Motion to Salvage Coverage for Costs Salvage Costs of Sunken Ship Denied

    The federal district court denied one insurer's motion for summary judgment seeking to establish its policy did not cover the cost to salvage a sunken yacht. Albert v. William, 2023 U.S. Dist. LEXIS 192241 (D. Haw Oct. 26, 2023). 

    The Nakoa, a ninety-four-foot yacht, sunk off the coast of West Maui. In December 2022, Noelani Yacht Charter and Jim Jones, purchased Nakoa from the Albert Revocable Trust (Trust) for $1,450,000 to be paid over fifteen years. After the purchase, the Nakoa ran aground off West Maui in late February 2023. Three weeks later, the Nakoa sank during a salvage attempt. 

    During the salvage attempt, the vessel appeared to have been insured by an ION entity: either Defendant ION Insurance Group, S.A., and/or Defendant ION Insurance Company, Inc. Before the grounding, The Trust had obtained a policy from ION Insurance Group, S.A., a foreign corporation, through defendant Steve Bonner, an insurance broker and president of defendant Allied Financial Network (AFN). In March 2023, after Nakoa's grounding, ION Insurance Group, S.A., may have assigned or transferred responsibility for Nakoa's policy to ION Insurance Company, Inc., a U.S. Corporation. The relationship between the two insurers was unclear. ION Insurance Company, Inc., may or may not have been the alter ego of ION Insurance Group.

    After Nakoa's grounding, the State of Hawaii's Department of Land and Natural Resources (DLNR) demanded that the Trust pay for the salvage operations. A representative of Edward William S.L., an agent of both ION defendants, told DLNR that "ION" was willing to make certain payments related to the salvage liabilities. ION Insurance Group, S.A., however, ultimately declined all coverage related to Nakoa's grounding. 

    The Trust sued ION Insurance Company, Inc., ION Insurance Company, Inc. and others. ION Insurance Company, Inc., filed for summary judgment arguing that the Trust erroneously named it as a defendant based upon the mistaken belief that the policy was transferred to it by ION Insurance Group, S.A. ION Insurance Group, Inc. argued it never insured Nakoa and the policy was not transferred to it. The Trust contended there were genuine disputes of material fact as to which ION entity was responsible for the relevant policy, whether there was an assignment of the policy, and whether ION Insurance Company, Inc., was merely the alter ego of ION Insurance Group, S.A. 

    The court concluded that questions of fact precluded the grant of summary judgment to ION Insurance Company, Inc. Based upon the existing record, the court could not tell the degree of interrelationship between the ION Defendants and whether ION Insurance Company, Inc., was or was not an alter ego of ION Insurance Group, S.A. A declaration submitted by ION insurance Company, Inc.'s chief executive offer, Opal Whitney, suggested that the ION defendants were distinct entities. But this was contradicted by the 2021 report provided to support the declaration. The report explained that ION Insurance Company, Inc., "derives a signaficant portion of their revenue from retrocession business from ION Insurance Group, S.A. Business expenses are also shared with the Group." Therefore, questions of fact remained as to the precise relationship between the ION defendants, such that ION Insurance Company, Inc. could not be dismissed from the case at this time. 

    Assuming the two insurers were distinct entities, the court could not determine on the present record which ION entity, if any, had responsibility to the Trust in connection with the Nakoa's grounding. Whitney's declaration denied that ION Insurance Company, Inc, was "a party to" or had "any interest in" Nakoa's policy at the time of the grounding. The duelling policy declarations submitted by the Trust, AFN, and ION Insurance Company, Inc., however, contradicted the declaration The policy declaration submitted by the Trust and AFN was on ION Insurance Group, S.A.'s letterhead with the ION log. It listed the Trust as the insured. 

    The dueling policy declarations submitted by ION Insurance Company, Inc., the Trust, and AFN complicated the situation and called into question what the operative policy was at the relevant time. Questions of fact remained as to which ION defendant was responsible for insuring Nakoa at the time of the grounding. ION Insurance Company, Inc.'s motion for summary judgment was therefore denied.