INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Barging in
In 2014, Swalling Construction Company, Inc., entered into a charter agreement with Pool Engineering, Inc., for a freight barge. Swalling obtained insurance through Alaska USA Insurance Brokers, LLC, which in turn obtained insurance from Atlantic Specialty Insurance Company. Upon Swalling’s return of the barge, Pool discovered damage to the hull.
Pool notified Swalling of the damage in August of 2014, and Swalling notified Alaska USA the next day. Alaska USA in turn notified Atlantic in February 2015. In an August 2015 letter, Atlantic stated the policy it issued covered only “insured peril[s],” and that there was no evidence that an “insured peril” damaged the barge’s hull. Atlantic also indicated that it received late notice of the claim.
In January 2016, Pool sued Swalling in federal court for breach of the charter contract and sought damages. Atlantic declined Swalling’s request to defend it, in a February 2016 letter. Atlantic’s letter reiterated that the damage itself was not covered under the policy it issued to Swalling. It also explained that the policy provided coverage for liabilities arising from specified “risks, events, and happenings,” but not “[l]iabilities arising from a charter party dispute over alleged damages to an insured vessel.”
Pool and Swalling engaged in extensive motion practice, and ultimately stipulated to a final judgment of $300,000, which was entered in July 2019.
On November 1, 2019, several months after the federal litigation concluded, Swalling sued Alaska USA and Atlantic in state court. Swalling alleged breach of contract by Atlantic and insurance bad faith and negligence by both Alaska USA and Atlantic.
Each party moved for summary judgment in August 2021. Alaska USA and Atlantic asserted that Swalling’s lawsuit was barred by the applicable statute of limitations. Swalling meanwhile argued that it was entitled to summary judgment on its claims because the underlying factual circumstances compelled that result.
The superior court denied summary judgment on Swalling’s claims against Alaska USA. The court agreed that Swalling’s “duty to inquire” into Alaska USA’s alleged failures was triggered in June 2016 when Atlantic declined to defend Swalling based on the provisions in its policy. It reasoned that Alaska’s “discovery rule” can toll an applicable statute of limitations, delaying the start of the clock until the claimant discovers or reasonably should discover that the elements of a cause of action exist.
The court determined that Atlantic’s June 2016 denial letter identified “specific policy provisions,” and should have placed Swalling on notice “of the possibility that [Alaska USA] had failed to acquire adequate coverage.”
Swalling argued that the superior court erred when it granted summary judgment in favor of Alaska USA. Swalling contended that the fact it “did not receive insurance coverage that covered exactly the type of potential liability it needed to be covered … [is] sufficient to provide the evidentiary circumstances necessary to find that a breach … occurred.”
The superior court found that Swalling’s claims were time barred. The Supreme Court of Alaska affirmed the superior court’s grant of judgment to Alaska USA and Atlantic.
Swalling Construction Company, Inc. v. Alaska USA Insurance Brokers, LLC, and Atlantic Specialty Insurance Company—Supreme Court of the State of Alaska—No. S-18523/18543/18574—November 8, 2024. n
