Admiralty/Marine Insurance

Sovereign Recycling International, Inc. v. New York Marine and General Insurance Co., 2001 U.S. Dist LEXIS 2199 (S.D.N.Y. March 6, 2001) involved a declaratory judgment action to recover approximately $285,000 in damages plus $500,000 in punitive damages for losses allegedly covered under an open cargo policy. Underwriters were successful in moving for summary judgment dismissing the case on the grounds that the insured failed to prove a loss coming within the scope of the policy. Plaintiffs shipped scrap metal to a Russia to be recycled into cobalt. The cobalt was then shipped to a warehouse designated by plaintiff in a Rotterdam. The cobalt was then sold to a company in the U.S. After plaintiffs shipped the cobalt to the United States, plaintiffs' purchaser discovered that a portion of the cobalt was missing. The court held that defendant was not liable, since plaintiffs did not make the required declarations of the voyages from Russia to Rotterdam or to the warehouse, and plaintiffs failed to show that the quantity of cobalt delivered was less than that removed from the warehouse. Plaintiffs' declaration of the voyages to a recycling company in Russia, and from the warehouse, indicated that plaintiff was not declaring a round trip, and the sheer volume of shipments from the foreign company to the warehouse belied plaintiffs' claim that their failure to declare the voyages was unintentional error. Further, plaintiffs' failure to inspect the cobalt at the warehouse precluded showing that the amount delivered was less than the amount shipped from the warehouse as required to invoke defendant's policy coverage.