-century London, which was — and remains — a global
insurance hub. In its nascent form, the doctrine applied to a
myriad of insurance contracts across a wide swath of industries.
As early as 1766, Lord Mansfield recognized that insurance
contracts impose a heightened duty of good faith to prevent a party
from omitting or concealing facts that would induce the
counterparty "into a bargain, from his ignorance." Carter v. Boehm
(1766) 97 Eng. Rep. 1162, 1164 (K.B.). Such a requirement was
rooted in practical wisdom, recognizing that an insurer often
lacked the ability to verify the insured's representations before
issuing a policy. See Thomas J. Schoenbaum, Admiralty and Maritime
Law § 19:14, at 460 (6th ed. 2018). This practical wisdom still
- 7 - rings true when applied to marine insurance — an industry in which,
for example, a policy may have to be issued in London, on a time-
sensitive basis, for a vessel berthed halfway across the globe.
American courts first recognized the doctrine of
uberrimae fidei in connection with marine insurance contracts in
the early nineteenth century. See McLanahan v. Universal Ins.
Co., 26 U.S. (1 Pet.) 170, 185 (1828). In 1882, the Supreme Court
confirmed the strict disclosure requirements that the doctrine
imposed on an insured. See Sun Mut. Ins. Co. v. Ocean Ins. Co.,
107 U.S. 485, 510-11 (1883).
For some time, American and English law concerning
marine insurance continued to develop in parallel through a parade
of judicial decisions. Parliament, however, codified the by-then-
venerable doctrine of uberrimae fidei by including it in the Marine
Insurance Act of 1906 (1906 MIA). See Marine Insurance Act 1906,
6 Edw. 7 c. 41, § 17 (U.K.). Congress, however, remained silent;
and American courts continued to develop their own federal common
law of admiralty and continued to interpret marine insurance
policies as incorporating, by implication, the doctrine of
uberrimae fidei. See, e.g., San Juan Towing, 778 F.3d at 82; N.Y.
Marine & Gen. Ins. Co. v. Cont'l Cement Co., 761 F.3d 830, 839
(8th Cir. 2014); AGF Marine Aviation & Transp. v. Cassin, 544 F.3d
255, 263 (3d Cir. 2008); Certain Underwriters at Lloyd's, London
v. Inlet Fisheries Inc., 518 F.3d 645, 650 (9th Cir. 2008); HIH
- 8 - Marine Servs., Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir.
2000); Puritan Ins. Co. v. Eagle S.S. Co. S.A., 779 F.2d 866, 870
(2d Cir. 1985).1
Parliament lately adopted a number of insurance reforms.
As relevant here, Parliament passed the Insurance Act of 2015,
which (among other things) effectively amended the 1906 MIA to
preclude an insurer from voiding a marine insurance policy by
recourse to the doctrine of uberrimae fidei. See Insurance Act
2015, c.4, § 14 (U.K.) ("Any rule of law permitting a party to a
contract of insurance to avoid the contract on the ground that the
utmost good faith has not been observed by the other party is
abolished."). Even so, Congress did not follow Parliament's lead.
This lack of congressional action is significant. As
the federal common law of admiralty developed, the Supreme Court
acknowledged that congressional silence left room for courts,
1 There appears to be only a single outlier. See Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 889 (5th Cir. 1991). This decision not only flies in the teeth of case law from both the Supreme Court and the overwhelming majority of circuits but also has been much-criticized. See, e.g., Inlet Fisheries, 518 F.3d at 653 (questioning the "logic chain" of Anh Thi Kieu); Thomas J. Schoenbaum, The Duty of Utmost Good Faith in Marine Insurance Law: A Comparative Analysis of American and English Law, 29 J. Mar. L. & Com. 1, 11 (1998) (calling into question Anh Thi Kieu decision because "no rule of marine insurance is better established tha[n] the utmost good faith rule").
- 9 - among others, to fill the vacuum.2 See Wilburn Boat Co. v.
Fireman's Fund Ins. Co., 348 U.S. 310, 321 (1955) ("We, like
Congress, leave the regulation of marine insurance where it has
been — with the States.").
Against this backdrop, Morales contends that Supreme
Court precedent requires courts to harmonize American and United
Kingdom maritime law and that, therefore, uberrimae fidei would
have to be scuttled (even if it included a requirement to prove
reliance) to match what Parliament wrought in the Insurance Act of
2015. This contention poses a question of law, which engenders de
novo review. See Giragosian, 57 F.3d at 53.
Morales does not dispute that uberrimae fidei is firmly
entrenched in the jurisprudence of this circuit. See San Juan
Towing, 778 F.3d at 80-81 (holding "without further equivocation
that the doctrine of uberrimae fidei is an established rule of
maritime law in this Circuit"). He nonetheless urges us to
disregard our own precedent, insisting that a trio of Supreme Court
cases compels us to do so. See Calmar S.S. Corp. v. Scott, 345
2 This means, of course, that questions sometimes arise in maritime cases as to whether federal or state common law should apply. See San Juan Towing, 778 F.3d at 76-80. Here, however, the parties present their uberrimae fidei arguments exclusively in terms of federal common law, and we therefore may accept the parties' plausible view that federal common law supplies the substantive rules of decision. Cf. Borden v. Paul Revere Life Ins. Co., 935 F.2d 370, 375 (1st Cir. 1991) (holding that, in diversity jurisdiction, court may accept parties' plausible agreement as to which state's law applies).
- 10 - U.S. 427, 442-443 (1953); Standard Oil Co. of N.J. v. United
States, 340 U.S. 54, 59 (1950); Queen Ins. Co. of Am. v. Globe and
Rutgers Fire Ins. Co., 263 U.S. 487, 493 (1924). The rule that
Morales draws from these cases is that, in admiralty, federal
common law should be tailored (or re-tailored, if necessary) to
mirror developments in English law. This is magical thinking:
the cases upon which Morales relies cannot bear the weight that he
loads upon them. We explain briefly.
To begin, the quoted statements that Morales excerpts
from his coveted trio of Supreme Court cases are dictum. None of
them are meant to establish a binding analytic framework. And
when all is said and done, Morales identifies no case in which the
Court based a holding on English law. To confirm these points, we
examine the cases that Morales cites.
In Queen Insurance, the Court was tasked with deciding,
for insurance purposes, whether the sinking of a commercial vessel
traveling with a military convoy resulted from "marine risks" or
"war risks." 263 U.S. at 490. To resolve this conundrum, the
Court looked primarily to a Court of Claims opinion, see Morgan v.
United States, 5 Ct. Cl. 182, 194 (1869), which itself drew on
English insurance law principles, see Queen Insurance, 263 U.S. at
492-93. Although Justice Holmes noted that "special reasons
[exist] for keeping in harmony with the marine insurance laws of
- 11 - England," id. at 493, the Court's holding was in no way based on
English law.
In Calmar, the dispute involved a privately insured ship
which — as a result of the attack on Pearl Harbor — was diverted
to Australia and detained there. See 345 U.S. at 428-29. While
detained, the ship was damaged by enemy bombing. See id. at 430.
The parties quarreled over whether the ship's insurance policy
afforded coverage, and the lower court based its resolution of
this controversy in part on a House of Lords decision. See id. at
442 (citing Rickards v. Forrestal Land, Timber and Rys. Co. (1942)
A.C. 50). On review, the Supreme Court cited an analogous English
case as "persuasive authority," but made plain that it was "not
required" to adopt that particular interpretation. Id. at 443.
The third case to which Morales adverts also involved
war risk insurance. There, the insured alleged that certain House
of Lords decisions, which detoured from the traditional proximate
cause inquiry, dictated the outcome. See Standard Oil Co. of N.J.,
340 U.S. at 59, 60 n.12 (citing Yorkshire Dale S.S. Co. v. Minister
of War Transp. (1942) A.C. 691; Bd. of Trade v. Hain S.S. Co.
(1929) A.C. 534; Attorney-General v. Adelaide S.S. Co. (1923) A.C.
292). Although the Court acknowledged the general "desirability
of uniformity" between American and English law in the
interpretation of marine insurance policies, it cautioned that
"this does not mean that American courts must follow House of
- 12 - Lords' decisions automatically." Id. at 59. Practicing what it
preached, the Court declined to follow the English precedents
hawked by the insured. Id. at 61.
Standard Oil offers us two important takeaways. First,
American courts are not bound by legal developments in the United
Kingdom. And even though the Standard Oil Court was speaking of
judicial decisions, we think it follows, a fortiori, that acts of
Parliament are equally non-binding. Second, although harmony
between American and English admiralty law is desirable, "our
practice is no more than to accord respect to established doctrines
of English maritime law." Id. at 59. The respect accorded by
American courts to English maritime law stems from the wisdom of
the particular doctrine, not from either the acceptance or the
rejection of that doctrine by Parliament. It follows, we think,
that federal courts tasked with hearing admiralty cases should
take heed of developments in English law, but they are not obliged
to change course merely because Parliament acts to alter a
previously entrenched principle.
Let us be perfectly clear. We do not gainsay that
federal common law is intended to be dynamic and to evolve over
time. See, e.g., Nw. Airlines, Inc. v. Transp. Workers Union of
Am., AFL-CIO, 451 U.S. 77, 95-96 (1981) (discussing federal courts'
role in developing "flexible" common law of admiralty). But
Congress has been conspicuously silent on issues of marine
- 13 - insurance, see Wilburn Boat Co., 348 U.S. at 321, and the fact
that federal common law has the capacity to evolve does not mean
that it is captive to the vagaries of Parliament (or any foreign
legislature, for that matter).
At any rate, abandoning the doctrine of uberrimae fidei
in marine insurance cases would have rebarbative consequences,
both upending settled law and disrupting an industry that has long
been premised on insureds telling the whole truth to insurers.
Given this grim prospect, we decline Morales's invitation to remove
the doctrine of uberrimae fidei from service and place it in
mothballs.
There are, of course, sound reasons to retain the
challenged doctrine. Although the availability of information has
improved dramatically in recent times, a marine insurer and its
insured do not have equal access to the information needed to make
underwriting decisions and to set premiums. Long ago, Lord
Mansfield famously wrote that "[i]nsurance is a contract upon
speculation. The special facts, upon which the contingent chance
is to be computed, lie most commonly in the knowledge of the
insured only." Carter 97 Eng. Rep. at 1164. This remains true in
the sphere of marine insurance. Thus, even though uberrimae fidei
has been scuttled in other areas of insurance law, see San Juan
Towing, 778 F.3d at 75, the peculiarities of marine insurance
underscore the case for its continued desirability.
- 14 - This proposition hardly can be disputed. Marine
insurance is often needed at a moment's notice, and insurers are
frequently located far away from the vessel that they are asked to
insure. See id. at 80. The insurer's task is made more formidable
because the calculation of marine insurance premiums must take
into account not only the vessel's history and particularities but
also the maritime experiences of the owner and/or operator. Time
is frequently critical to the issuance of marine insurance
policies, and this wide constellation of facts is difficult for an
insurer to ascertain on short notice unless it has the full and
frank cooperation of the insured. See generally Mitchell J. Popham
& Chau Vo, Misrepresentation and Concealment in Marine Insurance
Contracts: An Analysis of Federal and State Law Within the Ninth
Circuit, 11 U.S.F. Mar. L.J. 99, 104 (1998).
So, too, the asymmetry in the availability of
information argues convincingly for the idea that the doctrine of
uberrimae fidei is necessary for the maintenance of an economically
efficient marine insurance industry. Requiring an insurer to
ascertain difficult-to-find information about a risk will impose
substantial costs on the industry — costs that are likely to be
passed along to policyholders in the form of higher premiums.
Placing the burden of disclosure on the insured (the party who
knows or can most easily obtain the necessary information) will
reduce processing costs and will help to keep premiums low. As
- 15 - one commentator aptly observed, uberrimae fidei is not "based on
'old fashioned' moral principles . . . [i]t is a rule designed to
minimize costs to both insurers and assureds." Schoenbaum, The
Duty of Utmost Good Faith, supra note 1, at 3. The doctrine,
therefore, remains "grounded in economic efficiency." Id.
This case is a poster child for the continuing relevance
of the doctrine. Morales admits that QBE's underwriter was
"pressed for time because Morales needed the insurance for that
same day." To accommodate Morales, QBE moved rapidly; it delivered
the requested coverage to Morales just thirty-six minutes after
his broker submitted his application. In other words, the
stringent burden of disclosure allowed Morales to obtain marine
insurance in a matter of minutes.
Even so, clear sailing is not yet in sight. Morales
argues that, even if uberrimae fidei remains applicable to marine
insurance in American jurisprudence, the district court misapplied
the doctrine because it did not make any finding that QBE actually
relied on the insured's incomplete accident history and other
omissions. To the extent that this claim of error turns on a
question of law, our review is de novo. See Giragosian, 57 F.3d
at 53. To the extent that it implicates the district court's
factfinding, our review is for clear error. See id.
Morales's argument posits that QBE must show that it
actually relied on his omissions in issuing the Cavileer Policy.
- 16 - This argument strikes a novel chord: we have never held that
actual reliance is a necessary prerequisite for an insurer to void
a marine insurance policy under the doctrine of uberrimae fidei.
Rather, we have held that the materiality of a false statement or
an omission, without more, provides a sufficient ground for voiding
such a policy. See, e.g., San Juan Towing, 778 F.3d at 83; Com.
Union Ins. Co. v. Pesante, 459 F.3d 34, 37-38 (1st Cir. 2006);
Grande v. St. Paul Fire & Marine Ins. Co., 436 F.3d 277, 282-83
(1st Cir. 2006); Giragosian, 57 F.3d at 54-55. Several other
courts of appeals likewise have concluded that a showing that an
omission or a representation relates to a material fact is alone
sufficient to void a marine insurance policy. See, e.g., Inlet
Fisheries, 518 F.3d at 655; AGF Marine Aviation, 544 F.3d at 262;
HIH Marine Servs., 211 F.3d at 1363. The commenters agree that,
under federal common law, the majority rule does not require actual
reliance in marine insurance cases. See, e.g., Schoenbaum,
Admiralty and Maritime Law, supra, at 480; W. Benjamin Woody,
Sinking Uberrimae Fidei: How the Eighth Circuit's Decision in St.
Paul Fire & Marine Insurance Co. v. Abhe & Svoboda, Inc.,
Accidentally Sank the Doctrine Before the Insurance Act 2015 Could,
40 Tul. Mar. L.J. 573, 584-85 (2016).
In an effort to blunt the force of these authorities,
Morales claims that three circuits — the Eleventh, Second, and
- 17 - Eighth — have required a showing of actual reliance. Morales's
claim, though, overstates the matter.
Caselaw from the Eleventh Circuit contravenes Morales's
claim. The case that he cites stands only for the unremarkable
proposition that misrepresentation of a prior loss known to both
parties "could not have led [the insurer] to rely on that
statement" and, thus, could "in no way constitute a material
misrepresentation in breach of uberrimae fidei." I.T.N.
Consolidators, Inc. v. N. Marine Unders. Ltd., 464 Fed. Appx. 788,
794 (11th Cir. 2012) (dictum). That case was decided on other
grounds, see id. at 795, and the Eleventh Circuit elsewhere has
stated unequivocally that a material misrepresentation, without
more, is a sufficient basis for voiding a marine insurance policy
under uberrimae fidei, see HIH Marine Servs., 211 F.3d at 1363.
The Second Circuit is more of a mixed bag. In the case
that Morales cites, the court merely assumed, without deciding,
that actual reliance was necessary. See Fireman's Fund Ins. Co.
v. Great Am. Ins. Co., 822 F.3d 620, 638 (2d Cir. 2016). But our
independent research indicates that the Second Circuit may,
indeed, require actual reliance when applying uberrimae fidei.
See Puritan, 779 F.2d at 871.
The Eighth Circuit case that Morales cites is favorable
authority for his position. See St. Paul Fire & Marine Ins. Co.
v. Abhe & Svoboda, Inc., 798 F.3d 715, 721 (8th Cir. 2015). Even
- 18 - so, that court recognized that its holding was contrary to the
weight of authority. See id. And in all events, the opinion is
suspect because the Abhe court looked to insurance law outside the
marine insurance context, see id. at 720-21, and failed to
acknowledge in any way the special relationship between marine
insurance and the doctrine of uberrimae fidei.
In the end, we are not persuaded by Morales's argument.
For one thing, binding precedent does not support the inclusion of
an actual reliance requirement within the doctrine of uberrimae
fidei. The Supreme Court has used only a materiality test —
without any mention of actual reliance — in describing the
preconditions for the application of uberrimae fidei in marine
insurance cases. See Sun Mut. Ins. Co., 107 U.S. at 509-10. And
in this circuit's jurisprudence, materiality alone has
consistently been recognized as a sufficient predicate for finding
that an insured breached his duty of uberrimae fidei. See, e.g.,
San Juan Towing, 778 F.3d at 83.
For another thing, Morales does not argue in the
alternative that we should impose an actual reliance requirement
regardless of controlling precedent. He does no more than cite
some out-of-circuit cases that follow the minority rule to support
his claim that our precedent also requires actual reliance. These
references are insufficient to support departure from our existing
precedent. We hold, therefore, that the majority rule continues
- 19 - to abide in this circuit; that under the majority rule, a showing
of actual reliance is not required; and that QBE had no need to
show that it actually relied on Morales's omissions in order to
prevail under the doctrine of uberrimae fidei.3
Morales makes yet another effort to bail the water out
of his sinking ship. He submits that certain language in the
Cavileer Policy modified the traditional duty of uberrimae fidei
and incorporated actual reliance into the contract. Specifically,
he points to two provisions:
A clause appearing on the bottom of each page of the
application, which states, "I also agree that if the
policy is issued, it was issued by you based upon and
in reliance of the truthfulness and completeness of
the answers provided herein."
A sentence in the "General Conditions and Warranties"
section of the Cavileer Policy, which states, "This
policy was issued based upon and in reliance of the
representations made by you or your representative
in the Application."
Contrary to Morales's importunings, this language does nothing to
water down the duty of uberrimae fidei. These provisions appear
3 We note QBE's insistence that actual reliance occurred here. Like the district court, we have no need to reach that factbound issue.
- 20 - to be little more than boilerplate contract terms, and we agree
with the district court that neither of them amounts to an
unambiguous statement modifying the duty of utmost good faith
inherent in marine insurance contracts. See QBE, 2018 WL 3763305,
at *7. To cinch the matter, other language in the Cavileer Policy
makes pellucid that the parties did not intend to diminish the
duty of uberrimae fidei:
If the named insured has, before or after a loss made a false statement or representation with respect to this insurance or has concealed or misrepresented any material fact or circumstance relating to this insurance, this policy shall be void and without effect. The false statement or representation or concealment need not be related to the damages or loss claimed in order to void the entire policy.
This language embodies the core of the uberrimae fidei doctrine:
that omission or misrepresentation of a material fact is a
sufficient ground, in and of itself, to allow an insurer to void
a policy of marine insurance.
For the sake of completeness, we note that our analysis
of the contractual language does not offer any reason to move away
from the overarching doctrine of uberrimae fidei. Quite the
contrary: the contractual language provides strong support for
the conclusion that the doctrine of uberrimae fidei is alive and
well in marine insurance policies. Although the disclosure
requirements in the contract align with those imposed by the
- 21 - doctrine of uberrimae fidei, contractual requirements may operate
as affirmative defenses. For example, waiver and estoppel may be
affirmative defenses to a claim that an insured has committed a
breach of a policy warranty, see, e.g., In re Frescati Shipping
Co., 718 F.3d 184, 214 (3d Cir. 2013); Suydam v. Reed Stenhouse of
Wash., Inc., 820 F.2d 1506, 1510 (9th Cir. 1987), and Morales
asserts them here. But he develops no argument on appeal that
these defenses apply against the doctrine of uberrimae fidei. See
HIH Marine Servs., 211 F.3d at 1362 n.2.
It is true, of course, that omitted facts must be
material in order to provide an avenue for an insurer to void an
insurance policy under the doctrine of uberrimae fidei. See San
Juan Towing, 778 F.3d at 83; Giragosian, 57 F.3d at 54-55. For
such purposes, materiality depends upon an objective standard.
See San Juan Towing, 778 F.3d at 82; see also Schoenbaum, Admiralty
and Maritime Law, supra, at 480. Materiality is to be gleaned by
evaluating the likely impact of facts that may influence a prudent
insurer when considering whether to issue a particular policy.
See Pesante, 459 F.3d at 38.
Here, the district court found that the incomplete
accident history (most notably, the earlier grounding) crossed the
threshold for materiality. See QBE, 2018 WL 3763305, at *8-9. On
appeal, Morales makes no developed argument to the contrary. Given
this unchallenged finding of materiality, the district court had
- 22 - an impeccable predicate for applying the doctrine of uberrimae
fidei.
We need go no further. From what we already have said,
it is evident that the court below carefully threaded its way
through the doctrinal complexities of uberrimae fidei and
supportably concluded that the doctrine entitled QBE to a
declaration that the Cavileer Policy was void.4
III. CONCLUSION
The judgment of the district court is
Affirmed.
4 Given our conclusion that the district court did not err in ruling that Morales breached the duty of uberrimae fidei, we have no occasion to reach the parties' arguments concerning breach of the warranty of truthfulness, waiver, and estoppel.
- 23 -