Grande v. St.Paul Fire & Marine Ins. Co.

365 F.Supp.2d 57

Frank P. GRANDE, Plaintiff, v. ST. PAUL FIRE & MARINE INSURANCE COMPANY and Charter Lakes Marine Insurance, Defendants.

No. CV-03-177BW.

United States District Court, D. Maine.

April 15, 2005.

COPYRIGHT MATERIAL OMITTED

Michael X. Savasuk, Law Office of Michael X. Savasuk, Portland, ME, for Frank P Grande, Plaintiff.

Mark G. Furey, Thompson, Bull, Furey, Bass & Maccoll, LLC, P.A., Portland, ME, for St Paul Fire & Marine Insurance Company, Charter Lakes Marine Insurance, Defendants.

ORDER ON MOTION FOR JUDGMENT AS A MATTER OF LAW

WOODCOCK, District Judge.

Claiming a failure to pay under an unissued trip insurance policy, a customer filed suit against an insurer and its agency for losses to a vessel damaged in transit. At the conclusion of the Plaintiff's case during a jury trial, the Defendants made an oral Motion for Judgment as a Matter of Law pursuant to Fed.R.Civ.P. 50(a). Because the Plaintiff produced no evidence trip insurance exists and would have been available to cover the claimed loss, and because any insurance contract, if issued, would have been voidable under the doctrine of uberrimae fidei, this Court GRANTS the Defendants' Motion for Judgment as a Matter of Law.

I. LEGAL STANDARD

A motion for judgment as a matter of law is controlled by Rule 50.¹ Fed R.Civ.P. 50. The standard for granting judgment as a matter of law "mirrors" the standard for granting summary judgment, such that the "inquiry under each is the same." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A motion for judgment as a matter of law "only may be granted when, after examining the evidence of record and drawing all reasonable inferences in favor of the nonmoving party, the record reveals no sufficient evidentiary basis for the verdict." Zimmerman v. Direct Fed. Credit Union, 262 F.3d 70, 75 (1st Cir.2001). In performing this review, the court "may not weigh the evidence, undertake credibility determinations, or engage in differential factfinding." Id.

II. FACTS

Frank P. Grande, a resident of Waterville, Maine, owned and operated APHRODITE, a 25-foot Catalina sail vessel, which he chartered off the Maine coast. He obtained charter insurance through Defendant Charter Lakes Insurance Company of Kentwood, Missouri (Charter Lakes), a marine insurance agency, which placed coverage with Defendant St. Paul Fire & Marine Insurance Co. (St.Paul). The St. Paul policy was for the policy term from June 3, 2002 through June 3, 2003.² Defendant's Exhibit 11.

Mr. Grande dreamt of owning a bigger vessel. In the spring of 2003, he went South on business and visited his cousin, Frank A. Grande.³ The cousins had known each other growing up and had remained close. Frank A. Grande had been successful in the real estate and construction business in Texas and, after discussing Frank P. Grande's plans to buy and charter a larger vessel, Frank A. Grande made a generous offer. He agreed to loan Frank P. Grande the money to purchase a bigger boat.

Frank P. Grande set about searching for a new vessel. In south Florida, he came upon what he was looking for: GINA, a 44-foot Irwin. He told his cousin about the GINA and Frank A. Grande ended up purchasing the boat for him.⁴ Once the purchase price of $75,000.00 was fixed, Frank A. Grande paid the full $75,000.00 to the seller; Frank P. Grande paid no money toward the purchase of the GINA. A Purchase and Sale Agreement dated April 27, 2003 and April 28, 2003, Joint Exhibit J1, and a Bill of Sale dated April 29, 2003 were entered into between the seller and Frank A. Grande. Defendant's Exhibit 18. Frank P. Grande was not listed as owner or buyer on either document. Id.

Frank P. Grande intended to sail the GINA to Maine, but before he did so, he needed insurance.⁵ He contacted Mark VanEpps, an insurance agent with Charter Lakes and told him, he needed to add the GINA to the charter policy, remove the APHRODITE, and obtain coverage for the trip from Florida to Maine. On April 28, 2003, Mr. VanEpps faxed a letter to Frank P. Grande, providing him with a quote. The letter begins: "Thank you for contacting us regarding your Charter Insurance." It quotes a price for insuring the GINA for $2,094.00 and lists the coverage provided by the policy and their limits. It also enclosed an application for Frank P. Grande to complete, sign and return, and requests a boat survey. The letter expressly notes that this is a quote only and coverage is "NOT BOUND." Finally, the following language appears in the letter:

The coverage is underwritten by St. Paul Fire & Marine Insurance Co., an A+ rated company. The annual premium for the above coverage is $2,094.00. There will be a one-time trip fee of $150.00 for navigating your boat from Coconut, FL to your homeport of Long Cove, ME. We will take the Catalina off the policy and pro-rate a return premium on that boat for you, and apply it to this premium, and invoice the remaining balance due.

Joint Exhibit J2B.

On April 28, 2003, Frank P. Grande faxed an insurance application to Charter Lakes. Joint Exhibit J2C. The insurance application asks the name of the "Registered Owner or Lessee" and indicates the applicant is to list "all registered owners." Frank P. Grande wrote in his name and did not list his cousin. In addition, the application asks whether the vessel is to be owner operated and Frank P. Grande answered, "Yes." Finally, it asks whether the vessel is to be operated by anyone other than the owner and Frank P. Grande again listed his name only as the owner operator. The insurance premium was paid for by Frank A. Grande, not Frank P. Grande. After sending the application and other information to Mr. VanEpps, Frank P. Grande called him some time before leaving port and confirmed that the GINA was insured both for charter insurance and the trip to Maine.

On May 5, 2003, Mr. Grande left port in Florida, heading for Maine. On May 16-17, 2003, GINA ran into heavy weather off the coast of Cape Hatteras and the crew issued a "PAN" call. They were rescued by the United States Coast Guard; GINA, however, sustained damages that are the focus of this lawsuit.

After the May 16-17, 2003 incident, Frank P. Grande received a binder and policy from the Defendants. See Plaintiff's Exhibit 8. The policy was for charter insurance and contained an endorsement that provided coverage to Mr. Grande for the trip from Florida to Maine. The policy, however, retained the 100 mile navigational limit that had been imposed in the APHRODITE policy. Frank P. Grande never received a separate policy for trip insurance. On May 22, 2003, St. Paul issued a reservation of rights letter to Frank P. Grande, raising questions about whether coverage existed under the charter insurance policy for the losses sustained to the GINA. Plaintiff's Exhibit 20. This letter was followed by a letter dated August 12, 2003, denying coverage on the ground that Frank P. Grande had exceeded the 100 mile navigational limit in the policy. Plaintiff's Exhibit 23.

III. DISCUSSION

A. The Trip Insurance Policy

In his Complaint, the Plaintiff claimed the Defendants agreed "to provide marine insurance without any navigational limits" and when it imposed navigational limits and denied coverage on that basis, they breached "their contracts." Plaintiff's Complaint ¶ 25. At trial, however, the Plaintiff abandoned his claim that the Defendants breached the terms of the charter insurance policy; instead, he claimed the loss should have been paid under a trip insurance policy.⁶ Mr. Grande contended that when he informed the insurance agent he wished to have coverage for a trip to Maine and the agent agreed to provide such coverage, this established an obligation on the part of the insurer and the agency to pay any loss to the vessel occurring during the trip. In other words, the insurer and agency were held to the quote without any limiting terms and conditions. Because the agent had written there "will be a one-time trip fee of $150.00 for navigating your boat from Coconut, FL to Long Cove, ME" and the loss occurred on the way to Maine, Mr. Grande says it must have been a covered loss.

Simply put, the Plaintiff's contention is erroneous. First, as the April 28, 2003 letter makes clear, the letter was an insurance quote, not an insurance binder. ("If you need coverage immediately, please call us ... to bind coverage. Coverage is NOT BOUND. This quote is valid only for 30 days."). This is a quote without a policy. Any insurance quote is subject to acceptance, to the issuance of an insurance binder, and to the terms and conditions of a later issued insurance policy. There is no basis for claiming the April 28, 2003 letter alone constituted an insurance contract upon which a cause of action for insurance proceeds could be based.

In this case, Frank P. Grande testified Mr. VanEpps confirmed before the GINA left port, that a binder had issued and the GINA was "free to go." He stressed that, when Mr. VanEpps informed him that the binder had issued, he made no mention of any navigational limits. The Plaintiff, therefore, contends that the binder must have been without navigational limit, except to the extent it was limited to a trip from Florida to Maine.

As Judge Carter explained, however, the "general rule regarding the terms of an oral binder or contract for temporary insurance pending issuance of a written policy consists, in absence of a special agreement, of the usual provisions of contract employed to effect like insurance." Acadia Ins. Co. v. Allied Marine Transp. LLC, 151 F.Supp.2d 107, 125 (D.Me.2001); see Pine Ridge Realty, Inc. v. Massachusetts Bay Ins. Co., 2000 ME 100, 752 A.2d 595, 599 (2000) ("In the insurance context, when a loss occurs after a binder has been issued, but before a policy is written, the insurer is bound to provide...