566 F2d 956 Gulf Mississippi Marine Corporation v. Continental Insurance Company
566 F.2d 956
GULF MISSISSIPPI MARINE CORPORATION, Plaintiff-Appellant,
CONTINENTAL INSURANCE COMPANY et al., Defendants-Appellees.
United States Court of Appeals,
Jan. 27, 1978.
George A. Frilot, III, Richard B. Foster, New Orleans, La., for plaintiff-appellant.
Henry J. Read, New Orleans, La., Bigham, Englar, Jones & Houston, New York City, for defendants-appellees.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before AINSWORTH, MORGAN and GEE, Circuit Judges.
Plaintiff Gulf Mississippi Marine Corporation appeals from the district court's decision holding that defendant Continental Insurance Company was not liable under the indemnity policy held by plaintiff for the costs incurred in defending a claim without the consent of defendants. We are called upon to construe the following clause of the insurance policy:
"in cases where the liability of the Vessel has been contested or proceedings have been taken to limit liability, with the consent in writing, of a majority (in amount) of the Underwriters on the hull and machinery, we will also pay a like proportion of the costs which the Assured shall thereby incur or be compelled to pay."
Plaintiff contends that the proper construction of this clause is that written consent of the Underwriters is necessary for the payment of costs for "proceedings . . . to limit liability," but that the written consent clause does not modify "cases where the liability of the Vessel has been contested." Plaintiff's proffered interpretation is unconvincing. The clause in question naturally and properly modifies both contests of liability and proceedings to limit liability. There is no comma between the phrases describing the two different types of proceedings in which potentially indemnifiable costs could be incurred, and it is therefore reasonable to read the subsequent modifying clause as relating to both of the preceding phrases. We find that the district court's Findings of Fact and Conclusions of Law correctly state the facts and interpret the law in this case.