Clear Spring Prop. & Causalty Co. v. Viking Power LLC

608 F.Supp.3d 1220

CLEAR SPRING PROPERTY AND CAUSALTY COMPANY, et al., Plaintiffs,

v.VIKING POWER LLC, et al., Defendants.

CASE NO. 21-62306-CIV-ALTONAGA/Strauss

United States District Court, S.D. Florida.

Signed March 11, 2022

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

Joanne M. Foster, Guy Yudin & Foster, LLP, Stuart, FL, Michael K. Spotts, Stuart, FL, for Defendant Viking Power LLC.

ORDER

CECILIA M. ALTONAGA, CHIEF UNITED STATES DISTRICT JUDGE

THIS CAUSE came before the Court on Defendants, Viking Power LLC and M & T Bank's [Rule] 12(b)(6) Motion to Dismiss Plaintiff's Amended Complaint [ECF No. 35], filed on February 7, 2022. Plaintiffs, Clear Spring Property and Casualty Company and Certain Underwriters at Lloyd's of London Subscribing to Cover Note No. B0507RN2100289 ("Underwriters"), filed a Response [ECF No. 36], and Defendants filed a Reply [ECF No. 39]. The Court has carefully considered the Amended Complaint [ECF No. 33] and its attachments, the parties’ written submissions, and applicable law.

I. BACKGROUND

This insurance dispute stems from a fire that damaged the Miss Dunia, a hull owned by Viking Power, and surrounding property. (See Am. Compl. ¶¶ 12, 14). The Court draws the facts, as it must, from the Amended Complaint.

Plaintiffs issued an insurance Policy to Viking Power on May 13, 2021. (See id. ¶ 15; id. , Ex. A, Policy [ECF No. 33-1] 2). The Policy was effective for one year beginning on May 28, 2021 and provided coverage for losses related to the Miss Dunia — up to $1,925,000 for damage to the hull itself and up to $2,000,000 for liability to third parties. (See Am. Compl. ¶¶ 15–17). In the event of a covered loss, the Policy made M & T Bank a payee. (See Am. Compl. ¶¶ 55–57; Policy 2).

The Policy conditioned coverage on the satisfaction of several warranties, two of which matter here. (See Policy 12–15). First, a fire-suppression warranty guaranteed that any "fire extinguishing equipment" aboard the Miss Dunia was "properly installed and ... maintained in good working order." (Id. 13 (alteration added)). Proper maintenance "include[d] the weighing of tanks once a year, certification/tagging and recharging as necessary." (Id. (alteration added)). Second, a survey-compliance warranty provided that if Plaintiffs requested a survey of the Miss Dunia and the survey made "any recommendations with respect to" the Miss Dunia, Defendants warranted "that all such recommendations [would be] completed prior to any loss giving rise to any claim hereunder[.]" (Id. (alterations added)).

The Policy made these warranties vital to the parties’ agreement and, as a result, to obtaining coverage for any loss. Under the Policy's general conditions, a breach of either warranty would "void th[e] policy from inception." (Id. 14 (alteration added)). As further protection, general condition "m" declared the Policy "null and void in the event of a non-disclosure or misrepresentation of a fact or circumstances material to [Plaintiffs’] acceptance or continuance" of coverage. (Id. 13 (alteration added)).

Plaintiffs allege that Defendants breached both the fire-suppression warranty and the survey-compliance warranty. (See Am. Compl. ¶¶ 66, 77). As for the fire-suppression warranty, Plaintiffs claim that the Miss Dunia's fire-extinguishing equipment had not been weighed, recertified, retagged, or recharged between 2018 and August 30, 2021, the day of the fire. (See id. ¶¶ 62–65). The Amended Complaint includes an image of a tag attached to a fire extinguisher on the Miss Dunia. (See id. ¶¶ 25–27). The tag lists every year between 2018 and 2022 in a separate box. (See id. ). Only the box marked "2018" is hole-punched. (See id. ).

As for the survey-compliance warranty, Plaintiffs allege that Viking Power submitted a survey with the original insurance application. (See id. ¶ 71; see generally id. , Ex. I, Report of Marine Survey [ECF No. 33-9]). The survey identified three categories of "deficiencies": (1) Tier 1 deficiencies, or problems "that should be corrected in a timely manner to avoid structure, system, or equipment failure"; (2) Tier 2 deficiencies, or minor issues that "do not require immediate service"; and (3) one safety hazard deficiency — the lack of recertification of the Miss Dunia's life rafts — that required prompt correction. (Id. ¶¶ 72–75 (quotation marks omitted)).

Viking Power also sent Plaintiffs a Letter of Compliance. (See id. ¶ 75). The Letter of Compliance indicated that as of May 2020, recertification of the Miss Dunia's life rafts was the only "outstanding recommendation" from the survey that remained to be implemented. (Id. (quotation marks omitted); see id. , Ex. L, Letter of Compliance [ECF No. 33-12]). Viking Power expected recertification to be complete by August 2020. (See Am. Compl. ¶ 75; Letter of Compliance). Plaintiffs allege "[u]pon information and belief" that the Letter of Compliance "was inaccurate, and not all survey recommendations had been complied with by the time of the fire." (Am. Compl. ¶ 76 (alteration added)).

On August 30, 2021, the Miss Dunia caught fire. (See id. ¶ 13). The fire burned for several hours and damaged the Miss Dunia, a nearby dock, and a landing craft. (See id. ¶¶ 13–14). Viking Power now faces several fire-related claims from third parties. (See id. ¶¶ 24–25). It also risks liability to individuals who were on board the Miss Dunia at the time of the fire for complications stemming from smoke inhalation. (See id. ¶ 23). Recently, the company filed suit in the United States District Court for the District of Massachusetts to seek exoneration of liability. (See id. ¶ 24).

Since the fire, two captains of the Miss Dunia — Sam Solberg and Charles Violissi — have stated in signed affidavits that the hull's fire-extinguishing system was properly maintained. (See Am. Compl., Ex. F, Solberg Aff. [ECF No. 33-6] ¶¶ 9–10; id. , Ex. G, Violissi Aff. [ECF No. 33-7] ¶¶ 12–17). Their affidavits are attached to the Amended Complaint. (See generally Solberg Aff.; Violissi Aff.).

Plaintiffs seek a declaration that Defendants are not entitled to coverage for losses that resulted from the fire. (See generally Compl.). In support of that request, Plaintiffs assert four claims: (1) breach of the Policy's fire-suppression warranty (see id. ¶¶ 58–66) (Count I); (2) breach of the Policy's survey-compliance warranty (see id. ¶¶ 67–77) (Count II); (3) breach of the duty of uberrimae fidei (see id. ¶¶ 78–88) (Count III); and (4) breach of the Policy's general condition "m" (see id. ¶¶ 89–96) (Count IV).¹ Defendants now move to dismiss all counts for the failure to state claims for relief. (See generally Mot.).

II. LEGAL STANDARD

"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (alteration added; quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A pleading withstands a motion to dismiss if it alleges "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "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) (citation omitted), abrogated on other grounds by Mohamad v. Palestinian Auth. , 566 U.S. 449, 132 S.Ct. 1702, 182 L.Ed.2d 720 (2012). A complaint's "well-pled allegations must nudge the claim ‘across the line from conceivable to plausible.’ " Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).

This pleading standard "does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Pleadings must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citation omitted).

When considering a motion to dismiss, courts must construe the complaint in the light most favorable to the plaintiff and take its well-pleaded factual allegations as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc. , 116 F.3d 1364, 1369 (11th Cir. 1997) (citing SEC v. ESM Grp., Inc. , 835 F.2d 270, 272 (11th Cir. 1988) ). Courts generally may not consider facts or evidence beyond the four corners of the complaint, including any attached exhibits. See Fin. Sec. Assurance, Inc. v. Stephens, Inc. , 500 F.3d 1276, 1284 (11th Cir. 2007) (citing Brooks , 116 F.3d at 1368 ); see also Fed. R. Civ. P. 10(c).

III. DISCUSSION

A. Choice of Law

The Policy contains a choice-of-law clause. (See Policy 16). Under the clause, disputes about coverage must "be adjudicated according to well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice[.]" (Id. (alteration added)). Absent any such "well established, entrenched precedent[,]" the clause requires application of New York law. (Id. (alteration added)).

This is an admiralty case. (See Am. Compl. ¶ 2). Therefore, "federal maritime conflict of laws control." Cooper v. Meridian Yachts, Ltd. , 575 F.3d 1151, 1161 (11th Cir. 2009) (citation omitted); see also GEICO Marine Ins. Co. v. Shackleford , 945 F.3d 1135, 1139 (11th Cir. 2019). Typically, if no "judicially established federal admiralty rule" resolves a question of maritime law, federal courts "rely on state law when addressing questions of maritime insurance." Shackleford , 945 F.3d at 1139 (quotation marks omitted; quoting Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 314, 75 S.Ct. 368, 99 L.Ed. 337 (1955) ;...