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Knight v. U.S. Fire Insurance Co.

decided: October 22, 1986.

FREDERICK W.A. KNIGHT, PLAINTIFF-APPELLANT,
v.
U.S. FIRE INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, CENTENNIAL INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, ROYAL INSURANCE COMPANY OF AMERICA, NORTHWESTERN NATIONAL INSURANCE COMPANY, HIGHLANDS INSURANCE COMPANY AND CONTINENTAL INSURANCE COMPANY, DEFENDANTS-APPELLEES



Appeal from the order of the United States District Court for the Southern District of New York, Constance Baker Motley, Ch. J., granting summary judgment to defendant insurance companies.

Feinberg, Chief Judge, Cardamone, Circuit Judge and Kelleher, District Judge.*fn*

Author: Feinberg

FEINBERG, Chief Judge:

Frederick W.A. Knight appeals from an order of the United States District Court for the Southern District of New York, Constance Baker Motley, Ch. J., granting summary judgment to defendant insurance companies. Knight argues that summary judgment was inappropriate because several genuine issues of material fact remain unresolved. Upon review, we conclude that no such issues are present. Therefore, we affirm the holding of the district court.

I. Facts

The relevant facts are as follows: Between 1976 and 1979, Knight purchased in Thailand 222 antique stone and bronze statues for approximately $65,000. In 1980, an appraiser hired by Knight valued the collection at $20,205,000. The same appraiser revised his estimate to $27,000,000 in April 1981 and then to $30,307,500 in September 1981, the month in which he died. The appraiser was to receive for his services 5% of the proceeds from the eventual sale of the statues.

Meanwhile, Knight had transported the statuary from Thailand to Singapore. In February 1981, Knight obtained through the insurance brokerage firm of Hogg Robinson & Gardner Mountain (Marine) Ltd. (Hogg Robinson) coverage of $20,205,000 from London underwriters for shipment of the collection from Singapore to Holland. In May 1981, after receiving the first revised estimate from his appraiser, Knight requested and obtained through Hogg Robinson an additional $10,000,000 coverage for the voyage.

In June 1981, however, after the approximately $30 million risk had been placed, Robert Jensen, Knight's broker at Hogg Robinson, received two anonymous phone calls reporting that Knight was planning to perpetrate a fraud. Jensen conveyed this information to the lead London underwriters who, in response, ordered their own appraisal of the statuary. A few days later, Jensen sent a telex to Knight informing him that the underwriters had voided his policy because of his material nondisclosures and misrepresentations regarding his collection. Jensen stated in the telex that, based on their appraiser's inspection of some of the statues, the underwriters believed that the collection was "grossly over-valued and, in some, if not all cases, replicas. . . . The evidence currently available to underwriters suggests that the proper value of the consignment is nominal only (possibly approximately 1 pct of the value declared)."

In the spring of 1982, Knight again attempted to obtain insurance for the same statues, this time through a New York brokerage firm, H.E. Yerkes & Associates, Inc. Knight obtained $30 million of coverage with several American underwriters for a voyage from Singapore to France. However, the collection ultimately was not shipped and the policy lapsed.

In October 1982, Knight approached Yerkes & Associates to reinstate his $30 million of coverage, claiming that he was preparing to ship the statues to a purchaser in Greece. The brokers succeeded in placing $30,630,750 of risk for the voyage from Singapore to Greece with several American insurance companies. Many of these insurers had agreed to insure the earlier projected voyage from Singapore to France. These are the policies contested in this lawsuit. For convenience, we will refer to them hereafter as one policy (the New York policy).

In January 1983, the statues were loaded on board a vessel for the voyage from Singapore to Greece. On February 7, 1983, the ship sank in the Indian Ocean and the statues were lost.

After the loss of his statues, Knight attempted to collect on the insurance provided by defendant underwriters. Defendants refused and, instead, voided the New York policy ab initio because of Knight's alleged material nondisclosures and misrepresentations. Thereafter, Knight brought this lawsuit. Defendants moved for summary judgment before Judge Motley, and she granted the motion in a 16-page memorandum opinion. This appeal followed.

II. Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment if it determines that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 ...


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