Ninth Circuit Again Considers Maritime Doctrine of Uberraimae Fidei

How often does a court take on the doctrine of uberrimae fidei?  The Hawaii appellate courts have never confronted uberrimae fidei.  The Ninth Circuit, however, has addressed the doctrine twice in a little more than a month.  We addressed in a prior post the Ninth Circuit’s prior handling of the doctrine in Certain Underwrites at Lloyds, London v. Inlet Fisheries Inc., 2008 U.S. App. LEXIS 2951 (9^th Cir. Feb. 11, 2008).  Uberrimae fidei is a longstanding federal maritime doctrine that applies to marine insurance contracts.  The doctrine imposes a duty of good faith.

In the latest decision, Judge Kozinski opens his opinion with the captivating sentence, “We consider the doctrine that’s on everyone’s lips: uberrimae fidei.”  See New Hampshire Ins. v. C’Est Moi, Inc., No. 06-55031 (9^th Cir. March 20, 2008). 

The insured boat owner collected $450,000 from Washington International when the C’Est Moi was destroyed by fire in 1992.  The insured restored the yacht, but it was uninsured until 2001, when a policy was obtained from New Hampshire Insurance Company. 

In 2004, the yacht sank in calm waters and the insured filed a claim.  New Hampshire sued to rescind the policy.  The district court held uberrimae fidei applied and granted summary judgment to New Hampshire.  In the insurance application, the insured had misrepresented the purchase price and had erroneously stated the yacht was insured by Washington International. 

On appeal, the insured argued the policy expressly voided coverage for intentional misrepresentations, thereby replacing uberrimae fidei.  An Eleventh Circuit decision, King v. Allstate Ins. Co., 906 F.2d 1537 (11^th Cir. 1990), held a policy excluding coverage for intentional misrepresentations supersedes the insured’s duty under uberrimae fidei.  Judge Kozinski was unpersuaded, however, and hoped the Eleventh Circuit would reconsider.  Nothing in the New Hampshire policy indicated it was meant to displace rights or responsibilities imposed by uberrimae fidei. 

As noted in our prior post, uberrimae fidei, not state law, applies to marine insurance contracts.  Consequently, the Ninth Circuit decisions could impact a Hawaii case involving marine insurance and breach of the duty of utmost good faith.