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COMPAGNIE DES BAUXITES DE GUINEE v. INSURANCE CO.

June 21, 1983

COMPAGNIE DES BAUXITES DE GUINEE, A Corporation, Plaintiff,
v.
INSURANCE COMPANY OF NORTH AMERICA, Defendant



The opinion of the court was delivered by: SIMMONS

I. Introduction

 Plaintiff, Compagnie Des Bauxites De Guinee, ("CBG"), instituted this diversity action under the business interruption provisions of an all risk policy of insurance issued by Defendant Insurance Company of North America, ("INA"), for losses allegedly sustained as the result of an accident occurring March 26, 1974, when the boom of an item of equipment known as "Bucket Wheel No. 3" failed and collapsed, resulting in extensive damage to Bucket Wheel No. 3, which allegedly caused Plaintiff CBG to suffer a business interruption loss. Plaintiff CBG owns and operates in the Republic of Guinea, West Africa, a mining and processing plant for bauxite ore. Bucket Wheel No. 3 is a large item of equipment which is used to reclaim dried bauxite stored in the Dried Ore Storage Building, located at Plaintiff CBG's bauxite processing and shiploading facilities in Kamsar, Guinea.

 Defendant INA, on April 15, 1983, moved for the entry of summary judgment as a matter of law, contending that the Plaintiff CBG failed and omitted to provide a signed and sworn Proof of Loss within 60 days of the date of the damage, in violation of the provisions of the contract of insurance, and that Defendant INA was thereby severely prejudiced; and further, that the alleged damage to Bucket Wheel No. 3 did not constitute a sudden fortuitous and accidental event so as to cause coverage to attach, and that the cause of the damage suffered by Bucket Wheel No. 3 pre-existed the February 12, 1974 inception date of the contract of insurance. Both sides have thoroughly briefed the issues presented by Defendant INA's Motion, and hearing and argument on said Motion was held May 12, 1983. After considering the contentions of the parties, the Defendant's Motion will be granted on the grounds that no fortuitous event occured for the reasons set forth in this Opinion.

 II. Undisputed Facts

 It is CBG's contention, as evidenced in their Pre Trial Statement and Answers to Interrogatories, that the damage suffered by Bucket Wheel No. 3 on March 26, 1974, was due entirely to design errors incorporated into that item of machinery. CBG's position with respect to this cause of damage has always been consistent, and CBG has never denied this contention, even during the course of the argument on this Motion. See Transcript, May 12, 1983 at pp. 10-11.

 The Report of Plaintiff's experts, O'Donnell & Associates, Inc., attached to and made a part of Plaintiff's Pre Trial Statement, states as follows:

 
2.0 CONCLUSION
 
3.0 OBSERVATIONS AND ANALYSIS
 
A new machine should not fail early in its life while doing the job it was designed to perform. If it does, the design is defective. We have now verified by calculations, computer analyses and tests that the collapse was due to a fatigue failure caused by the stresses on the boom associated with reversal of slewing direction. These stresses were significantly larger than those used in designing the Bucket Wheel. Although these increased stresses were not large enough to produce visible damage to the boom, they eventually initiated a tiny crack at a highly stressed point which grew larger with each cycle until the boom suddenly collapsed on March 26, 1974.
 
3.2 Role of Prior Incidents
 
Some of the contemporaneous reports on the Bucket Wheel collapse suggested that overload incidents occurring prior to March 26, 1974, significantly contributed to the collapse of the boom. The fatigue analysis which we performed demonstrates to the contrary that the collapse occurred as a result of the cyclic stresses associated with normal operation, and not as a result of the prior incidents.
 
. . . Consequently, it is our conclusion that the collapse of the boom not only was attributable to normal operation, but would have occurred even if there had been no prior incidents. (Underlining Supplied).

 Further, the Plaintiff's Pre Trial Report of O'Donnell and Associates also discusses the problem of overloading in the Analysis and ...


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