St. Paul Fire & Marine Insurance v. Matrix Posh, LLC

Present: RALPH K. WINTER, ROSEMARY S. POOLER and DENNY CHIN, Circuit Judges. SUMMARY ORDER Matrix Posh, LLC (“Matrix”) appeals from the district court’s judgment dated May 2, 2012, following its grant of summary judgment declaring that the marine insurance policy on Matrix’s vessel was void ab initio. We assume the parties’ familiarity with the underlying facts, procedural history, and specification of issues for review. “We review a district court’s grant of summary judgment de novo, construing the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party’s favor.” Kuebel v. Black & Decker Inc., 648 F.3d 352, 358 (2d Cir.2011). “Summary judgment is appropriate only if the moving party shows that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law.” Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir.2003). The doctrine of uberrimae fidei demands “that the parties to a marine insurance policy must accord each other the highest degree of good faith.” Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 13 (2d Cir.1986). This duty of utmost good faith “requires an assured to disclose any information that materially affects the risk being insured, because the assured is more likely to be aware of such information.” N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 123 (2d Cir.2001). If the insured fails to make the required disclosures — i.e., any material information — the policy is void ab initio. Knight, 804 F.2d at 13. “[T]he materiality of the nondisclosure does not depend on what an investigation would have revealed.... Instead, the insurer should be afforded the opportunity to investigate prior to its acceptance of the risk. Accordingly, the assured is required to communicate the information to the insurer before the policy is issued, so that the insurer can decide for itself at that time whether to accept the risk.” Id. at 13-14. Here, it is undisputed that Matrix did not disclose the prior damage to the insured vessel. That Matrix now claims that the previous damage was minor is of no moment, as this is not the standard for materiality. The determination of the extent of the previous damage is exactly “what an investigation would have revealed,” which is not the test for materiality as clearly held in Knight. Id. Rather the damage should have been disclosed to St. Paul, affording it “the opportunity to investigate prior to its acceptance of the risk.” Id. at 14. Because Matrix failed in its duty of full disclosure, the policy is void ab initio. We note that the parties dispute whether the “misrepresentation was made in *96 reply to a specific question.” Kerr v. Union Marine Ins. Co., 130 F. 415, 417 (2d Cir.1904). The application here only inquired as to “insurance losses,” and the previous damage to the vessel did not cause Matrix’s own insurer to incur a loss, although another insurer bore the loss. Rather than excluding the question of ma-terialness, id., this Court has considered the question of materiality and concluded that Matrix violated its obligation under ubemmae fidei, voiding the policy. We find the Appellants’ remaining arguments to be without merit. Accordingly, the judgment of the district court hereby is AFFIRMED. •