Justia Admiralty & Maritime Law Opinion Summaries

Articles Posted in Insurance Law
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A yacht owned by Raiders ran aground. Raiders had insured the vessel with GLI, which denied coverage stating the yacht’s fire-extinguishing equipment had not been timely recertified or inspected notwithstanding that the vessel’s damage was not caused by fire. GLI sought a declaratory judgment that Raiders’ alleged failure to recertify or inspect its fire-suppression equipment rendered the policy void from its inception. Raiders responded with five counterclaims, including three extra-contractual counterclaims arising under Pennsylvania law for breach of fiduciary duty, insurance bad faith, and breach of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.Concluding the policy’s choice-of-law provision mandated the application of New York law and precluded Raiders’ Pennsylvania law-based counterclaims, the district court dismissed those claims. The court rejected Raiders’ argument that applying New York law would contravene Pennsylvania public policy, thereby making the choice-of-law provision unenforceable under Supreme Court precedent (Bremen (1972)), which held that under federal admiralty law a forum-selection provision is unenforceable “if enforcement would contravene a strong public policy of the forum in which suit is brought.” The Third Circuit vacated. Bremen’s framework extends to the choice-of-law provision at issue; the district court needed to consider whether Pennsylvania has a strong public policy that would be thwarted by applying New York law. View "Great Lakes Insurance SE v. Raiders Retreat Realty Co LLC" on Justia Law

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Plaintiff-Appellant XL Insurance America, Inc. (“XL”), as subrogee of Boh Bros. Construction Co., L.L.C. (“Boh Bros.”), challenged the district court’s summary judgment in favor of Defendant-Appellee Turn Services, L.L.C. (“Turn”).   On appeal, Turn devotes significant ink to its contention that Boh Bros.’s responsibility for repairing the dolphin does not equate to a proprietary interest in it.   The Ninth Circuit vacated and remanded. The court held that Robins Dry Dock is not implicated by the $1.2 million that XL paid Boh Bros. to cover the repairs. The court explained that for nearly a century, Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), has limited plaintiffs’ ability to recover “purely economic claims . . . in a maritime negligence suit.”1 “[A]bsent physical injury to a proprietary interest”—or one of a few other limited exceptions—plaintiffs asserting such claims are out of luck. The court explained the “spectre of runaway recovery lies at the heart of the Robins Dry Dock rubric.”   Further, the court concluded that it is clear that the doctrine would be inapplicable here if XL had paid the money directly to Plains because Plains had a proprietary interest in the damaged dolphin. That the money passes through the hands of an intermediary—here, Boh Bros.—is irrelevant to the concerns animating Robins Dry Dock. View "XL Insurance America v. Turn Services" on Justia Law

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In 2011, during the course and scope of his employment as a shipwright, Claimant Robert Arlet slipped and fell on an icy sidewalk on the premises of his employer, Flagship Niagara League (Employer), sustaining injuries. Employer had obtained a Commercial Hull Policy from Acadia Insurance Company (Insurer). Through the policy, Insurer provided coverage for damages caused by the Brig Niagara and for Jones Act protection and indemnity coverage for the “seventeen (17) crewmembers” of the Brig Niagara. Employer had also at some point obtained workers’ compensation insurance from the State Workers’ Insurance Fund (SWIF). Insurer paid benefits to Claimant under its Commercial Hull Policy’s “maintenance and cure” provision. Claimant filed for workers’ compensation benefits. Employer asserted Claimant’s remedy was exclusively governed by the Jones Act. Employer also filed to join SWIF as an additional insurer in the event the Workers' Compensation Act (WCA) was deemed to supply the applicable exclusive remedy, and Employer was found to be liable thereunder. SWIF denied coverage, alleging Employer’s policy was lapsed at the time of Claimant’s injury. Thereafter, Claimant filed an Uninsured Employers Guaranty Fund (UEGF) claim petition, asserting the fund’s liability in the event he prevailed, and Employer was deemed uncovered by SWIF and failed to pay. The Workers’ Compensation Appeals Board (WCAB) found that as a land-based employee, Claimant did not meet the definition of seaman under the Jones Act and was, therefore, entitled to pursue his workers’ compensation claim. The issue this case presented for the Pennsylvania Supreme Court's review was one of first impression: the right of an insurer to subrogation under the WCA. The Supreme Court concluded Insurer’s Commercial Hull Policy did not cover Claimant, because Claimant was not a “seaman” or crew member. The WCA’s exclusive remedy applied, but Insurer was seeking subrogation for payment it made on a loss it did not cover. "[T]he 'no-coverage exception' to the general equitable rule precluding an insurer from pursuing subrogation against its insured comports with the purposes and public policy supporting the rule and hereby adopt it as the law of this Commonwealth. ... any equitable rule precluding an insurer from seeking subrogation against its insured is best tempered by the exception adopted herein today." View "Arlet v. WCAB (L&I)" on Justia Law

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The district court held on summary judgment that, under Eleventh Circuit precedent, federal maritime law requires strict compliance with captain and crew warranties in a marine insurance policy. The district court concluded that, because Ocean Reef breached those warranties, there was no coverage for the loss of its yacht under a policy issued by Travelers.The Eleventh Circuit applied Wilburn Boat Co. v. Firearm’s Fund Ins. Co., 348 U.S. 310, 316 (1955), and concluded that there does not exist entrenched federal maritime rules governing captain or crew warranties in this case. Therefore, Florida law applies to determine the effect of Ocean Reef's breaches. The court reversed and remanded for further proceedings. View "Travelers Property Casualty Company of America v. Ocean Reef Charters LLC" on Justia Law

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In this dispute between a boat owner and his insurance company, the First Circuit affirmed the judgment of the district court in favor of the insurer, holding that the district court properly applied the doctrine of uberrimae fidei in this case.When Defendant applied for an insurance policy for his yacht from an entity later acquired by Plaintiff he failed to disclose that he had grounded a forty-foot yacht in Puerto Rico. Plaintiff later sought a declaratory judgment voiding the policy on the grounds that Defendant had failed to honor his duty of utmost good faith, known as uberrimae fidei in maritime law, in acquiring the policy and had therefore breached the warranty of truthfulness contained in the policy. The district court concluded that Plaintiff was entitled to void the policy. The First Circuit affirmed, holding that the district court correctly concluded that the uberrimae fidei doctrine entitled Plaintiff to a declaration that the policy was void. View "QBE Seguros v. Morales-Vazquez" on Justia Law

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After plaintiff's boat was stolen, Geico denied coverage based on plaintiff's misrepresentation that he was in possession of the boat. On appeal, plaintiff argued that the district court erred in applying the doctrine of uberrimae fidei.The Eleventh Circuit affirmed the district court's grant of summary judgment for Geico and denial of plaintiff's motion for partial summary judgment. The court held that plaintiff's misrepresentation voided his policy ab initio. Based on the record, the court concluded that plaintiff's initial policy, by its terms, expired on May 5, 2018, because he did not pay the required premium for the new policy period. Therefore, plaintiff's boat was uninsured between May 5, 2018, and when he first called Geico on May 25, 2018. Although plaintiff is correct that the doctrine of uberrimae fidei applies only when an insurer issues a policy, not when a policy is already in full force, his policy was not in full force on May 25th because it had expired. The court also concluded that plaintiff's statements were material to Geico's issuance of coverage on May 25, even if by renewal and backdating. Therefore, the district court properly applied the doctrine of uberrimae fidei and correctly held that plaintiff's renewal policy was void ab initio. View "Quintero v. Geico Marine Insurance Co." on Justia Law

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The Inganamorts docked their 65-foot fishing vessel behind their part-time Boca Raton, Florida residence. In 2011, while they were at their New Jersey home, the ship sank enough to sustain serious damage. They reported the loss to their insurer, Chartis, with whom they had an all-risk policy. Chartis sent a claims specialist, who reported three inches of standing water in the starboard forward cabin bilge and multiple potential sources of water ingress, including a hole in the hull the size of a screw. He found that the electrical breakers were severely rust-stained and blackened from an electrical failure; subsequent testing revealed obvious water intrusion. The final review confirmed the initial findings and identified that the battery charger was not working; without a source of power, the ship’s bilge pumps had ceased functioning.Chartis sought a declaratory judgment that it was not liable for the damage and claimed that the Inganamorts were liable for misrepresentation. The Inganmorts neither filed a statement of facts nor opposed Chartis’s statement of undisputed facts. The district court treated Chartis’s statement of facts as undisputed and granted Chartic summary judgment, finding that the Inganamorts “ha[d] no evidence to demonstrate a fortuitous loss[.]” The Third Circuit affirmed. An insured bears the burden of proving fortuity; the Inganamorts did not meet that burden. View "Chartis Property Casualty Co. v. Inganamort" on Justia Law

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Geico Marine filed suit seeking a declaration that a navigational limit in the policy with defendant that required the vessel to be north of Cape Hatteras, North Carolina, during hurricane season barred coverage. The district court ruled against Geico Marine and declared that the policy covered the loss.The Eleventh Circuit reversed and remanded, holding that the navigational limit barred coverage. In this case, the policy was not ambiguous about whether it contained a navigational limit when the loss occurred, and the plain language of the policy contained a navigational limit. Because the navigational limit was dispositive where the vessel suffered damage while outside the covered navigational area, the court need not address the breach of a duty of uberrimae fidei. View "Geico Marine Insurance Co. v. Shackleford" on Justia Law

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Atlantic sought a declaratory judgment that the insurance policy it had issued to Coastal was void ab initio or, in the alternative, that there was no coverage for the loss of the barge or damage to an adjacent pier. District Court Judge Wexler passed away prior to issuing his findings of fact and conclusions of law. The case was transferred to Judge Azrack, who, after no party requested the recall of any witness under Federal Rule of Civil Procedure 63, issued findings of fact and conclusions of law in her role as successor judge and entered judgment finding Atlantic liable to Coastal under the terms of the policy.Under Federal Rule of Civil Procedure 52(a)(6), factual findings of successor judges who have certified their familiarity with the record are subject to the "clearly erroneous" standard of review. The Second Circuit also held that, under Federal Rule of Civil Procedure 63, a successor judge is under no independent obligation to recall witnesses unless requested by one of the parties. In this case, the court found no reversible error in Judge Azrack's findings of fact and conclusions of law, including findings that Coastal did not breach its duty of uberrimae fidei, and thus the policy was not void; Atlantic failed to prove that the vessel was unseaworthy; the loss of the vessel was due to a "peril of the sea" and was covered by the policy; Coastal was entitled to damages for contractual payments withheld by its contractor for repairs to a pier; and Coastal proved its damages using only a summary spreadsheet of invoices, as evidence. View "Atlantic Specialty Insurance Co. v. Coastal Environmental Group Inc." on Justia Law

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The Fifth Circuit affirmed the district court's summary judgment determination that Nature's Way, as the owner of a tugboat, was also "operating" an oil barge that the tugboat was moving at the time of a collision, as the term was used in the Oil Pollution Act of 1990 (OPA). The court held that the ordinary and natural meaning of "operating" under the statute would apply to the exclusive navigational control that Nature's Way exercised over the barge at the time of the collision. Therefore, the National Pollution Funds Center violated the Administrative Procedures Act by determining that Nature's Way was an operator of the barge and thus denying reimbursement on the grounds that its liability should be limited by the tonnage of the tugboat and not the tonnage of the barges. View "United States v. Nature's Way Marine, LLC" on Justia Law