Clear Spring Prop. & Casuality Co. v. Bluewater Adventures of Sarasota

CLEAR SPRING PROPERTY AND CASUALITY COMPANY, Plaintiff, v. BLUEWATER ADVENTURES OF SARASOTA, Defendant.

No. 22-CV-60554-GAYLES/STRAUSS

United States District Court, S.D. Florida

December 6, 2022

REPORT AND RECOMMENDATION ^[1]

JARED M. STRAUSS, UNITED STATES MAGISTRATE JUDGE

THIS MATTER came before the Court upon Defendant Bluewater Adventures of Sarasota's Motion to Dismiss (“Motion”) [DE 10]. I have reviewed the Motion the Response and Reply thereto [DE 31, 38], and all other pertinent portions of the record. For the reasons discussed herein, I respectfully recommend that the Motion [DE 10] be GRANTED IN PART and DENIED IN PART.

BACKGROUND

In November 2019, Defendant purchased insurance for its vessel a 2004 82' Sunseeker (“Vessel”), from Plaintiff. See Complaint [DE 1] ¶¶ 9 26-36. Defendant renewed its insurance policy with Plaintiff in November 2020 and again in November 2021. Id. ¶¶ 38, 40. In December 2021, the Vessel sustained damages when it struck several coral heads in the Bahamas. Id. ¶ 14. At the time, Captain Garron Burger was operating the Vessel. Id. ¶ 10. His navigation errors caused - or at least contributed to - the loss. Id. ¶ 25.

When Defendant initially went through the process of purchasing insurance coverage from Plaintiff in November 2019, it submitted an application for insurance on November 22, 2019. Id. ¶ 26. On November 25, 2019, Plaintiff's Managing General Agent provided a quotation. Id. ¶ 27. The quotation indicated it was subject to an out-of-water survey. Id. Consequently, on the same day the quotation was provided (November 25, 2019), Plaintiff submitted a survey that had been prepared by Sean Meagher of Patton Marine Surveyors and Consultants on November 18, 2019. Id. ¶ 28; [DE 1-4]. The survey indicates that “there are 10 pages of recommendations which are an integral part of the report and should be read in conjunction with” it. Complaint ¶ 29; [DE 14] at 1. In addition to submitting the survey on November 25, 2019 Defendant also submitted a 3-page “Recommendations” document, dated October 10, 2019. Complaint ¶ 30; [DE 1-5].

The following day (November 26, 2019), Defendant made a request to bind coverage and submitted an 11-page “Recommendations” document, dated November 10, 2019. Complaint ¶ 31; [DE 1-6]. In conjunction therewith, and as part of its original application, Defendant submitted a Letter of Survey Recommendations Compliance (“LOC”). Complaint ¶¶ 32, 45; [DE 1-7]. The LOC, which was signed on November 25, 2019, references an October 10, 2019 survey by Patton Marine Surveyors and certifies compliance with all recommendations in the survey pertaining to the Vessel. See Complaint ¶¶ 32-34; [DE 1-7]. The LOC also warns, above the signature block, that “[a]ny misrepresentation in [the LOC] may render insurance coverage null and void from inception.” Complaint ¶ 35; [DE 1-7].

Consequently, a commercial yacht insurance policy, effective from November 26, 2019 to November 26, 2020, was issued to Defendant. Complaint ¶ 36. As indicated above, Defendant renewed the policy in November 2020 and November 2021. The policy in place at the time of the December 2021 incident in the Bahamas (the “Subject Policy”) [DE 1-9] had an effective date range of November 26, 2021 to November 26, 2022. Complaint ¶ 40. At the time of both the 2020 and 2021 renewals, Defendant assured there were no changes to the policy during the previous policy period and no changes since the submission of Defendant's original application form. Id. ¶¶ 38, 40, 45; [DE 1-8, 1-10]. In this vein, the Renewal Questionnaire Defendant submitted in both 2020 and 2021 verified certain information and then included an “Other Changes” section providing as follows:

When quoting your renewal, we have assumed that there have been no changes to your policy during the current policy period. If there are any other changes since your original application form was submitted to us, please give details below. If you are unsure whether any change might have an influence upon the quotation that we have provided you with, please contact your broker for advice.

[DE 1-8; 1-10].

Notwithstanding the foregoing, Defendant never actually remedied the issues noted in the November 10, 2019 Recommendations. Complaint ¶¶ 42, 43, 47. In other words, the issues noted therein - at least most of the issues - remained outstanding at the time of the December 2021 incident with the Vessel. Defendant, however, never advised Plaintiff - at the time of either renewal or at any other time - that any of the recommendations had not been addressed. Id. ¶ 46. Therefore, Plaintiff alleges that Defendant misrepresented compliance with the requirements of the survey. Id. ¶¶ 41, 47, 53-54, 59-60. For this reason and others, Plaintiff seeks a declaration that the Subject Policy was void from inception and/or that no insurance coverage exists for the loss sustained from the December 2021 incident. In its Complaint, Plaintiff includes the following four counts: (I) Uberrimae Fidei; (II) Breach of General Condition L; (III) Breach of General Condition Q; and (IV) Breach of Operator Warranty.

LEGAL STANDARD

At the pleading stage, a complaint must contain “a short and plain statement of the claim showing the [plaintiff] is entitled to relief.” Fed.R.Civ.P. 8(a). Although Rule 8(a) does not require “detailed factual allegations,” it does require “more than labels and conclusions”; a “formulaic recitation of the cause of action will not do.” Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007). When a claim sounding in fraud is alleged, the complaint “must satisfy the heightened pleading standards embodied in Federal Rule of Civil Procedure 9(b), which requires the plaintiff to ‘state with particularity the circumstances constituting fraud.'” Cisneros v. Petland, Inc., 972 F.3d 1204, 1216 (11th Cir. 2020) (citation omitted). To do so, a plaintiff must allege “(1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the Plaintiff[ ]; and (4) what the defendants gained by the alleged fraud.” Id. (citation omitted).

To survive a motion to dismiss, “factual allegations must be enough to raise a right to relief above the speculative level” and must be sufficient “to state a claim for relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The mere possibility the defendant acted unlawfully is insufficient to survive a motion to dismiss.” Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261 (11th Cir. 2009) (citing Iqbal, 556 U.S. at 679)).

In considering a Rule 12(b)(6) motion to dismiss, the court's review is generally “limited to the four corners of the complaint.” Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009) (quoting St. George v. Pinellas Cnty., 285 F.3d 1334, 1337 (11th Cir. 2002)).^[2] Courts must accept the factual allegations in the complaint as true and view them in the light most favorable to the plaintiff. Cambridge Christian Sch., Inc. v. Fla. High Sch. Athletic Ass'n, Inc., 942 F.3d 1215, 1229 (11th Cir. 2019); Tims v. LGE Cmty. Credit Union, 935 F.3d 1228, 1236 (11th Cir. 2019). But “[c]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal.” Jackson v. Bellsouth Telecomms., 372 F.3d 1250, 1262-63 (11th Cir. 2004) (citation omitted). See also Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”).

ANALYSIS

I. COUNTS I (Uberrimae Fidei) & II (Breach of General Condition L)

“[T]he marine insurance doctrine of uberrimae fidei is the controlling law of this circuit.” Quintero v. Geico Marine Ins. Co., 983 F.3d 1264, 1270 (11th Cir. 2020) (quoting HIHMarine Servs., Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000)). It is “the controlling federal rule even in the face of contrary state authority.” Id. (quoting Steelmet, Inc. v. Caribe Towing Corp., 747 F.2d 689, 695 (11th Cir. 1984)). The uberrimae fidei doctrine, “which embodies the ‘highest degree of good faith,'” requires an insured under a marine insurance contract to “fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk.” Id. at 1271 (quoting HIHMarine, 211 F.3d at 1362). The insured's “duty to disclose extends to those material facts not directly inquired into by the insurer.” Id. (quoting HIHMarine, 211 F.3d at 1362).

It encompasses “all material facts that are ‘within or ought to be within, the knowledge of one party, and of which the other party has no actual or presumptive knowledge.'” Id. (quoting Steelmet, 747 F.2d at 695).

“[U]nder uberrimae fidei, an insured's material misrepresentation to an insurer renders a marine insurance policy void ab initio. Id. (citing AIG Centennial Ins. Co. v. O'Neill, 782 F.3d 1296, 1303 (11th Cir. 2015)). “The policy is void even if the insured's misrepresentation was the result of ‘mistake, accident, or forgetfulness,' or the insurer did not inquire about the particular material fact the insured failed to disclose.” Id. (citing HIH Marine, 211 F.3d at 1362-63). Materiality is considered from an objective standpoint. See id. It is examined “from a reasonable insurer's perspective, asking whether a particular fact ‘could possibly influence the mind of a prudent and intelligent insurer in determining whether he would accept the risk.'” Id. (quoting ...