Am. S.S. Owners Mut. Prot. & Indem. Ass'n, Inc. v. Henderson, 10 Civ. 8033 (PGG)

• Decision Date: 26 March 2013
• Docket Number: 10 Civ. 8033 (PGG),11 Civ. 3869 (PGG)
• Parties: AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., Plaintiff, v. MARK J. HENDERSON, Defendant. MARK J. HENDERSON, Plaintiff, v. AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., Plaintiff,

v.MARK J. HENDERSON, Defendant.

MARK J. HENDERSON, Plaintiff,

v.AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., Defendant.

10 Civ. 8033 (PGG)

11 Civ. 3869 (PGG)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Dated: March 26, 2013

MEMORANDUMOPINION & ORDER

PAUL G. GARDEPHE, U.S.D.J.:

In these consolidated actions, seaman Mark J. Henderson claims that American Steamship Owners Mutual Protection and Indemnity Association, Inc. (the "Association") is obligated to satisfy a judgment he obtained against Atlantic Pelagic Seafood, LLC ("Atlantic"). The Association has moved for an order declaring that New York law governs these actions. For the reasons stated below, the Association's motion will be granted.

BACKGROUND¹

I. FACTUAL BACKGROUND

The Association is a non-profit mutual insurance organization that offers insurance to its vessel-owning members against third-party liabilities arising from the ownership and operation of insured vessels. (N.Y.² Cmplt. ¶ 20; Naughton Aff., Ex. A (Apr. 1, 2011 Tsimis Aff.) at ¶ 2). The Association is incorporated under New York law and has its principal place of business in New York, New York. (N.Y. Cmplt. ¶¶ 4-5; Maine³ Am. Cmplt. ¶ 2)

Non-party Atlantic is a Delaware limited liability company. (N.Y. Cmplt. ¶ 6; Maine Am. Cmplt. ¶ 3) It is now defunct. The company had an office in Maine but was not registered with the Maine Secretary of State to do business in that state. (Maine Am. Cmplt. ¶ 3; Naughton Aff. ¶ 4 & Ex. B; Stevens Aff., Ex. C)

Atlantic was a member of the Association and obtained insurance for the vessel "American Freedom" for the 2006-07 and the 2007-08 policy years.⁴ (Naughton Aff., Exs. C, D) At the beginning of each policy year, the Association issued a Certificate of Entry to Atlantic, stating that coverage for the American Freedom was subject to the Association's By-Laws and Rules. (Id.) Those By-Laws and Rules state that "any contract of insurance between the Association and a Member shall be governed by and construed in accordance with the law of the State of New York." (Naughton Aff., Ex. G at ¶ 47)

All communications concerning Atlantic's Association insurance coverage were conducted by Association representatives in Manhattan and Atlantic's insurance brokers, Arthur J. Gallagher (UK) Ltd. in London, and North Star Insurance Services, LLC in Seattle, Washington. (Apr. 1, 2011 Tsimis Aff. ¶ 15) The Association did not solicit Atlantic 's business in Maine. (Id. ¶ 16) Instead, Atlantic's insurance brokers contacted the Association about obtaining insurance for Atlantic. (Id.)

When the Certificate of Entry for the 2006-07 policy year was issued on June 14, 2006, the American Freedom was being refitted at a shipyard in Norway for delivery in Maine. (Naughton Aff., Ex. C at AC00025) A Certificate of Documentation issued by the National Vessel Documentation Center on October 4, 2006 lists the ship's hailing port as Portland, Maine. (Stevens Aff., Ex. C) The ship became operational on January 3, 2007. (Naughton Aff., Ex. C at AC00058) During the 2007-08 policy year, the ship had insurance coverage for travel "to the waters and tributaries of the Atlantic Ocean not north of the US/Canada border and not South of the South Carolina/Georgia border, [and] not more than 250 miles offshore." (Naughton Aff., Ex. D at 2)

Henderson is a resident of Wyoming. (Maine Am. Cmplt. ¶ 1; N.Y. Cmplt. ¶ 11) He was employed by Atlantic as a crew member on the American Freedom for two voyages. In connection with the first trip, Atlantic flew him to Norway and he accompanied the vessel on its maiden voyage from Norway to its home port of Portland, Maine. (Naughton Aff., Ex. E (Henderson Aff.) at ¶ 6) The second voyage began off the coast of Massachusetts. (Id.) On February 23, 2007, during the ship's second voyage, Henderson was seriously injured. (N.Y. Cmplt. ¶ 12; Maine Am. Cmplt. ¶ 7; Henderson Aff. ¶ 8) According to the Master's/Supervisor's Report of Injury/Illness, the incident occurred while the ship was off thecoast of Long Island, New York. (Apr. 1, 2011 Tsimis Aff. ¶ 18 & Ex. C) Henderson disputes the exact location indicated in the Report, but he does not dispute that he was taken to Southhampton Hospital on Long Island after the incident. (Henderson Aff. ¶¶ 8-9)

II. PROCEDURAL BACKGROUND

In February 2010, Henderson commenced a personal injury action against Atlantic in the United States District Court for the District of Maine. (See Maine Am. Cmplt. ¶ 8) Atlantic defaulted, and on April 22, 2011, Henderson obtained a default judgment in the amount of $415,570.19. (Id. ¶ 9; Naughton Aff., Ex. F)

On October 21, 2010, while Henderson's personal injury action was pending in Maine, the Association commenced a declaratory judgment action in this Court against Atlantic and Henderson seeking a declaration prohibiting Henderson from enforcing against the Association any judgment he obtained against Atlantic in the District of Maine. (N.Y. Cmplt. at 9-10) On February 8, 2011, this Court issued a default judgment against Atlantic declaring, inter alia, "that the [the Association] shall have no obligation to provide insurance coverage for any claims asserted by Mr. Henderson in the Maine Action and/or arising out of the February 23, 2007 incident." (N.Y. Dkt. No. 8 at 2)

On December 10, 2010, Henderson commenced a declaratory judgment action in Maine state court, seeking a declaration that the Association is obligated to pay any judgment he obtained against Atlantic. (See Maine Dkt. No. 1, Ex. 3) The Association removed Henderson's action to the District of Maine (Maine Dkt. No. 1), and then moved to dismiss or transfer the action to this District. (Maine Dkt. No. 13) The District of Maine granted the Association's motion to transfer, finding that the factors listed in 28 U.S.C. § 1404(a) favored transfer because neither party had any presence in Maine, the injury did not occur there, there were no witnessesor documents there, and Henderson's choice of forum was not dispositive given that both sides had engaged in a "race to the courthouse." (Maine Dkt. No. 34)

On March 15, 2012, with the consent of the parties, this Court consolidated the two declaratory judgment actions.⁵ (N.Y. Dkt. No. 38; Maine Dkt. No. 42) The Court also ordered the parties to submit briefing concerning choice of law. (Id.) On April 30, 2012, the Association filed a motion seeking an order declaring that New York law applies. (N.Y. Dkt. No. 41-43; Maine Dkt. Nos. 45-47) New York law prohibits direct action suits against maritime insurers by judgment creditors such as Henderson.⁶ On May 30, 2012, Henderson filed opposition papers, arguing for the application of Maine law, which does not categorically prohibit such suits.⁷ (Maine Dkt. Nos. 48-49) On June 14, 2012, the Association filed a reply brief. (N.Y. Dkt. No. 44; Maine Dkt. No. 50) It is undisputed that if New York law applies, the Association will prevail in these actions. (Mar. 12, 2012 Conf. Tr. 6:3-4 (Graydon G. Stevens, counsel for Henderson: "[I]f New York substantive law applies, we cannot win. I concede that."))

DISCUSSION

Pursuant to 28 U.S.C. § 1333, federal district courts have original jurisdiction over "any case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333(1). "It is well-settledthat federal admiralty jurisdiction over maritime contracts extends to suits involving marine insurance policies." Atlantic Mutual Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 199 (2d Cir. 1992); Advani Enters., Inc. v. Underwriters at Lloyds, 140 F.3d 157, 161 (2d Cir. 1998) (same). This rule applies to disputes such as this, in which a judgment creditor seeks satisfaction from a marine indemnity insurer for a judgment against an insured entity. See State Trading Corp. of India, Ltd. v. Assuranceforeningen Skuld, 921 F.2d 409, 414-15 (2d Cir. 1990). Indeed, both parties invoked admiralty jurisdiction in their complaints. (N.Y. Cmplt. ¶ 1; Maine Cmplt. ¶ 1⁸ ) Accordingly, the consolidated actions arise under this Court's admiralty jurisdiction.

"A federal court sitting in admiralty must apply federal choice of law rules."⁹ State Trading Corp., 921 F.2d at 414; see also Commercial Union Ins. Co. v. Flagship Marine Servs., Inc., 190 F.3d 26, 30 (2d Cir. 1999) ("Absent a specific federal rule, federal courts look to state law for principles governing maritime insurance policies, and apply federal maritime choice of law rules to determine which state's law to apply.") (internal citations omitted). Those rules are based on the "principle of resolving conflicts 'by ascertaining and valuing points ofcontact between the transaction and the states . . . whose competing laws are involved.'" State Trading Corp., 921 F.2d at 417 (quoting Lauritzen v. Larsen, 345 U.S. 571, 582 (1953)). Factors for consideration include:

(1) any choice-of-law provision contained in the [insurance] contract; (2) the place where the contract was negotiated, issued, and signed; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties.

Advani, 140 F.3d at 162; see also Hartford Fire Ins. Co. v. Mitlof, 193 F.R.D. 154, 157 (S.D.N.Y. 2000) (applying Advani factors to determine choice-of-law governing non-party's motion to intervene in marine insurer's declaratory judgment action against insured); State Trading Corp., 921 F.2d at 416-17 (listing similar factors for consideration in judgment creditor's suit against marine insurer). Here, these factors weigh in favor of applying New York law.

First, the insurance contract underlying the parties' dispute incorporates by reference the Association's By-Laws and Rules. (Naughton Aff., Ex. D) The By-Laws and Rules, in turn, specify that "any contract of insurance between the...