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Pringle v. Water Quality Insurance Syndicate

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


September 15, 2009

JOHN P. PRINGLE, BANKRUPTCY TRUSTEE FOR THE ESTATE OF SAN PEDRO BOAT WORKS, INC., PLAINTIFF,
v.
WATER QUALITY INSURANCE SYNDICATE, AN UNINCORPORATED SYNDICATE ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK; ENVIRONMENTAL POLLUTION GROUP, INC., A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK; CERTAIN SOLVENT LLOYD'S UNDERWRITERS THAT SUBSCRIBED TO ENVIRONMENTAL POLLUTION GROUP, INC. POLICY NOS. 01-02001, 02-02001, 03-02001, 04-02001, 05-02001 AND 06-02001, UNKNOWN FOREIGN ENTITIES ORGANIZED UNDER THE LAWS OF THE UNITED KINGDOM; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.

The opinion of the court was delivered by: The Hon. Dean D. Pregerson U.S. District Judge

JUDGMENT AND RELATED CROSS-ACTIONS.

JUDGMENT

Then-Plaintiff SAN PEDRO BOAT WORKS, INC. ("SPBW") filed a motion for summary judgment herein on August 8, 2006 against Defendant WATER QUALITY INSURANCE SYNDICATE ("WQIS") regarding WQIS' alleged duty to defend SPBW under its insurance policies. In the interest of judicial economy, the court decided the question of rescission first, and converted SPBW's motion into a motion for summary judgment by WQIS on the validity of its rescission.

On August 6, 2009, the court issued its Order Granting Summary Judgment to WQIS and EPG; Denying Plaintiff's Motion For Summary Judgment. In it the court granted WQIS' motion for summary judgment on the basis that SPBW did not meet its obligations under the doctrine of uberrimae fidae when it failed to disclose material facts to WQIS, which if known, would have affected WQIS' underwriting decisions regarding SPBW. Specifically, SPBW did not disclose that it had been under investigation by the Los Angeles Health Department and Hazardous Materials Control Program for several years regarding environmental pollution at SPBW's berth 57. SPBW's failure to disclose material facts entitled WQIS to rescind its policy, and to summary judgment herein. The court also found that WQIS never waived its right to rescind the marine insurance policies it issued to SPBW and that this rescission was not time-barred or barred by the doctrine of estoppel.

Defendants CERTAIN SOLVENT LLOYD'S UNDERWRITERS THAT SUBSCRIBED TO ENVIRONMENTAL POLLUTION GROUP, INC. POLICY NOS. 01-02001, 02-02001, 03-02001, 04-02001, 05-02001 AND 06-02001 ("Certain EPG Underwriters") also moved for summary judgment herein on September 18, 2006. The basis for the motion was that SPBW has no standing in Case No. CV 04-08495 DDP, because SPBW has been through bankruptcy and it has been determined by the bankruptcy court that SPBW has no scheduled assets which are of value to the bankruptcy estate. Since Certain EPG Underwriters' policies issued to SPBW are indemnity and not liability policies, and since SPBW has paid no losses, SPBW has no redressable injury in fact and lacks standing to bring this action. SPBW has not shown, as it must, that some funds were actually paid either by SPBW or on its behalf. The same applies to the Intervenor CITY OF LOS ANGELES. There is no loss for Certain EPG Underwriters to indemnify. Therefore now-Plaintiff/Trustee JOHN P. PRINGLE lacks standing to bring claims against Certain EPG Underwriters, and they are entitled to summary judgment.

IT IS HEREBY ORDERED that judgment be formally entered in favor of WQIS and Certain EPG Underwriters, and that this case be and the same hereby is dismissed.

20090915

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