Northern Assurance Company of America v. C&G Boat Works, Inc., 1:11-cv-00283

Hull 117, a 92-foot tug, was built by C&G Boat Works for Crescent Towing under a hull builder’s risk policy issued March 3, 2010.
Policy insured up to $10,000,000 for listed vessels during March 7, 2010–March 7, 2011 and covered all risks of physical loss or damage to the Vessel as defined.
Hull 117’s lube oil piping systems were externally fabricated and installed with pickled pipe and welding methods instructed by C&G management.
Alleged damage to Hull 117’s engines occurred during sea trials on September 30, 2011, with bearing damage and metal particulates traced to contaminants in the lube oil piping systems.
Investigations showed contaminants included weld slag and torch slag; Tube-Mac later re-pickled and flushed piping after contamination was found.
Underwriters denied coverage based on Addendum No. 2 exclusions for faulty production or assembly procedures; C&G sought coverage and brought counterclaims in a declaratory judgment action.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the faulty production or assembly procedures exclusion is ambiguous	Underwriters argue broad production procedures exclusion.	C&G contends exclusion is limited to faulty production/assembly steps, not mere instructions.	Ambiguous; interpreted as referring to faulty production/assembly instructions only.
Whether the all-risk policy covers the engine damage	Underwriters must show exclusion excludes coverage for fault-related damage.	C&G asserts fortuity standard and exceptions to exclusion support coverage.	All-risk coverage applies; burden shifts to Underwriters to prove exclusion; fortuity found.
Whether the faulty workmanship exclusion excludes hull engine damage	Underwriters rely on exclusion to deny coverage for workmanship-related damage.	C&G argues exception for faulty workmanship that results in hull damage does not bar coverage.	Faulty workmanship exclusion does not bar coverage; exception for destruction/ deformation of Vessel applies.

Clark v. Coats & Clark, Inc., 929 F.2d 604 (11th Cir. 1991) (burden on movant and standard for summary judgment)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting framework)
Lofton v. Sec’y of Dep’t of Children & Family Servs., 358 F.3d 804 (11th Cir. 2004) (limits on credibility assessments in summary judgment)
Van T. Junkins & Assocs. v. U.S. Indus., Inc., 736 F.2d 656 (11th Cir. 1984) (limitations on use of contradictory affidavits)
Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So.2d 687 (Ala. 2001) (ambiguity standard for undefined policy terms)
State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293 (Ala. 1999) (ambiguity; reasonable understanding of policy terms)
Morrison Grain Co. v. Utica Mut. Ins. Co., 632 F.2d 424 (5th Cir. 1980) (fortuity concept in all-risk insurance)