Guam Indus. Servs. v. Zurich Am. Ins. Co.

Insurance policies with unambiguous terms will be interpreted by their ordinary meaning.

Guam Industrial Services, Inc. (“Guam Industrial”) carried two insurance policies on a dry dock that it owned. The first insurance policy was a Hull and Machinery Policy, insured by Zurich American Insurance Company (“Zurich”) and Starr Indemnity and Liability Company (“Starr”). The second policy was an Ocean Marine Policy covered only by Zurich. Guam Industrial’s dry dock collapsed, causing barrels of oil, amounting to about 113,000 gallons, to sink. The barrels did not leak upon entering the water. Guam Industrial filed insurance policy claims, which were denied, and the district court granted summary judgment for the insurance companies. On appeal, the Ninth Circuit concluded that the district court was correct in determining both policies were appropriately denied. The panel reasoned that the Hull and Machinery Policy was properly denied because Guam Industrial got a lesser “commercial” certification, instead of obtaining the Navy Certification warranty required under the policy. The panel rejected Guam Industrial’s claim that Zurich waived the need for the Navy Certification when Zurich allowed Guam Industrial to hold commercial warranty because when the dock collapsed, Guam Industrial was not conforming to the commercial warranty standards either. The panel held that the Ocean Marine Policy was also properly denied due to the unambiguous contractual terms and their ordinary meaning. The ordinary meaning of the Ocean Marine Policy and its adjoining endorsement were clear that unless the oil leaked from the barrel, then the policy would not be triggered. AFFIRMED.