Reifer-Mapp v. 7 Maris, Inc., Civ. No. 92-1657 (JAF).

• Decision Date: 27 July 1993
• Docket Number: Civ. No. 92-1657 (JAF).
• Citation: 830 F. Supp. 72
• Parties: Margaret REIFER-MAPP, et al., Plaintiffs, v. 7 MARIS, INC., etc., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

830 F. Supp. 72

Margaret REIFER-MAPP, et al., Plaintiffs, v. 7 MARIS, INC., etc., et al., Defendants.

Civ. No. 92-1657 (JAF).

United States District Court, D. Puerto Rico.

July 27, 1993.

Steven G. Glucksman, Gary, Williams, Parenti, Finney & Lewis Stuart, FL, (Francisco López-Romo of counsel), San Juan, PR, for plaintiffs.

Fernando D. Castro, Calvesbert & Brown, San Juan, PR, for Fireman's Fund.

OPINION AND ORDER

FUSTE, District Judge.

Plaintiffs, residents of Barbados, bring this action in damages against a San Juan Harbor-based vessel, in rem, and the shipowner, a Puerto Rico corporation, and the ship's insurer, in personam. Admiralty and maritime jurisdiction is invoked under 28 U.S.C. § 1333. In addition, the plaintiffs allege diversity jurisdiction under 28 U.S.C. § 1332, the amount in controversy exceeding $50,000, exclusive of interest and costs. The vessel has not been arrested and, therefore, the exclusive admiralty jurisdiction has not been effectively triggered. Fed.R.Civ.P. 9(h), 38(e), and 82. Based on the diversity of citizenship jurisdictional allegation, a trial by jury has been requested.

Defendant insurer now brings a motion for dismissal and/or summary judgment claiming that Puerto Rico's direct action statute, 26 L.P.R.A. § 2001 et seq., does not reach ocean marine insurers. We reject the insurer's argument and hereby deny its motion to dismiss and/or for summary judgment.

I. Facts

Reifer-Mapp was allegedly injured aboard the M/V LA REINA DE LA BAHIA ("LA REINA"), in the navigable waters of the United States and Puerto Rico, on May 19, 1991. (See Statement of Uncontested Facts, Docket Document No. 12). She alleges that while seated, she was struck in the head and neck by an inadequately and negligently secured life raft on the top level of the ship. (See Complaint, Docket Document No. 1). Plaintiff Reifer-Mapp claims that the alleged mishap caused her severe and permanent injuries that have impacted negatively on the life of her husband and on their conjugal partnership. Plaintiffs seek damages in the amount of $6,000,000. Id.

Movant, insurer Fireman's Fund Insurance Company ("Fireman's Fund") issued an ocean marine protection and indemnity insurance policy, No. OV 22697230, on or about February 9, 1991, to defendant 7 Maris, Inc., the shipowner, covering the subject vessel, LA REINA, through February 9, 1992. (See Statement of Uncontested Facts, Docket Document No. 12). The policy which by its terms was in force on the date of the alleged accident provided coverage for the hull and machinery of the vessel, as well as coverage for protection and indemnity associated with the general operation of the vessel, including personal injury liability, with a limitation of $1,000,000 "per vessel per occurrence." (See id., Napvo Insurance Program, Exhibit 1 at 16).

II. Issue

Fireman's Fund claims that it cannot be sued directly by plaintiffs under the direct action statute of Puerto Rico. 26 L.P.R.A. § 2003. The insurer weaves its argumentative web around the language and holdings of Louisiana state courts,¹ the Supreme Court of Puerto Rico, and the Fifth Circuit, in addition to interpretations of various sections of Title 26 of the Laws of Puerto Rico. The fundamental claim espoused by insurer is a legal one. The insurer contends that plaintiffs lack a cause of action against any ocean marine insurer because the statute under which the plaintiffs are bringing their direct action should be interpreted to be inapplicable to "`marine protection and indemnity' insurance." (Motion to Dismiss and/or for Summary Judgment, Docket Document No. 21 at 3). If Fireman's Fund's contention is correct and the relevant standards are met for a motion to dismiss, such dismissal pursuant to Rule 12(b)(6) would be appropriate as a matter of law as to the suit against the insurer. See Fed.R.Civ.P. 12(b)(6). On the other hand, if Fireman's Fund's argument fails to hold water, and plaintiffs' direct action suit is properly pled, we must assess whether the record is ripe for a summary judgment analysis. See Fed.R.Civ.P. 56(c). If both the granting of dismissal and summary judgment are inappropriate means of disposing of plaintiffs' complaint, the case must proceed down the path to a trial on the merits.

III. Standards for Dismissal and Summary Judgment

Rule 12(b)(6) states that a defendant may move to dismiss an action against it based only on the pleadings for "failure to state a claim upon which relief can be granted...." Fed.R.Civ.P. 12(b)(6). There is a stringent standard for granting a dismissal, particularly since dismissal takes place so early in the process of litigation. In the case of a motion to dismiss, "we begin by accepting all well-pleaded facts as true, and we draw all reasonable inferences in favor of the nonmovant." Washington Legal Foundation v. Massachusetts Bar Foundation, 993 F.2d 962, 971 (1st Cir.1993); see Coyne v. City of Somerville, 972 F.2d 440, 442-43 (1st Cir. 1992). We then determine whether plaintiff has stated a claim on which relief can be granted.

On the other hand, Rule 56(c) states that summary judgment "shall be rendered forthwith if the pleadings, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) (emphasis added). Therefore, in deciding a summary judgment motion, there are essentially three inquiries to pursue: The materiality and genuineness of the factual dispute, and the entitlement to judgment as a matter of law. Id.; see Goldman v. First National Bank, 985 F.2d 1113, 1116 (1st Cir.1993); see also Román Figueroa v. Torres Molina, 754 F.Supp. 239, 240-41 (D.P.R.1990). In all of the court's considerations in deciding a summary judgment motion, the court must consider the record in the light most favorable to the non-moving party. Bank One Texas, N.A. v. A.J. Warehouse, Inc., 968 F.2d 94, 97 (1st Cir.1992).

IV. Discussion: Puerto Rico's Direct Action Statute and Maritime Insurers

Federal maritime law does not permit direct action suits against indemnity insurers on the traditional basis that "in an indemnity contract ... the insurer agrees to reimburse expenses to the insured that the insured is liable to pay and has paid."²Continental Oil Co. v. Bonanza Corp., 677 F.2d 455, 459 (5th Cir.1982), vacated on other grounds, 706 F.2d 1365 (5th Cir.1983). See Albany Ins. Co. v. Wisniewski, 579 F.Supp. 1004, 1013-14 (D.R.I.1984). Thus, a local remedy must exist to permit a direct action by a third party against an indemnity insurer. Puerto Rico has adopted such a statute. 26 L.P.R.A. § 2001 et seq.

A. The Language of the Statute

Title 26, Chapter 20, of the Laws of Puerto Rico Annotated ("L.P.R.A."), provides for direct action suits against insurers. 26 L.P.R.A. § 2001 et seq. The statute holds insurers absolutely liable for covered perils whether or not the insured party compensated the injured person or was found to be at fault in a final judgment. The relevant section reads as follows:

The insurer issuing a policy insuring any person against loss or damage through legal liability for the bodily injury, death, or damage to property of a third person, shall become absolutely liable whenever a loss covered by the policy occurs, and payment of such loss by the insurer to the extent of its liability therefor under the policy shall not depend upon payment by the insured of or upon any final judgment against him arising out of such occurrence.

26 L.P.R.A. § 2001. The Puerto Rico Supreme Court has decided several cases interpreting this section. See, e.g., García v. Northern Assurance Co., 92 P.R.R. 236 (1965). The Northern Assurance decision was also founded on the direct action section of the statute. See 26 L.P.R.A. § 2003. The direct action statute of the Puerto Rico Insurance Code states the following:

(1) Any individual sustaining damages and losses shall have, at his option, a direct action against the insured under the terms and limitations of the policy, which action he may exercise against the insurer only or against the insurer and the injured jointly. The direct action against the insurer may only be exercised in Puerto Rico. The liability of the insurer shall not exceed that provided for in the policy, and the court shall determine, not only the liability of the insurer, but also the amount of the loss. Any action brought under this section shall be subject to the conditions of the policy or contract and to the defenses that may be pleaded by the insurer to the direct action instituted by the insured.

(2) If the plaintiff in such an action brings suit against the insured alone, such shall not be deemed to deprive him of the right, by the subrogation to the rights of the insured under the policy, to maintain action against and recover from the insurer after securing final judgment against the insured.

26 L.P.R.A. § 2003. The language of the direct action statute largely speaks for itself. As long as the suit is pursued in Puerto Rico, "any individual" who properly claims "damages and losses" may bring such action directly against the insured, the insurer, or both jointly. Id. In fact, a damaged party may bring an action first against the insured and later against the insurer. Id. The insurer cannot be held liable for damages in excess of the relevant insurance policy according to the statute, and a directly-sued insurer may plead the defenses as described above. Moreover, the conditions on the policy may limit recovery by the terms of the insurance agreement. Id.

The court should point out that nowhere in the statutory section containing the direct action remedy in Puerto Rico are there exceptions or special considerations involving any particular type of insurance policy or company. Thus, from the language of the statute alone, a direct action based on an ocean...