Seabulk Offshore, Ltd. v. American Home Assur. Co.
| Decision Date | 28 July 2004 |
| Docket Number | No. 03-2087.,No. 03-1320.,03-1320.,03-2087. |
| Citation | 377 F.3d 408 |
| Parties | SEABULK OFFSHORE, LIMITED, Plaintiff-Appellant, v. AMERICAN HOME ASSURANCE COMPANY, Defendant-Appellee, and Dyn Marine Services, Incorporated, Defendant. Seabulk Offshore, Limited, Plaintiff-Appellant, v. Dyn Marine Services, Incorporated, Defendant-Appellee, and American Home Assurance Company, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeal from the United States District Court for the Eastern District of Virginia, James C. Cacheris, J ARGUED: Thomas Owen Mason, Williams, Mullen, Clark & Dobbins, McLean Virginia, for Appellant.
Robert N. Kelly, Jackson & Campbell, P.C., Washington, D.C., for American Home Assurance Company; Caroline Turner English, Arent, Fox, Kinter, Plotkin & Kahn, P.L.L.C., Washington, D.C., for Dyn Marine Services, Incorporated.
ON BRIEF: Rachel L. Semanchik, Williams, Mullen, Clark & Dobbins, McLean, Virginia, for Appellant.
Barbara M.R. Marvin, Jackson & Campbell, P.C., Washington, D.C., for American Home Assurance Company; Howard V. Sinclair, J. Marcus Meeks, Arent, Fox, Kinter, Plotkin & Kahn, P.L.L.C., Washington, D.C., for Dyn Marine Services, Incorporated.
Before WILKINSON and KING, Circuit Judges, and William D. QUARLES, Jr., United States District Judge for the District of Maryland, sitting by designation.
Reversed in part, vacated in part, and remanded by published opinion. Judge KING wrote the opinion, in which Judge WILKINSON and Judge QUARLES joined.
This appeal stems from an insurance coverage dispute rooted in a maritime accident. Plaintiff Seabulk Offshore, Limited ("Seabulk") appeals from rulings made in the Eastern District of Virginia in favor of defendant American Home Assurance Company ("American Home") and defendant Dyn Marine Services, Incorporated ("Dyn Marine"). Seabulk initially filed suit in 2002 in the Southern District of Texas, seeking a declaratory judgment and damages. The Texas proceeding was thereafter transferred to the Eastern District of Virginia, where Seabulk filed an amended complaint (the operative complaint in this proceeding). By its lawsuit, Seabulk sought a declaration that it was entitled to insurance coverage by American Home for a lawsuit then pending against it in Texas; in the alternative, Seabulk sought damages from Dyn Marine for breach of contract and for fraud. In seeking declaratory relief, Seabulk alleged that it was covered under an insurance policy issued by American Home. Seabulk's breach of contract and fraud claims sought damages arising from a related agreement between Seabulk and Dyn Marine. Dyn Marine counterclaimed against Seabulk for breach of contract, and it cross-claimed against American Home, also seeking insurance coverage for the Texas lawsuit.
On January 28, 2003, the district court ruled that Seabulk was not entitled to either insurance coverage or damages, it awarded summary judgment to American Home and Dyn Marine, and it dismissed Dyn Marine's cross-claim against American Home. Seabulk Offshore, Ltd. v. Dyn Marine Servs., Inc., Nos. 66 and 67 Civ. 02-777-A (E.D.Va. Jan. 28, 2003) (the "January Opinion"). The court thereafter awarded summary judgment to Dyn Marine, in the sum of more than $400,000, on its counterclaim against Seabulk. Seabulk Offshore, Ltd. v. Dyn Marine Servs., Inc., Nos. 84 and 85 Civ. 02-777-A (E.D.Va. Jul. 30, 2003) (the "July Opinion"). Seabulk has appealed, maintaining that the court erred in its rulings.1 As explained below the insurance policy affords coverage to Seabulk, and we therefore reverse the award of summary judgment in favor of American Home and vacate the balance of the January Opinion. Because the July Opinion was filed without the benefit of this decision, we also vacate and remand that Opinion.
Seabulk is a limited partnership headquartered in Florida; it owns and operates offshore commercial shipping vessels.2 Dyn Marine, a subsidiary of DynCorp, is a California corporation with its principal place of business in Virginia; part of its business is to supply crews to operate offshore commercial shipping vessels. American Home maintains its principal place of business in New York, and it is engaged in the insurance business.
On February 6, 2001, following more than a month of negotiations, Seabulk and Dyn Marine entered into a "Manning Agreement" (the "Agreement"), providing that Dyn Marine would supply crews to operate two Seabulk commercial shipping vessels, the Seabulk New Hampshire and the Seabulk Kentucky.3 Exhaustive in its scope, the Agreement is comprised of thirteen Articles governing various aspects of the relationship between Seabulk and Dyn Marine. Most pertinent here is Article VIII, entitled "Insurance," which spells out the parties' obligations to procure and maintain insurance coverage.
Section 8.1 of the Agreement provides, inter alia, that Dyn Marine would secure and maintain a policy of commercial general liability insurance ("CGL insurance" or "CGL coverage"), affording coverage for Bodily Injury and Property Damage.4 Agreement § 8.1. The CGL coverage required by the Agreement was to be broader than typical CGL coverage, however, in that it was to provide "in rem coverage," plus coverage for "contractual liability" and "completed operations."5 Id. Seabulk and Dyn Marine agreed that the CGL insurance would have "[m]inimum limits of $5,000,000 per occurrence" with "no annual aggregate." Id. Dyn Marine was to name Seabulk as an additional insured, with the CGL coverage being primary to any other applicable coverage. Id. Finally, Seabulk and Dyn Marine agreed that Dyn Marine's insurer was to waive its rights of subrogation against Seabulk. Id.
Pursuant to section 8.2(a), Seabulk agreed, for its part, to procure and maintain full protection and indemnity insurance ("P & I insurance" or "P & I coverage") on the Seabulk New Hampshire and the Seabulk Kentucky.6 Agreement § 8.2(a). The P & I insurance was to provide coverage, inter alia, for "maintenance, cure and unearned wages" with respect to the Dyn Marine crews.7 Id. And Seabulk agreed to name Dyn Marine as "a coinsured with a waiver of subrogation," with the P & I coverage having "a minimum [policy] limit of $25,000,000 per occurrence." Id.
During the relevant period, Dyn Marine maintained CGL coverage through an insurance policy issued to DynCorp in Virginia by American Home, specifically Policy No. RM GL 612-38-16, effective from July 1, 2000, through July 1, 2001 (the "Policy"). The Policy provided coverage to DynCorp and thirty-four of its subsidiaries, including Dyn Marine, which are named as insureds in the Policy's "Broad Named Insured Endorsement." In this Endorsement, Dyn Marine is designated with an asterisk, indicating by footnote that the Policy functions, with respect to Dyn Marine, "To Cover U.S. Office Exposures Only" (the "Exposures Footnote").8
The Policy obligates American Home to pay to Dyn Marine those sums that Dyn Marine becomes legally obligated to pay as damages because of bodily injury or property damage for covered occurrences while the Policy is in effect.9 Policy § I. It vests in American Home "the right and duty to defend any `suit'" seeking such damages, and it recognizes that American Home may, at its discretion, "investigate any `occurrence' and settle any [resulting] claim or `suit.'" Id. In its Section IV, the Policy contains a "Separation of Insureds" clause, declaring that its CGL coverage applies "[a]s if each Named Insured were the only Named Insured," and "[s]eparately to each insured against whom [a] claim is made or [a]'suit' is brought." Policy § IV(7).
In addition, the Policy bears four other Endorsements that are pertinent to this appeal:
• Endorsement # 4 (the "Coverage Territory Endorsement"): This Endorsement amends the Policy's coverage territory "to include the Gulf of Mexico and other areas up to [sic] including 100 miles offshore."
• Endorsement # 9 (the "Watercraft Endorsement"): This Endorsement deletes "all watercraft exclusions ... in their entirety." Absent the deletion of the watercraft exclusions, the Policy would not provide coverage for bodily injury or property damage "arising out of the ownership, maintenance, use or entrustment to others of any ... watercraft owned or operated by or rented or loaned to any insured." Policy § I(2)(g).
• Maritime Liability Endorsement In Rem Coverage (the "In Rem Endorsement"): This Endorsement modifies the Policy's "Section II — Who Is An Insured" to provide that "In Rem actions against any watercraft owned or operated by ... any insured will in all respects be treated in the same manner as though the action were In Personam against that insured."
• Additional Insured — Where Required Under Contract or Agreement Endorsement (the "Additional Insured Endorsement"): This Endorsement amends Section II of the Policy to add as an additional insured any organization that Dyn Marine becomes obligated to include as an insured under a contract requiring Dyn Marine to furnish insurance of the type provided by the Policy.10 Such an organization benefits from the Additional Insured Endorsement "only with respect to liability arising out of ... operations or premises owned by or rented to [Dyn Marine or another named DynCorp subsidiary]." An additional insured falling within this Endorsement's purview is entitled to coverage that does not exceed the lesser of (1) the coverage and/or limits of the Policy, or (2) the coverage and/or limits required by contract.
On March 25, 2001, while the Agreement and the Policy were in effect, the Seabulk New Hampshire, manned by a Dyn Marine crew, collided in Louisiana's Amelia Channel with a barge being towed by the vessels Miss Debbie and Miss Sue (the "Accident"). Two Miss Debbie crewmen thereafter filed a personal injury lawsuit against Seabulk in the Southern District of Texas. See Simon v. Odyssea Vessels,...
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