                                                                                                                           Opinions of the United
2009 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-27-2009

Ace Capitol v. Varadam Foundation
Precedential or Non-Precedential: Non-Precedential

Docket No. 08-2232




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Recommended Citation
"Ace Capitol v. Varadam Foundation" (2009). 2009 Decisions. Paper 1308.
http://digitalcommons.law.villanova.edu/thirdcircuit_2009/1308


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                                                                  NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT


                                      No. 08-2232
                                     ____________

                   ACE CAPITOL AND OTHER PARTICIPATING
                  UNDERWRITERS AND INSURERS SEVERALLY
                    SUBSCRIBING TO POLICY NO. A5BGLY170

                                            v.

                     VARADAM FOUNDATION; JAIME JALIFE,
                                            Appellants
                               ____________

             APPEAL FROM THE UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF DELAWARE
                           (D.C. Civ. No. 1-05-cv-00413)
                    District Judge: Honorable Sue L. Robinson
                                   ____________

                     Submitted Under Third Circuit L.A.R. 34.1(a)
                                    March 2, 2009
                  Before: BARRY, WEIS and ROTH, Circuit Judges.
                                (Filed: May 27, 2009)
                                    ____________

                                       OPINION


WEIS, Circuit Judge.

             The District Court entered summary judgment in favor of Ace Capitol, et

al., insurers, and against Varadam Foundation and Jaime Jalife, owners, finding that a



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navigational clause in a marine insurance policy barred coverage for damage to a vessel.

The parties are familiar with the factual background and the legal issues, and because this

is a not precedential opinion, we will not discuss the matters in detail.

              For a number of years the owners’ vessel, the “Mamma Mia,” was insured

to cover certain operations, inter alia, in the east and west coasts of Mexico. On May 23,

2005, the insurers sent a quote to Fredric A. Silberman of Alliance Marine Risk

Managers, the owners’ broker, based on navigational limits listing various geographical

areas, but stating, “Warranted not south of the Tropic of Cancer between 1st June and

31st October inclusive.” On May 24, 2005, a policy was issued that did not mention the

Tropic of Cancer.

              On May 26, 2005, Silberman requested amendments to the policy. The next

day, insurers, via facsimile, acknowledged Silberman’s communication and stated their

understanding that owners would find the “attached endorsement . . . to be in order” and

that insurers would “now process formal endorsement accordingly.” The insurers’ fax

closed with, “[w]ill therefore await your further advices in due course.” The attached

endorsement included the Tropic of Cancer limitation.

              Silberman advised the owners’ local insurance agent in Mexico of the

insurers’ communication on the same day, May 27, 2005, noting the changes to the

navigational clause.




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              On May 31, 2005, insurers issued a “modified” policy with the Tropic of

Cancer limitation included.

              On June 5, 2005, the Mamma Mia was damaged when it ran aground at its

home port of Puerto Aventuras, south of the Tropic of Cancer. Insurers denied coverage

because the accident occurred in a location outside the warranted area. Insurers and

owners both filed declaratory actions.

              The District Court granted summary judgment in favor of insurers, rejecting

the owners’ contention that there was a non-binding unilateral modification. The Court

held that the terms of the policy were set out in the May 23, 2005, quote from insurers to

which owners had agreed in their May 26, 2005, fax. Additionally, the Court refused to

accept the owners’ theory that the modified policy was a cancellation, a premise that

would have granted the owners extended coverage.

              On appeal, owners contend that, when interpreted under Delaware law, the

policy permits a partial cancellation and that the “modified” policy acted as a partial

cancellation. Consequently, the owners claim that they were entitled to a ten-day

extension of coverage which would include the date the Mamma Mia ran aground. In the

alternative, the owners assert that the policy’s cancellation provision is ambiguous and

under Delaware law must be construed against the insurers.

              We have carefully reviewed the owners’ contentions and conclude that a

common-sense reading of the policy reveals that the entire contract must be cancelled



                                              3
before the ten-day extension takes effect. See New Castle County, Del. v. Nat’l Union

Fire Ins. Co. of Pittsburgh, Pa., 243 F.3d 744, 749-50 (3d Cir. 2001) (“Delaware law

requires us to interpret insurance contracts ‘in a common sense manner’ . . . [and to]

examine the disputed language in the context of the entire policy” (citation omitted)). No

such cancellation occurred here.

              We also find no ambiguity in the cancellation provision. See id. at 750

(ambiguity exists where the provision is “reasonably or fairly susceptible of different

interpretations or may have two or more different meanings” (citation omitted)).

              Accordingly, the owners’ arguments fail, and we will affirm the Judgment

of the District Court.




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