Cincinnati Ins. Co. v. Fish

• Decision Date: 24 February 2022
• Docket Number: Civil Action No. RDB-19-3355
• Citation: 587 F.Supp.3d 329
• Parties: The CINCINNATI INSURANCE COMPANY, Plaintiff/Counter-Defendant, v. Joseph FISH, Defendant/Counter-Plaintiff.
• Court: U.S. District Court — District of Maryland

587 F.Supp.3d 329

The CINCINNATI INSURANCE COMPANY, Plaintiff/Counter-Defendant,

v.Joseph FISH, Defendant/Counter-Plaintiff.

Civil Action No. RDB-19-3355

United States District Court, D. Maryland.

Signed February 24, 2022

Craig David Roswell, Niles Barton and Wilmer LLP, Baltimore, MD, Bryant Steven Green, Zelle LLP, Washington, DC, for Plaintiff/Counter-Defendant.

Todd DeLear Lochner, Eugene Samarin, Lochner Law Firm, P.C., Annapolis, MD, for Defendant/Counter-Plaintiff.

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge

This case arises out of hull damage to a 48-foot ocean yacht owned by Joseph Fish ("Fish") and insured by the Cincinnati Insurance Company ("Cincinnati"). Fish's yacht sustained the damage in a storm while it was docked at a marina in Kent Island, Maryland on July 23, 2017. (Compl., ECF No. 1 ¶ 9.) On November 21, 2019, after having already issued a payment to Fish one year earlier, Cincinnati filed this one-count declaratory judgment action pursuant to 28 U.S.C. §§ 1333 and 2201 to determine any further monetary liability under the policy issued to Fish. (Compl., ECF No. 1.) Four days later, Fish filed a nine-count complaint against Cincinnati and another defendant, HMS Insurance Associates, Inc. ("HMS"), in the Circuit Court for Baltimore City, Maryland, alleging one declaratory judgment count and seven insurance-related counts against Cincinnati and one count of negligence against HMS. See Joseph Fish v. The Cincinnati Insurance Co. et al. , Civil Action No. RDB-20-0018. That original state action was then removed to this Court on January 3, 2020. Id. On April 2, 2020, this Court denied Fish's motion to remand that case because Defendant HMS had been fraudulently joined as Fish had not demonstrated any right to relief against HMS, the marine insurance broker. Id. , Memorandum Order, ECF No. 18 (D. Md. Apr. 2, 2020). In addition, this Court dismissed defendant HMS from that action for Fish's failure to state the sole negligence claim asserted against HMS. Id. On April 3, 2020, this Court entered an Order consolidating for all purposes this case with the removed state court action. (Order, ECF No. 15.)

On July 23, 2021, Fish filed an Amended Counterclaim alleging several causes of action against Cincinnati. (Answer and Amended Counterclaim, ECF No. 69.) Specifically, Fish brings his own declaratory judgment action (Count One). He also raises claims against Cincinnati for breach of contract (Count Two); first-party lack of good faith in violation of Md. Code Ann., Cts. & Jud. Proc. § 3-1701 and Md. Code Ann., Ins. § 27-1001 (Count Three); unfair claim settlement practices in violation of Md. Code Ann., Ins. §§ 27-301 et seq. (Counts Four, Six, Seven, and Eight); and breach of the implied covenant of good faith and fair dealing (Count Eight*).¹

Presently pending are the parties’ cross motions for summary judgment (Cincinnati Motion, ECF No. 80; Fish Opp. and Cross Motion, ECF No. 82.) The parties submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2021). For the reasons that follow, Cincinnati's Partial Motion for Summary Judgment (ECF No. 80) as to Fish's Amended Counterclaim is GRANTED with respect to Counts Three through Eight*. Fish's Cross Motion for Summary Judgment (ECF No. 82) is DENIED. Accordingly, this case shall proceed as to Cincinnati's claim for declaratory judgment and Fish's amended counterclaim for declaratory judgment and breach of contract.

BACKGROUND

I. The Policy

At all times relevant to this case, Joseph Fish maintained an all-risk Personal Watercraft Insurance Policy with the Cincinnati Insurance Company bearing policy number W01 0782932 (the "Policy"). The Policy insures a 2000 48’ Ocean Yacht SS (the "Boat") with a policy limit in the amount of $215,000 less a $4,300 deductible. The Policy provides in relevant part as follows:

PERILS INSURED

"We" will pay for:

a) All risks of physical loss to the property insured except that which is excluded;

b) Loss to the property insured caused by any latent defect in the hull or machinery excluding the cost of repairing or replacing any defective part.

(Personal Watercraft Policy, ECF No. 80-5 at 10.)

The policy continues:

EXCLUSIONS

We will not pay for loss resulting directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss:

a) Wear and tear, inherent vice, deterioration, marine life, vermin, ice or freezing, electrolytic action, mechanical breakdown, dampness, corrosion, marring, denting, or extreme of temperature

(Id. ) The policy further provides:

SECTION V – DUTIES AFTER A LOSS

In the event of any loss, damage, or "occurrence" that is covered by this policy, any person presenting a claim must:

...

PROTECT AND RECOVER

Protect the insured property from further loss. Make every effort to recover it. Any steps "you" so take will not mean "you" are waiving any right "you" have to abandon the property. "We" will pay the reasonable costs incurred not exceeding the Limit of Insurance stated in Section I on the Declarations Page.

COOPERATE WITH US

Cooperate with "us" in all ways in the investigation, defense, and settlement of any loss; submit to examination under oath if "we" request.

(Id. at 14.)

II. Fish's Claim

On July 24, 2017, Fish informed Cincinnati that on the day prior while the Boat was moored in Kent Island, Maryland, it sustained damage to its hull during a powerful storm. (Claim Log Notes, ECF No. 80-6 at 3.) Fish also reported that the Boat had been taking on water. (Id. ) On July 25, 2017, Cincinnati claim representative Dan Lambrecht spoke with Fish by telephone. (Id. ) Fish reported that he would take the Boat to a shipyard to be inspected. (Id. ) Lambrecht memorialized the telephone conversation in an email dated July 26, 2017. (ECF No. 80-7.) On July 28, 2017, Fish wrote to Lambrecht and indicted that the storm had caused damage to the Boat's electrical system. (ECF No. 82-2.) Lambrecht heard nothing from Fish for several weeks. Throughout August and September 2017, Lambrecht called and emailed Fish to request information regarding the claim. (ECF No. 80-6 at 4-5.) Fish eventually responded by telephone on October 11, 2017 and informed Lambrecht that he had not yet had a chance to take the Boat in for inspection because he had been using it for the rest of that summer. (Id. at 5.) Fish indicated that he would get the Boat to a shipyard within a few weeks. (Id. ) Lambrecht continued to call and email Fish to obtain the information necessary to adjust his claim. (Id. at 5-7.) On June 26, 2018, eleven months after the storm, Lambrecht sent Fish a letter informing him that if he did not contact Cincinnati regarding his claim within 30 days, Cincinnati would close its file. (June 26, 2018 Letter, ECF No. 80-9.)

One month later, on July 27, 2018 (one year after the storm), Fish responded to Lambrecht by email and stated that he did intend to present a claim for damage to the Boat and that he would be arranging to have the Boat inspected by the company Jarrett Bay, which operates a yacht yard in North Carolina. (July 27, 2018 Email, ECF No. 80-10.) Fish called Lambrecht on August 14, 2018 to inform him that an inspection had been scheduled for August 24, 2018. (ECF No. 80-6 at 8.) On August 24, 2018, Fish called Lambrecht to report that the inspection had been conducted the week prior and that he should have an estimate for repairs by the following week. (Id. at 8-9.) On September 12, 2018, having received no estimate, Lambrecht again wrote to Fish requesting an update. (Sept. 12, 2018 Letter, ECF No. 80-11.)

On October 18, 2018, Fish forwarded an estimate prepared by Jarrett Bay Boat Works dated August 23, 2018. (ECF No. 80-6 at 10; Jarrett Bay Estimate, ECF No. 80-12.) The Jarrett Bay Estimate totaled more than $220,000, an amount that exceeded the $215,000 policy limit. (ECF No. 80-12; ECF No. 80-5 at 2.)

On October 24, 2018, Cincinnati retained Davis Company Limited, Marine Surveyors and Consultants ("Davis") to investigate the cause and scope of damage to the Boat. (ECF No. 80-6 at 11.) Douglas McDaniel of Davis reviewed Jarrett Bay's Estimate and as well as photos of the damage and then inspected the Boat on November 1, 2018. (McDaniel Report, ECF No. 80-14.) At the inspection, Fish reported exterior damage and interior mold and water damage resulting from the July 2017 storm. (Id. at 1.) McDaniel noted that "[n]o other damages were reported by Mr. Fish at the time of [McDaniel's] inspection." (Id. ). At the inspection, McDaniel observed damage to the exterior of the Boat. (Id. at 2.) McDaniel also observed interior water damage and mold under the areas of the side windows, on the wood side panels, the carpet on the port side, and under the port settee in the salon. (Id. ) Following his inspection, McDaniel concluded that the Boat's exterior damage was consistent with "with being struck by hail and/or falling/flying debris" but that the water and mold damage was "consistent with a lack of maintenance over time." (Id. ) McDaniel found the value of damages in the Jarrett Bay Estimate "to be unreasonable and beyond the scope of damages found during our inspection. [Jarrett Bay's] supplied estimate already easily exceeds the fair market value of the vessel prior to the loss of $208,900.00." (Id. at 3.) For the Boat's exterior damage, McDaniel calculated the loss at $22,925.00, minus the $4,300 deductible, for a net loss of $18,625.00. (Id. ) McDaniel calculated the loss due to any interior water or mold damage to be $36,375.00. (Id. )

On November 17, 2018, Cincinnati issued a payment to Fish in the amount of $18,625.00, its determination of the value of the Boat's exterior damage resulting from the July 2017 storm - less Fish's deductible. (Nov. 17, 2018 Letter, ECF No. 80-18.) Cincinnati denied the claim as to the interior mold and water damage. (Id. ) On March 29, 2019, Cincinnati...