UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
CENTENNIAL INSURANCE COMPANY
LITHOTECH SALES, LLC
Litho 21, Inc., as assignee of, and successor
in interest to,
all rights in this action belonging to defendant
ON APPEAL FROM THE UNITED STATES DISTRICT
FOR THE DISTRICT OF NEW JERSEY
D.C. Civil No. 99-cv-01949
District Judge: The Honorable John W. Bissell,
Argued February 5, 2002
Before: BECKER, Chief Judge, McKEE, and BARRY,
(Opinion Filed: February 26, 2002)
George P. Birnbaum, Esq. (Argued)
130 West 57th Street
New York, NY 10019
Attorney for Appellant
James W. Carbin, Esq. (Argued)
Duane, Morris & Heckscher
744 Broad Street
Newark, NJ 07102
Attorney for Appellee
BARRY, Circuit Judge
Appellant Litho 21, Inc. ("Litho 21") is the
assignee of and successor in interest to
the defendant below, Lithotech Sales, LLC.
In this capacity, Litho 21 appeals the
District Court's grant of summary judgment
to plaintiff Centennial Insurance Co.
("Centennial"). We have jurisdiction pursuant
to 28 U.S.C. 1291 and will affirm.
We write only for the parties who are familiar
with the procedural history and
facts of the case, so we need not recite
that history and those facts here. Accordingly, we will forthwith address
the one argument Litho 21 raises on appeal: the Fraudulent Bills of Lading
Clause covers Litho 21's economic loss resulting from the shipment of a
Heidelberg printing press different from that described in the bill of
lading, and the District Court erred in concluding to the contrary.
The insurance contract in which the Fraudulent
Bills of Lading Clause is found is
a marine open cargo policy and, thus, as
the District Court properly found, the Court's
admiralty jurisdiction was invoked. Wilburn
Boat Co. v. Fireman's Fund Ins. Co., 348
U.S. 310, 313 (1955). "With admiralty jurisdiction
comes the application of substantive
admiralty law." East River S.S. Corp. v.
Transamerica Delaval, Inc., 476 U.S. 858, 864
(1986). The application of substantive admiralty
law does not, however, result in the
"automatic displacement of state law." Jerome
B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 545
(1995). State law may provide the rule of decision in an
admiralty case so long as it does not conflict
with maritime law. Calhoun v. Yamaha
Motor Corp., U.S.A., 40 F.3d 622, 627 (3d
Cir. 1994). Courts have generally applied
state law when interpreting the language
of marine insurance policies. See, e.g., Wilburn Boat Co., 348 U.S. at
321 (applying Texas law to interpret a marine insurance policy); Advani
Enterprises, Inc. v. Underwriters at Lloyds, 140 F.3d 157, 162 (2d Cir.
1998) (applying English law); Bank of San Pedro v. Forbes Westar, Inc.,
53 F.3d 273, 275 (9th Cir. 1995) (applying California law).
The inquiry, therefore, became which state
law to apply. A court exercising
admiralty jurisdiction must apply federal
conflict-of-laws principles. Calhoun v. Yamaha
Motor Corp., U.S.A., 216 F.3d 338, 343 (3d
Cir. 2000). Absent a choice of law clause in
a contract, as here, the governing law generally
is the law of the forum where the contract is executed and performed. Valdesa
Compania Naviera, S.A. v. Frota Nacional de Petroleiros, 348 F.2d 33, 38
(3d Cir. 1965); see also Restatement (Second) of
Conflict of Laws 188(3) (1971). Accordingly,
New Jersey law governs the present
policy, which was drafted, signed, and delivered
between New Jersey corporations within New Jersey.
In New Jersey, the terms of an insurance policy,
absent ambiguity, should be
given "their plain ordinary meaning." Zacarias
v. Allstate Ins. Co., 775 A.2d 1262, 1264
(N.J. 2001). The Fraudulent Bills of Lading
Clause at issue here is not ambiguous, and
we will accord the terms of that clause their
plain meaning. The clause states:
This policy also covers loss of or damage
to the property insured occasioned through the acceptance by the Insured
or Insured's agent or customers or consignees or others of Fraudulent Bills
of Lading or Shipping Receipts.
Thus, for there to be coverage under the clause,
Litho 21 was required to show that (1) the insured property was lost or
damaged; (2) the bill of lading was fraudulent; and (3) the loss or damage
was caused by the fraudulent bill's acceptance. Assuming without deciding
that there was a loss of or damage to the Heidelberg printing press, there
are no facts which even suggest that the bill of lading was fraudulent
or that its acceptance caused the harm.
First, Litho 21 did not show that the bill
of lading issued by A. Hartrodt (UK) Ltd.
was drafted inaccurately with the specific
intent to deceive. At most, it merely alleged that the bill of lading might
have been part of a fraudulent scheme by A. Hartrodt to substitute a different
printing press. When and where precisely the shipper or, for that matter,
anyone else in the commercial chain did or could have accomplished this
during the press's sea voyage is not mentioned. Instead, Litho 21 lists
all of the inaccuracies contained in the bill of lading and argues that
these inaccuracies, given the circumstances, reveal fraud. We disagree.
Simply because a fraud happened somewhere at sometime does not necessarily
mean that the bill of lading was fraudulent, as it must be for coverage
under the Fraudulent Bills of Lading Clause. Litho 21 had the burden of
producing facts sufficient to raise a genuine issue as to the fraudulent
nature of the bill of lading and the shipper's fraudulent intent. It did
not do so.
Second, Litho 21 did not show that any purported
loss of or damage to the insured
property was caused by the acceptance of
the bill of lading, as is also required by the
Fraudulent Bills of Lading Clause. Litho
21 asserts that the press it received was
severely worn, rusted, and fire-damaged.
There is utterly no indication, however, that
this damage occurred because of any inaccuracies
much less any fraud in the bill of
lading, and it appears that the deficiencies
in the press preexisted the issuance of the bill of lading by A. Hartrodt.
Indeed, the serial number on the bill of lading was that of the defective
Because Litho 21 failed to articulate facts
sufficient to invoke coverage under the
Fraudulent Bills of Lading Clause, we will
affirm the judgment of the District Court.
TO THE CLERK OF THE COURT:
Kindly file the foregoing Memorandum Opinion.
/S/ Maryanne Trump Barry