Eighth Circuit Rules Insurer Must Pay Importer for Goods Damaged at Container Terminal
The 8th U.S. Circuit Court of Appeals affirmed a lower court decision awarding the Amera-Seiki Corporation insurance money for a piece of industrial equipment it imported that was damaged at the Port of Los Angeles. The Northern Iowa District Court had ruled that The Cincinnati Insurance Company had to pay out $337,025.50 plus prejudgment interest to cover the loss.
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Iowa-based Amera-Seiki is an importer of computerized industrial equipment. In 2009, it took out a commercial property insurance policy from Cincinnati Insurance. It covered damage to “newly acquired or constructed property” at any location acquired by the policyholder other than at fairs, trade shows, or exhibitions.
In 2010, during the policy period, Amera-Seiki bought a vertical lathe from Taiwan for import into the U.S. The lathe was shipped to the Port of Los Angeles, where it was to be stored at the APL Container Terminal/Global Gateway South Terminal for a few days until a flat-bed truck could arrive to transport the equipment to Illinois. But during its final transit from storage to the location where the delivery driver could pick it up, the lathe fell off a yard tractor being driven by a longshoreman, destroying the lathe. Amera-Seiki filed a claim with Cincinnati Insurance, which was mostly denied. The insurer paid out only $10,000 in transportation coverage.
Cincinnati Insurance argued that the loss didn’t fall under the insurance policy because it didn’t happen at a location owned by Amera-Seiki. A lease of storage space at a terminal does not give any control or authority to Amera-Seiki over the terminal storage space, the insurer said. But Amera-Seiki argued the word “acquire” should be defined more broadly. If Cincinnati Insurance wanted to define an acquired location as not including leased storage space, it should have done so in the insurance policy, the importer said. And the insurer specifically excepted fairs, trade shows, and exhibitions from coverage, even though renting space in those three situations is not very different from renting storage space at a terminal, Amera-Seiki said. The district court agreed with the importer, and ordered Cincinnati Insurance to pay the full $337,024.50 value of the loss plus prejudgment interest.
In the end, the appeals court found both definitions of acquire to be plausible. As such, the definition of the term is ambiguous for the purposes of the claim, it said. And under Iowa law, which governed this case, ambiguous terms in insurance policies are construed in favor of the insured, not the insurer, said the 8th Circuit, affirming the lower court’s ruling.
(Amera-Seiki Corporation v. The Cincinnati Insurance Company, 8th Circ. No. 12-2739, dated 07/23/13)