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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. )
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:
1
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 2 of 8
1. This case arises out of a claim for insurance benefits made by defendant C & G
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.
and existing under the laws of the State of Pennsylvania. At all times pertinent to this action, it
the laws of the State of Pennsylvania. At all times pertinent to this action, it was authorized to
the laws of the State of Ohio. At all times pertinent to this action, it was authorized to conduct
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.
2
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 3 of 8
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
the laws of the State of New York. At all times pertinent to this action, it was authorized to
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
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
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 Court’s 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
15. The District and Division in which this action has been filed is proper since the
contract of insurance, upon which the defendant’s claims are based, was issued by the
3
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 4 of 8
Underwriters for delivery in Mobile County, Alabama and C & G Boat Work’s principal place of
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
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
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).
Crescent Towing to determine the cause, nature and extent of engine damage to Hull 117’s
engines. The findings were summarized as follows: “The main bearings were badly scored on
4
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 5 of 8
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
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.).
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
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
24. Because of the improper welds 1, the lubrication system was not completely
cleaned. As a result, metal particles were introduced into the engines through the lubrication
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
5
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 6 of 8
25. The Underwriters have mutually agreed to submit this coverage dispute to the
The Underwriters issued policy number 3 MNB 1944-2010 to C & G Boat Works, which
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:
Further, Underwriters shall not pay for any loss, damage or expense caused or
arising in consequence of:
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.
2
The 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.
3
Exhibit 7.
6
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 7 of 8
...
(Exhibit 7, pp. 5,10).
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
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
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.
7
Case 1:11-cv-00283-KD-N Document 1 Filed 06/02/11 Page 8 of 8
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
d. The Underwriters requests such other, further or additional relief to which they
OF COUNSEL:
CHRISTIAN & SMALL, LLP
505 North 20th Street, Suite 1800
Birmingham, Alabama 35203
(205) 795-6588
DEFENDANT’S ADDRESS
TO BE SERVED BY CERTIFIED MAIL
8
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aJS44 (Rev. I2107) CIVI COVER SHEET tr-
bylocalruleso|court'Thisform,approvedbytheJudiciaI
the civil docket sheet, (sEE INSTRUCTIONS oNTHEREVERSEoFTHEFoRM,)
(b) County ofResidence ofFirst Listed Plaintiff County of Residence of First Listed Defendant
(EXCEPT IN U,S. PLAINTIFF CASES) ON U.S. PLAINTIFF CASES ONLY)
NOTE: lN LAND CONDEMNATION CASES, USE THE LOCATION OF THE
LAND INVOLVED.
(c) Attornev's (Firm Nme, Address, and Tclephone NurlbeJ) Attomeys (If Krown)
LaBdii6 S:'Aivid, ibhn WJohns-oir, l[; Ch'iistian & Small LLP, 505 N 20th St,
Birmingham, Alabama 35203; (205) 795-6588
II. BASIS OF JURISDICTION (Place m "X" in one Box only) III. CITIZENSHIP OF PRINCIPAL PARTIESelace an "X" in one Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
DI U.S. Goveurment O3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Govement Not a Party) Citizen ofThis State O I El ! llcorporate! o/ Principal PlacL: J 4 04
of Business ln This State
IV. NAT
FI I l0 lnsurance PERSONALINJURY PERSONALINJURY 610 Agriculture 422 Appaal 28 USC 158 4O0 State Reapportionment
U 120 Mdne 310 Airplane D 362 Personal lnjury - 620 Other Food & Drug 423 Withdrawal 0
4 I Antitrust
D 130 Miller Act 315 Airylane Product Med, Malpractioe 625 Drug Related Seizure 28 USC 157 430 Bmks md Bmking
o 140 Negotiable lnstrument Liability D 365 Personal lnjury - ofPropeny 2l USC 881 450 Commeroe
O 150 Recovery of Overyalment 0 320 Assault, Libel & Produot Liability D 630 Liquor Laws 460 Deportation
& Enforcernent of Slander n 368 Asbestos Personal D 640 R.R. & Truck 470 Racketeer Influenced ald
D I5l MedicseAct 3 330 Federal Employors' Itrjuty Product n 650 Airline Regs. 0 830 Patent Compt Organizations
I 52 Recovery of Defaulted Liability Liability O 660 Occupational 0 840 Trademark 480 Consurner Credit
Student Loans O 340 Marine PERSONAL PROPERTY Safety/Health D 490 Cabls/Sat TV
(Excl. Veterms) O 345 Mdne Product D 370 Other Fraud D 690 Other D 8 l0 Selective Serryice
CitetheU,s.CivilStatuteunderwhichyouarefiling (Donotcitejurisdictionalstatutesunlessdiversity):
VI. CAUSE OF ACTION Brief description of cause:
VII. REQUESTED IN 0 cuecr IF THIS IS A clAss ACTION DEMAND $ CHECK YES only ifdernanded in complaint
'000 exclusive of
COMPLAINT: UNDER F.R.C.P.23 Exceeds $75 JURY DEMAND: 0 Yes dNo
vrrr. RELATED CASE(S) (.ee
._
lnsnctrons): interest & Costs
ruDGE DOCKET NUMBER
lF ANY
SICNATURE ATTORNEY OF RECORD
,l7375-4
Our File No.
Pleose find ottoched o Civil Cover Sheet regording o suit my firm intends io file
todoy. 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, ond
TRAVELERS INSURANCE COMPANY
Represented by LoBello Alvis ond John W Johnson, llwith Christion & Smoll LLP
Defendonf:
C & G BOAT WORKS, INC.
Pleose chorge our firm's credit cord for the $350 filing fee. The number is os
follows:
479804200097 8924r Exp.8/12; SIC # 458
Should you hove ony questions, pleose do not hesitoie fo contoct me of the number
below or by response to this emoil.
Sincerely,
Melonie Byrd