Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters, LLC

568 F.Supp.3d 1357

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff,

v.OCEAN REEF CHARTERS, LLC, Defendant.

CASE NO. 18-CIV-81270-RAR

United States District Court, S.D. Florida.

Signed October 26, 2021

Michael Edward Conroy, Richard James McAlpin, Kassandra Cecilia Doyle Taylor, McAlpin & Conroy PA, Richard David Shane, Duane Morris LLP, Miami, FL, Walter Cooper Jarnagin, GrayRobinson, P.A., West Palm Beach, FL, James W. Carbin, Pro Hac Vice, Sheila Raftery Wiggins, Pro Hac Vice, Duane Morris LLP, Newark, NJ, for Plaintiff.

Benjamin C. Hassebrock, Stephanie Alice Weeks, Stephen A. Marino, Jr., Ver Ploeg & Marino, P.A., Miami, FL, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

RODOLFO A. RUIZ II, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court on Defendant Ocean Reef Charters, LLC's Renewed Motion for Summary Judgment [ECF No. 169] ("Defendant's Motion") and Plaintiff Travelers Property Insurance Company's Motion for Summary Judgment [ECF No. 170] ("Plaintiff's Motion").¹ Earlier in this litigation, the Court issued an Order Granting Plaintiff's Motion for Summary Judgment and Denying Defendant's Motion for Summary Judgment. Travelers Prop. Cas. Co. Am. v. Ocean Reef Charters, LLC , 396 F. Supp. 3d 1170 (S.D. Fla. Aug. 26, 2019) ("Prior Order"). Defendant appealed the Prior Order to the Eleventh Circuit, which issued a mandate reversing the Prior Order and remanding the case to this Court for further proceedings. Travelers Prop. Cas. Co. Am. v. Ocean Reef Charters, LLC , 996 F.3d 1161 (11th Cir. 2021) ("Mandate"). The Court having carefully reviewed the Mandate, the parties’ written submissions, the record, and applicable law, and being otherwise fully advised, it is hereby

ORDERED AND ADJUDGED that Plaintiff's Motion [ECF No. 170] is DENIED and Defendant's Motion [ECF No. 169] is GRANTED IN PART for the reasons stated herein.

BACKGROUND

The Court assumes the parties’ familiarity with the relevant factual background as exhaustively set forth in the Prior Order, Travelers , 396 F. Supp. 3d at 1172–73, and the Mandate, 996 F.3d at 1163–64. Thus, the Court need only provide the procedural posture since the Prior Order was issued.

This case is about whether Plaintiff was justified in denying Defendant's claim under a $2 million insurance policy covering Defendant's yacht M/Y My Lady ("the Vessel"), which sank during Hurricane Irma without a captain or crew. Plaintiff seeks a declaratory judgment as to coverage of the Vessel under the policy and recovery of the costs Plaintiff incurred to raise the Vessel. See generally Compl. [ECF No. 1]. Defendant counterclaims, also seeking a declaratory judgment as to coverage of the Vessel and recovery of the costs Defendant has incurred in salvaging and storing the Vessel, as well as damages under breach of contract. See generally Answer [ECF No. 49]. As the Court noted in its Prior Order, this case turns on choice of law. Travelers , 396 F. Supp. 3d at 1174. Wilburn Boat Co. v. Firearm's Fund Ins. Co. , 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), requires that state law, not federal admiralty law, be applied to interpret a maritime insurance contract in the absence of a judicially established federal admiralty rule on point. Travelers , 996 F.3d at 1162. The Court concluded in the Prior Order that a series of Eleventh Circuit cases established a rule that all express warranties in maritime insurance contracts must be strictly construed in the absence of some limiting provision in the contract. Travelers , 396 F. Supp. 3d at 1177. The Court found that Defendant breached the warranties in the insurance contract between the parties requiring employment of a full-time captain and crew and consequently released Plaintiff from liability even if compliance with the warranties would not have prevented the loss of the Vessel. Id.

On appeal, the Eleventh Circuit issued a thorough opinion denying that it has fashioned the sort of "established and entrenched" rule for warranties specifically covering captain and crew that would overcome Wilburn Boat ’s default requirement that state law be applied. Travelers , 996 F.3d at 1162–64. In the absence of such a rule, the Eleventh Circuit reversed the Court's Prior Order and remanded for further proceedings consistent with Florida law. Id. at 1171.

LEGAL STANDARD

A "court shall grant 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). "An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Allen v. Bd. of Pub. Educ. for Bibb Cnty. , 495 F.3d 1306, 1313 (11th Cir. 2007). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Hornsby-Culpepper v. Ware , 906 F.3d 1302, 1311 (11th Cir. 2018) (internal quotation marks omitted) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

Initially, the moving party bears the "burden to demonstrate the basis for its motion, and [it] must identify the portions of the record ‘which it believes demonstrates the absence of a genuine issue of material fact.’ " Id. (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). "The movant may meet this burden by demonstrating that the nonmoving party has failed to present sufficient evidence to support an essential element of the case." Id. (citing Celotex , 477 U.S. at 322–23, 106 S.Ct. 2548 ). Provided that the moving party meets its burden, the burden then shifts to the non-moving party to show that a genuine issue of material fact exists. Id. at 1311–12. The Court "must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party." Stewart v. Happy Herman's Cheshire Bridge, Inc. , 117 F.3d 1278, 1285 (11th Cir. 1997) (citation omitted).

ANALYSIS

The Eleventh Circuit, as stated in the Mandate, has not fashioned an established and entrenched rule governing captain and crew warranties, so Wilburn Boat requires that the Court apply state law. See generally Travelers , 996 F.3d 1161. Therefore, Florida law—specifically, the anti-technical provision in section 627.409(2) of the Florida Statutes —governs the analysis here. Under section 627.409(2), "[a] breach or violation by the insured of a warranty, condition, or provision of a wet marine or transportation insurance policy, contract of insurance, endorsement, or application does not void the policy or contract, or constitute a defense to a loss thereon, unless such breach or violation increased the hazard by any means within the control of the insured." Fla. Stat. § 627.409(2). A "hazard" under section 627.409(2) concerns "danger to the insured vessel itself," Great Lakes Reinsurance (UK), PLC v. Rosin , 757 F. Supp. 2d 1244, 1258 (S.D. Fla. July 30, 2010), and a causal connection is necessary to prove that the breach "increased the hazard" that resulted in the loss, Pickett v. Woods , 404 So. 2d 1152, 1153 (Fla. 5th DCA 1981) (reversing judgment for insurer because breach of policy condition "did not contribute to the accident" as required by section 627.409(2) ). Therefore, if Defendant breached the warranties requiring the employment of a full-time, licensed, and approved captain and at least one part- or full-time crewmember, Plaintiff's denial of Defendant's claim would be justified only if these breaches increased the hazard that the Vessel would suffer loss.

As a threshold matter, the Court renews and incorporates its finding in the Prior Order that Defendant was in breach of the captain and crew warranties when the Vessel sank. Travelers , 396 F. Supp. 3d at 1177. The Court also notes that the Eleventh Circuit, in its plenary review of this case, agreed that Defendant "did not employ a professional captain" or "have any crew onboard" when Hurricane Irma struck the vicinity. Travelers , 996 F.3d at 1163. "Under the law-of-the-case doctrine, the findings of fact and conclusions of law by an appellate court are generally binding in all subsequent proceedings in the same case in the trial court or on a later appeal." Williams v. Morgan , 478 F.3d 1316, 1321 (11th Cir. 2007) (quotations omitted). The Court sees no reason to depart from either this general rule or its previous finding, so the only remaining issue is whether Defendant's breaches "increased the hazard" and thus invalidated the policy under section 627.409(2).

Defendant, as the moving party, bears the "burden to demonstrate the basis for its motion, and [it] must identify the portions of the record ‘which it believes demonstrates the absence of a genuine issue of material fact.’ " Hornsby-Culpepper , 906 F.3d at 1311 (quoting Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548 ). Defendant "may meet this burden by demonstrating that [Plaintiff] has failed to present sufficient evidence to support an essential element of the case." Id. (citing Celotex , 477 U.S. at 322–23, 106 S.Ct. 2548 ). Defendant argues that the discrepancy between the testimony provided by the parties—particularly between that of the parties’ expert witnesses—meets this burden. Def. Mot. at 13. Defendant proffers the expert testimony and report of Capt. Thomas Danti. [ECF No. 106-18] at 1–2. Capt. Danti concluded in his report that (1) Defendant's storm preparations performed by the Vessel's owner met the standard of care for a professional mariner; (2) Defendant's lack of a full-time captain did not increase the hazard that caused the loss of the Vessel; and (3) the main cause of damage was the unforeseeable failure of a mooring pile during the storm. Id. Ex. A at 8.

Defendant's showing shifts the burden to Plaintiff to...