Facts

Defendant The Fort Miller Group Inc. ("Fort Miller") was a holding company for several subsidiaries, which included defendant The Fort Miller Company Inc. The Fort Miller Company Inc. manufactured and sold products such as concrete, chain-link fencing, and gates. In 1998, Fort Miller purchased defendant Beeche Systems Corporation ("Beeche Systems"). Defendants purchased an insurance policy from St. Paul Reinsurance Company Limited ("St. Paul").

Beeche Systems sold "engineer access systems" to companies for use on a project being conducted on the San Francisco/Oakland Bay Bridge. On Jan. 4, 2002, an accident occurred on the bridge involving a Beeche engineer access system. The system was damaged, individuals were injured, and the project suffered delays. Lawsuits were filed against Beeche Systems as a result of the accident.

Various insurance carriers, including St. Paul, contributed to settlements in those lawsuits. Specifically, St. Paul paid $671,000 under a reservation of rights to rescind the policies and seek reimbursement. Plaintiff Unionamerica Insurance Company Ltd. ("Unionamerica"), as the successor-in-interest to St. Paul, sued defendants seeking rescission and reimbursement.

PLAINTIFF'S CONTENTIONS:
Unionamerica claimed that Fort Miller made misrepresentations and omissions in its policy application.

DEFENDANTS' CONTENTIONS:
The defense argued that plaintiff was attempting to cover its losses for an ill-conceived insurance policy. Defendants claimed it was plaintiff's policy to keep premiums for coverage unless a claim existed, at which time it would rescind the policy.

Result

The court awarded the plaintiff $1,548,292. The court found that defendant Beeche Systems' business was significantly different from that of defendant Fort Miller and its other subsidiary groups. As such, Fort Miller's policy application did not contain a sufficient description of Beeche System's business.

Other Information

FILING DATE: May 9, 2005.