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De Guinee v. Insurance Co.

decided: November 10, 1983.

COMPAGNIE DES BAUXITES DE GUINEE, A CORPORATION
v.
INSURANCE COMPANY OF NORTH AMERICA COMPAGNIE DES BAUXITES DE GUINEE APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA.

Seitz, Chief Judge, Gibbons and Rosenn, Circuit Judges.

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judge:

Compagnie des Bauxites de Guinee (CBG) appeals from a judgment against Insurance Company of North America (INA) for $72,273 in its suit on an insurance policy. CBG contends that the judgment should have been no less than $5,732,402, and seeks a new trial. We conclude that the jury's verdict on which the judgment was entered is supported by evidence in the record and that no trial errors warrant the granting of a new trial. Thus we affirm.

I.

CBG, a Delaware corporation, has its principal place of business in the Republic of Guinea, where it mines, processes, and ships bauxite ore. The CBG mine is in the interior of the country, about 85 miles from its processing and shiploading facility on the West Coast of Africa at Kamsar. Connecting the mine and the Kamsar facilities is a railroad operated by CBG over which ore cars transport the ore to a crusher house in which the ore is crushed. After crushing, the ore is kiln dried, and stored in sheds to await shipment. Shipment is by ocean vessels which deliver the ore to aluminum producers in the United States, Canada, France, West Germany and Italy. Those shipments are made pursuant to long term contracts.

On July 17, 1974 one CBG train enroute from the mine to Kamsar collided head-on with another CBG train returning empty. Two locomotives and 30 ore cars were destroyed, seven other ore cars were damaged, and 800 feet of railroad track were destroyed. As a result of the collision all rail traffic was stopped for several days while the wreckage was cleared and a temporary by-pass track laid around the site.

INA is a Pennsylvania corporation which issues casualty insurance. On February 2, 1974, INA issued to CBG a policy insuring against "loss resulting directly from necessary interruption of business caused by damage to or destruction of real or personal property . . . ." When notified of the loss INA admitted that the destruction of the locomotives, ore cars, and track were perils falling within the insuring clause of the policy. The policy requires that the insured render a signed and sworn proof of the loss sustained. Because there were other casualties at Kamsar at about the same time that were unrelated to the train wreck, CBG apparently was unable to prepare a proof of loss within 60 days, and INA granted several extensions of the 60 day policy deadline. A proof of loss was finally submitted in March of 1975, claiming $2,654,682.81. INA, while acknowledging that the loss was covered, informed CBG that the proof of loss did not conform to the requirements of the policy. Fruitless negotiations followed, and CBG filed suit in December, 1975.

II.

As noted above, the policy insures against "loss resulting directly from necessary interruption of business caused by damage to or destruction of real or personal property . . . by the peril(s) insured aginst." It provides, further, that "in the event of such damage or destruction this Company shall be liable for the ACTUAL LOSS SUSTAINED by the Insured resulting directly from such interruption of business . . . ." That undertaking is qualified, however, by the provision that "it is a condition of this insurance that if the Insured could reduce the loss resulting from interruption of business, . . . by making use of stock (raw, in process or finished) at the location(s) described herein or elsewhere, such reduction shall be taken into account in arriving at the amount of loss hereunder." Finally, the policy provides for additional coverage for "such expenses as are necessarily incurred for the purpose of reducing loss under this policy . . . ."

At the trial the parties stipulated that CBG expended $72,273 in reducing the losses resulting from the train collision, and the court directed the entry of a verdict for this sum. It is not in dispute on this appeal. What is in dispute is claimed losses resulting from interference with bauxite production allegedly caused by the interruption of rail service. CBG stipulated at trial that new ore cars received around November 15, 1974 would be considered replacements for those destroyed or damaged in the collision, and thus that the period of recovery for business interruption would terminate as of that date. Thus the trial involved establishment of losses due to business interruption caused by the destruction of locomotives, ore cars and track, between July 17 and mid-November, 1974. INA took the position that no loss of bauxite production occurred during that period as a result of the destruction of the locomotives, ore cars and track, but that CBG was attempting to attribute to their destruction production losses that actually resulted from other causes. INA also took the position that in any event the inventory of processed bauxite in storage during the relevant period sufficed to meet CBG's contractual obligations for shipments, and must be taken into account in arriving at the amount of the loss. Extensive conflicting evidence was presented on both issues.

Both contested issues were given to the jury in the form of special interrogatories as follows:

2. Did CBG experience a loss in production sometime during the period between July 24, 1974 and November 17, 1974, which was directly caused by the July 17, 1974 train collision?

YES///--- NO////--

ANSWER QUESTION 3 ONLY IF YOUR ANSWER TO QUESTION 2 WAS YES. IF YOUR ANSWER TO QUESTION 2 IS NO, PROCEED TO QUESTION 5, ENTER "NONE" ON LINE 5A, AND ...


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