Justia Admiralty & Maritime Law Opinion Summaries

Defendant-appellant J. Brian O'Neill purchased the Bryemere, a sport-fishing vessel, in 2006. As he negotiated the Bryemere’s price, O’Neill incorporated a limited-liability company in the state of Rhode Island, Carolina Acquisition, LLC to take ownership of the vessel. O’Neill then applied for a preferred ship mortgage with Bank of America, N.A. (BOA) to fund the Bryemere’s cost. O’Neill signed the mortgage in his capacity as managing member of Carolina, using the ship as collateral. As a condition of the loan, BOA required proof of insurance for the Bryemere, and requested that the insurance policy contain a mortgage clause that would protect BOA’s interests as a mortgagee in the event the underlying insurance policy was found void. O’Neill’s insurance broker, Willis of Pennsylvania, Inc., sought an insurance quote for the Bryemere from AIG Centennial Insurance Company. Susan Bonner, an underwriter, handled the application process on behalf of AIG. Sharon King, a broker, was assigned to O’Neill’s case on behalf of Willis. Instead of working directly with King, O’Neill delegated the task of obtaining insurance for the Bryemere to his executive secretary, Desiree Foulds. Instead of explaining the insurance-application process to Foulds, King forwarded the application to Foulds without comment and returned the application Foulds had completed to Bonner without reviewing it for accuracy or completeness. Foulds made three mistakes on the application that were relevant to this appeal: (1) she listed O’Neill as the owner of the vessel instead of Carolina; (2) in response to a question about whether the owner or captain had ever suffered any “losses,” she disclosed one prior loss in 2003, when O’Neill lost a boat due to fire, when in fact (by his own admission at trial) O’Neill had suffered two additional losses that went undisclosed: propeller damage to his Ocean yacht and a blown engine on his sailing vessel; and (3) Foulds listed the Bryemere’s purchase price as $2.35 million, when the closing statement reflected a purchase price of $2.125 million. AIG issued the final policy. Following the Bryemere’s purchase, O’Neill invested $225,000 to pay for repairs recommended for the ship. During the voyage from Florida to Rhode Island, the crew “noticed considerable flexing in the vessel’s hull.” Upon arrival in Rhode Island, several marine experts inspected the Bryemere and concluded that it suffered from a number of structural defects rendering the vessel, in the words of one marine surveyor, “un-seaworthy, dangerous and unsafe for any use.” O’Neill then submitted a claim to AIG for coverage under his insurance policy. In response, AIG filed a declaratory judgment action with the federal district court in Florida seeking affirmation that the insurance policy was void ab initio as to both O’Neill and BOA. After an eight-day bench trial, the District Court issued an order finding that neither O’Neill nor BOA could recover under the policy. As to O’Neill, the District Court held that the misrepresentations regarding O’Neill’s prior loss history and the Bryemere’s purchase price rendered the policy void ab initio under the maritime doctrine of uberrimae fidei. As to BOA, the District Court held, among other things, that the named insured on the policy, O’Neill, was not the mortgagor on the loan and that BOA had no rights under the standard mortgage clause as a result. O’Neill and BOA appealed. But finding no reversible error, however, the Eleventh Circuit affirmed the district court. View "AIG Centennial Insurance Co. v. O'Neill" on Justia Law

Starr Indemnity filed suit seeking a determination of their rights and obligations under Continental Cement's insurance policies after the Mark Twain, a cement barge owned by Continental Cement, sank in the Mississippi River. Continental Cement counterclaimed for breach of contract and vexatious refusal to pay under Missouri law. Determining that Continental Cement did not waive its appeal, the court concluded that the district court did not err by applying the federal doctrine of utmost good faith, a judicially established federal admiralty rule, instead of Missouri state law; Continental Cement waived its appeal of the denial of its motion for judgment as a matter of law on Starr Indemnity's utmost good faith defense; and, apart from the issue of waiver, the district court did not abuse its discretion in submitting the utmost good faith instruction. Accordingly, the court affirmed the judgment of the district court. View "New York Marine & General Ins., et al. v. Continental Cement Co., et al." on Justia Law

This case arose out of the sinking of a vessel owned by Hornbeck while at R&R's shipyard for repairs. R&R's liability insurer, National, filed suit to disclaim liability under its policy. Hornbeck counterclaimed. The district court found that R&R was negligent and that National was liable for the ensuing damages. The court concluded that the district court did not clearly err in finding that R&R was negligent under bailment law where the vessel was delivered to R&R afloat, R&R had full custody of the vessel, and the vessel sank while under R&R's care; even if the salvage company had been negligent, R&R would remain fully liable because this negligence was a foreseeable consequence of R&R's own negligence; under Rule 13(a), Hornbeck had standing to bring its counterclaim and the district court properly ruled on that claim after deciding R&R's liability; and the district court erred in the amount of damages it awarded and in applying an 18% interest rate. Accordingly, the court affirmed in part, reversed in part, and remanded for the entry of judgment and the appropriate assessment of interest on that judgment. View "National Liability & Fire Ins. Co. v. R & R Marine, Inc., et al." on Justia Law

The Club is a non-profit provider of protection and indemnity insurance. The Club's Rules include a choice-of-law provision selecting New York law and a two-year statute of limitations for claims against the Club. The Club filed a civil action against defendant alleging that it breached the insurance contract by failing to reimburse the Club for a shortfall and by failing to pay the overdue insurance premiums. The court agreed with the district court, and precedent, that an otherwise valid choice-of-law provision in a maritime contract is enforceable and may require application of a jurisdiction's statute of limitations, in lieu of the doctrine of laches, to govern issues regarding the timeliness of claims asserted under that agreement. Accordingly, the court held that the district court correctly applied New York's six-year statute of limitations to the Club's claims arising under its maritime insurance contract with plaintiff. Therefore, the court affirmed the judgment of the district court. View "American Steamship Owners v. Dann Ocean Towing, Inc." on Justia Law

Plaintiff, injured while employed by GC, filed suit against GC alleging that he was working as a seamen at the time of his accident and sought damages under the Jones Act, 46 U.S.C. 30104, for GC's negligence. Travelers, which provided coverage to GC at the time of plaintiff's accident, moved to intervene. In this appeal, the court held that an insurer who makes voluntary Longshore Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. 901-950, payments to an injured employee on behalf of the employer acquires a subrogation lien on any recovery by the employee in a Jones Act suit against the employer based on the injuries for which the insurer has already compensated him. Therefore, Travelers was entitled to the disputed funds in the district court's registry, and Travelers could intervene for the purpose of collecting these funds. Accordingly, the court reversed the district court's denial of the motion to intervene filed by Travelers and remanded with instructions. View "Chenevert v. Travelers Indemnity Co." on Justia Law

This appeal arose out of an allision between a vessel owned by Settoon and an oil well. On appeal, Settoon challenged the district court's grant of summary judgment in favor of the umbrella insurers. The court concluded that the umbrella insurers were not liable for damages resulting from the allision because Settoon failed to provide them notice within 30 days; SNIC was liable to Settoon because delayed delivery prevented SNIC from relying on the exclusions in the policy and the conditions precedent of the exceptions to the exclusions; and prejudgment interest should be calculated from the date Settoon paid for the allision. Accordingly, the court reversed and remanded for calculation of prejudgment interest and affirmed the district court's judgment in all other respects. View "In Re: Settoon Towing, L.L.C." on Justia Law

This dispute concerned the MSA's indemnification provision and the insurance agreements supporting M-I's indemnification obligations. At issue was whether, pursuant to the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1333(a), Louisiana law governed the indemnity provisions. The court affirmed the district court's grant of partial summary judgment, finding that the OCSLA applied to the parties' contractual dispute, and thus, pursuant to the OCSLA choice of law provision, Louisiana law applied, under which the Louisiana Oilfield Indemnity Act (LOIA), La. Rev. Stat. 9:2780(B), invalidated the indemnity provisions. View "Ace American Ins. Co. v. M-I, L.L.C." on Justia Law

In 2008, MDS purchased a vessel and executed a note in favor of FirstBank, secured by a preferred ship mortgage, under an agreement that required that they maintain insurance. In 2009, Customs and Border Protection seized the vessel as part of a drug enforcement action. The search and seizure damaged the vessel, significantly decreasing its value. Customs notified FirstBank, which initiated an administrative forfeiture proceeding, intervened in the criminal case, obtained voluntary dismissal of the indictment against the vessel, then submitted an insurance claim for "loss of the vessel including, without limitation, the value of the Bank's collateral, legal fees incurred in attempting to secure its release, as well as any applicable costs and interests." The insurer denied the claim. The district court granted FirstBank partial summary judgment and awarded $74,512.50 in attorneys' fees for costs and expenses incurred in securing release of the vessel and defending the validity of the policy. The First Circuit affirmed, finding no genuine issues of material fact.View "Markel Am. Ins. Co. v. Diaz-Santiago" on Justia Law

This case arose when an ocean-going tanker collided with a barge that was being towed on the Mississippi River, which resulted in the barge splitting in half and spilling its cargo of oil into the river. Following the filing of numerous lawsuits, including personal injury claims by the crew members and class actions by fishermen, the primary insurer filed an interpleader action, depositing its policy limits with the court. At issue was the allocations of the interpleader funds as well as the district court's finding that the maritime insurance policy's liability limit included defense costs. The court affirmed the district court's decision that defense costs eroded policy limits but was persuaded that its orders allocating court-held funds among claimants were tentative and produced no appealable order.View "Gabarick, et al. v. Laurin Maritime (America) Inc., et al." on Justia Law

This case arose from an oil spill in the Mississippi River when an ocean-going tanker struck a barge that was being towed. Appellants (Excess Insurers) appealed the district court's decision requiring them to pay prejudgment interest on the funds deposited into the court's registry in an interpleader action. The Excess Insurers argued that the district court erred by: (1) finding that coverage under the excess policy was triggered by the primary insurer's filing of an interpleader complaint; (2) holding that a marine insurer that filed an interpleader action and deposited the policy limits with the court was obligated to pay legal interest in excess of the policy limits; and (3) applying the incorrect interest rate and awarding interest from the incorrect date. The court held that because the Excess Insurers' liability had not been triggered at the time the Excess Insurers filed their interpleader complaint, the district court erred in finding that they unreasonably delayed in depositing the policy limit into the court's registry and holding them liable for prejudgment interest. Therefore, the court reversed the judgment and did not reach the remaining issues.View "Gabarick, et al. v. Laurin Maritime (America), Inc., et al." on Justia Law