Zurich Insurance v. Wheeler

838 F.2d 338
CourtCourt of Appeals for the Ninth Circuit
DecidedJanuary 28, 1988
DocketNo. 86-6426
StatusPublished
Cited by1 cases

This text of 838 F.2d 338 (Zurich Insurance v. Wheeler) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zurich Insurance v. Wheeler, 838 F.2d 338 (9th Cir. 1988).

Opinion

NOONAN, Circuit Judge:

Orange Production Credit Association (the Mortgagee) appeals from judgment in favor of Zurich Insurance Company (the Insurer) in a suit on a policy of hull insurance endorsed in favor of the Mortgagee. The suit is in admiralty under 28 U.S.C. § 1333. California law governs. Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 316, 75 S.Ct. 368, 371, 99 L.Ed. 337 (1955). We reverse the judgment of the district court and remand for entry of judgment for the Mortgagee.

FACTS

On September 20, 1982, the Insurer issued a policy, effective for one year, on the fishing vessel Enterprise in favor of Carl Wheeler and C & W Enterprises (the Assured) in the amount of $500,000. The perils insured against were the common ones, taken from the Lloyd’s policy in the First Schedule of the British Marine Insurance Act, 1906, 6 Edw. 7, c. 41: “of the Seas, Men-of-War, Fire, Lightning, Earthquake, Enemies, Pirates, Rovers, Assailing Thieves, Jettison, Letters of Mart and Counter-Mart, Surprisals, Takings at Sea, Arrests, Restraints, and Detainments of All Kings, Princes, and Peoples, Barratry of the Master and Marines, and all other like Perils, Losses and Misfortunes,” excepting such perils as excluded elsewhere. An “Additional Perils” clause and a “Pollution Hazard” clause added a variety of accidents; explosions; the breakdown of electrical machinery; contact with aircraft, rockets, or similar missiles; the negligence of masters, officers, crew or pilots, and the destruction by the government to abate a pollution hazard, with the proviso as to all these events that “such loss or damages has not resulted from want of due diligence by the Assured.” Ship collision liability was also covered.

A separate clause entitled “War Strikes and Related Explosions” overrode the clauses on perils and declared that the policy did not cover “any loss, damage, or expense” caused by a variety of acts including capture, seizure, arrest, or detainment, piracy, strikes or “malicious acts or vandalism unless committed by the Master or Mariners.” In February 1983, in return for a reduction of the premium by $1,755, the insurance was reduced to $350,000.

The payee of the policy was the Mortgagee. In addition there was a Hull Mortgage Endorsement attached to the policy, which as between the Insurer and the Mortgagee admitted the seaworthiness of the ship and stated:

And the interest of the mortgagee shall not be impaired or invalidated by any act of [sic] neglect of the mortgagor, owner, master, agent, or crew of the vessel insured by this policy, or by any failure to comply with any warranty or condition over which the mortgagee has no control or over which they [sic] have control but have not exercised such control, provided that the loss in the absence of such act or neglect or breach of warranty or condition would have been a loss recoverable under the policy.

The “act of neglect” marked above by “sic” was an obvious misprint and was corrected by the trial court to read “act or neglect.”

The Mortgagee was acknowledged in the endorsement to hold a mortgage of $156,-000, and the Assured was denied the privilege of canceling the policy without the Mortgagee’s written consent. The total premium paid, $12,990, included the Hull Mortgage Endorsement without indication of how the premium was allocated. The endorsement was sufficiently common to be identified by the insurance agent simply as “ENDT # 1.”

Wheeler, the owner of the Enterprise, owed the Mortgagee $214,000 principal and accrued interest. The Mortgagee had already foreclosed on his home and in July 1983 had filed an action to foreclose on the ship. Wheeler discussed with his girlfriend Linda Stone the possibility of sinking the ship to obtain the insurance. On August 8, 1983 he sought and got from the Mortgagee permission to take the Enterprise on a fishing trip. The Mortgagee imposed conditions on the voyage; Wheeler agreed that the net profit from the trip would be paid to it. On the evening of August 13, 1983, near Catalina Island in calm to moderate [340]*340weather, Wheeler assisted by Linda and her son, opened a butterfly valve in a discharge line with the result that the fish hold flooded from a back flow of sea water through the discharge line. The ship sank.

PROCEEDINGS

Wheeler submitted a claim to the Insurer seeking the full amount of the insurance. The Mortgagee also made proof of loss covered under the policy. The Insurer refused to pay and instead brought a declaratory judgment action against Wheeler and the Mortgagee, seeking a judgment that the sinking of the Enterprise was caused by a peril not insured against by the policy. The district court found that Wheeler had scuttled his ship. The court held that scuttling, “the deliberate sinking of a vessel by its owner,” was not a peril enumerated and insured against.

The court entered judgment for the Insurer on March 27, 1986. On April 9, 1986 the Mortgagee moved for a new trial and for amendment of the judgment. The motion was heard on June 2, 1986, the court instructing the Mortgagee’s counsel to prepare a formal order denying its motion. This order was signed by the court and entered on June 6, 1986. Notice of its entry, however, was not received by the Mortgagee. On July 9, 1986 counsel for the Mortgagee talked by telephone to the clerk of the court and was told that the order had not been entered. The Mortgagee learned of the entry of the order only on August 8, 1986. On August 20, 1986, seventy-four days after the entry of the order denying a new trial, the Mortgagee filed a motion to extend the time to file an appeal and/or for vacation of the entry of judgment. On September 15, 1986 the district court vacated the judgment and reentered it effective that date. The Mortgagee then filed a timely appeal.

ANALYSIS

Timeliness of the Appeal. Notice of appeal must be filed within 30 days after the entry of judgment. Fed.R.App.P. 4(a). The Mortgagee failed to do so. However, for “compelling reasons,” the district court may vacate its original entry of judgment and reenter its order in order to permit an appeal to be taken. See Kramer v. American Postal Workers Union, 556 F.2d 929, 930 (9th Cir.1977). But if the district court abuses its discretion in extending the appeal period by vacating and reentering judgment, this court is without jurisdiction. Rodgers v. Watt, 722 F.2d 456, 458 (9th Cir.1983) (en banc).

The failure of the clerk to give notice is not a ground, by itself, for a finding of excusable neglect, but is a factor to be considered along with other circumstances. Id. at 460. In this case, the clerk failed to give notice and then told counsel that the order had not been entered. Counsel exhibited sufficient diligence in checking with the clerk. His reliance on the clerk’s representation was an excuse for failing to file within the prescribed time.

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Related

Zurich Insurance Company v. Wheeler
838 F.2d 338 (Ninth Circuit, 1988)

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Bluebook (online)
838 F.2d 338, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zurich-insurance-v-wheeler-ca9-1988.