This аdmiralty case requires us to interpret a marine insurance policy, Open Cargo Policy No. 10490MC594 (“the Policy”) issued by Mutual Marine Office, Inc. (“MMO”) for New York Marine & General Insurance Company (“New York Marine”) and certificates of insurance, Special Marine Policies (“SMPs”), issued under the
Plaintiff New York Marine brought suit, seeking to disclaim liability under the Policy for any of Deepak’s loss. On June 29, 2000, the district court awarded Deepak partial recovery. For the reasons set forth below, we affirm in part, and reverse and remand in part.
I. BACKGROUND
A.The Parties
New York Marine & General Insurance Company is an insurance company that does business in New York through its managing general agent, Mutual Marine Office, Inc. MMO issued to Tradeline the marine insurance policy at issue in this litigation. Tradeline is a United Arab Emirates corporation engaged in the business of supplying and shipping various commodities. Frenkel & Co. (“Frenkel”), an insurance broker with an office in New York, acted as an intermediary for Trade-line in obtaining the insurance policy by negotiating with New York Marine through MMO. Frenkel, however, is not an agent of either New York Marine or MMO.
Deepak Fertilisers and Petrochemicals Corp., Ltd. is a corporation organized under the laws of India, engaged in importing fertilizer for sale in the Indian market.
B. The Policy
In May 1994, MMO, on behalf of New York Marine, issued to Tradeline Open Cargo Policy No. 10490MC594, effective May 9, 1994 (“the Policy”). The Policy remained in effect until it was canceled around November 1, 1998, and therefore was in effect during the incidents giving rise to this litigation. The Policy contained 50 typed or manuscripted clauses, several typed endorsements, and several attached pre-printed forms, including the industry standard Institute Cargo Clauses (C) (“ICC(C)”),
Clause 43 of the Policy authorized Tradeline to issue to its customers “evidence of insurance” in the form of Certificates or Special Policies of Insurance. This clause provides that “[t]he clauses appearing in this form shall be deemed to be included in Certificates and/or Special Policies of Insurance when issued under the authority granted in this clause.” These Certificates or Special Policies were intended to provide Tradeline’s customers with a way to make direct claims against New York Marine for loss or damage to insured cargo. Shortly after the Policy became effective, MMO forwarded to Tradeline pre-printed Certificates for issuance to its customers.
C. The Tradeline-Deepak Contract
In April 1998, Deepak purchased two shipments of diammonium phosphate from Tradeline, in the amounts of 28,000 metric tons (“MT”) and 21,509.155 MT. Both shipments were to be carried from Mexico to the sole port of discharge at Kandla, India
The DAP was purchased on “CIF” (cost, insurance and freight) terms for $220 per metric ton, for a total price of $10,892,014.10. Tradeline was bound by the terms of its contract with Deepak to maintain insurance on the cargo on a warehouse to warehouse basis and to sell insurance to Deepak for the risks associated with the transit. Therefore, Tradeline delivered to Deepak Special Marine Policies (“SMPs”) 367 and 368 as evidence of the insurance on the DAP shipments, issued pursuant to its power under Clause 43 of the Policy. In addition to the preprinted provisions, both SMPs contained a typed provision that stated, “[notwithstanding anything contained herein to the contrary: Average Terms & Conditions: London ICC Clauses (C), London War Clauses (cargo), London Strikes Clauses (cargo).” Deepak fulfilled its obligation to Tradeline under the contract, having paid to Trade-line the full purchase price of the DAP.
D. The Voyage and Request for Rainwater Coverage
On or about April 18, 1998, the two shipments of DAP were loaded aboard the M/V Sea Guardian at the port of Lazaro Cardenas, Mexico, under two Bills of Lading. The port of Kandla, India was agreed upon by Deepak and Tradeline as the sole port of discharge.
On May 28 or 29, 1998, the M/V Sea Guardian arrived at the Port of Kandla, and, because of draft restrictions at the berth, began to load the DAP onto lighter-ing barges for transit to the wharf at Kandla. The lightering process continued through June 8, 1998, and the offloaded DAP was located on the wharf or at other locations within the port trust area, where the DAP was being bagged by Rishi Shipping (“Rishi”), Deepak’s handling and forwarding agent.
Meanwhile, on May 28, 1998, Deepak was informed by Rishi that “weather is cloudy and we shouldn’t take risk of rain.” The next day, Rishi again informed Dee-pаk by facsimile that insurance for rain was necessary. Deepak forwarded this fax to Tradeline on that same day, with a handwritten note, “please do the needful immediately.” Deepak advised Tradeline, shortly after this communication, that it did not wish to insure for the more expensive all risks coverage under Institute Cargo Clauses (A) (“ICC(A)”), but rather wished to add rainwater coverage to the existing coverage. Deepak also wished only to cover 21,000 MT of the entire shipment.
On June 1, 1998, Tradeline inquired of Frenkel whether it could obtain an upgrade to include the risk of rainwater. Specifically, Tradeline asked if ICC(A) terms covering only rainwater damage could be obtained, whether rainwater coverage could be added to the existing ICC(C) coverage, and whether rainwater damage could be obtained for only part of the total DAP shipment. On June 5, 1998, after various communications between Tradeline and Frenkel, and Frenkel and MMO, MMO set the rate fоr an upgrade of ICC(C) coverage to include risk of rainwater damage at 1.5 cents per $100 of insured value. On June 8, 1998, Deepak informed Tradeline that it accepted these quoted terms and Tradeline issued new SMPs shortly thereafter. The new SMPs contained a revised typewritten provision stating:
Notwithstanding anything contained herein to the contrary: Average terms & conditions:
London ICC clauses (C)
London War Clauses (cargo)
London Strike Clauses (cargo)
*119 including risks of rainwater damages, with effect from 5th June 1998.
Claims payable in India.
Frenkel approved these SMPs 377 and 378 to replace SMPs 367 and 368, with the new coverage to be effective June 5, 1998. Tradeline wrote “cancelled” on SMPs 367 and 368.
On June 9,1998, while the DAP was still being discharged, a cyclone struck the port of Kandla, involving cyclonic wind and rain forces, tidal waves and rising waters. When the cyclone struck, approximately 12,500 MT had been offloaded from the M/V Sea Guardian. About 5,000 MT were already bagged and transported to other inland locations. The M/V Sea Guardian, with approximately 36,500 MT of DAP still on board, was diverted from the рort of Kandla, which was closed due to the cyclone, to the distress port of JNPT, India.
On June 12, 1998, Deepak gave notice of loss stemming from the cyclone to New York Marine through Frenkel. Shortly thereafter, MMO, on behalf of New York Marine, retained Tata Marine Services, who in turn hired J.B. Boda Surveyors Ltd. to assess the extent of the damage to the DAP shipment.
E. Undisputed Losses Incurred by Deepak
Deepak suffered seven separate categories of damages. First, 1,650 MT of DAP were lost as the result of the sinking of lightering barges in the port of Kandla, amounting to a claim of $399,300. Second, 1,054.06 MT of DAP were lost in the shore area of the port of Kandla as a result of the cyclone rains, rising tides, and tidal waves of 9 meters, resulting in a claim of $255,082.52. Third, 2,672.92 MT of DAP were damaged by the cyclone and resulting floods in the port trust area of Kandla. The DAP had been deposited from the lightering barges onto the shore area. The loss amounted to $471,978.24, which represents the difference in insured value less the monies recеived after a salvage sale. Fourth, Deepak incurred mitigation expenses in segregating and reconditioning the damaged DAP, cost of replacement bags, additional transportation costs and extra overhead for the salvage operations amounting to $30,703.87. Fifth, Deepak incurred forwarding, landing and storage costs for diverting the cargo to the port of distress, JNPT, in the amount of $280,754.89 ($247,463.39 for additional wharfage, statutory port charges, demur-rage, cost of excavators, customs overtime, manual bagging charges statutorily imposed, additional supervision, cost of transporting empty bags to JNPT and survey costs plus $33,291.50 toward the cost of moving the vessel from Kandla to JNPT). Sixth, 566.53 MT of DAP were damaged by rain water at the port of JNPT, resulting in a loss of $100,454.48, the difference in insured value less the monies received for the salvage sale. Seventh, 47.85 MT of DAP was lost during the discharge of the shipments at the port of distress, in the amount of $11,579,70.
Total losses claimed amount to $1,549,853.70. By letter dated September 21, 1998, MMO declined Deepak’s claim in its entirety.
F. Proceedings Below
Because this complex appeal raises several issues among several parties, we set forth the claims, counterclaims and third-party claims in some detail.
On October 30, 1998, New York Marine brought a declaratory judgment action against Tradeline and Deepak, seeking a declaration that the Policy was void ab initio. New York Marine claimed that the defendants violated the duty of utmost good faith when they sought to add rain
Tradeline and Deepak counter-claimed against New York Marine, alleging that New York Marine breached the Policy by failing to pay Deepak’s claim and, in addition to compensatory damages, prayed for punitive damages based on New York Marine’s alleged bad faith in denying the claims under the Policy. Deepak filed a cross-claim against Tradeline for breach of the CIF sales contract. Tradeline also filed a third-party complaint against MMO, New York Marine’s agent, alleging that MMO breached its duty of good faith by causing Deepak’s claim to be wrongfully denied.
New York Marine filed a third-party complaint against Frenkel, alleging that Frenkel misrepresented or failed to disclose to New York Marine material facts regarding the requested rainwater coverage upgrade and that it permitted unauthorized SMPs to issue.
On motions for summary judgment filed by Deepak, Tradeline, and Frenkel and on New York Marine’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the district court dismissed Tradeline’s and Deepak’s claims for punitive damages, but denied all the remaining motions because disputed questions of material fact existed. See New York Marine & General Ins. Co. v. Tradeline (L.L.C.), No. 98 Civ. 7840(HB),
Following a bench trial, the district court rejected New York Marine’s claim that the Policy was void ab initio. See New York Marine & General Ins. Co. v. Tradeline (L.L.C.), No. 98 Civ. 7840(HB),
The parties filed timely appeals.
II. DISCUSSION
On appeal, Deepak’s principal argument is that the district court misinterpreted the
New York Marine and MMO cross-appeal, contending, as they did below, that the Policy was void ab initio. Tradeline likewise cross-appeals, and echoes Dee-pak’s principal argument.
A. Jurisdiction, Standard of Review and Choice of Law
Federal subject matter jurisdiction exists pursuant to 28 U.S.C. § 1331, which provides federal district courts with original jurisdiction over “any civil case of admiralty or maritime jurisdiction.” Federal admiralty jurisdiction extends to cases involving marine insurance contracts. See Advani Enters., Inc. v. Underwriters at Lloyd’s,
Although we review a district court’s findings of fact for clear error, see Atlantic Mut. Ins. Co. v. Balfour MacLaine Int’l Ltd. (In re Balfour MacLaine Int’l Ltd.),
B. The Status of the Policy
New York Marine’s principal contention below was that Deepak and Tradeline violated the doctrine of uberrimae fidae, the duty of utmost good faith, by failing to disclose to MMO or New York Marine the status of the DAP shipments and the weather predictions when Deepak sought rainwater coverage. Because of this failure to disclose, New York Marine argued, the entire policy was void ab initio, and Deepak should recover nothing on its claim. The district court agreed that Dee-pak and Tradeline had violated this duty, but held that the entire policy was not void; instead, only the SMPs issued with rainwater coverage were void. See Neiu York Marine II,
On appeal, New York Marine again urges that the entire policy is void. Dee-pak, on the other hand, argues that it violated no duty, because it disclosed to Tradeline the existence of bad weather at the port of Kandla and that any knowledge possessed by Tradeline is imputed to New York Marine, because Tradeline was acting as New York Marine’s agent with respect to the issuance of the SMPs. Because we agreе with Deepak’s argument that Tradeline was acting as New York Marine’s agent, we reverse the district court’s holding with respect to Deepak’s duty of utmost good faith.
New York common law provides that an agency relationship “results from a manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the consent by the other to act.” Meese v. Miller,
Clause 43 of the Policy explicitly grants authority to Tradeline to issue “Special Policies of Insurance” for shipments covered by the Policy, manifesting New York Marine’s consent to Tradeline acting on its behalf. When Tradeline issued, upon Deepak’s request, SMPs 377 and 378, which included rainwater coverage, it consented to act as New York Marine’s agent with respect to this transaction. There is no question that Tradeline was under New York Marine’s control in issuing the SMPs — Tradeline communicated with New York Marine’s managing general agent, MMO, in acquiring and setting the premium for the coverage. Therefore, Tradeline acted as New York Marine’s agent in issuing both the original SMPs (367 and 368) and the rainwater coverage SMPs (377 and 378). Knowledge possessed by Tradeline regarding the location of the vessel and the weather predictions will thus be imputed to New York Marine.
Perzy v. Intercargo Corp.,
it is beyond dispute that even if [the freight forwarder] may also have been serving as Perzy’s agent when she purchased insurance, in all events she was surely Intercargo’s agent in that respect. Before Perzy had ever entered the picture Intercargo had given [the freight forwarder] the authority to write insurance policies with Intercargo as insurer.
Id. at 1377 (emphasis in original). The court further noted that Intercargo controlled the policy’s terms, and that the freight forwarder worked on Intercargo’s behalf in writing certificates for it. See id.
Here, too, the relationship between Tradeline and New York Marine commenced prior to Deepak’s DAP shipments. As we noted earlier, Tradeline was authorized under Clause 43 to issue “Special Policies of Insurance,” but New York Marine generally controlled the terms of the Policy and set the premiums. We therefore conclude that Tradeline was acting as
2. Application of the Doctrine of Uberrimae Fidae
“[P]arties to a marine insurance contract are held to the highest degree of good faith. Under this obligation, called uberrimae fidae, the party seeking insurance is required to disclose all circumstances known to him which materially affect the risk.” Puritan Ins. Co. v. Eagle Steamship Co. S.A.,
The district court found, and we agree, that the prediction of severe rainy weather in the Kandla area is a material fact that would have affected New York Marine’s decision whether to issue the extended coverage at all or to do so at a higher premium. See New York Marine II,
The record includes a letter sent by fax from Deepak to Tradeline which references the impending rainy weather at Kandla. Tradeline does not dispute that it received this letter. Tradeline was therefore aware of the material weather information, and this knowledge is imputed to New York Marine. Deepak fulfilled its duty of utmost good faith by informing Tradeline, as New York Marine’s agent, of the material circumstances. We therefore conclude that uberrimae fidae does not void SMPs 377 and 378, and that Deepak can recover any loss covered by those SMPs. As we conclude below, however, Deepak is not entitled to full recovery, even under SMPs 377 and 378.
C. Deepak’s Recovery under Open Cargo Policy No. 10I90MC59I
1. The Governing Terms of the Policy
Both the original and the rainwater SMPs contain the phrase, “Mot-withstanding anything contained herein to the contrary: Average terms & conditions: London ICC Clauses (C).” The district court concluded that this phrase “is unambiguous and resolves all potential conflicts [between Policy and ICC(C) provisions] in favor of the provisions outlined in the ICC(C) clauses.” New York Marine II,
In support of its argument, Deepak invokes several of the Policy’s provisions. The first, Glause 48, provides that “[i]t is further agreed that the terms, conditions and limits contained herein (clauses 1 to 47 inclusive) shall supersede those .of, the printed policy to which this form is attached wherever the same may conflict.” Second, Clause 11(G) provides that'“[i]n the event that broader terms or conditions appear in a policy, special policy, [or] certificate ... which has been accepted by this Assurer, then such terms and conditions shall be applicable.” Third, Clause 43, which authorizes Tradeline to issue SMPs, provides that the “clauses appearing in this form shall be deemed to be included in Certificates and/or Special Policies of Insurance when issued under the authority granted in this clause.” Finally, the SMPs were issued “subject to conditions of Open Policy No. 10490MC594.” Deepak contends that the combined effect of thеse clauses demonstrate that the parties intended, where any conflict in terms arise, the broader terms and conditions to govern coverage. Additionally, Deepak cites rules of insurance policy interpretation, which require conflicts to be interpreted against the insurer and which require courts to afford broader coverage where the policy contains conflicting clauses. Therefore, Deepak argues that the manuscripted Policy clauses are given effect over the ICC(C) clauses.
We reject this contention. Although it is true, as a general rule, that “where a certificate states expressly that it is subject to the terms and conditions of the policy, the language of the policy controls,” Taylor v. Kinsella,
We agree with the district court that these typewritten provisions modify both the “average terms and conditions” paragraph contained in the SMPs and Clause 11 of the Policy, also entitled “average
All goods and/or merchandise ... are insured:
Cement clinker, sulphur, rock phosphate, bentonite, barytes, scrap metal, ammonia, diammonium phosphate, urea, silicon sand, salt, soyabean and rice in bulk are insured:
I. Institute Cargo Clause (C) and all claims for shortage and/or leakage are subject to a deductible of one-half of one percent (1/2 of 1%) of the insured value.
or, if declared by the Assured prior to know [sic] or reported loss.
II. Per Institute Cargo Clauses (A). All claims subject to a deductible of 2% of the insured value.
The original, unamended Clause 11(A) provided for no such choice, and dictated the level of coverage. When Tradeline and Deepak chose ICC(C) coverage in the CIF sales contract, and Tradeline incorporated this choice into the SMPs, it incorporated the ICC(C) terms into the Policy to govern coverage.
Clauses 11(G) and 48 do not require the opposite result. Clause 11(G) states that “[i]n the event that broader terms ... appear in a policy, special policy, [or] certificate ... then such terms and conditions shall be applicable.” Clause 11(G) contemрlates the situation where the SMPs contain broader terms than the Policy and states that the broader terms control. Here, the Policy itself contains broader terms than the SMPs. The SMPs’ additional “notwithstanding anything contained herein” language plainly supersedes the broader Policy provisions. Also, as the district court recognized, if Clause 11(G) required that the Policy’s broader terms were always applicable, Tradeline could never insure any shipment for less than all-risks coverage. See New York Marine II,
Deepak’s argument for broader coverage based on Clause 48, which provides that clauses 1 through 47 of the Policy supersede clauses contained in the “printed policy” in cases of conflict, fails for the same reason. If the phrase “printed policy” refers either to the SMPs issued pursuant to Clause 43 or to the ICC(C) pre-printed provisions which were attached to the open policy, then the Policy would, in effect, always provide one level of coverage, notwithstanding the choices later made by the insured party with respect to a specific shipment. This result would ignore both Clause 11(G), which allows, for an additional premium, broader coverage than that provided in the Policy, and Endorsement Nine, which allows the insured to choose between either ICC(C) or ICC(A) coverage. We refuse to interpret a contractual term in such a way as to nullify other provisions. Cf. 2 Couch on Insurance § 21:19 (“[T]he expressed intent of the parties is to be ascertained by examining the ... policy as a whole.... [T]he policy must be construed in its entirety, with each clause interpreted in relation to others contained therein. All its words, parts, and provisions must be construed together as one entire contract, each part interpreted in the light of all the other parts[.]”) (footnotes omitted).
We therefore conclude that the terms governing the DAP shipments are con
2. Deepak’s. Recovery under the Policy
Thus far, we have concluded that the ICC(C) provisions contain the governing terms of the Policy with respect to the DAP shipments at issue here. Additionally, contrary to decision of the district court, we have concluded that, because Tradeline was acting as New York Marine’s agent in issuing SMPs 377 and 378 and Deepak fully informed Tradeline of the circumstances surrounding the request for rainwater coverage, Deepak did not violate its duty of uberrimae fidae owed to New York Marine. Therefore, we will now ascertain which aspects of Deepak’s claim are covered by the Policy as amended by SMPs 377 and 378.
Deepak asserts that it is an assured under the'Policy, аnd New York Marine does not dispute this assertion. We agree that Deepak is an assured. Clause 1 of the Policy provides the Policy is “[f]or account of whom it may concern.” “Insurance carried for the account of ‘whom it may concern’ covers anyone having an insurable interest in the insured property at the time of the happening of the loss.” The John Russell,
The district court awarded to Deepak $399,300 in connection with the DAP lost due to the sinking of the lightering barge in the port of Kandla. Additionally, the district court awarded $11,579.70 in connection with the DAP lost during discharge at JNPT, the port of distress. See New York Marine II,
Our focus, therefore, is whether Deepak is entitled to recover for any other losses incurred. Clause 1 delineates the risks covered, which include loss or damage due to (a) fire or explosion; (b) a stranded, grounded, sunk or capsized vessel; (c) collision of the vessel with “any external object;” or (d) discharge of cargo at a port of distress. SMPs 377 and 378 modify this clause by adding the risk of rainwater damage. Clause 8 of the ICC(C) terms outlines the duration of insurance coverage. This Clause provides that the insurance coverage' commenced from the time the DAP left Tradeline’s warehouse and “continue[d] during the ordinary course of transit” and terminated either (1) on delivery to the, final warehouse or storage site at the named destination; or (2) on delivery to any other warehouse or storage site,
whether prior to or at the destination named herein, which the Assured elect[ed] to use either for storage other than in the ordinary course of transit or for allocation or distribution or on the expiry of 60 days .after completion of discharge overside of the goods hereby insured.
Deepak seeks to recover $255,082.52 for 1,056.06 MT of DAP that had been deposited from the lightering barges onto the shore area and was washed away as a result of rising tides and tidal waves. Additionally, Deepak claims $471,978.24 for DAP that was damaged by the cyclone on the shore of Kandla. The district court
Although the SMPs 377 and 378 amended Clause 1 of the ICC(C) provisions to include the risk of rainwater damage, the SMPs did nothing to alter Clause 8, the duration clause, which terminates coverage upon delivery to any site,-either prior to or at the named destination, used for storage or distribution allocation. Therefore, once the DAP had been offloaded from the MW Sea Guardian onto the shore area into the custody of Rishi Shipping, Deepak’s clearing and forwarding agent, the DAP had been delivered to “any other warehouse of place of storage” and was no longer in the “ordinary course of transit” under Clause 8. At that point, the insurance coverage terminated, and any loss or damage at that point cannot be recovered under the Policy. See Jomark Textiles, Inc. v. Int’l Fire and Marine Ins. Co., Ltd.,
Clause 12 of the Policy, which provides for broader “warehouse to warehouse” coverage does not affect our determination of Deepak’s coverage with respect to these two claims, because, as we concluded earlier, where there are conflicts' between ICC(C) provisions and the Policy provisions, the ICC(C) provisions control. Similar reasoning defeats Deepak’s arguments for coverage which invoke Clause 17 of the Policy, entitled “Shore Coverage,” providing that “where this insurance covers on goods while on any land conveyance and/or while on docks, wharves, quays, or elsewhere on the shore, the perils insured against include ... cyclone, ... flood, [and] rising waters.” This clause does not apply here, because such shore coverage was not included in the insurance covering the DAP shipments, as demonstrated by the SMPs’ adoption of ICC(C) terms. We therefore agree with the district court that New York Marine is not liable under the Policy, as amended by the SMPs, for either the approximately 1056 MT of DAP washed away on the shore of Kandla or the approximately 2672 MT of DAP damaged while at the shore area at Kandlа.
The next category of loss claimed by Deepak amounts to $30,703.87 in salvage and reconditioning costs for the DAP damaged at the shore of Kandla. The district court concluded that, because the damage itself was not covered under the Policy, the costs incurred in salvage efforts were likewise not covered. See New York Marine II,
*127 In case of any imminent or actual loss or misfortune, it shall be lawful and necessary to and for the Assured, his or their factors, servants and assigns, to sue, labor and travel for, in and about the defense, safeguard and recovery of the goods and merchandise, or any part thereof without prejudice to this insurance; nor shall the acts of the Assured or this Assurer in recovering saving and preserving the property insured in case of disaster be considered a waiver or an acceptance of abandonment; to the charges whereof, this Assurer will contribute according to the rate and quantity of the sum hereby insured.
Where, as a result of the operation of a risk covered by this insurance, the insured transit is terminated at a port or place other than that to which the subject-matter is covered under this insurance, the Underwriters will reimburse the Assured for any extra charges properly and reasonably incurred in unloading!,] storing and forwarding the subject-matter to the destination to which it is insured hereunder.
This Clause 12, which does not apply .to general average or salvage charges, shall be subject to the exclusions contained in Clauses 4, 5, 6 and 7 above, and shall not include charges arising from the faulty negligence[,] insolvency or financial default of the Assured or their [sic] servants. (Emphasis added.)
To determine the import of this Clause, we must first ascertain whether the DAP wаs forwarded to JNPT, the port of distress, “as a result of the operation of a risk covered by this insurance.” Clause 1 of the ICC(C) terms includes as a covered risk “loss of or damage to the subject-matter insured reasonably attributable to discharge of cargo at a port of distress.” Additionally, SMPs 377 and 378 adds rainwater damage as a covered risk. Deepak therefore argues that the movement of the M/V Sea Guardian, because of heavy rainfall, from Kandla to JNPT as a port of distress triggered coverage under Clause 12.
We do not agree that Clause -12 of the ICC(C) terms provides coverage to Dee-pak for those “extra charges properly and reasonably incurred in unloading[,] storing and forwarding the subject-matter to the destination to which” the DAP was insured. As New York Marine contended at oral argument, the expenses incurred by Deepak in diverting the DAP to JNPT were not incurred as a result of loss or damage to the DAP “reasonably attributable to dischаrge of cargo at a port of distress.” Neither was the vessel diverted to JNPT as a result of rainwater damage to the DAP. Instead, the expenses were incurred as a result of the closure of the port at Kandla due to the cyclonic weather. Risks covered under the Policy include neither port closure nor cyclones. Therefore, we cannot conclude that the expenses incurred in the diversion to JNPT oc~
Next, Deepak claims that it should recover for the rainwater damage to approximately 566 MT of DAP that occurred during storage in a silo at JNPT. As we noted earlier, SMPs 377 and 378 cover rainwater damages. Because we cannot ascertain, however, whether this DAP was still “in transit” under ICC(C) Clause 8, we remand to the district court for a detérmination regarding whether this DAP was covered under the Policy given this clauses duration limitations. Deepak contends that this DAP was damaged in part because of the negligence of the stevedores or of the port facilities at JNPT. Such a contention raises questions concerning whether, at that point, the DAP was in “the ordinary course of transit” or had instead been stored, at Deepak’s direction, “other than in the ordinary course of transit.” We distinguish this claim for damage from the damage which occurred at the port of Kandla, because in the latter instance, the offloaded DAP was being handled by Rishi Shipping, a clearing and forwarding agent hired by Deepak. This fact clearly shows that the DAP was damaged in the shore area at Kandla outside the duration described in ICC(C) Clause 8. Therefore, on remand the district court must ascertain if coverage had indeed terminated because the DAP in the JNPT silo was delivered to “any other warehouse or place of storage, whether prior tо or at 'the destination named herein, which [Deepak] electfed] to use either for storage other than in the ordinary course of transit or for allocation or distribution.”
D. The Tradeline-Deepak CIF Sales Contract
Deepak contends on appeal, as it did below, that Tradeline breached the CIF sales contract by improperly writing, the SMPs and thereby limiting Deepak’s insurance coverage to the ICC(C) clauses. The district court rejected this claim, and concluded that Tradeline fulfilled its obligations under the CIF contract. We agree with the district court.
“[U]nder a CIF contract [ ] the seller fulfills his obligation simply by loading the cargo and forwarding to the buyer a bill of lading and insurance certificate.” Natl Am. Corp. v. Fed. Republic of Nigeria,
Here, Tradeline loaded the DAP shipments aboard the M/V Sea Guardian, issued two bills of landing and issued two certificates of insurance, the SMPs 367 and 368 (later replaced by SMPs 377 and 378). Tradeline apparently fulfilled all its obligations under the CIF contract. Examination of the terms of the specific CIF contract at issue reveals that Tradeline provided exactly the type of insurance outlined in the contract. Clause 8 of the CIF' contract states that Trade'line is to
cover insurance and give details to [Dee-pak] prior to commencement of loading. The insurance cover shall be provided by a reputed international insurance firm to cover 110% of C.I.F. value of the ordered cargo covering the following*130 risks: a) London ICC Clauses (C)[;] b) London War Clauses (Cargo)[;] c) London Strikes Clausеs (Cargo).
Under the contract, Tradeline was obligated to supply insurance providing ICC(C) coverage and, under either set of SMPs, it did so. We affirm the district court’s dismissal of Deepak’s breach of contract claim against Tradeline.
E.Attorneys ’ Fees
Deepak appeals the district court’s denial of attorneys’ fees, contending that it is entitled to full reimbursement because it was “dragged halfway around the world and ... cast in a defensive posture by the insurer [New York Marine] simply because [New York Marine] did not wish to live up to its contractual obligations.”
Generally, attorneys’ fees awards in admiralty suits are discretionary and based on a finding of bad faith. See Ingersoll Milling Machine Co. v. M/V Bodena,
The district court refused to award attorneys’ fees to Deepak and Tradeline, reasoning that (1) New York Marine did not act in bad faith in denying the claim or instituting the declaratory action; and (2) Deepak was not “truly successful” in defending this suit, because it only recovered a fraction of its claim. See New York Marine II,
F. Punitive Damages
Deepak alleges that New York Marine breached the Policy in bad faith, and therefore is liable to Deepak for punitive damages. The district court dismissed this claim, New York Marine I,
Under New York law, punitive damages in a breach of contract claim are available if the plaintiff demonstrates (1) that the defendant’s conduct is “actionable as an independent tort; (2) the tortious conduct must be of [an] egregious nature; (3) the egregious conduct must be directed to plaintiff; and (4) it must be part of a pattern directed at the public generally.” New York Univ. v. Cont’l Ins. Co.,
The district court noted that Dee-pak’s claim for punitive damages alleged no facts regarding the fourth prong, and Deepak alleges none on appeal. We therefore conclude that Deepak’s punitive damages claim must fail.
G. Pre-Judgment Interest Rate
The district court applied the United States Treasury Bill rate as provided in 28 U.S.C. § 1961(a). Deepak contends that this was error, and that the district court
“[T]he rate of pre-judgment interest is within the broad discretion of the district court.” Mentor Ins. Co., Ltd. v. Brannkasse,
United States Treasury Bills are such short-term, risk-free obligations. See Ingersoll Milling Machine Co. v. M/V Bodena,
III. CONCLUSION
For the foregoing reasons, we affirm the district court’s dismissal of Deepak’s breach of contract claim against Tradeline and the claims for punitive damages. We also affirm the district court’s decisions with respect to attorneys’ fees and prejudgment interest. We reverse the district court’s conclusion that Tradeline was not New York Marine’s agent with respect to the Special Marine Policies issued to Deepak and that SMPs 377 and 378 were void, and remand for a determination of New York Marine’s liability for the rainwater damage to the DAP stored in the silo at JNPT.
Notes
. The Institute Cargo Clauses (C), along with several other types of clauses, were developed in 1983 by the Institute of London Underwriters to replace the old Lloyd’s S.G. (ship and goods) Policy. See 2 Thomas Schoenbaum, Admiralty and Maritime Law § 19-4 (3d ed.2001).
. The district court also dismissed Tradeline's claim of deceptive acts and practices under N.Y. Gen. Bus. Law § 349, concluding that the statute was inapplicable. See New York Marine,
. Frenkel filed a cross-appeal as well, asserting that New York Marine's third-party complaint against it should have been dismissed on its motion for summary judgment. At oral argument, Frenkel conceded that, because New York Marine had abandoned its claim against Frenkel, there was nothing for this Court to address with respect to Frenkel’s cross-appеal.
. The district court concluded that “even if a principal-agent relationship between Trade-line and New York Marine was created by Clause 43 of the Open Policy, Tradeline violated its duty of utmost good faith ... by failing to disclose the weather conditions ...." New York Marine II,
. Additionally, we reject Deepak's contention that the district court, in construing the insurance policy, improperly admitted parol evidence, specifically the testimony of Anna Abruzzese, an underwriting secretary at MMO. -While it is true that parol evidence is admissible only when an insurance policy is ambiguous, see In re Prudential Lines Inc.,
. Clause 41 states:
. Deepak also invokes Clause 21 of the Policy, which echoes Clause 12 of the ICC(C) terms, and provides recovery for landing, warehousing, forwarding expenses and damage to cargo "reasonably attributable to transhipment or to discharge of cargo at port of distress.” The Policy's Clause 21, however/ provides broader coverage than does ICC(C)'s Clause 12. Because we determined earlier that where conflicts arise between the Policy's and ICC(C)'s terms, the ICC(C) terms prevail, we look only to ICC(C)'s Clause 1.2 to determine coverage.