Alabama Supreme Court Enforces “Mysterious Disappearance” Exclusion in Case of a Missing Sailboat

The Alabama Supreme Court, reversing a trial court’s decision, has ruled that the “mysterious disappearance” exclusion in an “all risk” insurance policy precluded coverage for a missing sailboat.

The Case

After Michael Britt purchased a Beneteau brand sailboat in 2004, he insured it with St. Paul Fire & Marine Insurance Company pursuant to an “all risk” insurance policy that provided coverage limits of $85,000 for “accidental direct physical loss of or damage to [the sailboat] … except as specifically stated or excluded in this policy.”

From 2004 onward, the sailboat served as Britt’s residence in Florida.

Britt’s father said that, in early September 2011, Britt telephoned him and told him that he had accepted a job driving a commercial truck and that he had to attend orientation for the new job in Oklahoma City, Oklahoma. Britt’s father said that Britt planned to sail the sailboat from West Palm Beach, Florida, to Jacksonville, Florida, store the boat in Jacksonville, and rent a car in Jacksonville to drive to Oklahoma City for the orientation.

On or around September 11, 2011, Britt set sail for Jacksonville. On September 15, 2011, the U.S. Coast Guard boarded the sailboat approximately one mile off the coast of Cape Canaveral, Florida, for a “cold hit” inspection. That inspection revealed that the sailboat was seaworthy as of September 15, 2011.

Britt’s father said that Britt telephoned him on September 15, 2011 and informed him that, given a lack of wind, he would arrive in Jacksonville later than anticipated but that he would telephone him when he arrived.

Britt’s father said that that telephone call never came and that no one had seen Britt or the sailboat since September 15, 2011.

In October 2011, Britt’s father contacted St. Paul to report the sailboat as lost. On February 14, 2012, Britt’s father was appointed conservator of his son’s estate. Shortly thereafter, he filed a claim with St. Paul for the lost sailboat.

On June 7, 2012, after conducting its own investigation into Britt’s disappearance, St. Paul sent Britt’s father a letter in which it declined coverage for the sailboat. The insurer decided that the circumstances surrounding the disappearance of the sailboat appeared to fall under the “mysterious disappearance” exclusion in Britt’s policy.

Britt’s father sued St. Paul for loss of the sailboat.

After the trial court denied St. Paul’s motion for summary judgment and granted the motion for partial summary judgment filed by Britt’s father, St. Paul appealed to the Alabama Supreme Court.

The Alabama Supreme Court’s Decision

The Alabama Supreme Court reversed.

In its decision, the court explained that because the St. Paul policy did not define “mysterious disappearance,” it had to give the phrase the common, everyday meaning a reasonable person of ordinary intelligence would give it. The court found no reason that the everyday meaning of the phrase “mysterious disappearance” should vary depending on whether the insurance policy in which it appeared was a theft policy or an all-risk policy, or on whether the policy provided or excluded coverage for mysterious disappearances.

The court then declared that it was “reasonably certain” that there was only one manner in which a person of ordinary intelligence would interpret the phrase “mysterious disappearance.” In the court’s view, if insured property could not be found and the circumstances surrounding its disappearance were so “unknown, puzzling or baffling” as to make the disappearance inexplicable, a person of ordinary intelligence would determine that disappearance to be “mysterious.” It added that if there was evidence to support a logical inference as to what happened to the insured property, even though that evidence was inconclusive, a person of ordinary intelligence would not find the circumstances so “unknown, puzzling or baffling” as to determine that the disappearance of the insured property was inexplicable. The mysterious-disappearance exclusion, the court decided, was not ambiguous as a matter of law.

The court then pointed out that there was no evidence to support any theory as to what had happened to the sailboat. It stated that if the “undisputed facts” in this case did not constitute a mysterious disappearance, then it was at a loss as to what facts would.

Thus, the court concluded, St. Paul had carried its burden of showing that Britt’s father’s claim on the policy fell within the mysterious-disappearance exclusion.

The case is St. Paul Fire & Marine Ins. Co. v. Britt, No. 1140423 (Ala. Jan. 29, 2016).

Rivkin Radler Comment

As the Alabama Supreme court notes, a number of courts have similarly defined “mysterious disappearance” within the context of an insurance policy exclusion. In 1946, the Supreme Court of North Carolina defined “mysterious disappearance” within an insurance policy as “any disappearance or loss under unknown, puzzling or baffling circumstances which arouse wonder, curiosity, or speculation, or circumstances which are difficult to understand or explain.” Davis v. St. Paul Mercury & Indem. Co., 40 S.E.2d 609 (N.C. 1946).

Since the North Carolina decision, numerous courts have tracked that court’s language in defining “mysterious disappearance.” See, e.g., Caldwell v. St. Paul Mercury & Indem. Co., 49 So. 2d 570 (Miss. 1950); Sigel v. American Guarantee & Liab. Ins. Co., 98 A.2d 376 (Pa. Super. 1953); Deckler v. Travelers Indem. Co., 94 So. 2d 55 (La. Ct. App. 1957); Seward v. Assurance Co. of Am., 32 Cal. Rptr. 821 (1963); Hammontree v. Central Mut. Ins. Co., 385 S.W.2d 661 (Mo. Ct. App. 1965); Claiborne v. United States Fire Ins. Co., 193 So. 2d 315 (La. Ct. App. 1966); Gifford v. M.F.A. Mut. Ins. Co., 437 S.W.2d 714 (Mo. Ct. App. 1969); Mancha v. St. Paul Fire & Marine Ins. Co., 474 S.W.2d 563 (Tex. Ct. App. 1971); Aetna Ins. Co. v. Zoblotsky, 481 P.2d 761 (Okla. 1971); Corcoran v. Hartford Fire Ins. Co., 333 A.2d 293 (N.J. Super. 1975); Lovas v. St. Paul Ins. Cos., 240 N.W.2d 53 (N.D. 1976); Coastal Plains Feeders, Inc. v. Hartford Fire Ins. Co., 545 F.2d 448 (5th Cir. 1977); Ward Cattle Co. v. Farm Bureau Ins. Co. of Nebraska, 388 N.W.2d 89 (Neb. 1986); Libralter Plastics, Inc. v. Chubb Grp. of Ins. Cos., 502 N.W.2d 742, 745 (Mich. Ct. App. 1993); and Farmland Indus., Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 333 F. Supp. 2d 1133 (D. Kan. 2004).