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OneBeacon unit must pay in tug sinking


A OneBeacon Insurance Group Ltd. unit is obligated to pay $1.2 million in connection with a tug’s sinking, said a federal appeals court Friday, in holding a ruling issued by the judge who replaced the original, deceased judge in the case should still stand.

In April 2013, a tug chartered by Edgewood, New York-based Coastal Environmental Group Inc., which was being used to repair damage caused by Hurricane Sandy, was taking on water and allowed to sink because of the ongoing danger it posed to a pier and the high cost of the thus-far unsuccessful pumping effort, according to Friday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in Atlantic Specialty Insurance Co. v. Coastal Environmental Group Inc. et. al.

After Atlantic Specialty, a unit of Minnetonka, Minnesota-based OneBeacon, which had insured Coastal Environmental under a maritime hull insurance policy as well as related protection and indemnity insurance, refused to indemnify Coastal Environmental under its maritime hull insurance policy, Coastal Environmental filed suit in U.S. District Court in Central Islip, New York.

Judge Leonard Wexler conducted a bench trial in the case in October and November 2017, but passed away in March 2018 before issuing a ruling in the case, according to the decision.

The case was transferred to Judge Joan M. Azrack who, after no party requested the recall of any witnesses in the case, certified her familiarity with the record and ruled Atlantic was obligated to indemnify Coastal Environmental for $1.2 million in the case.

Atlantic Specialty appealed, arguing Judge Azrack had made “legal, factual, and evidentiary errors” and that she erred by not recalling certain witnesses.

A three-judge appeals court panel unanimously upheld the lower court ruling.  A “successor judge is under no independent obligation to recall witnesses unless requested by one of the parties,” said the ruling. “In addition, we find no reversible error in Judge Azrack’s findings of act and conclusions of law,” it said, in affirming the lower court’s ruling.

Attorneys in the case could not be reached for comment.

Last year, a federal appellate court overturned a lower court ruling and ruled in favor of Atlantic Specialty in a dispute with a protection and indemnity insurer over insurance coverage for a sunken tugboat.





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