northern assurance company of america et al v. c&g boat works, inc. complaint

8/6/2019 NORTHERN ASSURANCE COMPANY OF AMERICA et al v. C&G BOAT WORKS, INC. Complaint

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IN THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF ALABAMA,

SOUTHERN DIVISION

NORTHERN ASSURANCE )

COMPANY OF AMERICA, NATIONAL )UNION FIRE INSURANCE COMPANY )OF PITTSBURGH, PA, INDEMNITY )INSURANCE COMPANY OF NA, )GREAT AMERICAN INSURANCE )COMPANY, AGCS MARINE )INSURANCE COMPANY, ESSEX )INSURANCE COMPANY, CATLIN ) CASE NO.: ______________________INSURANCE COMPANY, ZURICH )AMERICAN INSURANCE COMPANY, )And TRAVELERS INSURANCE )

COMPANY, ))Plaintiffs, )

)vs. )

)C & G BOAT WORKS, INC. )

)Defendant. )

COMPLAINT FOR DECLARATORY JUDGMENT

COME NOW Northern Assurance Company of America (NAC), lead underwriter and

on behalf of National Union Fire Insurance Company of Pittsburgh, PA, Indemnity Insurance

Company of NA, Great American Insurance Company, AGCS Marine Insurance Company,

Essex Insurance Company, Catlin Insurance Company, Zurich American Insurance Company

and Travelers Insurance Company (the Underwriters), subscribing each for itself and not for

the other, severally and not jointly, and for their Complaint for Declaratory Judgment, hereby

states as follows:

Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 1 of 8


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I. Parties, Jurisdiction and Venue

1. This case arises out of a claim for insurance benefits made by defendant C & G

Boat Works under a policy issued by the Underwriters.

2. NAC is a company organized and existing under the laws of the State of

Massachusetts, with its principal place of business located in the State of Massachusetts. At all

times pertinent to this action, it was qualified to conduct business in the State of Alabama.

3. National Union Fire Insurance Company of Pittsburgh, PA is a company organized

and existing under the laws of the State of Pennsylvania. At all times pertinent to this action, it

was authorized to conduct business in State of Alabama.

4. Indemnity Insurance Company of NA is a company organized and existing under

the laws of the State of Pennsylvania. At all times pertinent to this action, it was authorized to

conduct business in State of Alabama.

5. Great American Insurance Company is a company organized and existing under

the laws of the State of Ohio. At all times pertinent to this action, it was authorized to conduct

business in State of Alabama.

6. AGCS Marine Insurance Company is a company organized and existing under the

laws of the State of Illinois. At all times pertinent to this action, it was authorized to conduct


7. Essex Insurance Company is a company organized and existing under the laws of

the State of Delaware. At all times pertinent to this action, it was authorized to conduct business

in State of Alabama.



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8. Catlin Insurance Company, Inc. is a company organized and existing under the

laws of the State of Texas. At all times pertinent to this action, it was authorized to conduct


9. Zurich American Insurance Company is a company organized and existing under

the laws of the State of New York. At all times pertinent to this action, it was authorized to

conduct business in State of Alabama.

10. Travelers Insurance Company is a company organized and existing under the laws

of the State of Connecticut. At all times pertinent to this action, it was authorized to conduct

business in the State of Alabama.

11. C & G Boat Works is a corporation organized and existing under the laws of the

State of Alabama, with its principal place of business located in the State of Alabama.

12. This is an action brought for declaratory judgment pursuant to 28 U.S.C. 2201

and 2202 and Rule 57 of the Federal Rules of Civil Procedure.

13. Federal subject matter jurisdiction exists in this matter pursuant to 28 U.S.C.

1332 because the Underwriters are diverse from the Defendant and the amount in controversy,

as shown below, exceeds this Courts minimum jurisdictional limits of $75,000, exclusive of

interest and costs, when an action is based upon diversity of citizenship. (See Exhibit 1

11/22/2010 Corr.).

14. There is a present justiciable controversy which requires this Honorable Court to

declare the rights, remedies, obligations and liabilities of these parties with respect to a policy of

insurance issued by the Underwriters.

15. The District and Division in which this action has been filed is proper since the

contract of insurance, upon which the defendants claims are based, was issued by the



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Underwriters for delivery in Mobile County, Alabama and C & G Boat Works principal place of

business is located in Mobile County, Alabama.

II. Facts of Claim

16. C & G Boat Works, Inc. contracted with Crescent Towing to construct Hull 117, a

tug boat. As part of the contract, C & G Boat Works installed two GE 6L250 diesel engines

(the main engines) in Hull 117.

17. On or about September 30, 2010, C & G Boat Works conducted sea trials of Hull

117. On sea trials, the port main engine experienced high bearing temperatures. The main

engines were inspected following the high temperatures.

18. During inspection, the main bearings were pulled and showed signs of damage

due to metal and particulate contamination on both the port and starboard main engines.

19. Further inspection in the presence of C & G customer Crescent Towing, GE and

C & G Boat Works of the lower end bearings and crankshaft journals of the starboard engine

revealed damage similar to the damage found in the lower end of the port engine. The lube oil

system piping was bore scoped, reveal[ing] significant amounts of various metal particles . . .

present in random areas within the piping which appeared to . . . be attributable to torch cutting,

arc welding and mechanical grinding that had previously been carried out on the piping sections

as they were being assembled. (See Exhibit 2 - W.T. Ames & Associates Corr., December 3,

2010, p. 2 of 5).

20. Busch and Associates, a metallurgical engineering consultant, was contacted by

Crescent Towing to determine the cause, nature and extent of engine damage to Hull 117s

engines. The findings were summarized as follows: The main bearings were badly scored on



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both the port and starboard engines. The scoring of the bearings was caused by aluminum oxide

particles, steel shavings, weld spatter, and, to a lesser extent silicon oxide. These contaminants,

in all probability, came from the oil lines provided by C & G Boat Works, Inc. as a result of

improper cleaning of the oil lines after fabrication. . . . One main and one rod journal on the

starboard engine were grooved and scored from the abrasive particles. In all probability, all were

damaged, requiring removal of the crankshaft from the engine. (See Exhibit 3 - Busch and

Associates, Inc. Corr., Nov. 9, 2010).

21. On December 7, 2010, NAC advised C & G Boat Works that the loss was

excluded by the policy, citing the provisions referenced herein, infra. (See Exhibit 4 12/7/2010

NAC Corr.).

22. Following the disclaimer, C & G submitted a memorandum to NAC, requesting

reconsideration of the claim, primarily based on the fact that its employee responsible for

construction and installation of the lubrication oil piping system deviated from construction

protocol and improperly welded certain joints in the piping system. (See Exhibit 5 1/7/2011 C

& G Memorandum to Underwriters).

23. C&G subsequently submitted written statements from four persons which support

the Underwriters position that the procedures used were faulty and which statements are

consistent with Exhibit 5. (See Exhibit 6 Statements of Kenneth Sprouse, Travis Hunt, Earl

LaFave and Daryl Boutwell).

24. Because of the improper welds1

1

Welding involves fusing two materials together by applying an electrical current of electricity to the materials.

Stick welding and tungsten inert gas (TIG) welding are two basic methods of welding. In stick welding, materials are

, the lubrication system was not completely

cleaned. As a result, metal particles were introduced into the engines through the lubrication

system constructed by C & G Boat Works, resulting in severe damage.



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25. The Underwriters have mutually agreed to submit this coverage dispute to the

Court. The parties stipulate that there is a present, justiciable controversy.

III. The Insurance Policy2

The Underwriters issued policy number

3

welded when a filler metal is melted between them. TIG welding effectively welds materials with or without the

use of filler metals. The employee made a root pass weld (first weld) using a stick welder rather than a tungsten

inert gas (TIG) weld. The TIG weld would have resulted in far less slag or spatter. The spatter, caused by the

stick weld, could not be sufficiently cleaned in the process of cleaning the piping system through which lubrication

oil travels. The metal particles resulting in the damage to the engines were from this stick weld due to the

particles passing through the lubrication system into the engine as the oil flowed through the system.

MNB 1944-2010 to C & G Boat Works, which

provided, in pertinent part:

PART I HULL SECTION

This policy insures against all risks of physical loss of or damage to the Vessel

occurring during the currency of this Policy, except as hereinafter provided.

. . .

Addendum No. 2

1. It is hereby understood and agreed that lines 61 and 62 of the PART I HULL

SECTION, HULL RISKS are deleted and the following substituted therefore:

Subject to the provisions of exclusion (b) of the following paragraph, in

the event that faulty design of any part of parts should cause physical

loss of or damage to the Vessel this insurance shall not cover the cost

or expense of repairing, replacing or renewing such part of parts, nor

any expenditure incurred by reason of a betterment or alteration inthe design. Faulty design shall include, but not be limited to, error,

omissions or deficiencies in plans, drawings, specifications or

calculations.

Further, Underwriters shall not pay for any loss, damage or expense caused or

arising in consequence of:

2The Underwriters reserve their right to assert any other applicable conditions, terms, coverages or exclusions

contained in the policy, regardless of whether cited herein. By specifically reciting the provisions above, the

Underwriters do not waive any other coverage defenses, whether in fact, law or contract. The policy is adopted

and incorporated by reference as if set forth fully herein.

3Exhibit 7.



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a) Faulty workmanship, or the installation or use of improper or

defective materials . . .

b) Faulty production or assembly procedures even if constituting faulty

design.

. . .

(Exhibit 7, pp. 5,10).

IV. COUNT ONE DECLARATORY JUDGMENT

26. The Underwriters adopt and incorporate by reference the foregoing as if set forth

fully herein.

27. By stating the grounds for relief requested herein, the Underwriters reserve the

right to assert any other term, condition or exclusion contained in the policy, which is adopted

and incorporated by reference as if set forth fully herein.

28. C & G Boat Works has made a claim for insurance benefits as a result of the

above-described damage/incidents.

29. An actual controversy exists as to whether the policy provides coverage such that

a declaration by this Honorable Court of the parties respective rights and obligations under the

contract of insurance is necessary. Specifically, a controversy exists with respect to the damage

to Hull 117s engines are excluded by Addendum 2, as set forth herein.

30. A real, bona fide controversy exists between the parties with regard to the duties

and obligations under the policy as to the existence of coverage for the claims submitted by C &

G Boat Works.

WHEREFORE, the Underwriters pray:

a. This Honorable Court take jurisdiction of this cause;



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b. This Honorable Court order, adjudge and decree that there is a bona fide

controversy between the parties as to their legal rights, duties, status and liability;

c. That upon final hearing of this cause, this Honorable Court will declare that no

coverage is provided under the applicable policy of insurance; and

d. The Underwriters requests such other, further or additional relief to which they

may be entitled, whether or not specifically requested herein.

Respectfully submitted on this the 2nd day of June, 2011.

/s/ LaBella S. Alvis _John W Johnson, IILaBella S. AlvisAttorneys for the Underwriters

OF COUNSEL:CHRISTIAN & SMALL, LLP505 North 20

thStreet, Suite 1800

Birmingham, Alabama 35203(205) 795-6588

DEFENDANTS ADDRESSTO BE SERVED BY CERTIFIED MAIL

C & G Boat Works, Inc.P. O. Box 1725Mobile, AL 36633



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Case 1:11-cv-00283-KD-N Document 1-1 Filed 06/02/11 Page 1 of 5


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\\ - 3q3-+D -Nbylocalruleso|court'Thisform,approvedbytheJudiciaIthe civil docket sheet, (sEE INSTRUCTIONS oNTHEREVERSEoFTHEFoRM,)

aJS44 (Rev. I2107) CIVI COVER SHEET tr-l. (a) PLAINTIFFSNorthein Assurance Company of Notlh America, et al

(b) County ofResidence ofFirst Listed Plaintiff(EXCEPT IN U,S. PLAINTIFF CASES)

(c) Attornev's (Firm Nme, Address, and Tclephone NurlbeJ)LaBdii6 S:'Aivid, ibhn WJohns-oir, l[; Ch'iistian & Small LLP, 505 N 20th St,Birmingham, Alabama 35203; (205) 795-6588

DEFENDANTSC & G Boat Works, Inc.

County of Residence of First Listed DefendantON U.S. PLAINTIFF CASES ONLY)

NOTE: lN LAND CONDEMNATION CASES, USE THE LOCATION OF THELAND INVOLVED.Attomeys (If Krown)

II. BASIS OF JURISDICTION (Place m "X" in one Box only) III. CITIZENSHIP OF PRINCIPAL PARTIESelace an "X" in one Box for Plainti(For Diversity Cases Only) and One Box for Defendant)D I U.S. GoveurmentPlaintiffO 2 U.S. CovetrunentDeferdmt

IV. NAT

O 3 Federal Question(U.S. Govement Not a Party)E 4 Diversity

(lndicate Citizership ofPuties in lten lll)

Citizen ofThis State

CitizenofAnotherstate d2 J 2Citizen or Subject ofa 0 3 O 3

PTF DEFO I El ! llcorporate! o/ Principal PlacL:of Business ln This StatePTF DEFJ 4 04

IncorporatedandPrincipalPlace O 5 O 5ofBusiness ln Another StateForeignNarion n 6 O 6

FIUDoOD

140 Negotiable lnstrument150 Recovery of Overyalment& Enforcernent ofI5l MedicseActI 52 Recovery of Defaulted

Student Loans(Excl. Veterms)0 I53 Recovety ofoveryaymentofVeteran's Be[efits160 Stockholders' Suits190 Other Conhacl195 Contract Product Liability

I l0 lnsurance120 Mdne130 Miller Act

4O0 State Reapportionment4 I 0 Antitrust430 Bmks md Bmking450 Commeroe460 Deportation470 Racketeer Influenced aldCompt Organizations480 Consurner Credit490 Cabls/Sat TV8 l0 Selective Serryice850 SecuritiEVCornmodities/

Exchmge875 Customer Challengel2 usc 34r0890 Other Statutory Actions891 Agricultural Acts892 Eoonomic Stabilization Ac893 Ervironmental Matters894 Energy Allocation Act895 Freedom of lnformationAct9O0Appeal of Fee Detenninatio

Under Equal Accessto iustice950 Consdrutionality ofState Statutes

DDoDoDonD

tr0ooO 210 Lmd CondetmationD 220 ForeclosureO 230 Rent Lease & EjectmentO 240 Torts to LmdD 245 Torl Product Liabiliry0 290 All Other Real Property

610 Agriculture620 Other Food & Drug625 Drug Related SeizureofPropeny 2l USC 881D 630 Liquor LawsD 640 R.R. & Truckn 650 Airline Regs.O 660 Occupational

Safety/HealthD 690 Other

422 Appaal 28 USC 158423 Withdrawal

28 USC 157PERSONALINJURY PERSONALINJURY310 Airplane D 362 Personal lnjury -315 Airylane Product Med, MalpractioeLiability D 365 Personal lnjury -0 320 Assault, Libel & Produot LiabilitySlander n 368 Asbestos Personal3 330 Federal Employors' Itrjuty ProductLiability LiabilityO 340 Marine PERSONAL PROPERTYO 345 Mdne Product D 370 Other FraudLiability 3 371 Truth in Lending350MotorVehicle f, 3S0OtherPersonal355 Motor Vehiole Property Dmage

Product Liability 0 385 Propetty Damage360 Other Pe6onal Product Liability

0 830 Patent0 840 Trademark

861 HtA (t395f0862 Black Lung (923)863 DIWC/DIWW (40s(g))864 SSID TitIE XVI

ll 7l 0 Fair Labor StmdardsAct720 Labor/Mgrnt. Rclations730 Labor/Mgmt.Reporting& Disolosure Act740 Railway Labor Act790 Othcr Labor Litigation791 Empl. Ret. lnc,

Secuity Act870 Taxes (U.S. Plaitrtiff

or Defendmt)871 IRS-Thnd Ptrty

26 USC 7609

441 Voting442 Employment443 Housing/Accolmodations444 Welfae445 Aner. w/Disabilities -Employment446 Amer. w/Disabilities -

Other0 440 Other Civil Rights

510 Motions to VacateSentetrca

Habeas Corpus:530 Genefal535 Death Penalty540 Mandarnus & Othel550 Civil Rights555 Prison Condition

463 Habcas Corpus -Alien Detainee0 465 Other lmmigmtionActions

V. ORIGIN (Plaoe m "X" in one Box only)El Original D 2 Removedfrom tr 3 RemandedfromProceeding State Court Appellate Court D 4 Reinstated or OReopened , Transfened from n 6- anolner olstncl - - Multidistrict J 7Litigation

CHECK YES only ifdernandedJURY DEMAND: 0 Yes

VI. CAUSE OF ACTIONCitetheU,s.CivilStatuteunderwhichyouarefiling (Donotcitejurisdictionalstatutesunlessdiversity):Brief description of cause:

VII. REQUESTED INCOMPLAINT: 0 cuecr IF THIS IS A clAss ACTIONUNDER F.R.C.P.23 Exceeds $75 DEMAND $'000 exclusive ofin complaintdNo

vrrr. RELATED CASE(S) ._lF ANY (.ee lnsnctrons): ruDGE interest & CostsDOCKET NUMBER06t01t2011

SICNATURE/s/ LaBella

ATTORNEY OF RECORDS. Alvis, Esq.

FOR OFFICE USE ONLYRECEIPT# AMOUNT APPLYINC IFP MAG. ruDGE



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"Melanie R. Byrd"061021201'l 09:30 AM

"efi le_newcases@a lsd. uscou rts. gov"Jeff Odom , Karen Jones

To

bccSubject

1 attachmentliq,..i;.:39981 - Civil Cover Sheet C&G.PDF

Our File No. ,l7375-4Decr Sir or Modom:Pleose find ottoched o Civil Cover Sheet regording o suit my firm intends io filetodoy. The porties involved ore os follows:Plqinfitfs:NORTHERN ASSURANCE COMPANY OF AMERICA,NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA,INDEMNITY INSURANCE COMPANY OF NA,GREAT AMERICAN INSURANCE COMPANY,AGCS MARINE INSURANCE COMPANY,ESSEX INSURANCE COMPANY,CATLIN INSURANCE COMPANY,ZURICH AMERICAN INSURANCE COMPANY, ondTRAVELERS INSURANCE COMPANY


northern assurance company of america et al v. c&g boat works, inc. complaint

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