Clear Spring Prop. & Cas. Co. v. Big Toys LLC

683 F.Supp.3d 1297

CLEAR SPRING PROPERTY AND CASUALTY COMPANY, Plaintiff, v. BIG TOYS LLC, Defendant.

Case No. 22-cv-21926-BLOOM/Otazo-Reyes

United States District Court, S.D. Florida

Entered July 20, 2023

Signed July 19, 2023

Aaron Michael Dmiszewicki, Charles Stuart Davant, Davant Law, P.A., Fort Lauderdale, FL, for Plaintiff.

Rochelle Wimbush, Ver Ploeg & Marino, P.A., Miami, FL, for Defendant.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon Plaintiff Clear Spring Property and Casualty Company's ("Clear Spring") Motion for Summary Judgment, ECF No. [27] ("Clear Spring's Motion"), filed on April 14, 2023. Defendant Big Toys LLC ("Big Toys") filed a Response in Opposition together with a Cross-Motion for Summary Judgment, ECF No. [36] ("Big Toys' Motion"). Clear Spring filed a Reply in support of its Motion, ECF No. [43], and Big Toys filed a Reply in support of its Motion, ECF No. [47]. Clear Spring then filed a Sur-Reply, ECF No. [51], with the Court's leave. ECF No. [51]. Finally, Big Toys filed a Notice of Supplemental Authority, ECF No. [52]. The Court has considered the parties' submissions, the record, the applicable law, and is otherwise fully advised. For the reasons set forth below, Clear Spring's Motion is granted, and Big Toys' Motion is denied.

I. BACKGROUND

On March 19, 2022, Big Toys' vessel was involved in a collision in Biscayne Bay, Miami, Florida. ECF No. [6] ¶ 9. The vessel was insured by Defendant Clear Spring, which initiated this action seeking a declaration that it has no duty to pay for the vessel's damages. See generally id. Clear Spring alleges that the insurance policy is void because Big Toys breached the insurance policy's "Fire Suppression Warranty" (Count I), Big Toys breached the duty of uberrimae fidei (Count II), and Big Toys failed to disclose that its named operators had violations or suspensions in the past five years (Count III). Id. Big Toys thereafter filed its Counterclaims for breach of contract. ECF No. [15] at 10.

Clear Spring's Motion for Summary Judgment is limited to Count I, breach of the insurance policy's "Fire Suppression Warranty." ECF No. [27]. Clear Spring argues that, under New York law, which governs pursuant to a Choice of Law provision within the insurance policy, Big Toys' breach of the Fire Suppression Warranty renders the insurance policy void. See generally id.

Big Toys responds that Florida law governs this dispute and Florida's "anti-technical" statute, Fla. Stat. § 627.409(2), prohibits Clear Spring from denying coverage based on Big Toys' alleged breach of the Fire Suppression Warranty. ECF No. [36]. Big Toys argues in the alternative that, (a) even if New York law applies, Clear Spring has not established that Big Toys breached the Fire Suppression Warranty, (b) Clear Spring has admitted that Big Toys complied with all conditions and warranties under the policy, and (c) Clear Spring waived its right to rescind the Policy because it failed to return the Policy premiums. Id. Big Toys concludes that it is entitled to summary judgment awarding it all benefits under the Policy. Id. at 20.

II. MATERIAL FACTS

Based on the parties' statements of material facts,¹ along with the evidence in the record, the following facts are not in dispute:

On March 19, 2022, there was a maritime collision in Biscayne Bay, Miami, involving Big Toys' 2019 45' Azimut (the "Vessel"). SMF ¶ 1; CSMF at 1 ¶ 1.² The Vessel was insured by Clear Spring pursuant to an insurance policy (the "Policy") with effective dates from May 28, 2021 through May 28, 2022. SMF ¶ 2; CSMF at 1 ¶ 2. The Policy insured the Vessel's hull for $860,000.00. SMF ¶ 2; CSMF at 1 ¶ 2.

The Policy contains the following warranty, which the parties call the "Fire Suppression Warranty":

If the Scheduled Vessel is fitted with fire extinguishing equipment, then it is warranted that such equipment is properly installed and is maintained in good working order. This includes the weighing of tanks once a year, certification/tagging and recharging as necessary.

ECF No. [6-1] at 13. The Policy further provides that a breach of a warranty "will void this policy from its inception." Id. at 14. The Vessel was fitted with fire suppression equipment. SMF ¶ 9; CSMF at 1 ¶ 9. The parties agree that there is no causal relation between the fire suppression equipment and the damages sustained by the Vessel. ECF No. [43] at 2 n.2.

The Policy contains the following Choice of Law provision:

It is hereby agreed that any dispute arising hereunder shall be adjudicated according to well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.

ECF No. [6-1] at 15.

Following the collision, Big Toys submitted a timely claim for damages to Clear Spring. CSMF at 4 ¶ 2; RSMF ¶ 2. Clear Spring refused to pay for those damages. CSMF at 4 ¶ 3; RSMF ¶ 3. Clear Spring has not returned any of the premiums paid by Big Toys. CSMF ¶ 4; RSMF ¶ 4.

On June 22, 2022, Clear Spring filed suit, seeking a declaration that the Policy is void because of Big Toys' breaches of the Policy, including its alleged breach of the Fire Suppression Warranty. See generally ECF No. [1].

III. LEGAL STANDARD

A court may grant a motion for summary judgment "if 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). The parties may support their positions by citations to materials in the record, including depositions, documents, affidavits, or declarations. See Fed. R. Civ. P. 56(c). An issue is genuine if "a reasonable trier of fact could return judgment for the non-moving party." Miccosukee Tribe of Indians of Fla. v. United States, 516 F.3d 1235, 1243 (11th Cir. 2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A fact is material if it "might affect the outcome of the suit under the governing law." Id.

A court views the facts in the light most favorable to the non-moving party, draws "all reasonable inferences in favor of the nonmovant and may not weigh evidence or make credibility determinations[.]' " Lewis v. City of Union City, Ga., 934 F.3d 1169, 1179 (11th Cir. 2019); see also Crocker v. Beatty, 886 F.3d 1132, 1134 (11th Cir. 2018) ("[W]e accept [the non-moving party's] version of the facts as true and draw all reasonable inferences in the light most favorable to him as the nonmovant."). "The mere existence of a scintilla of evidence in support of the [non-moving party's] position will be insufficient; there must be evidence on which a jury could reasonably find for the [non-moving party]." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. "If more than one inference could be construed from the facts by a reasonable fact finder, and that inference introduces a genuine issue of material fact, then the district court should not grant summary judgment." Bannum, Inc. v. City of Fort Lauderdale, 901 F.2d 989, 996 (11th Cir. 1990).

IV. DISCUSSION

The primary issue raised by the Motions is whether a breach of the Fire Suppression Warranty renders the Policy void. As the Court explains below, that issue turns on whether Florida or New York law governs. The Court concludes that the Policy has a valid Choice of Law provision designating New York law as the "gap-filler" for this maritime dispute. Under New York law, a breach of the Fire Suppression Warranty renders the Policy void.

The Court also addresses Big Toys' additional arguments as to why summary judgment should not be granted to Clear Spring, because (B) the Fire Suppression Warranty is ambiguous, (C) Clear Spring has failed to show that Big Toys breached that warranty, (D) Clear Spring inadvertently admitted that Big Toys complied with the warranty, and (E) Clear Spring improperly initiated this action prior to refunding the policy premiums that Big Toys paid. The Court finds Big Toys' arguments to be without merit and concludes that summary judgment is appropriate.

A. Choice of Law

The first issue is what law governs the effect of Big Toys' alleged breach of the Fire Suppression Warranty. As a dispute arising under a maritime insurance contract, this case "fall[s] within the admiralty jurisdiction of the federal courts," so it is "governed by maritime law." GEICO Marine Ins. Co. v. Shackleford, 945 F.3d 1135, 1139 (11th Cir. 2019). However, when no "judicially established federal admiralty rule" resolves the issue at hand, federal courts "rely on state law when addressing questions of maritime insurance." Id. (quoting Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 314, 75 S.Ct. 368, 99 L.Ed. 337 (1955)). The parties agree that no judicially established federal admiralty law governs the effect of Big Toys' alleged breach of the Fire Suppression Warranty. See Clear Spring Prop. & Cas. Co. v. Viking Power LLC, 608 F. Supp. 3d 1220, 1226 (S.D. Fla. 2022) ("[T]here is no firmly established federal maritime precedent governing express fire-suppression . . . warranties."). Thus, the Court must look to state law to fill in the gap of federal maritime law. Shackleford, 945 F.3d at 1139.

Big Toys argues that "Florida's relationship to this action overwhelmingly favors the application of Florida law." ECF No. [36] at 6. "The subject Policy was issued and delivered in Florida, via a Florida agent/broker, to a Florida insured," and "[t]he Incident, as well as all acts and/or omissions giving rise to this claim, occurred in Florida." Id. Clear Spring concedes that, under Florida law, its breach of warranty claim would fail, because Florida's "anti-technical statute," Fla. Stat. § 627.409(2), precludes an insurer from rescinding its policy due to a technical breach that is unrelated to the loss. ECF No. ...