Amount:
$3.1 Million Recovery

Case Name:
U.S. FIRE INSURANCE COMPANY v.
INTERNATIONAL CONSOCIATES, INC.

Case Number:
No. 86-1608

Plaintiff:
U.S. Fire Insurance Company

Defendant (Represented by Harvey R. Levine):
International Consociates, Inc.

Facts and Background:
1984: Defendant International Consociates, Inc. (ICI)
purchased a tugboat, the Viking. In March 1984 it purchased
a $250,000 hull policy on the Viking from U.S. Fire through the
marine insurance brokerage of W.K.P. Wilson & Sons. At the time
the insurance policy was obtained, the Viking’s intended use was
to tow scrap ships from various locations in Central and South
America to destinations which included Central and South America
and Africa. The Viking made two successful tows in Central
America, and on the third tow encountered a tropical storm with
high seas, and sank off San Andreas Island near Honduras. ICI
made a claim under the policy for the total loss. U.S. Fire
denied the claim and then brought a declaratory relief action
against its insured. ICI counterclaimed for policy benefits,
breach of the covenant of good faith and fair dealing, and
violations of sections of Cal.Ins.Code 790.03 (h).

Plaintiff’s Contentions:
Claimed ICI concealed and/or misrepresented material facts at the
time the policy was underwritten, including that ICI had prior
marine losses, no experience in towing vessels, and that the
captain of the Viking had no U.S. master’s license and his
British Honduran license was a forgery.

Defendant’s Contentions:
ICI did not conceal or misrepresent facts and that any facts
allegedly concealed or misrepresented were not material to the
risk. When U.S. Fire underwrote the policy, they asked no
questions regarding the license of the captain of the vessel. ICI
alleged Wilson was negligent in procuring the policy and
conspired with U.S. Fire to violate Cal.Ins.Code 790.03 (h) and
deny ICI policy benefits. Wilson contended it was not negligent
in procuring the policy. Also, it was the sole agent of ICI and
could not be held liable for conspiring to violate the Insurance
Code Section.