U.S. Fire Ins. Co. v. Icicle Seafoods, Inc.
| Decision Date | 19 November 2021 |
| Docket Number | C20-00401-RSM |
| Parties | UNITED STATES FIRE INSURANCE COMPANY, et al., Plaintiffs/Counterclaim Defendants, v. ICICLE SEAFOODS, INC., et al., Defendants/Counterclaim Plaintiffs. |
| Court | U.S. District Court — Western District of Washington |
Matthew Clayton Crane, Meliha Jusupovic, Bauer Moynihan & Johnson, Samuel D. Colito, Thomas Lether, Lether Law Group, Seattle, WA, for Plaintiffs/Counterclaim Defendants United States Fire Insurance Company, National Union Fire Insurance Company of Pittsburgh PA, Great American Insurance Company of New York, Argonaut Insurance Company, Endurance American Insurance Company, Houston Casualty Company, Certain Underwriters at Lloyds London.
Chelsey Lyn Mam, Franklin Dennis Cordell, Greg D. Pendleton, Michael Rosenberger, Miles C. Bludorn, Gordon Tilden Thomas & Cordell LLP, Daniel Francis Mullin, Tracy A. Duany, Timothy E. Allen, Mullin, Allen & Steiner, PLLC, Seattle, WA, for Defendants/Counterclaim Plaintiffs Icicle Seafoods Inc., ISVesselCo Inc.
This matter comes before the Court on parties’ cross-motions for summary judgment. Defendants-Counterclaim Plaintiffs Icicle Seafoods, Inc., and ISVesselCo, Inc. (collectively, "Icicle") have moved for partial summary judgment regarding the applicability of Washington law, Icicle's right to a jury trial, and interpretation of the deductible language. Dkt. #74. Plaintiff-Counterclaim Defendants United States Fire Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, Great American Insurance Company of New York, Argonaut Insurance Company, Endurance American Insurance Company, Houston Casualty Company, and Certain Underwriters at Lloyd's, London (collectively, "Insurers") have filed a response and cross-motion on those issues, Dkt. #86, as well as a motion for summary judgment on Icicle's counterclaims. Dkt. #111. Parties have not requested oral argument, and the Court finds it unnecessary to resolve the relevant issues. Parties’ motions are resolved as set forth below.
A full background of this case is not necessary given the Court's previous orders in this matter. See Dkts. #127, #128. This action arises out of an insurance claim for Loss of Hire ("LOH") damages claimed by Icicle as a result of engine damage on the vessel R.M. THORSTENSON ("the RMT") in December 2016 that interrupted Icicle's fish processing operations in 2017 and 2018. From 2018 until 2020, parties unsuccessfully attempted to settle the LOH claim. Insurers adjusted Icicle's LOH claim in the amount of $966,638.48, which Icicle refused to accept on the basis that their damages approximated $4 million. Dkt. #1 at ¶ 11, Dkt. #18 at ¶ 86.
On March 13, 2020, Insurers filed a declaratory judgment action in this Court seeking a declaration of Icicle's actual loss of net earnings sustained as a result of the RMT's December 2016 engine damage and as limited by the policy terms and conditions between the parties. Dkt. #1 at ¶ 30. On June 5, 2020, Icicle counterclaimed for violations under breach of contract, breach of duty of good faith and fair dealing, the Washington Consumer Protection Act, RCW 18.86, and the Insurance Fair Conduct Act ("IFCA"), RCW 48.30.015. Dkt. #18 at ¶¶ 88-98.
Icicle filed the instant Motion for Partial Summary Judgment on January 21, 2021, seeking a determination that (1) Washington law applies to this dispute; (2) Icicle is entitled to a jury trial; (3) the 14-day deductible contained in the LOH endorsement was triggered by the RMT's engine failure; (4) the 14-day deductible does not require proof of economic loss; and (5) the 14-day deductible was exhausted during the 2017 cod season. Dkt. #74. On February 8, 2021, Insurers moved for summary judgment on the same issues. Dkt. #86. On May 20, 2021, Insurers filed a subsequent motion for summary judgment seeking dismissal of Icicle's counterclaims. Dkt. #111.
Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Material facts are those which might affect the outcome of the suit under governing law. Id. at 248, 106 S.Ct. 2505. In ruling on summary judgment, a court does not weigh evidence to determine the truth of the matter, but "only determine[s] whether there is a genuine issue for trial." Crane v. Conoco, Inc. , 41 F.3d 547, 549 (9th Cir. 1994) (citing Federal Deposit Ins. Corp. v. O'Melveny & Myers , 969 F.2d 744, 747 (9th Cir. 1992) ). When parties have filed simultaneous cross-motions on the same claim, "the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them." Tulalip Tribes of Washington v. Washington , 783 F.3d 1151, 1156 (9th Cir. 2015) (quoting Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1134 (9th Cir. 2001) ) (internal quotations omitted).
On a motion for summary judgment, the court views the evidence and draws inferences in the light most favorable to the non-moving party. Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ; Sullivan v. U.S. Dep't of the Navy , 365 F.3d 827, 832 (9th Cir. 2004). The Court must draw all reasonable inferences in favor of the non-moving party. See O'Melveny & Myers , 969 F.2d at 747, rev'd on other grounds , 512 U.S. 79, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994). However, the non-moving party must make a "sufficient showing on an essential element of her case with respect to which she has the burden of proof" to survive summary judgment. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The Court will first address what law governs this marine insurance policy dispute. Icicle contends that Washington law applies while Insurers argue that federal common law and federal maritime law apply. Dkt. #74; Dkt. #86. Icicle relies on the Ninth Circuit's holding in Bohemia, Inc. v. Home Ins. Co. , which read U.S. Supreme Court precedent as holding "that state law will control the interpretation of a marine insurance policy only in the absence of a federal statute, a judicially fashioned admiralty rule, or a need for uniformity in admiralty practice." 725 F.2d 506, 510 (9th Cir. 1984). Insurers argue that Bohemia does not apply here, since the policy sets forth a choice of law provision that expressly selects federal admiralty law and federal common law as the governing law.
The two contracts at issue in this dispute are USA Marine Insurance Policy No. PK-16-060 ("USA Marine Policy") and Lloyds London's Unique Market Reference No. B0507/M16PH06590 ("Lloyds Slip Policy"). Both contain the following provision under the Loss of Charter Hire Insurance heading: "This insurance is subject to English law and practice U.S. LAW AND PRACTICE." Dkt. #18 at 56, 92 (strikeout in original). A separate section of the Lloyds Slip policy reads: "In any case arising out of this insurance, the same shall be governed by and construed in accordance with Washington law and practice, jurisdiction ...." Id. at 72. Insurers argue that "U.S. LAW AND PRACTICE" must be construed as a choice of law provision expressly selecting federal admiralty and common law. Dkt. #86. The Court disagrees. While the policy does not explain what was intended by the phrase "U.S. law and practice," the strikeout indicates parties’ intention to be bound by American law as opposed to English law—a choice that merely distinguishes between the laws of two countries, not between federal law and the law of any U.S. state.
Insurers’ arguments to the contrary are unavailing. Relying on two cases from the Ninth and Fifth Circuits, Insurers argue that in maritime contracts, "United States law" means federal common and statutory law. In Flores v. Am. Seafoods Co. , the contract expressly stated, "[t]his Agreement shall be governed exclusively by the general maritime laws of the United States and applicable United States Statutes " and that the "obligations, rights and remedies with respect to the employment relationship established by this Agreement ... shall not be enlarged, supplemented or modified by the laws of any State or local jurisdiction. " 335 F.3d 904, 910 (9th Cir. 2003) (emphases added). Consistent with the plain language of the contract, the Ninth Circuit determined that "general maritime laws of the United States and applicable United States Statutes" referred to federal common and statutory law governing admiralty cases. Id. at 918, n.8. Flores does not extend to the instant case, where the plain language of the contract makes no reference to U.S. general maritime laws and statutes, nor does it expressly disclaim application of the laws of any state or local jurisdiction.
Fifth Circuit case Foster Wheeler Energy Corp. v. An Ning Jiang MV , 383 F.3d 349 (5th Cir. 2004), likewise does not support Insurers’ position. In that case, the court addressed two choice-of-law clauses in bills of lading for carriage between Spain and China, and construed "U.S. law" as meaning the federal Carriage of Goods by Sea Act ("COGSA"). Not only did the Foster court construe "U.S. law" to mean one specific federal statute, COGSA, but it considered the meaning of the term in a wholly distinct context: a bill of lading for carriage of goods across international borders. The language and purpose of that contract is readily distinguishable from parties’ marine insurance policy.
Having concluded that "U.S. LAW AND PRACTICE" merely indicates parties’ choice of American law over English law, the Court finds no conflict between that provision and the provision of the Lloyd's Slip Policy that...
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