Sentry Select Insurance v. Royal Insurance Co. of America

Appellants and cross-appellees Kelly-Ryan, Inc., Sentry Select Insurance Company, and Lloyd’s Syndicates 588, 861, and 1209 (collectively, “Kelly-Ryan and the P & I Underwriters”) appeal the district court’s summary judgment in favor of ap-pellee and cross-appellant Royal Insurance Company (“Royal”). The district court held that Kelly-Ryan is not entitled to indemnity from Royal under the Marine Coverage Endorsement (“MEL”) to the Big Shield Commercial Catastrophe Liability Insurance Policy (“Big Shield policy”) issued by Royal, because Kelly-Ryan breached its duty of uberrimae fidei (utmost good faith) to Royal under federal maritime law.

Kelly-Ryan sought indemnification from Royal after settling a Jones Act suit, 46 U.S.C. § 30104 (a) (formerly codified as 46 U.S.C. § 688 (a)), with one of its maritime employees who was electrocuted during the delivery of a prefabricated house in remote Alaska. The district court held that, under federal maritime law, the doctrine of uberrimae fidei required Kelly-Ryan to disclose to Royal the material fact that employees covered under the MEL endorsement routinely worked with electrical power lines. Kelly-Ryan had not made that…