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Powell v. Sphere Drake Insurance9/4/2001
Sphere Drake, a marine liability insurer, orally promised to give David Powell a Letter Of Undertaking (LOU) in exchange for his release of an insured vessel from judicial arrest. Powell released the vessel, but did not obtain the signed LOU from Sphere Drake. Five years later, Powell filed this suit, claiming that Sphere Drake breached its oral promise to tender a signed LOU. Powell also claimed violations of the Consumer Protection Act and the Uniform Fraudulent Transfer Act. The trial court granted Sphere Drake's motions for summary judgment. We affirm.
FACTS
David Powell sustained physical injuries while working on the Alaskan Eight vessel. Alaskan Pacific Star, Inc. and Alaska Eight Star Enterprises, Inc. (collectively APS) own the vessel.
In 1992, Powell filed a commercial and personal injury action in the Alaska federal district court against APS. He arrested the vessel to secure APS's payment of his potential damages award.
A federal magistrate held a post-arrest bond hearing on April 2, 1992. The magistrate placed a value of $160,000 on Powell's personal injury claim and a value of $61,000 on Powell's commercial claim. In order to release the vessel from arrest, APS was required to post a bond for $221,000.
After the hearing, the parties began to negotiate for the vessel's release from arrest. Attorney Matthew Reynolds represented Powell and attorney Charles Ray represented APS. APS's marine liability insurer, Sphere Drake Insurance P.L.C., also participated in the negotiations. Joe Stacey of LeGros, Buchanan, Paul & Whitehead served as Sphere Drake's counsel.
On April 9, 1992, Stacey faxed a draft of a LOU to Reynolds and Ray. The two-page draft provided that in consideration of Powell's release of the vessel without bond, Sphere Drake Underwriting Management Ltd., Sphere's management firm, would pay any final judgment up to $160,000:
In consideration of your releasing from arrest the ALASKAN EIGHT, arrested under process in rem in the subject action, of your not requiring the posting of a release bond or security other than this undertaking, and of your not attaching other assets of the vessel's owners as security for damages for all claims arising from the alleged personal injury as alleged in your complaint, the undersigned does irrevocably undertake and agree as follows:
(a) To pay in full (upon written demand served upon LeGros, Buchanan, Paul & Whitehead of Seattle, Washington, as attorneys for said vessel) any final judgment or judgments not exceeding in the aggregate US$160,000 entered in favor of plaintiff, David Powell, as may be provided by a final judgment or judgments for personal and psychological injuries .
(b) It is understood and agreed that the signing of this letter by Lamorte Burns (Northwest), Inc. is not to be construed as binding it, but is to be binding only upon Sphere Drake Underwriting Management, Ltd. SPHERE DRAKE UNDERWRITING MANAGEMENT, LTD., by LAMORTE BURNS (NORTHWEST), INC.
By Linda Pysher
The undersigned warrants that it is specially authorized to give and execute the covenants above-described by the protection and indemnity underwriter of ALASKAN EIGHT, pursuant to telefax authority received by Lamorte Burns (Northwest), Inc. as agents for Sphere Drake Underwriting Management, Ltd.
LAMORTE BURNS (NORTHWEST), INC. By Linda Pysher
Stacey's faxed cover sheet to Ray said that the draft was 'a Sphere Drake letter of undertaking.' Powell approved the draft LOU as proposed. On April 10, 1992, Stacey faxed the final LOU. The final LOU was the same as the draft LOU. Neither the draft
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