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Third Circuit Joins First, Second, Fifth and Eleventh Circuits in Holding an Insured Bears the Burden to Show a Loss is Fortuitous (NJ)

April 9, 2020

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<p style="text-align: justify;">Recently, in <a href="">Chartis Prop. Cas. Co. v. Inganamort</a>, the United States Court of Appeals for the Third Circuit considered whether Joan and John Inganamort (“Inganamort”) met their burden of proof to establish a “fortuitous” loss under an all-risk insurance policy issued to Ingagamort by Chartis Property Casualty Company (“Chartis”).</p>
<p style="text-align: justify;">By way of brief background, in September 2011, Iganamort’s 65-foot fishing vessel sustained serious damage when it was partially sunk while docked at Iganamort’s Florida residence.<span class="Apple-converted-space">  </span>After submitting the claim under its all-risk policy, Chartis sent a claims specialist to conduct a preliminary survey of the boat.<span class="Apple-converted-space">  </span>After various testing, the claims specialist ultimately concluded there was “obvious water intrusion”, caused by multiple potential sources of water ingress.<span class="Apple-converted-space">  </span>Chartis concluded Inganamort’s loss was not covered by the pertinent policy and decided to file a declaratory judgment action in the United States District Court for the District of New Jersey to affirm its position that, <i>inter alia</i>, Chartis was not liable for the damage to Iganamort’s boat.<span class="Apple-converted-space">  </span>Subsequently, Chartis won summary judgment, which was affirmed by the District of New Jersey.<span class="Apple-converted-space">  </span>In response, Inganamort appealed.<span class="Apple-converted-space">  </span>In pertinent part, Inganamort argued it was not required to prove the loss was fortuitous. In addition, Inganamort, nevertheless, asserted the boat sustained damage from “heavy rainfall”, which constituted a fortuitous loss as a matter of law. <span class="Apple-converted-space"> </span></p>
<p style="text-align: justify;">On appeal, the Third Circuit narrowed the issues to one simple question: who bore the burden of proving a fortuitous loss.<span class="Apple-converted-space">  </span>Based on well-established precedent, and the reasoning applied by the First, Second, Fifth and Eleventh Circuits, the Third Circuit noted a “fortuitous loss” – in the context of an all-risk insurance policy – equated to an unexplainable loss or something that was “dependent on chance”.<span class="Apple-converted-space">  </span>While an insured is not required to show the exact cause of the loss, an insured does bear the burden of proving the loss was fortuitous. <span class="Apple-converted-space"> </span></p>
<p style="text-align: justify;">The Court next considered whether the “heavy rain” constituted a “fortuitous loss”.<span class="Apple-converted-space">  </span>In doing so, the Court relied on Chartis’ statement of undisputed facts, which did not contain any data substantiating Inganamort’s arguments that there were “heavy rainfalls” on or around the alleged date of loss. Accordingly, the Court determined Ignanamort failed to show the damage to its boat was caused by a fortuitous loss. <span class="Apple-converted-space"> </span></p>
Thanks to Lauren Berenbaum<span class="Apple-converted-space"> for this post.  If you have any questions or comment, please contact <a href="">Vincent Terrasi</a>.</span>



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