Court Rejects Contention that Insured Had Intentionally Destroyed Evidenced by Removing a Wrecked Ship

A federal district court has ruled that an insured did not destroy evidence when it removed a wrecked ship without first notifying its insurer.  

The Case 

During insurance coverage litigation between Starr Indemnity & Liability Company and New York Marine & General Insurance Company (together, “Starr”) and the Continental Cement Co., Starr asserted that Continental had intentionally destroyed evidence by removing a wrecked ship, and it sought sanctions. 

The Court’s Decision 

The court denied the insurers’ request. It first found there had been “ample opportunity” for Starr to inspect the ship during the course of the litigation, noting that Starr had conducted at least two inspection dives and determining that Starr had been able to “fully investigate and test” the cause of the ship’s sinking. 

The court also ruled that Continental had done nothing “untoward” by beginning wreck removal. According to the court, once Starr had declined coverage on the hull and protection and indemnity policies, “Continental was under no obligation to consult Starr regarding the appropriate method of wreck removal or to obtain Starr’s permission prior to wreck removal.” It concluded that the “mere fact that Continental commenced removal without first notifying Starr” did not demonstrate that Continental’s intent was to destroy evidence. 

The case is Starr Indemnity & Liability Co. v. Continental Cement Co., L.L.C., No. 4:11CV809 JAR (E.D. Mo. April 23, 2013).