Nat'l Liab. & Fire Ins. Co. v. Rooding
| Decision Date | 20 January 2017 |
| Docket Number | Civil Action No.: ELH-15-2572 |
| Parties | NATIONAL LIABILITY & FIRE INSURANCE COMPANY, Plaintiff, v. RONALD ROODING, Defendant. |
| Court | U.S. District Court — District of Maryland |
National Liability & Fire Insurance Company ("National"), plaintiff, filed suit against defendant Ronald Rooding on August 31, 2015, seeking a declaratory judgment as to its obligations under two marine insurance policies that National had issued to Rooding. ECF 1.1 In particular, National seeks a declaration that it is not obligated to provide coverage to Rooding with respect his claim for damages, arising out of the loss of the vessel MARGARITAVILLE (the "Vessel"). Rooding reported the loss on May 1, 2015. But, according to National, Vessel sank prior to that date, when the policies were not in effect. ECF 1. Further, National seeks a declaration that the policies are "null and void ab initio," on the grounds that Rooding breached the implied warranty of seaworthiness; breached the duty established by the doctrine of uberrimae fidei; and/or because Rooding breached the terms of the "Fraud and Concealment" clause of the policies Id.
Now pending is National's "Motion for Attorneys' Fees and Costs" (ECF 35), supported by a Memorandum of Law (ECF 35-1, collectively, "Motion for Fees"). In the Motion for Fees, filed pursuant to Fed. R. Civ. P. 4(d)(2), National seeks to recover $2,690 in attorney's fees and costs, incurred, inter alia, in attempting to serve Rooding with the suit. National submitted several exhibits with its Motion for Fees. See ECF 35-2 through ECF 35-8. Rooding requested additional time to respond to the Motion for Fees (ECF 41), which I granted by Order of November 2, 2016. ECF 42. Despite the extension, Rooding did not respond to the Motion for Fees and the time to do so has expired. See Local Rule 105.2; ECF 42.
In addition, National has filed a "Second Motion for Entry of Default Judgment." ECF 36. It is supported by a Memorandum of Law (ECF 36-1) (collectively, "Motion" or "Motion for Default") and two exhibits. ECF 36-2 and ECF 36-3. Rooding has not responded to the Motion for Default and the time to do so has expired. See Local Rule 105.2.
No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion for Default. Furthermore, I shall grant the Motion for Fees, but in an amount to be determined after further submissions from National.
On or about August 16, 2014, Rooding purchased the Vessel from Jack Franklin for the sum of $9,515.00. ECF 1 ¶ 9. The Vessel was a 30-foot 1978 Trojan yacht. Id. ¶ 4. However, Rooding did not obtain a Certificate of Title to the vessel from the Maryland Department of Natural Resources until April 29, 2015. Id. ¶ 9. Rooding allegedly represented on his Application for Title that he had paid $3,500 for the Vessel. Id. Rooding kept the Vessel in aslip located at River Watch Marina in Middle River, Maryland, on a tributary of the Chesapeake Bay. Id. ¶ 10.
Rooding endeavored to procure insurance for the Vessel on or about August 15, 2014, and contacted National's underwriting agent. Id. ¶ 11. According to plaintiff, Rooding was told that the Vessel could be insured only for Rooding's "financial investment" in the Vessel. Id. However, Rooding allegedly sought coverage of $25,000 on the hull. Id. On August 16, 2014, National issued Policy No. 3792430-14 (ECF 1-2, the "First Policy"), with the effective date of August 16, 2014 through August 16, 2015. Id. It provided hull liability coverage of $25,000. Id.; see ECF 1-2.3
National alleges, id. ¶ 12:
The cover letter enclosing the First Policy informed Rooding that to maintain the coverage, Rooding needed to provide: (1) an acceptable condition and value marine survey; (2) a copy of the "sales agreement" for the Vessel; and (3) a completed and signed Marine Insurance Application. The Marine Insurance Application provided to Rooding contained certain pre-filled information, including an entry of "$25,000" as the "Boat Purchase Price." Rooding never signed or returned the Application or the Bill of Sale. He also did not send a survey to the underwriter until many months later.
National alleges that a marine survey of the Vessel was conducted in late August or early September of 2014. It indicated that a valve leading to the intake hoses for the head and "wash down system" was "missing a required dedicated handle to open and close the valve." Id. ¶ 13. And, the "hull valve (or seacock) with the missing handle was later determined to have been stuck in the open position" when the First Policy was issued, "unknown and unreported" to National. Id. ¶ 14. As a result, National contends that the Vessel was "defective and unseaworthy" when the First Policy was issued on August 16, 2014. Id.
On December 4, 2014, the First Policy was terminated for non-payment of the premium. Id. ¶ 16. Rooding requested another insurance policy from National on January 22, 2015. Id. ¶ 18. On January 26, 2015, National "determined that the Vessel could be insured under a no navigation ('port risk') policy, so long as Rooding removed a 110 volt electrical outlet from the aft cockpit compartment. . . .", because that was considered "a safety hazard . . . ." Id. On January 23, 2015, National sent Rooding an insurance application, which reflected a "Boat Purchase Price of $25,000." Id. ¶ 19. Rooding signed and submitted the application. Id.
The outlet was removed on or about April 3, 2015. ECF 1 ¶ 20. Thereafter, National issued Policy No. 3842216-15. ECF 1-3 ("Second Policy"). It insured the vessel on a "'no navigation' basis" from March 31, 2015 to March 31, 2016. ECF 1 ¶ 21.
Rooding executed another version of the Marine Insurance Application form for the Second Policy, dated April 8, 2015. ECF 1 ¶ 22. "On this version of the form, Rooding removed the $25,000 figure placed on the 'Boat Purchase Price' subject line, and left the line blank." Id. According to National, it subsequently increased Rooding's Hull insurance to $26,500, based on representations by Rooding as to the installation of equipment on the Vessel. Id. ¶ 23. It also provided coverage of $6,200 for Rooding's personal effects. Id.
On May 1, 2015, in Claim No. 1502226, Rooding notified plaintiff that the Vessel had sustained "significant water damage due to a sinking incident of an unknown cause that occurred on an unknown date." Id. ¶ 24. However, Rooding was unable to offer plaintiff an explanation of how or when the Vessel sank. Id. ¶ 25. Moreover, he did not provide the actual date of the occurrence.
National retained an expert marine surveyor, Michael J. McCook, to inspect the Vessel. Id. ¶¶ 27-28. McCook "concluded to a reasonable degree of certainty [that] the [V]essel sankafter the first freeze in the Middle River area . . . after January 1, 2015 . . . and prior to March, 2015," because of "ice breaking the sea strainer serving the head." ECF 1 ¶ 31. McCook explained: "When the ice broke the strainer, due to the open valve (seacock) on the supply hose, water entered the Vessel, overwhelmed the bilge pumps and the Vessel ultimately sank." Id. McCook opined, id.: "There is no evidence to support any other reasonable cause of the sinking."
Thus, National's investigation revealed defects in the Vessel that, in National's view, rendered the Vessel defective and unseaworthy before either policy was issued. National asserts, based on McCook's investigation, id. ¶ 31: "Had the boat been properly winterized, the failure would not have occurred." National also asserts, id. at ¶ 34:
After performing the investigation referred to above, National Liability determined that there was no coverage available to Rooding under the Policies for the reasons set forth in the claim denial letter dated August 5, 2015, which is attached hereto as Exhibit C [ECF 1-4] and incorporated herein by reference. In sum, coverage was not extended for Rooding's claim because Rooding could not establish that the reported sinking occurred during the periods that the Policies were in force, or on or between August 16, 2014 and December 4, 2014 or on or between March 31, 2015 and the date the loss was reported, May 1, 2015.
On August 27, 2015, National sent Rooding a letter denying his claim. ECF 1-5. National advised that the Policies were void ab initio because, in National's view, Rooding had (1) breached the implied warranty of seaworthiness; (2) breached the doctrine of uberrimae fidei; and (3) breached the "Fraud and Concealment" clause of the Policies. Id. Notably, the letter also stated that the "Date of Loss" was "Undetermined." Id.4
National contends that Rooding "violated his duty to National Liability by misrepresenting material facts and by omitting material facts." Id. ¶ 45. In particular, plaintiff contends that defendant misrepresented the purchase price of the vessel as $25,000 when theactual purchase price "was $9,515.00 or $3,500." Id. ¶¶ 45a, 45b. Plaintiff also asserts that defendant failed "to disclose unseaworthy conditions aboard the Vessel prior to the inception of coverage on August 17, 2014 and again prior to the inception of coverage on March 31, 2015." Id. ¶ 45g. According to plaintiff, there is no coverage under the policies because "the Insured [] failed to indicate or rely upon any cause for the sinking and cannot demonstrate that the claimed loss occurred during the effective policy dates." Id. ¶ 49.
On September 1, 2015, the Clerk issued a summons for service of the suit on defendant. ECF 5. On October 28, 2015, pursuant to Rule 4(d), National sent a "'Request for the Waiver of Service of Summons' along with all required enclosures and notifications, to Defendant, Ronald Rooding, by first class mail, postage prepaid." ECF 10. Then, on November 10, 2015, plaintiff filed an amended complaint, correcting the zip code for defendant. ECF 11. On the same date, plaintiff sent a...
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