Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters, LLC

• Decision Date: 26 August 2019
• Docket Number: CASE NO. 18-CIV-81270-RAR
• Parties: TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff, v. OCEAN REEF CHARTERS, LLC, Defendant.
• Court: U.S. District Court — Southern District of Florida

396 F.Supp.3d 1170

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff,

v.OCEAN REEF CHARTERS, LLC, Defendant.

CASE NO. 18-CIV-81270-RAR

United States District Court, S.D. Florida.

Signed August 26, 2019

James W. Carbin, Sheila Raftery Wiggins, Pro Hac Vice, P. Ryan McElduff, Duane Morris, LLP, Newark, NJ, Richard David Shane, Duane Morris LLP, Miami, FL, Claude Robert Murray, Jr., C. Robert Murray, Jr., P.A., Fort Lauderdale, FL, for Plaintiff.

Darlene M. Lidondici, Christopher Rogers Fertig, Kristen Marie Susik, Fertig & Gramling, Fort Lauderdale, FL, Karl S. Essler, Morgenstern DeVoesick PLLC, Pittsford, NY, Stephen A. Marino, Jr., Benjamin C Hassebrock, Stephanie Alice Weeks, Ver Ploeg & Marino, P.A., Miami, FL, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

RODOLFO RUIZ, UNITED STATES DISTRICT JUDGE

This case sheds light on the proper application of federal admiralty law in the interpretation of a marine insurance policy. Both parties seek declarations regarding the effect of a breach of an express warranty in a marine insurance policy and urge the Court to apply contrasting legal frameworks in reaching its decision. As explained herein, the Court finds Eleventh Circuit case law governing the interpretation of express warranties in marine insurance contracts navigates us through stormy seas and mandates the application of federal admiralty law, rather than Florida law, to the policy at issue.

The case is before the Court on Defendant Ocean Reef Charters, LLC's ("Ocean Reef") Motion for Summary Judgment [ECF. No. 106] ("Ocean Reef MSJ") and Plaintiff Travelers Property Insurance Company's ("Travelers") Motion for Summary Judgment [ECF No. 108] ("Travelers MSJ").¹ The Court has carefully reviewed the parties' written submissions, the record, and applicable law, and being otherwise fully advised in the premises, it is hereby

ORDERED and ADJUDGED that Ocean Reef's Motion for Summary Judgment is DENIED and Travelers' Motion for Summary Judgment is GRANTED for the reasons stated herein.

BACKGROUND

Hurricane Irma, a Category 4 hurricane, made landfall in Florida in September 2017 and has proven to be one of the costliest hurricanes in history, causing at least 80 fatalities and upwards of $11 billion of damage in Florida alone.² Unfortunately, Ocean Reef's yacht, a 1998 92-foot Hatteras called M/Y MY LADY ("Yacht"), was amongst the damage. According to Ocean Reef, one of the pilings of the dock where the Yacht was moored failed during the hurricane, causing the Yacht to strike the seawall until she sank ("Claimed Loss"). Ocean Reef's Statement of Material Facts [ECF No. 106 at 3-8] ("Ocean Reef SMF") at ¶ 24. The Yacht was insured by Travelers at the time of the Claimed Loss. Travelers' Statement of Material Facts [ECF No. 109] ("Travelers SMF") at ¶ 2; Ocean Reef SMF ¶ 1.

Travelers and Ocean Reef have a long history. Travelers insured the Yacht from October 10, 2014 through October 10, 2017 under three consecutive policies. Ocean Reef SMF ¶ 3. The third and final Travelers' policy, effective October 10, 2016 through October 10, 2017, insured the Yacht at an agreed value of $2,000,000 ("Policy"). Id. The Policy contained two express warranties attached as stand-alone addendums. See Policy at 19-20 [ECF No. 15 ]. The first warranty was a Captain Warranty that read:

It is warranted you employ a professional captain for the yacht shown on the Declarations Page of this policy. Such captain shall be employed full time and approved by us. We will pay up to $1,500 for the cost of hiring a replacement captain, approved by us, if your captain is unable to perform his regular duties due to a medically certified cause.

Policy at 19. The second warranty was a Crew Warranty that read:

You employ 1 full time or part time professional crew for your yacht shown on the Declarations Page of this policy. We also provide coverage tor any additional, temporary crew you employ.

Policy at 20. While there is some dispute as to the purpose of these warranties, neither party argues that the warranties are vague or ambiguous.

Travelers first insured the Yacht in 2014. Travelers SMF ¶ 3; Ocean Reef SMF ¶ 1. In 2016, Ocean Reef submitted a claim for damage caused to the Yacht by a lightning strike. Travelers SMF ¶ 26; Ocean Reef SMF ¶ 12. Whether Ocean Reef employed a captain in compliance with the Captain Warranty at that point is disputed, but Travelers ultimately found that Ocean Reef complied with the terms of the policy and paid the claim. See Ocean Reef SMF ¶ 13. In 2017, Ocean Reef submitted a claim for a loss of a jet ski that occurred while it was anchored off the Bahamas. Travelers SMF ¶ 27; Ocean Reef SMF ¶ 14. Travelers denied the claim because the Yacht did not have a professional, full time, approved, licensed captain at the time of the loss. Travelers SMF ¶ 27; Ocean Reef SMF ¶ 14. Just before Hurricane Irma, in August 2017, a Travelers underwriter recommended non-renewal of the Yacht's coverage after the Policy expired in October due to a "very shady" claims history. Ocean Reef SMF ¶ 16.

The back and forth between Ocean Reef and Travelers peaked in September 2017, just as it became likely that Hurricane Irma would strike South Florida. At that time, the Yacht was moored at Hillsboro Inlet in Pompano Beach, rather than the location prescribed in the policy. Travelers SMF ¶ 29. Travelers was never advised that the Yacht was moved. Id. On or about September 5, 2017, Richard Gollel, an Ocean Reef representative, sought to re-hire Captain Michael McCall to move the Yacht before Hurricane Irma arrived. Captain McCall had previously been approved by Travelers to captain the Yacht. Travelers SMF ¶ 23, 34; Ocean Reef SMF ¶ 17; Ocean Reef SMF Response ¶ 23. While the parties dispute whether Captain McCall was appropriately hired, it is undisputed that Captain McCall was not in Florida from September 5, 2017 through September 10, 2017, when Hurricane Irma made landfall. See id.; Travelers SMF ¶ 35. Additionally, in an October 23, 2017 email, Captain McCall confirmed that he "was hired by Mr. Gollel on September 5 thru [sic] September 10, 2017 as temporary Captain." See Ocean Reef SMF ¶ 17, Ex. M.

On or about September 6, 2019, a day after Captain McCall was allegedly hired, Mr. Gollel asked one of Ocean Reef's insurance brokers for permission to move the Yacht to a more protected location himself because "he was between captains." Travelers SMF ¶ 32; Ocean Reef SMF ¶ 19. Mr. Gollel is not and has never been a U.S. Coast Guard licensed captain, is not a professional captain, and did not have experience operating a vessel as large as the Yacht. Travelers SMF ¶¶ 9-10. Ocean Reef's insurance broker responded that she did not know if Mr. Gollel, who was "watching" the Yacht for two months while it was moored, could operate the Yacht without violating the Captain Warranty and consequently voiding the Policy. See Travelers SMF ¶ 23, 33; Ocean Reef SMF Response ¶ 23; 33. Indeed, it is undisputed that the Yacht did not have a professional crew or a full time, professional, licensed captain located in Florida in September 2017. Travelers SMF ¶ 41; Ocean Reef SMF Response ¶ 41.

Ultimately, the Yacht was not moved from its position and remained moored at Hillsboro Inlet in Pompano Beach. Ocean Reef SMF ¶ 22. According to Ocean Reef, the Yacht suffered enough damage in the hurricane to amount to a "total loss" under the Policy. Ocean Reef SMF ¶ 25. Travelers promptly issued a reservation of rights letter on September 25, 2017 and agreed to pay to raise the Yacht and tow it to Bradford Marine for storage and inspection. Ocean Reef SMF ¶ 26. The following day, Travelers filed suit against Ocean Reef in the Western District of New York, seeking a declaration that the Claimed Loss was not covered due to an alleged breach of the Captain and Crew warranties. See Complaint [ECF No. 1 ]. Finally, on November 9, 2017, Travelers officially denied coverage under the Policy on the basis that Ocean Reef breached the Captain and Crew warranties.

On August 31, 2017, the Western District of New York transferred the case to this Court, finding that "the choice-of-laws analysis disfavors New York and favors the State of Florida, which appears to have more relevant contacts." [ECF No. 37 ]. Travelers moves for summary judgment seeking a declaration that Ocean Reef breached the Captain and Crew warranties and Travelers is therefore released from any obligations to Ocean Reef regarding the Claimed Loss. See generally, Compl. Ocean Reef seeks a declaration to the opposite effect and, in its Counterclaim [ECF No. 49 ], seeks an award of damages against Travelers for non-payment under the Policy.

LEGAL STANDARD

Summary judgment is appropriate where "the pleadings, depositions, 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). In making this assessment, the Court "must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party," Stewart v. Happy Herman's Cheshire Bridge, Inc. , 117 F.3d 1278, 1285 (11th Cir. 1997) (citation omitted), and "must resolve all reasonable doubts about the facts in favor of the non-movant." United of Omaha Life Ins. Co. v. Sun Life Ins. Co. of Am. , 894 F.2d 1555, 1558 (11th Cir. 1990) (citation omitted).

The movant's initial burden on a motion for summary judgment "consists of a responsibility to inform the court of the basis for its motion and to identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Fitzpatrick v. City of Atlanta , 2 F.3d...