The opinion of the court was delivered by: SIMMONS
Plaintiff CBG purchased from Defendant INA business interruption insurance under an all risk policy of insurance which provided primary coverage in the amount of $10,000,000.00. CBG also purchased from the remaining defendants excess insurance coverage in the amount of $10,000,000.00. Plaintiff CBG is claiming losses in the instant case in excess of $22,000,000.00, hence the involvement of these Excess Insurers.
Plaintiff CBG is engaged in the mining, processing, selling and shipping of bauxite ore, (which is used in the production of aluminum), in the Boke Region, Republic of Guinea, West Africa. The tippler/crusher involved herein is located at CBG's processing and shiploading facilities at the port of Kamsar in the Republic of Guinea.
Bauxite ore which is mined and blasted at Sangaredi is trammed 135 kilometers to the port of Kamsar, where the raw ore is tippled and received at a crushing plant, consisting of two crushing lines, which crushes the bauxite ore into smaller pieces, so that it can be further processed and ultimately shipped.
When the ore cars arrive at the crushing plant in Kamsar, each car is raised approximately 42 feet, at which point the ore is "tippled" so that the blasted ore is emptied into the hopper of the crushing plant. The blasted ore then falls to the bottom of the hopper, which is a moving conveyor system known as an "apron feeder," consisting of a series of pans which move the ore to a moving screen, known as the "wobbler" which separates the large ore pieces from the smaller ore pieces. The larger pieces are then conveyed to the crusher where "hammers" crush the ore into smaller pieces which are then transported to various other locations at the Kamsar facility.
The tippler/crusher operation suffered continual problems, and in August and September 1974, suffered such serious structural failure, collapse, and deformation of its support beams that it had to be rebuilt, which reconstruction was accomplished in June or July 1975. Plaintiff CBG claims business interruption losses for the period of September 1974 through September 1975.
Defendants INA and the Excess Insurers have moved for Summary Judgment, contending firstly that Plaintiff CBG failed to comply with the provisions of the policy of insurance which require immediate written notice of any loss, thereby causing severe prejudice to Defendants, who were denied the opportunity to inspect and examine the tippler/crusher prior to its rebuilding, secondly, that suit was not brought within twelve months of the inception of the loss as required by the contract of insurance, which also severely prejudiced Defendants; and finally, that the failure and collapse of the tippler and the crusherhouse cannot, as a matter of law, constitute the sudden fortuitous and accidental event which is required before coverage can attach under the terms and conditions of said contract of insurance.
In the light of the undisputed facts, the Motions of Defendants INA and the Excess Insurers for Summary Judgment will be granted on the ground that a fortuitous event has not occurred, based on the reasoning set forth hereinbelow in this Opinion.
As a matter of law, insurance coverage, even under an all risk policy of insurance, extends only to fortuitous losses, or losses caused by a fortuitous event. Dow Chemical Co. v. Royal Indemnity Co., 635 F.2d 379 (5th Cir. 1981); Atlantic Lines Limited v. American Insurance Co., 547 F.2d 11 (2d Cir. 1976). The determination of whether a loss is fortuitous is a legal question for the court to determine. Redna Marine Corporation v. Poland, 46 F.R.D. 81 (S.D.N.Y. 1969). This requirement of a "fortuitous" event has been utilized by the courts as a fundamental principle of law in interpreting insurance contracts, and is not a new or novel concept. See G. Couch, Couch on Insurance 2d § 48:141 (1951).
A fortuitous event is an event which is dependent on chance, and is synonymous with the term "accident." Although an insurer is obligated under an all risk policy of insurance to pay for losses which are caused by a fortuitous and extraneous event, an insurer is not obligated to pay for loss which is likely or certain to happen, due to the nature and inherent deficient qualities of the property insured. For example, damage which is inevitable or due to wear and tear is not covered by all risk policies, since there is no "risk" involved because such damage or loss is certain to occur. Avis v. Hartford Fire Insurance Co., 195 S.E. 2d 545, 547, 283 N.C. 142 (1973). As stated previously, "all risk" policies of insurance cover only those damages or losses which are due to a fortuitous circumstance or casualty.
As indicated above, in order that a loss be covered under a policy of insurance, such as the one at issue, the loss must result from a risk, and not from the probable consequence of the inherent deficient qualities of the item insured. Although coverage under an "all risk" policy of insurance is broad, the term "all risk" does not mean that "all losses" are covered, it is only those losses that are of a fortuitous nature or which are caused by a fortuitous event which are covered. Avis v. Hartford Fire Insurance Co., 192 S.E. 2d 593, 16 N.C. App. 588 (1972); on appeal, 195 S.E. 2d 545, 283 N.C. 142 (1973).
"Fortuitous" means happening by chance or accident, occurring unexpectedly or without known cause; accidental and undesigned. Black's Law Dictionary (Rev. 4th Ed. 1968). The damage or loss must therefore result from an extraneous cause, and not wholly from an inherent defect in the subject matter or from the inherent deficient qualities, nature, and properties of the subject matter insured. Greene v. Cheetham, 293 F.2d 933 (2d Cir. 1961); Mellon v. Federal Insurance Co., 14 F.2d 997 (S.D.N.Y. 1926) (A.Hand, J.).
It is important to note that in the instant case, Defendants are not denying coverage on the basis of a specific exclusionary term of the contract of insurance; rather, they are claiming that the failure and collapse of the tippler/crusher was not caused by a fortuitous event of any kind or by chance, and that the interim and final failure and collapse of the tippler/crusher was ...