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OneBeacon unit wins dispute over coverage for sunken tug boat


A federal appellate court has overturned a lower court ruling and ruled in favor of a OneBeacon Insurance Group unit in a dispute with a protection and indemnity insurer over insurance coverage for a sunken tug boat.

Three tugs — the M/V Miss Dorothy, the M/V Angela Rae and the M/V Freedom — were traversing the Mississippi River with a barge, FSB 101, when Miss Dorothy hit a portion of a bridge fender system and sank, resulting in a total loss, according to Thursday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Continental Insurance Co. vs. L&L Marine Transportation Incorporated; P&I Underwriters subscribing to Policy Number B0507M13PP07280 vs. Atlantic Specialty Insurance Co.

Columbus, Ohio-based Continental Insurance Co., the sunken tug’s insurer, alleged Angela Rae was negligent in the 2013 incident. As part of the ensuing litigation, an insurance dispute developed between Atlantic Specialty, a unit of New York-based OneBeacon, and P&I Underwriters, both of whom insured the Angela Rae, which was owned by Harvey, Louisiana-based L&L Marine Transportation, as to who had coverage in the incident.

The U.S. District Court in New Orleans ruled Atlantic Specialty was responsible, which was unanimously overturned by a three-judge appeals court panel.

Under its policy, Angela Rae covers any damage to her tow or her tow’s freight, while P&I’s broader policy covers situations that Atlantic Specialty does not, said the ruling.

The basic issue in this dispute, said the ruling, is whether Miss Dorothy was the tow of the Angela Rae for purposes of Atlantic Specialty’s policy.

It was not, the ruling concluded. Under a “plain meaning approach,” said the ruling, “it is evident that the Miss Dorothy was not the ‘tow’ of the Angela Rae.

“Nowhere is there indication that the Angela Rae was providing the Miss Dorothy with any motive power or was pushing or pulling her in any way…there is no reason to characterize the Miss Dorothy as the ‘tow” of the Angela Rae,” said the ruling, in reversing the lower court’s decision and ruling in Atlantic Specialty’s favor.