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BERKELEY v. FIREMAN'S FUND INS. CO.

August 28, 1975

Roland Frank Breckenbury BERKELEY et al., Plaintiffs,
v.
FIREMAN'S FUND INSURANCE COMPANY, a corporation, and Eagle Star Insurance Company, a corporation, Defendants



The opinion of the court was delivered by: BEEKS

 On December 12, 1968, the crab fishing vessel NORTH SEA broke apart while encountering gale winds and mountainous seas, and was lost off Sennet Point, Alaska. Poul Henning Beer-Hansen and Elmer Thomas Olsen, crew members, and Edwin T. Grabowski, master, perished. Benjamin Golodoff, crew member, survived.

 At the time of the casualty the NORTH SEA was owned by Northern Fishing & Trading Company, Inc. (Northern). It had been demised to Aleutian King Crab, Inc. (Aleutian), and it was being operated by Grabowski under a sub-bareboat charter from Aleutian. Following the loss of the vessel, Northern, Aleutian and the executrix of Grabowski's estate joined in a petition for exoneration from or limitation of liability. *fn1" Golodoff and the personal representatives of the estates of Hansen and Olsen filed claims, subsequently settled, in the limitation action.

 The present case, involving interpretation of marine insurance contracts, is here under the admiralty jurisdiction. *fn2" At issue is determination of the ultimate responsibility for the costs of defense and settlement of the Hansen, Olsen and Golodoff claims. The several plaintiffs herein (Lloyd's) defended the claims, negotiated and paid the settlements. The Hansen claim was settled for $112,500, of which plaintiffs paid $92,500. The Olsen claim was settled for $125,000, which Lloyd's paid in full. The Golodoff claim, also paid in full by Lloyd's, was settled for $35,000. Lloyd's incurred attorneys' fees of $51,931.21 in the defense of the three claims, and now seeks reimbursement from Fireman's Fund Insurance Company (Fireman's Fund) and Eagle Star Insurance Company (Eagle Star) for the costs of defense and settlement.

 The matrix of insurance coverage from which this litigation is spawned may be described as follows. On February 1, 1968 underwriters at Lloyd's undertook employer's liability insurance. Insurance policies issued by Lloyd's are not on record herein. The record does, however, contain certificates numbered 63587 and 63589-91 issued by Voigt, Walker & Co., Inc. which evidence a layered scheme of insurance underwritten by Lloyd's, and which the parties agree represent Lloyd's coverage. These certificates are hereinafter referred to collectively as the "Lloyd's policy." Listed as assureds under the Lloyd's policy at the time of the loss of the NORTH SEA were Northern as owner, Aleutian as charterer, and Grabowski as sub-bareboat charterer of the NORTH SEA. The NORTH SEA, accordingly, was listed in the schedule of vessels.

 The first layer of the Lloyd's policy, certificate No. 63587, contains a limit of liability of $10,000 on account of bodily injuries to or death of one or more persons as a result of any one accident. Also issued were certificates of additional coverage, Nos. 63588-91. Plaintiffs herein are underwriters of the top three layers, certificates Nos. 63589-91, with limits of $430,000/$530,000 in excess of $20,000/$20,000. Although the record does not conclusively so indicate, it may be presumed for purposes of this opinion that the difference between the amount of the Hansen settlement and the amount paid thereunder by plaintiffs was in fact paid by underwriters of certificates Nos. 63587-88, who chose not to join in this lawsuit.

 Lloyd's policy, in full force and effect at the time of the loss of the NORTH SEA, provided:

 
"Underwriters do hereby agree with the employer named herein and referred to as the 'Assured', in the event a member of the crew of the fishing vessel named herein suffering accidental bodily injuries, including death resulting therefrom:
 
"1. TO INSURE said Assured against loss by reason of the liability imposed upon him by law for damages on account of such injuries and to pay and satisfy judgments finally establishing the Assured's liability in actions defended by the Underwriters, all subject to the limits of liability provided for herein; . . .
 
* * *
 
"NO. 7 ENDORSEMENT
 
"It is understood and agreed that the following specified clauses of the Fishing Insuring Agreements form attached hereto are amended to read as follows:
 
" Paragraph 1. TO INSURE said Assured against loss by reason of the liability imposed upon him as an employer for damages on account of such injuries and to pay and satisfy judgments finally establishing the Assured's liability in actions defended by the Underwriters, all subject to the limits of liability provided for herein. It is expressly understood that any liability incurred by the Assured under any Workmen's Compensation Act is completely excluded under this certificate unless specifically endorsed hereon; . . ."

 Lloyd's also agreed, in the event of personal injuries or death suffered by a member of the crew of the fishing ...


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