Transpac Marine, LLC v. Yachtinsure Servs., Inc.

655 F.Supp.3d 18

TRANSPAC MARINE, LLC, Plaintiff, v. YACHTINSURE SERVICES, INC., Defendant.

CIVIL ACTION NO. 20-10115-DPW

United States District Court, D. Massachusetts

Signed February 13, 2023

Matthew John Valcourt, Valcourt and Associates LLC, Dania, FL, for Plaintiff.

Robert J. Murphy, Daniel C. Kelley, Holbrook & Murphy, Boston, MA, Samuel P. Blatchley, Eckland & Blando LLP, Boston, MA, for Defendant.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, UNITED STATES DISTRICT JUDGE

TABLE OF CONTENTS

I. BACKGROUND . . . 22

A. Factual Background . . . 23

1. Mr. Young's Renewal Application . . . 23

2. Events Preceding the Destruction of the Vessel . . . 24 3. Plaintiff's Claim and Defendant's Denial . . . 26

B. Travel of the Matter . . . 26

C. The Parties' Contentions . . . 27

II. LEGAL STANDARD . . . 28

III. DISCUSSION . . . 28

A. Jurisdiction . . . 28

B. Choice of Law . . . 29

C. Legal Framework Applicable to This Matter . . . 30

1. Interpretation of Marine Insurance Contracts under Federal Law . . . 30

2. The Parties' Framing of the Legal Doctrines . . . 31

D. Interpretation of Relevant Terms of the Hurricane Plan . . . 33

1. Question 15: Number of Lines Securing the Summer Star . . . 33

2. Question 19: Safety Arrangements in the Event of a Named Storm Warning . . . 34

E. Consequences of Breach of Promissory Warranties . . . 35

F. Plaintiff's Breach . . . 36

1. Question 15 . . . 36

2. Question 19: Safety Arrangements in the event of a Named Storm Warning . . . 38

IV. CONCLUSION . . . 38

This matter concerns the voidability of a marine insurance policy under principles of federal maritime law. Plaintiff Insured pursues a claim for breach of contract against Defendant Insurer, based on the insurer's refusal to pay for damage sustained by Plaintiff's insured vessel during a hurricane in August of 2019. The Insured contends that the damage to the vessel, along with the costs he has incurred as a direct result of the vessel's demise, are covered by his marine insurance policy and that he is entitled to the compensation provided for in his policy.

By contrast, the Insurer asserts that the policy issued to Plaintiff is void as a matter of law. The Insurer contends that it is beyond dispute that the Insured made material misrepresentations in his application for insurance coverage, which voids the policy in its entirety.

The parties advance cross-motions for summary judgment. Those motions require me to consider an insured's duty under federal maritime law to comply strictly with its representations and warranties in a marine insurance policy.

I will grant summary judgment to the Insurer because the Insured breached its promissory warranties to the Insurer under the policy. I will correlatively deny summary judgment to the Insured.

I. BACKGROUND

Plaintiff Transpac Marine, LLC, ("Transpac") on behalf of its sole owner and managing member Ralph Young,¹ brings the instant action against its insurer, Defendant Yachtinsure Services, Inc. ("Yachtinsure"), for breach of their marine insurance policy. [Dkt. No. 1 at 1] Yachtinsure asserts counterclaims for declaratory judgment, 28 U.S.C. § 2201, seeking this court's judgment that Mr. Young's insurance policy is void as a matter of law and that Yachtinsure has no obligation to pay damages. [Dkt. No. 8 at 25]

A. Factual Background

Ralph Young owned and lived on a seventy-four-foot motor operated vessel named the SUMMER STAR ("the vessel"). [Dkt. No. 28-3 at 1 & 28-1 at 1] Mr. Young insured the vessel through Plaintiff Transpac with Defendant Yachtinsure Services, Inc. from 2013 through 2019. On August 28, 2019, the vessel ran aground and was destroyed when Hurricane Dorian hit St. Thomas in the United States Virgin Islands, where the vessel was moored. Mr. Young tendered abandonment of the vessel, submitted a claim for his damages to Yachtinsure, and demanded payment in accordance with his insurance policy. [Dkt. No. 24-3 at 2] Yachtinsure rejected the abandonment and denied Mr. Young's claim, based on what it considered his material misrepresentations in his April 2019 policy renewal application. [Dkt. 8 at 17]

1. Mr. Young's Renewal Application

On April 16, 2019, Mr. Young submitted an application for the renewal of his marine insurance policy to Yachtinsure for the period of April 25, 2019, to April 25, 2020. [Dkt. No. 28-3 at 4] To renew his existing policy, Mr. Young was obligated to submit an updated application form and a Hurricane Plan for review by Yachtinsure's underwriters. [Dkt. No. 28-3 at 4-6]

Yachtinsure's Hurricane Plan required substantive responses to twelve questions regarding how the subject vessel, the SUMMER STAR, would generally be operated and the safety precautions Mr. Young would take in the event of a tropical storm. Mr. Young's responses to two of those questions are of particular relevance to the instant matter.

The Hurricane Plan inquired in Question 15: "How many lines are going to be used to secure the vessel and what is the diameter and material of those lines?" Mr. Young responded: "10 lines, 3/4 inch Nylon braid" [Dkt. No. 24-5 at 1 (emphasis in original)] In Question 19, it asked: "What arrangements have you made for the safety of your vessel in the event that a named storm warning is issued?" Mr. Young responded "Constant weather watch and advance reservations at marinas[.]" [Dkt. No. 24-5 at 2]

The Hurricane Plan form provided by Yachtinsure also required applicants to sign a "Declaration" confirming that the applicant had disclosed all material facts, i.e., those "likely to influence acceptance or assessment of this hurricane questionnaire/plan by underwriters[,]" and that the applicant's representations were, to the best of his knowledge, true. [Dkt. No. 24-5 at 2] The applicant was warned that the Hurricane Plan contains "statements upon which underwriters will rely in deciding to accept this insurance" and that the Hurricane Plan "will form the basis of" any insurance contract between the parties. [Dkt. No. 24-5 at 2] The declaration also stated that misrepresentation or nondisclosure of material facts "may entitle underwriters to void the insurance." [Dkt. No. 24-5 at 2]

Mr. Young completed and signed the Hurricane Plan on behalf of Transpac Marine, LLC on April 15, 2019 and submitted the documents to Yachtinsure the following day. [Dkt. No. 24-5 at 2] On April 17, Mr. Young's broker received a follow-up email from Yachtinsure's representative regarding the submitted Hurricane Plan. The representative stated in this email that "we need confirmation that the lines will be doubled in the event of a named/numbered windstorm." [Dkt. No. 28-3 at 3(emphasis in original)] Mr. Young responded to his broker with an email, which appears on this record to have been forwarded to Yachtinsure's representative, stating "Confirmed that in the event of a named/numbered storm, mooring lines will be doubled." [Dkt. No. 28-3 at 3] Yachtinsure asserts, and Mr. Young does not dispute, that Mr. Young's email representation that he would double the mooring lines on the vessel in the event of a named windstorm was incorporated into his policy agreement with Yachtinsure.² [See Dkt. No. 30 at 13]

Yachtinsure's representative sent an email to Mr. Young's broker on April 24, 2019, with a list of special conditions for the renewal of Mr. Young's policy and an attached "cover summary with all endorsements that apply." Among those special conditions was the statement that renewal was "subject to an updated Hurricane preparation plan being seen and agreed by underwriters within 14 days from inception." [Dkt. No. 28-3 at 2] The Yachtinsure representative also reiterated that Yachtinsure "need[s] the HPP document [Hurricane Plan] updated with confirmation that the insured will double the amount of lines in the event of a windstorm."³ [Dkt. No. 28-3]

On April 24, 2019, Yachtinsure issued a marine insurance policy to Transpac Marine, LLC, Policy No. ASI00620200, which took effect the next day and expiring on April 25, 2020. [Dkt. No. 1-2] The policy Declaration issued by Yachtinsure listed as a "Special Condition" of the policy that "an updated Hurricane preparation plan be[ ] seen and agreed by" Yachtinsure's underwriters. [Dkt. No. 1-2 at 3]

2. Events Preceding the Destruction of the Vessel

During an examination under oath conducted by Yachtinsure related to this matter, Mr. Young provided the following account of the events leading to the destruction of the SUMMER STAR, and the steps he took to comply with his Hurricane Plan and to mitigate the damages to the vessel. [See generally Dkt. No. 39-1]

On August 24, 2019, while living on the SUMMER STAR in the area of the United States Virgin Islands, Mr. Young became aware of a tropical storm on track to hit the area of the Greater Antilles in the coming days. Mr. Young began to monitor the storm's trajectory on several online weather-monitoring sites.⁴ At that time, the storm was projected to track south and make landfall in the Dominican Republic. [Dkt. No. 39-1 at 39] Mr. Young held a month-to-month contract reserving a berth at a marina in Puerto Del Ray, Fajardo in Puerto Rico where he might have been able to shelter from the storm.⁵ However, after considering the then-projected trajectory of the storm at that time, he judged it unsafe to attempt to reach Puerto Rico. [Dkt. No. 39-1 at 29] Instead, he decided to sail to Crown Bay in St. Thomas, US Virgin Islands where the storm was expected to pass with windspeeds below thirty-miles-per-hour. [Dkt. No. 39-1 at 39]

On or about August 26th, after he had arrived at Crown Bay in St. Thomas, Mr. Young sought to reserve a berth at the Crown Bay Marina. [Dkt. No. 39-1 at 51-52] Although he had sheltered at Crown Bay Marina during Hurricane Erika in 2015 and had docked there several times prior to August 2019, Mr. Young had no contractual reservation arrangement with Crown Bay Marina [Dkt. No. 39-1 at 29, 51] and admitted that he made no attempt to contact the Marina in advance of his arrival on ...