Catlin (Syndicate 2003) at Lloyd's v. San Juan Towing & Marine Servs., Inc.

• Decision Date: 13 May 2013
• Docket Number: Civil No. 11-2093 (FAB),C/w Civil No. 11-2116 (FAB)
• Court: U.S. District Court — District of Puerto Rico
• Parties: CATLIN (Syndicate 2003) AT LLOYD'S, Plaintiff, v. SAN JUAN TOWING & MARINE SERVICES, INC., Defendant.

CATLIN (Syndicate 2003) AT LLOYD'S, Plaintiff,

v.SAN JUAN TOWING & MARINE SERVICES, INC., Defendant.

Civil No. 11-2093 (FAB)

C/w Civil No. 11-2116 (FAB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

DATED: May 13, 2013

MEMORANDUM AND ORDER

BESOSA, District Judge.

Before the Court is plaintiff Catlin (Syndicate 2003) at Lloyd's ("plaintiff Catlin")'s motion for reconsideration. Having considered plaintiff Catlin's motion and memorandum of law (Docket Nos. 114 & 115), as well as defendant San Juan Towing & Marine Services, Inc.'s opposition (Docket No. 118), the Court finds that it enjoys both diversity and admiralty jurisdiction over the complaint.

I. PROCEDURAL BACKGROUND

On September 21, 2012, defendant SJT filed a motion for partial summary judgment, arguing that the object of the insurance contract between the parties — a floating drydock called the Perseverence — is not a "vessel" for purposes of maritime law. (See Docket Nos. 78 & 80.) Plaintiff Catlin responded on October 23, 2012, opposing summary judgment for the sole reason that the Perseverence does constitute a vessel. (Docket No. 82.)Defendant SJT replied on November 7, 2012, maintaining that the Perseverence is not a vessel pursuant to the controlling Supreme Court decisions of Cope v. Vallette Dry Dock Co., 119 U.S. 625 (1887) and Stewart v. Dutra Constr. Co., 543 U.S. 481 (2005). (Docket No. 90.) On January 11, 2013, Magistrate Judge Marcos E. Lopez issued a Report and Recommendation ("R&R") in which he analyzed the Perseverence under then-existing Supreme Court precedent; concluded that the Perseverence constituted a vessel; and recommended that the Court deny defendant SJT's motion. (Docket No. 99.)

Defendant SJT filed an objection to the R&R on January 25, 2013 and argued that the magistrate judge's conclusions could not stand in light of a recently decided Supreme Court case, Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013), which addressed the definition of a "vessel" pursuant to maritime law. (Docket No. 103.) Plaintiff Catlin responded on February 8, 2013 by contending that Lozman did not change the legal analysis required to determine whether the Perseverence is a vessel, and that the Court should accept the magistrate judge's findings in full. (Docket No. 106.) On April 8, 2013, the Court issued an opinion and order holding that the Perseverence is not a vessel under Lozman; finding that the Court lacked admiralty jurisdiction over Case No. 11-2093; and, therefore, granting defendant SJT's motion for summary judgment. (Docket No. 112.) Catlin (Syndicate 2003) at Lloyd's v. San JuanTowing and Mar. Servs. Inc., 2013 U.S.Dist. LEXIS 52307 (D.P.R.) 2013) Subsequently, it also entered a judgment dismissing Case No. 11-2093 without prejudice for want of admiralty jurisdiction. (Docket No. 113.)

On April 16, 2013, plaintiff Catlin filed a motion for reconsideration of the Court's opinion and order. (Docket No. 114.) It first argues that regardless of the Perseverence's vessel status, the Court has admiralty jurisdiction over Case No. 11-2093 because the dispute is over a marine insurance policy. (Docket No. 115 at p. 4.) In the alternative, plaintiff Catlin argues that the Court should not have dismissed the complaint altogether, because plaintiff Catlin properly pled an alternate basis for subject matter jurisdiction: diversity jurisdiction pursuant to 28 U.S.C. § 1332. Id. In opposition, defendant SJT argues that the insurance policy between the parties is not a maritime contract precisely because the object of that contract - the Perseverence - is not a vessel. (Docket No. 118 at pp. 3-19.) Defendant SJT then concedes, however, that plaintiff Catlin did properly invoke diversity of citizenship jurisdiction in its complaint. Id. at p. 19.

II. DISCUSSION

A. Diversity Jurisdiction

The Court acknowledges, and both parties agree, that plaintiff Catlin properly pled diversity jurisdiction in itscomplaint. 28 U.S.C. § 1332(a), which covers diversity jurisdiction, requires that the amount in controversy exceed $75,000, and that all plaintiffs be diverse from all defendants. 28 U.S.C. § 1332(a); see also Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) ("[T]he presence in the action of a single plaintiff from the same State as a single defendant deprives the district court of original diversity jurisdiction over the entire action."). Courts evaluate whether there is diversity between all plaintiffs and all defendants by looking to the parties' domiciles. Padilla-Mangual v. Pavia Hosp., 516 F.3d 29, 31 (1st Cir. 2008). In the complaint, plaintiff Catlin alleges that it is organized pursuant to the laws of the United Kingdom, its principal place of business is in London, and it does business in the United States in New York, New York. (Docket No. 1 at p. 2.) It also alleges that defendant SJT is a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, with its principal office located in Puerto Rico. Id. For the purposes of diversity jurisdiction, plaintiff Catlin and defendant SJT are not domiciled in the same state, and, therefore, are citizens of different states. Because plaintiff Catlin also pleads that the matter in controversy exceeds $75,000, id., the Court finds that diversity jurisdiction exists over the lawsuit. Accordingly, the Court vacates its order entering judgment dismissing Case No. 11-2093, (Docket No. 113).

B. Admiralty Jurisdiction

Despite the Court's diversity jurisdiction, the question remains whether the case could also be sustained under admiralty jurisdiction because of the involvement of a maritime contract. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 23 (2004) (acknowledging that a case may rest on both diversity and admiralty jurisdiction). For the reasons discussed below, the Court concludes that admiralty jurisdiction does exist.

1. Standards

A federal district court possesses original and exclusive jurisdiction over "[a]ny civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333 (1) (2013); see also U.S. Const. Art. III, § 2, cl. 1 (extending the federal judicial power to "all [c]ases of admiralty and maritime [j]urisdiction"). In a contract dispute, federal admiralty jurisdiction exists when the subject matter of the contract underlying a case or controversy is maritime in nature. New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. 1, 30-36 (1870); Acadia Ins. Co. v. McNeil, 116 F.3d 599, 601 (1st Cir. 1997). Supreme Court precedent "do[es] not draw clear lines between maritime and non-maritime contracts[, however, and] . . . the boundaries of admiralty jurisdiction over contracts — as opposed to torts or crimes — being conceptual rather than spatial, have always been difficult to draw." Kirby, 543 U.S. at 23.

Because the protection of maritime commerce is the fundamental interest giving rise to maritime jurisdiction, a court must evaluate "whether the nature of the transaction was maritime, that is, whether the contract relates to the navigation, business or commerce of the sea," to determine whether a contract falls within federal admiralty jurisdiction. P.R. Ports Auth. v. Umpierre-Solares, 456 F.3d 220, 224 (1st Cir. 2006) (internal citations and quotation marks omitted); see also Kirby, 543 U.S. at 24 (reasoning that a court must evaluate "the nature and character of the contract, and that the true criterion is whether it has reference to maritime service or maritime transactions") (internal quotations and citations omitted). An analysis of whether a contract's "primary objective" has an "essentially maritime nature" and relates to "maritime commerce" is imperative. See N.H. Ins. Co. v. Home Savings & Loan Co., 581 F.3d 420, 424 (6th Cir. 2009) (quoting Kirby, 543 U.S. at 24-25). Although the Supreme Court has repeatedly acknowledged the difficulty in defining "an overarching principle or scheme that brings together all of the disparate maritime contract cases under a single unified banner[,] . . . thus far it has offered very little in the way of guidance." N.H. Ins. Co., 581 F.3d at 426-27. Instead, the Supreme Court has merely directed lower courts to apply the "conceptual" approach of construing the contract as a whole and "look[ing] for guidance in analogous precedent." Id. (citing Kossick v. United Fruit Co., 365U.S. 731, 735 (1961) for the proposition that "[p]recedent and usage are helpful insofar as they exclude or include certain common types of contracts . . . . This is the approach the Supreme Court has prescribed, so it is the approach we must apply."). In general, "to be a maritime contract, the subject matter of the contract must be directly and intimately related to the operation of a vessel and navigation; it is not enough that the contract relate in some preliminary (shoreside) manner to maritime affairs." 1 Thomas J. Schoenbaum, Admiralty & Maritime Law § 3-10 (5th ed. 2012).

Courts widely recognize that federal admiralty jurisdiction attaches in actions based upon marine insurance policies. See, e.g., Dunham, 78 U.S. at 30-36 (finding that admiralty jurisdiction exists over policies of marine insurance); Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 313 (U.S. 1955) ("Since the insurance policy here sued on is a maritime contract[,] the Admiralty Clause of the Constitution brings it within federal jurisdiction."); Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54 (1st Cir. 1995) ("The propriety of maritime jurisdiction over a suit involving a marine insurance policy is unquestionable."). "Marine insurance" is a contract (1) of indemnity against a loss to an insurable interest; (2) that is triggered by an accident or fortuity; and (3) that insures against a peril that is maritime in character. 2 Thomas J. SchoenbaumAdmiralty & Maritime Law § 19-2 (5th ed. 2012). "Not all insurance controversies with maritime connections, [however,] relate sufficiently to 'the navigation, business or...