Mid–century Ins. Co. A/K/A Farmers Ins. Co. v. Fish

• Decision Date: 07 September 2010
• Docket Number: Case No. 1:09–cv–220.
• Citation: 749 F.Supp.2d 657
• Parties: MID–CENTURY INSURANCE COMPANY a/k/a Farmers Insurance Company, and Farmers Insurance Exchange, Plaintiff,v.Jim A. FISH, Aneta Pryor, Keith Pepin, and Gary Sequr, and Cindy Harrington, Robbin Harrington, Robert Jones, Cynthia Jones, Jim Hoff, Steve Eberhard, Jeffrey Cripe,1 and The Black River Yacht Club, Defendants.Jim A. Fish, Counterclaim–Plaintiff,v.Mid–Century Insurance Company a/k/a Farmers Insurance Company, and Farmers Insurance Exchange, Counterclaim–Defendants.
• Court: U.S. District Court — Western District of Michigan

749 F.Supp.2d 657

MID–CENTURY INSURANCE COMPANY a/k/a Farmers Insurance Company, and Farmers Insurance Exchange, Plaintiff,

v.Jim A. FISH, Aneta Pryor, Keith Pepin, and Gary Sequr, and Cindy Harrington, Robbin Harrington, Robert Jones, Cynthia Jones, Jim Hoff, Steve Eberhard, Jeffrey Cripe,1 and The Black River Yacht Club, Defendants.Jim A. Fish, Counterclaim–Plaintiff,

v.Mid–Century Insurance Company a/k/a Farmers Insurance Company, and Farmers Insurance Exchange, Counterclaim–Defendants.

Case No. 1:09–cv–220.

United States District Court, W.D. Michigan, Southern Division.

Sept. 7, 2010.

Richard J. Gianino, Plunkett & Cooney, P.C., Detroit, MI, for Plaintiff/Counterclaim–Defendants.Dennis S. McCune, Dennis S. McCune, PC, Kalamazoo, MI, for Defendants/Counterclaim–Plaintiff.Sara Lisznyai, James Owen Marks, Marks & Lisznyai PC, Jonesville, MI, Joseph R. Enslen, Straub Seaman & Allen PC, Grandville, MI, Kristen Elissa Ray, Paul Van Oostenburg, Smith Haughey Rice & Roegge PC, Grand Rapids, MI, for Defendants.

OPINION and ORDER

Granting in Part & Denying Without Prejudice in Part Fish's Motion for Summary Judgment:

Granting Summary Judgment to Jim A. Fish under Mid–Century Insurance Company's “Yacht Secure” Policy;

Denying Without Prejudice Jim Fish's Motion for Summary Judgment under Farmers Insurance Exchange's Umbrella Policy;

Denying Without Prejudice Farmers Insurance Exchange's Motion for Summary Judgment under Its Umbrella Policy;

Vacating the Pretrial Conference and Trial Sine Die

PAUL L. MALONEY, Chief Judge.

This is a boat-insurance coverage dispute involving two policies issued by two separate insurers. For the reasons that follow, the court will grant summary judgment to the insured, Jim A. Fish (“Fish”) on the “Yacht Secure” policy number FY–701132719 issued to him by Mid–Century Insurance Company (“Mid–Century”), due to the Mid–Century policy's failure to define crucial terms such as “safe berth afloat.” The court will deny without prejudice the cross-motions for summary judgment on the umbrella policy issued to Fish by Farmers Insurance Exchange, due to the incomplete state of the record and the apparent existence of genuine issues of material fact.

Background. No party has contested the complaint's allegations regarding the State of residence and/or citizenship of the parties; until and unless some party does so, the court accepts those allegations as true. According to Mid–Century's complaint, Mid–Century is a “foreign insurer”, i.e., it is incorporated in a jurisdiction other than Michigan, which has its principal place of business in Los Angeles, California. See Comp. ¶ 1. Of the twelve individual defendants, two are residents of Ohio (Robert Jones and Cynthia Jones) and ten are residents of Michigan (Fish, Pryor, Pepin, Robbin & Cyndy Harrington, Sequr, Hoff, Eberhard, Cripe and Shouldice), see Comp. ¶¶ 2–12. Defendant Black River Yacht Club (“the Yacht Club”) is a Michigan corporation with its principal place of business in Van Buren County, Michigan, see Comp. ¶ 13. Mid–Century's complaint alleges, without contradiction from any party, that more than $75,000 is in controversy, exclusive of interest, attorneys fees, and costs. Accordingly, on the record as it stands, the court has diversity jurisdiction.

Fish applied to Mid–Century for a Yacht Secure insurance policy, and he signed an application which identified a “layup period” from October 1 of the policy year to April 1 of the policy year, see Comp. ¶ 19 and Ex B (application). Mid–Century issued a policy to Fish for the coverage period May 17, 2008 through May, 2009 inclusive (“the policy”), and both this original policy and the subsequent renewal policy contained a lay-up warranty consistent with a lay-up period of October 1–April 1 of the policy year, see Comp. ¶¶ 18 and 20 and Ex A (policy). As to Fish's 42–foot 5–inch 1973 Trojan yacht, Section I of the policy, entitled Property Insurance, provided coverage “against direct accidental physical loss or damage and any loss caused by a latent defect in the insured yacht, except as otherwise excluded, while the covered property is afloat or ashore within the navigational limits specified on the Declarations page ... [.]” Comp. ¶¶ 21–22. Policy Section II (Liability Insurance), Coverage E, entitled Protection and Indemnity, provides coverage as follows:

We will pay damages caused by an occurrence to which this coverage applies for which the insured shall become legally obligated to pay arising out of the ownership, maintenance, or use of the insured yacht or non-owned yacht resulting in:

(1) bodily injury; or

(2) property damage; or

(3) pollution.

We will pay the cost to remove or dispose of the wreck or the insured yacht or any reasonable attempt to do so, such removal as required by law.

We have the right and duty to defend the insured against any lawsuits seeking damage for which coverage applies. Our right and duty to defend ends when we have used up the applicable limit of insurance and the payment of judgments or settlements under Coverage E. We have no duty to defend the insured against any lawsuit seeking those damages resulting from bodily injury, property damage or pollution to which this insurance does not apply.

Comp. ¶ 23. The policy contains a Mariners' Choice Endorsement (Form No. 61–1233, January 2007) which amends the General Conditions applicable to all coverages as follows:

3. Lay-up

This section is amended to read as follows:

There is no coverage under this policy if the insured yacht is being occupied or navigated during the lay-up period specified on the Declarations Page. If the insured yacht is laid up for the period specified on the Declarations Page, the following conditions apply:

a) The insured yacht is warranted to be laid up and out of commission ashore or in a safe berth afloat.

b) The insured yacht is warranted to not be occupied for recreational purposes.. However, if you are required to occupy the insured yacht for the purposes of safety, repairs, alteration or for betterments and improvements, not to exceed two overnight stays within any thirty-day period, coverage will not be suspended;

c) The insured yacht is warranted to not be available for immediate navigation. However, if you are required to move the insured yacht within the immediate berthing location for the purposes of safety, repairs, alterations or for betterments and improvements, coverage will not be suspended; and

d) The insured yacht is warranted not to be used as a live-aboard.

Comp. ¶ 24. The policy's declarations page provides that the yacht will be laid up ashore from October 1 to April 1 at J & B Landing, 750 East Wells Street, in South Haven, Michigan, see id. ¶ 25.

On October 5, 2008, Fish, Pryor and Pepin went to the yacht club in order to operate Fish's yacht, see Comp. ¶ 28. While preparing the yacht for use, Pepin tried to load fuel but accidentally placed the fuel into the hull rather than the appropriate tank, id. ¶ 29. When Pepin's error was discovered, the fuel was redirected into the proper opening, id. ¶ 30. When Fish attempted to connect a portable fuel pump to the boat battery, an explosion occurred, causing bodily injury to Fish, Pepper, Pryor and Eberhard; destroying Fish's yacht; and damaging boats and boat wells owned by the Harringtons, Sequr, Hoff, Eberhard, Cripe, the Joneses, and the yacht club, id. ¶¶ 31–33. Plaintiff Mid–Century agrees with the physical details of the accident, and it acknowledges that Fish's yacht was destroyed. See Plaintiff/Counterclaim–Defendant Mid–Century's Answer to Counterclaim filed June 25, 2009 (Doc 22, “Mid–Century Ans. to Counterclaim”) ¶¶ 14–15.

Procedural History, Claims, and Counterclaim.

Mid–Century filed this declaratory-judgment action in March 2009. In count one, mid-Century seeks a declaration that it owes no duty to indemnify Fish for damage to his boat from the October 5, 2008 explosion because he violated the policy's lay-up warranty, which required the yacht to be out of the water and non-operational at that time. See Comp. ¶¶ 35–36. In count two, Mid–Century seeks a declaration that it owes no duty to defend or indemnify Fish for any claims of bodily injury or property damage from the October 5, 2008 explosion, again because he violated the policy's lay-up warranty by occupying the yacht for recreational purposes and making it available for immediate navigation. See Comp. ¶¶ 38–40.

Defendant Fish, the yacht owner and the insured, counters that on the day of the accident, he intended to board and move the boat only to “winterize” it and move it “within the immediate berthing location for the purposes of safety, repairs, alterations or for betterments and improvements to J & B Landing ... which is approximately 75–100 yards from where the watercraft was berthed at the Black River Yacht Club.” Def. Fish's Counterclaim (Doc. 17) ¶ 13. Defendant Fish asserts a counterclaim against Mid–Century to recover monetary payment for the bodily injury and property damage which he and other defendants allegedly sustained as a result of the accident. See Def. Fish's Counterclaim ¶¶ 12–16 (Count One) and Prayer for Relief ¶¶ A–C. Defendant Fish also asserts a counterclaim against third-party defendant Farmers Insurance Company and/or third-party defendant Zurich American Insurance Company (collectively “Farmers”), pursuant to a general-liability “personal umbrella policy” number 600–535195, for payment for bodily injuries and property damage which he and other defendants allegedly sustained as a result of the accident. See Def. Fish's Counterclaim ¶¶ 17–19 (Count Two) and Prayer for Relief ¶¶ A–C.

In its answer to Fish's counterclaim, Mid–Century contends that its alleged parent and/or affiliate companies—Farmers Insurance Company, Foremost Insurance Company, and Zurich Insurance Company—are irrelevant because they did not issue the policy on which this action is based, and must be sued in their independent separate...