Opinion
CASE NO. 20-22865-CIV-ALTONAGA/Torres
2021-10-18
GREAT LAKES INSURANCE SE, Plaintiff, v. SEA 21-21 LLC, Defendant.
Michael Isaac Goldman, Pro Hac Vice, Goldman and Hellman, Brookline, MA, Steven Eric Goldman, Jacqueline Louise Goldman, Goldman & Hellman, Fort Lauderdale, FL, for Plaintiff. Christopher J. Lynch, Christopher J. Lynch, P.A., Coral Gables, FL, Henry E. Marinello, Henry E. Marinello, P.A., Miami, FL, for Defendant.
Michael Isaac Goldman, Pro Hac Vice, Goldman and Hellman, Brookline, MA, Steven Eric Goldman, Jacqueline Louise Goldman, Goldman & Hellman, Fort Lauderdale, FL, for Plaintiff.
Christopher J. Lynch, Christopher J. Lynch, P.A., Coral Gables, FL, Henry E. Marinello, Henry E. Marinello, P.A., Miami, FL, for Defendant.
ORDER
CECILIA M. ALTONAGA, CHIEF UNITED STATES DISTRICT JUDGE
THIS CAUSE is before the Court on Plaintiff, Great Lakes Insurance SE's ("Great Lakes[’s]") Motion for Summary Judgment [ECF No. 70], filed on August 20, 2021. Defendant, SEA 21-21 LLC ("SEA 21") filed a Response to Plaintiff's Motion for Summary Judgment [ECF No. 84] along with supporting exhibits [ECF Nos. 77–82], to which Great Lakes filed a Reply [ECF No. 86]. The Court has carefully considered Great Lakes's Second Amended Complaint [ECF No. 62], the parties’ briefings and factual submissions, the record, and applicable law. For the reasons below, Great Lakes's Motion is DENIED .
The parties’ factual submissions include: Plaintiff's Statement of Material Facts Not in Dispute in Support of Plaintiff's Motion for Summary Judgment ("Pl.’s SOF") [ECF No. 69]; Defendant's Statement of Material Facts in Opposition to Plaintiff Great Lakes Insurance SE's Statement of Material Facts in Support of Plaintiff's Motion for Summary Judgment ("Def.’s SOF") [ECF No. 83]; and Plaintiff's Reply Statement of Material Facts ("Pl.’s Reply SOF") [ECF No. 85].
I. BACKGROUND
The following relevant facts are undisputed. On April 12, 2018, SEA 21, via its agent insurance broker, Global Insurance Brokers, Inc. ("Global"), submitted to Great Lakes an application for a marine insurance policy (the "Original Application"). (See Pl.’s SOF ¶ 3; Def.’s SOF ¶ 3). The Original Application sought Hull & Machinery coverage on a 1996 65-foot Ocean Tech vessel named "LA BESTIA" (the "Insured Vessel"). (See Original Appl. [ECF No. 62-1] 1). The Original Application asks, "Have you or any named operator been involved in a loss in the last 10 years (insured or not)[?]" (Id. 3 (alteration added)). SEA 21 checked the "No" response box. (See id. ). The Original Application additionally asks of each "named operator," "Have you been involved in a Loss in the last 10 years (insured or not)? If YES, please give details[.]" (Id. (alteration added)). The response for the named operator Jorge Fernandez states, "No." (Id. ). The Original Application represents the purchase price of the Insured Vessel as $400,000. (See id. 1).
The Court uses the pagination generated by the electronic CM/ECF database, which appears in the headers of all court filings.
Jorge Fernandez also owned, in whole or in part, Sea 20-20 LLC and Jet Boat Miami LLC. (See Pl.’s SOF ¶ 30; Def.’s SOF ¶ 30).
Great Lakes issued Marine Insurance Policy No. CSRYP/166843 (the "2018 Policy") on March 19, 2018. (See Pl.’s SOF ¶ 8). The Policy afforded Hull & Machinery insurance coverage for the Insured Vessel in the amount of $400,000 for a period of one year commencing March 5, 2018. (See id. ). Great Lakes issued the 2018 Policy based upon SEA 21's representations in the Original Application. (See id. ¶ 9; Def.’s SOF ¶ 9).
Just over a year later, on March 22, 2019, SEA 21, via Global, submitted to Great Lakes a Renewal Questionnaire for coverage of the Insured Vessel. (See Renewal Questionnaire [ECF No. 62-4] 3). The Renewal Questionnaire asks whether each named operator had "been involved in a Loss in the last 10 years (insured or not)? If YES, please give details and amounts paid[.]" (Id. 2 (alteration added)). The response regarding the named operator Jorge Fernandez states, "No." (Id. ).
Great Lakes issued SEA 21 Marine Insurance Policy No. CSRYP/174282 (the "2019 Policy") on the same day, affording Hull & Machinery insurance coverage for the Insured Vessel in the amount of $400,000 for a period of one year commencing March 5, 2019. (See generally 2019 Policy [ECF No. 62-5]). Great Lakes issued the 2019 Policy based upon SEA 21's representations within the Original Application and the Renewal Questionnaire. (See Pl.’s SOF ¶ 16; Def.’s SOF ¶ 16). The 2019 Policy contains the following choice-of-law provision:
It is hereby agreed that any dispute arising hereunder shall be adjudicated according to the well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.
(2019 Policy 16).
On March 7, 2019, SEA 21 also requested that Great Lakes increase the insured hull value of the Insured Vessel from $400,000 to $775,000. (See Pl.’s SOF ¶ 18; Def.’s SOF ¶ 18; Mar. 7, 2019 Email Correspondence [ECF No. 62-2]). Although SEA 21 was unable to access the actual receipts for various improvements and upgrades that would support an increase in the insured hull value, Great Lakes's underwriter, Concept Special Risk, Ltd. ("Concept"), requested that SEA 21 produce a spreadsheet showing the individual costs for the items. (See Pl.’s SOF ¶ 20; Def.’s SOF ¶ 20; Mar. 20, 2019 Email Correspondence [ECF No. 69-2]). SEA 21 provided a breakdown of upgrades and improvements made to the Insured Vessel totaling $324,185. (See generally Mar. 21, 2019 Email [ECF No. 62-3]).
Concept agreed to incorporate $176,510 of the costs of several improvements and upgrades to the Insured Vessel in its consideration of SEA 21's request to increase the insured value of the Insured Vessel. (See Pl.’s SOF ¶ 22; Def.’s SOF ¶ 22). On April 5, 2019, Concept issued an endorsement increasing the agreed value of the hull sum insured to $560,000. (See Pl.’s SOF ¶ 23; Def.’s SOF ¶ 23). Shortly thereafter, Great Lakes agreed to increase its coverage based upon SEA 21's representations on the subject. (See Pl.’s SOF ¶ 24; Def.’s SOF ¶ 24; 2019 Policy 3).
Ten months later, on February 26, 2020, the Insured Vessel caught fire and sank while en route to Bimini from Pompano Beach, Florida. (See Pl.’s SOF ¶ 25; Def.’s SOF ¶ 25). In response to a first notice of loss (see Feb. 2020 Email [ECF No. 62-6]), Great Lakes investigated this incident, discovered several facts that the parties now dispute, and subsequently initiated this lawsuit (see Pl.’s SOF ¶¶ 26–32; Def.’s SOF ¶¶ 26–32).
On July 13, 2020, Great Lakes filed a Complaint for Declaratory Judgment [ECF No. 1] against SEA 21. Upon learning additional information during litigation (see, e.g. , Pl.’s SOF ¶¶ 33, 54, 56–60), Great Lakes amended its Complaint twice (see generally Am. Compl. [ECF No. 20]; Second Am. Compl.); its Second Amended Complaint, filed on June 29, 2021, is now the operative pleading. Invoking the Court's admiralty jurisdiction under Federal Rule of Civil Procedure 9(h) and 28 U.S.C. section 1333, this declaratory action asks the Court to find that the 2019 Policy did not cover losses SEA 21 incurred due to the February 26, 2020 incident. (See Second Am. Compl. ¶ 3; id. 10). The sole count of the Second Amended Complaint ("Count I") alleges that SEA 21 misrepresented several material facts in its Original Application, Renewal Questionnaire, and in subsequent communications, including with respect to SEA 21's prior loss history, the Insured Vessel's purchase price, and the costs of several improvements and upgrades to the Insured Vessel. (See id. ¶¶ 47–57). Great Lakes now seeks summary judgment on Count I of its Second Amended Complaint. (See generally Mot.).
II. LEGAL STANDARD
Numerous decisions within and beyond the Eleventh Circuit confirm the authority of a district court to order summary judgment in maritime insurance disputes. See, e.g. , HIH Marine Servs. v. Fraser , 211 F.3d 1359, 1362 (11th Cir. 2000) (affirming the district court's order of summary judgment in a maritime insurance dispute in which the defendant misrepresented material facts while obtaining hull insurance); AGF Marine Aviation & Transp. v. Cassin , 544 F.3d 255, 260 (3d Cir. 2008) (clarifying the origin of the federal judiciary's jurisdiction over marine insurance disputes and affirming the district court's summary judgment order in the insurer's favor). Yet, summary judgment is appropriate only if the pleadings, discovery and disclosure materials on file, and any affidavits reflect an absence of a genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a), (c). An issue of fact is "material" if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The issue is "genuine" if the evidence could lead a reasonable jury to find for the non-moving party. See id. ; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The Court draws all reasonable inferences in favor of the party opposing summary judgment. See Chapman v. AI Transp. , 229 F.3d 1012, 1023 (11th Cir. 2000). "Summary judgment may be inappropriate even where the parties agree on the basic facts [ ] but disagree about the inferences that should be drawn from these facts." Whelan v. Royal Caribbean Cruises Ltd. , No. 1:12-cv-22481, 2013 WL 5583970, at *2 (S.D. Fla. Aug. 14, 2013) (alteration added; citation omitted). If "reasonable minds might differ on the inferences arising from undisputed facts, then the Court should deny summary judgment" and proceed to trial. Id. (citations omitted).
III. DISCUSSION
A. Application of Federal Admiralty Law and the Doctrine of Uberrimae Fidei
As an initial matter, "[m]arine insurance contracts qualify as maritime contracts, which fall within the admiralty jurisdiction of the federal courts and are governed by maritime law." GEICO Marine Ins. Co. v. Shackleford , 945 F.3d 1135, 1139 (11th Cir. 2019) (alteration added; citations omitted). And in matters of admiralty, the supremacy of established federal rules of law over state law is clear. See Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 314, 75 S.Ct. 368, 99 L.Ed. 337 (1955) ("[I]n the absence of controlling Acts of Congress this Court has fashioned a large part of the existing rules that govern admiralty. And States can no more override such judicial rules validly fashioned than they can override Acts of Congress." (alteration added; citation omitted)). Thus, if a judicially fashioned rule of federal maritime law applies to the dispute, a district court must apply it despite contrary state law. See id. In the absence of a judicially fashioned admiralty rule, the district court must rely upon state law in addressing questions of marine insurance. See Shackleford , 945 F.3d at 1139 (quoting AIG Centennial Ins. Co. v. O'Neill , 782 F.3d 1296, 1302 (11th Cir. 2015) ); see also ABB Power T&D Co., Inc. v. Gothaer Versicherungsbank VVAG , 939 F. Supp. 1568, 1580–81 (S.D. Fla. 1996).
The well-settled maritime doctrine of uberrimae fidei is the controlling law in the Eleventh Circuit and therefore applies to this dispute. See Steelmet, Inc. v. Caribe Towing Corp. , 747 F.2d 689, 695 (11th Cir. 1984) ("The general rule of [uberrimae fidei ], requiring full disclosure, is well settled in this circuit, and as a clear rule of maritime law it is the controlling federal rule even in the face of contrary state authority." (alteration added; citation omitted)). "Uberrimae fidei requires that an insured fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk." HIH Marine Servs. v. Fraser , 211 F.3d 1359, 1362 (11th Cir. 2000) (citations omitted).
In addition to the apparent applicability of federal admiralty law and the doctrine of uberrimae fidei , the parties agree upon the application of "well established, entrenched principles and precedents of substantive United States Federal Admiralty law" within the Policies (2019 Policy 16), the exact language of which has previously been held to be a valid choice-of-law provision. See Great Lakes Reinsurance (UK), PLC v. Rosin , 757 F. Supp. 2d 1244, 1251 (S.D. Fla. 2010) ; (see also Mot. 7–8; Resp. 5).
The uberrimae fidei doctrine requires the insured to exercise the "highest degree of good faith" in entering a marine insurance contract because "the underwriter often has no practicable means of checking on either the accuracy or the sufficiency of the facts" that the insured furnishes to the insurer before the insurer accepts the risk and sets the policy's conditions and premiums. Id. (quoting Gilmore & Black, The Law of Admiralty 62 (2d ed. 1975); quotation marks omitted). The insured's duty to disclose extends to those material facts into which the insurer may not have directly inquired. See id. at 1362–63 (citing Jackson v. Leads Diamond Corp. , 767 F. Supp. 268, 271 (S.D. Fla. 1991) ; other citation omitted). Thus, an insured's material misrepresentation on an application for marine insurance would violate the uberrimae fidei doctrine and warrant the voidance of the entire disputed maritime insurance policy. See id. at 1363. Whether a misrepresented fact is material is central to the application of uberrimae fidei , as it is in the instant case. In the context of marine insurance disputes, the issue of materiality is a mixed question of law and fact that the court can answer as a matter of law only "if reasonable minds could not differ on the question." Great Lakes Reinsurance (UK) PLC v. Roca , No. 07-23322-Civ, 2009 WL 200252, at *4 (S.D. Fla. Jan. 27, 2009) (citing Woods v. Indep. Fire Ins. Co. , 749 F.2d 1493, 1496 (11th Cir. 1985) ). To determine a fact's materiality, the Court must decide whether the fact could "possibly influence the mind of a prudent and intelligent insurer in determining whether he would accept the risk." O'Neill , 782 F.3d at 1303 (citation and quotation marks omitted); see also Great Lakes Reinsurance (UK) PLC v. Gonzalez , No. 10-21138-Civ, 2011 WL 13115484, at *1 (S.D. Fla. Sept. 12, 2011) ("[T]he standard is whether a reasonable insurer , not insured, would find the misrepresentation material." (alteration added; emphasis in original; citation omitted)). A misrepresentation may warrant voidance of the marine insurance policy even if the misrepresentation resulted from unintentional conduct, such as mistake, accident, or forgetfulness. See Fraser , 211 F.3d at 1363 (citing Steelmet , 747 F.2d at 695 ).
B. Great Lakes's Motion for Summary Judgment
Great Lakes seeks summary judgment, asserting the Court should find the 2019 Policy void because SEA 21 misrepresented two material facts in its Original Application, its Renewal Questionnaire, and other coverage-related communications. (See generally Mot.). First, Great Lakes argues that SEA 21 misrepresented its loss history on both its Original Application and Renewal Questionnaire by failing to disclose several losses that occurred before Great Lakes insured the Vessel. (See id. 9–11). Second, Great Lakes claims SEA 21 misrepresented the purchase price of the Insured Vessel and the cost of improvements and upgrades on its Original Application and in a subsequent request for increase in the scope of coverage. (See id. 12–13).
To analyze these alleged instances of material misrepresentations, the Court must first determine whether each respective fact — SEA 21's loss history and the representations regarding the Insured Vessel's purchase price and improvement costs — was material to Great Lakes's decision to insure SEA 21. If the Court finds either fact material, the Court must then determine if there is a genuine dispute as to whether SEA 21 misrepresented that material fact.
Both parties muddle the required legal analysis in their respective briefs, often equating the materiality of a particular fact in an insurer's decision to provide insurance coverage with the actual misrepresentation of that fact. As the analysis here makes clear, the threshold question must be whether a particular fact is material to a reasonable insurer's decision to insure, and the dispositive question is whether the insured misrepresented that material fact.
After a review of the record evidence, the parties’ briefs, and supportive factual submissions, the Court does not find either of Great Lakes's theories sufficient to warrant summary judgment. Great Lakes does not meet its initial burden to demonstrate the absence of genuine disputes of material fact.
1. SEA 21's Material Misrepresentation of Its Loss History
a. Materiality
The preliminary question is whether SEA 21's loss history constitutes a fact material to Great Lakes's extension of insurance coverage under the 2019 Policy — the marine insurance policy in effect at the time of SEA 21's February 26, 2020 loss. Great Lakes begins by incorrectly characterizing "loss history" as material as a matter of law, citing All Underwriters at Lloyd's (London) Subscribing to Policy No. 200-451-7275 v. Kenney , 986 F. Supp. 1384 (S.D. Fla. 1997), to support that proposition. (See Mot. 9). Such a position ignores relevant and binding precedent.
A subsequent 2009 decision in which the court explicitly declined to follow the analysis in Kenney and opted for a more fact-specific approach in alignment with more recent Eleventh Circuit precedent offers a helpful explanation:
Plaintiff cites to one case from our district that held a misrepresentation of an insured's prior marine loss record was material as a matter of law. In All Underwriters at Lloyd's v. Kenney , Judge Gonzalez applied Ninth Circuit precedent and concluded that failure of the insured to disclose his prior marine loss on the application was material as a matter of law, thus voiding the policy ab initio. Judge Gonzalez, however, did not have the benefit of the Eleventh Circuit's [ Fraser ] decision at the time he rendered his order. [Fraser ]’s resolution of the void ab initio issue raised in that case suggests that the Ninth Circuit's bright line rule should not be strictly followed in this circuit. Absent a contrary holding from the Eleventh Circuit, this Court should decline to follow in Judge Gonzalez's footsteps in extending the Ninth Circuit precedent to this case. We believe that a closer factual examination of the materiality element is necessary to decide the issue.
Roca , 2009 WL 200252, at *5 (emphasis and alterations added; citations omitted).
Courts have arrived at the same conclusion on numerous subsequent occasions, and the undersigned does the same here. See, e.g. , AIG Centennial Ins. Co. v. O'Neill , No. 09-60551-Civ, 2013 WL 10450139, at *14 (S.D. Fla. May 9, 2013) ("As the Roca court stated, the Eleventh Circuit has never adopted the bright-line rule of the Ninth Circuit. Instead, courts in the Eleventh Circuit have employed ‘a more fact-specific inquiry’ regarding the question of materiality." (citations omitted)); see also Markel Am. Ins. Co. v. Fernandez , No. 09-20449-Civ, 2010 WL 11602243, at *3 (S.D. Fla. July 20, 2010).
The Court thus considers the record evidence to determine whether SEA 21's loss history was material to Great Lakes's decision to issue the 2018 and 2019 Policies. The Court will deem material a misrepresentation or omission on an applicant's marine insurance policy "if it might have a bearing on the risk to be assumed by the insurer." Id. (emphasis added; quoting Fraser , 211 F.3d at 1363 (quotation marks omitted)). "[A] finding that even one misrepresented or omitted fact might have affected [the insurer's] decision to insure will void the policy." Id. (alterations added; emphasis in original; citation and quotation marks omitted). Furthermore, the Court's fact-specific materiality analysis requires that the insurer provide specific evidence of materiality unless the materiality of the omitted fact is "patently obvious[.]" Roca , 2009 WL 200252, at *6 (alteration added). The insurer's after-the-fact, conclusory statements claiming a certain fact is material and would have affected its decision to insure an applicant are inadequate grounds for the Court to conclude that an omitted fact is material. See id. ; AXA Glob. Risks (UK) Ltd. v. Pierre , No. 00–388–Civ, 2001 WL 1825853, at *9 (S.D. Fla. Nov. 8, 2001). To establish materiality, Great Lakes offers an August 19, 2021 sworn declaration of Beric Usher, Concept's senior underwriter. (See generally Usher Decl. [ECF No. 69-1]). Therein, Mr. Usher declares, "In reliance on the truth of the material facts disclosed in the Original Application [and Renewal Questionnaire], Concept agreed to issue the 2018 [and 2019] Polic[ies]," and "Concept assessed a 10% credit on the premium charged for the 2018 [and 2019] Polic[ies] in reliance on the insured's representations that he had no losses in the previous ten (10) years." (Id. ¶¶ 25–26, 32–33 (alterations added)). Mr. Usher also declares:
Accurate responses to the specific questions in the 2018 Original Application and the 2019 Renewal Questionnaire regarding an insured's loss history are material because they could and likely would influence the mind of a prudent and intelligent underwriter in determining whether to accept the risk because these past events are the best (and only) indicators of future risk. Therefore, truthful answers to these questions are material to my decisions as a prudent and intelligent underwriter because false answers would only result in a faulty evaluation of the risk.
The matter of an insured's loss history, whether he or she was at the helm when such a loss occurred or not, is always of concern to Concept, and to any reasonable underwriter, as it is an indicator of the insured's care and skill in managing and maintaining the vessel, and it is the best indicator of the likelihood of future losses.
(Id. ¶¶ 44–45).
These retrospective, self-serving statements of Great Lakes's insurance underwriter, alone, are inadequate to support the insurer's claim of materiality. See Roca , 2009 WL 200252, at *6 (declining to find a defendant-insured's loss history material as a matter of law solely based upon an underwriter's after-the-fact sworn declaration). Yet, Great Lakes also offers the Concept Underwriting Manual, which articulates Concept's underwriting practices, as evidence supporting the materiality of SEA 21's loss history. (See generally Underwriting Manual [ECF No. 69-11]). The Court agrees that certain provisions of the Underwriting Manual adequately support a finding of materiality because they indicate that the underwriter of the 2018 and 2019 Policies might have considered SEA 21's loss history in deciding whether to offer marine insurance coverage.
Specifically, the Underwriting Manual states the following:
Assuming that the owner and operators (they may not be the same person) meet all of the standards referred to above we must consider their past loss records on boats as well as land. Again, we are seeking patterns and we specifically ask about marine losses – insured or not – to establish if any pattern of incidents exist[s] that may not have been the subject of an insurance claim but that would suggest if we were to issue a policy could well become one against our underwriters. For example, an owner could have had a number of small grounding incidents that caused damage to his vessel but not enough to impact a policy. This would suggest that sooner or later if the pattern continues, he will commit a major navigational error that will result in an expensive insurance claim.
If an owner has had previous losses, these must be taken into consideration when deciding whether or not to offer terms and these will impact the price charged.
(Id. 4–5 (emphasis and alteration added)).
SEA 21 does not dispute the contents or accuracy of the Concept Underwriting Manual. (See Pl.’s SOF ¶ 49; Def.’s SOF ¶ 49). Therefore, because Great Lakes has provided specific, undisputed evidence supporting the conclusion that it might have considered SEA 21's loss history before offering SEA 21 marine insurance coverage under the 2018 Policy and subsequent 2019 renewal, the Court finds SEA 21's loss history material as a matter of law. See Roca , 2009 WL 200252, at *4 ("Materiality of misrepresentation is a mixed question of law and fact that can be decided as a matter of law if reasonable minds could not differ on the question." (citation omitted)).
b. Misrepresentations
The Original Application specifically inquired as to whether the insured or any named operator was involved in a loss in the prior ten years. (See Original Appl. 3). SEA 21 responded "No." (Id. ). The parties dispute whether this response constitutes a misrepresentation because they dispute several facts relating to the underlying alleged losses that Great Lakes discovered during its preliminary investigation into the February 26, 2020 incident and throughout this litigation. These disputes of fact are both genuine — because such evidence may lead the factfinder to determine that SEA 21 did not misrepresent its loss history — and material — because these facts may affect the outcome of this dispute under the applicable doctrine of uberrimae fidei.
The parties first dispute the reason why the Insured Vessel was housed in dry dock for repairs in July 2016, an incident that SEA 21 did not disclose on either its Original Application or Renewal Questionnaire. Great Lakes asserts that SEA 21 did not disclose a July 2016 incident in which the Insured Vessel struck a sandbar, requiring it to be housed in dry dock and undergo subsequent repairs. (See Mot. 2; Pl.’s SOF ¶¶ 34–35). In support of this position, Great Lakes offers two emails: (1) a March 4, 2018 email from SEA 21's corporate representative Jorge Fernandez to Jet Boat Miami's insurance broker attaching a list of repairs made to the Insured Vessel in July 2016 but not disclosing the cause necessitating those repairs (see Mar. 4, 2018 Email [ECF No. 69-5] 2); and (2) a May 24, 2021 email from Global to counsel for Great Lakes, in which a Global employee states, "To the best of my recollection, the July 2016 incident mentioned in 2018 by Mr. Fernandez ‘related to minor damages sustained when vessel went over a small sandbar raising-up at low tide[.’]" (May 24, 2021 Email [ECF No. 69-6] 1 (alteration added)).
SEA 21 disputes Great Lakes's preferred conclusion, citing the deposition testimony of its corporate representative, Jorge Fernandez, in which he denies any sandbar incident as the reason necessitating the repairs. (See Def.’s SOF ¶¶ 34–35 (citing July 21, 2021 Fernandez Dep. [ECF No. 69-7] 9:13–16:18)). In its Reply, Great Lakes takes issue with SEA 21's exclusive reliance upon its corporate representative's deposition testimony and urges the Court to find the self-serving testimony insufficient to raise a genuine dispute of material fact. (See Reply 4 (collecting cases)).
Even if the Court were to agree that SEA 21's exclusive reliance upon its corporate representative's deposition testimony would be insufficient to raise a genuine dispute of material fact, the evidence Great Lakes presents does not meet its initial burden required for a summary judgment. As the moving party, Great Lakes must demonstrate the absence of a genuine issue as to any material fact, and in deciding whether it meets this burden, the Court must view the proffered evidence and all factual inferences arising from it in the light most favorable to SEA 21. See Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997). Considering the evidence in that light, Great Lakes simply has not met its burden. For example, the most obvious and reasonable inference the Court draws in SEA 21's favor from the evidence is that the Global employee's "best [ ] recollection" was incorrect, and a sandbar did not cause damage to the Insured Vessel. (May 24, 2021 Email 1 (alteration added)). Thus, there remains a genuine dispute of material fact as to whether SEA 21 suffered a loss by damaging the Insured Vessel in July 2016.
The parties also disagree as to whether SEA 21 incurred a loss due to alleged injuries sustained by a woman named Maria Cardoza while aboard a SEA 21-owned vessel in early August 2016. Great Lakes represents that Ms. Cardoza was injured aboard a SEA 21-owned vessel on August 6, 2016. (See Pl.’s SOF ¶ 36). Referring to the deposition testimony of SEA 21's corporate representative and a demand letter in which Ms. Cardoza's attorney sought insurance information from SEA 21, Great Lakes states, "Ms. Cardoza made a claim against SEA 21-21 and/or Jet Boat Miami LLC for damages related to the injuries she sustained on August 6, 2016." (Id. ¶ 37 (citing July 21, 2021 Fernandez Dep. 43:16–44:1, 45:15–46:6; Demand Letter [ECF No. 69-8] 2)). SEA 21 cites the same deposition testimony of its corporate representative in which Mr. Fernandez denies that Ms. Cardoza's legal action was against SEA 21, the insured party under the 2019 Policy. (See Def.’s SOF ¶ 37 (citing July 21, 2021 Fernandez Dep. 48:5–13)).
The evidence Great Lakes offers regarding the incident involving Ms. Cardoza is insufficient for summary judgment. First, neither the deposition testimony nor the demand letter irrefutably demonstrates that SEA 21 suffered a loss. The language of the Original Application may be read to support SEA 21’s position that an individual's legal claim against the insured does not necessarily amount to a loss because a loss would involve a final amount paid to the injured party (see Original Appl. 3; see also Renewal Questionnaire 2), and Great Lakes does not offer any evidence that SEA 21 ever compensated Ms. Cardoza for her injuries. Merely because a person asserts a legal claim or right does not mean that legal right is automatically validated.
Additionally, Great Lakes's proffered evidence does not support the conclusion that Ms. Cardoza made any claim against Mr. Fernandez, a named operator under the 2018 or 2019 Policy and a beneficial owner of the Insured Vessel, or that he or SEA 21 otherwise incurred a loss stemming from Ms. Cardoza's alleged injury. The evidence at most establishes that Ms. Cardoza may have filed a lawsuit; it does not prove she prevailed against SEA 21 or Mr. Fernandez, such that the claim amounted to a loss that was required to be disclosed.
The parties also dispute whether SEA 21 incurred a loss after another woman, Mache Lanier, suffered an injury while aboard a vessel owned by Jet Boat Miami. Great Lakes represents that Ms. Lanier suffered an injury aboard a vessel owned by Jet Boat Miami on May 26, 2017, and subsequently made a claim against that entity. (See Pl.’s SOF ¶¶ 38–39). Great Lakes once again offers as evidence the deposition testimony of SEA 21's corporate representative, Jorge Fernandez, in addition to a September 2017 email from Mr. Fernandez notifying Jet Boat Miami's insurance broker of the incident. (See July 21, 2021 Fernandez Dep. 19:7–20:13; Sept. 26, 2017 Email [ECF No. 69-9]). SEA 21 only disputes that Ms. Lanier suffered an injury at all. (See Def.’s SOF ¶¶ 38–39). The facts presented do not establish that SEA 21 or Jorge Fernandez suffered a loss because, again, a claim does not necessarily result in a loss.
Moreover, Jet Boat Miami is a distinct legal entity from SEA 21, and both entities are legally distinct from Mr. Fernandez. See Bigfoot Media Props., LLC v. Cushman In T, LLC , 185 A.D.3d 772, 773, 128 N.Y.S.3d 36 (N.Y. App. Div. 2020) ("[A] limited liability company is a separate legal entity from its members[.]" (alterations added; quotations marks and citations omitted)); see also Fla. Stat. § 605.0108(1) ("A limited liability company is an entity distinct from its members."). Thus, the fact that Ms. Lanier asserted a claim against Jet Boat Miami does not necessarily imply she made a claim against Mr. Fernandez, let alone that he suffered a loss.
SEA 21 is a Florida limited liability company. (see Second Am. Compl. ¶ 5; Answer [ECF No. 63] ¶ 5). The Court also cites New York law given the choice-of-law provision in the Policies. (See 2019 Policy 16).
The above reasoning applies with equal force to the parties’ dispute over whether an October 20, 2017 injury of a third woman, Andreana Diaz, constitutes a loss that SEA 21 misrepresented in its Original Application. Great Lakes submits, "[Ms.] Diaz was injured aboard a vessel owned in whole or part by Jet Boat Miami LLC, an entity which Mr. Fernandez owned." (Pl.’s SOF ¶ 41 (alteration added)). Great Lakes further states, "Ms. Diaz made a claim against Jet Boat Miami LLC for her injuries as a result of the October 20, 2017 incident." (Id. ¶ 42). In support, Great Lakes cites Mr. Fernandez's corporate deposition testimony and an email from Mr. Fernandez to SEA 21's insurance broker relaying Diaz's claim post-incident. (See July 21, 2021 Fernandez Dep. 30:16–31:14; Oct. 27, 2017 Email [ECF No. 69-10] 2). SEA 21 disputes these facts only to the extent they represent Mr. Fernandez as a complete owner of Jet Boat Miami. (See Def.’s SOF ¶ 41).
Regardless, because Great Lakes presents no evidence that SEA 21 — the insured party under the Policies and a legal entity wholly distinct from Jet Boat Miami — incurred a loss resulting from Ms. Diaz's claim, the Court cannot decide as a matter of law that SEA 21 misrepresented its loss history by omitting Ms. Diaz's incident on its Original Application. Nor can the Court conclude that Mr. Fernandez suffered a loss because the evidence shows only that Ms. Diaz took legal action against Jet Boat Miami, not Mr. Fernandez personally.
Finally, the parties dispute whether SEA 21 misrepresented its loss history in its Renewal Questionnaire when it did not disclose a crew member's injury while aboard or near a vessel owned by two other entities. Great Lakes argues that when Erick Largacha was injured on May 9, 2018 while working as a crew member aboard a vessel owned by Sea 20-20 LLC and Jet Boat Miami, Mr. Fernandez incurred a loss by virtue of his partial ownership of both entities. (See Pl.’s SOF ¶¶ 28–30). Great Lakes states that Mr. Largacha made a claim against "Sea 20-20 LLC and/o [sic] Jet Boat Miami LLC related to the injuries he sustained on May 9, 2018." (Id. ¶ 31 (alteration added)). Great Lakes supports these assertions with citations to the policy insuring the vessel on which Mr. Largacha was allegedly injured and the deposition testimony of Mr. Fernandez.
SEA 21 disputes Great Lakes's factual representations on numerous grounds. SEA 21 first denies that Mr. Largacha was injured while aboard the vessel, citing Mr. Fernandez's deposition testimony. (See Def.’s SOF ¶ 28 (citing Mar. 26, 2021 Fernandez Dep. [ECF No. 60-2] 36:3–4)). SEA 21 further denies that Mr. Fernandez suffered a loss as a result of Mr. Largacha filing a claim against Jet Boat Miami because Mr. Fernandez "was not the owner of the vessel upon which Largacha was a crew member and he was not operating the vessel at the time of loss." (Def.’s SOF ¶¶ 32, 72–73). There is a genuine dispute as to whether a claim against and payment on behalf of Sea 20-20 and Jet Boat Miami (see Reply 7), both limited liability entities, constitute a loss by Mr. Fernandez.
Resolving every reasonable inference in SEA 21's favor, genuine disputes of material fact remain. Accordingly, Great Lakes is not entitled to summary judgment on its theory that SEA 21 violated its duty under uberrimae fidei to accurately disclose its loss history.
2. SEA 21's Misrepresentations of the Insured Vessel's Purchase Price and Improvement Costs
a. Materiality
In its second uberrimae fidei analysis, the Court examines whether the purchase price and costs of improvements to the Insured Vessel constitute facts material to Great Lakes's issuance of the 2019 Policy, and then whether the insured misrepresented these facts. Great Lakes would have the Court adopt the holding in Great Lakes Reinsurance (UK) PLC v. Atlantic Yacht & Marine Servs., Inc. , No. 07-20295-Civ, 2008 WL 2277509 (S.D. Fla. Feb. 26, 2008), where the court held a vessel's purchase price is "by definition" material. Id. at *3 (adopting the Ninth Circuit's bright-line materiality standard). As explained, however, the Court employs " ‘a more fact-specific inquiry’ regarding the question of materiality." O'Neill , 2013 WL 10450139, at *14. (alteration added; citations omitted). Just as the court in Roca previously rejected the bright-line standard of materiality in the context of an insured's loss history, the Court does the same in consideration of an insured vessel's purchase price and improvement costs. A closer factual examination is necessary. See Roca , 2009 WL 200252, at *4–5.
Other than Great Lakes's citation to outdated precedent, it appears that two submissions support Great Lakes's overall position that the Insured Vessel's purchase price and the costs of improvements were material to the insurer's issuance of the 2019 Policy. First, Great Lakes relies upon the declaration of its underwriter, Beric Usher. (See Mot. 12–13 (citing Pl.’s SOF ¶¶ 61–62, 65)). As discussed, Mr. Usher's declaration is a retrospective, self-serving statement inadequate on its own to support Great Lakes's assertion of materiality. See Roca , 2009 WL 200252, at *6 ; see also Pierre , 2001 WL 1825853, at *9.
Support for the materiality of the Insured Vessel's purchase price and improvement costs is once again found in the Concept Underwriting Manual, which states:
[T]he purpose of insurance is to enable someone to be put back into the condition they enjoyed prior to a loss, therefore, we do not insure vessels for more than their purchase price to the current owner without evidence in the form of receipts of genuine investment to increase the vessel's value[.]
(Underwriting Manual 3 (alterations added)). These company guidelines indicate that Great Lakes, through its underwriter, might have taken the Insured Vessel's purchase price and costs of improvements into account when deciding whether to insure SEA 21. See Fernandez , 2010 WL 11602243, at *3. The Court therefore finds the purchase price and costs of improvements to the Insured Vessel material as a matter of law. See Roca , 2009 WL 200252, at *4.
b. Misrepresentation
The remaining question is if there exists a genuine dispute of material fact as to whether SEA 21 misrepresented the purchase price of the Insured Vessel and subsequent improvement costs in its Original Application, Renewal Questionnaire, and policy-related communications. Although Great Lakes believes this case is one in which a reasonable factfinder could decide only one way, the Court disagrees.
Great Lakes claims that SEA 21 misrepresented the Insured Vessel's purchase price in the Original Application and Renewal Questionnaire because SEA 21 inaccurately represented the costs of central engine repairs associated with a $50,000 deferral of payment. (See Mot. 12). Great Lakes relies on the declarations of Mr. Usher, and its retained expert, Revel Boulon, to support this assertion. (See Usher Decl. ¶ 12; Boulon Decl. [ECF No. 69-16] ¶ 10). According to Mr. Boulon's findings, SEA 21 spent only $20,758.58 on center engine repairs, resulting in the Vessel initially being over-insured by nearly $30,000. (See Pl.’s SOF ¶ 60 (citing Boulon Decl. ¶ 10)). Additionally, Mr. Boulon concludes that SEA 21 only spent $37,754.49 in upgrades and improvements and not the $176,510 that SEA 21 represented. (See id. ¶ 63 (citing Boulon Decl. ¶ 9)).
Great Lakes states it would not have insured SEA 21 had it known the accurate purchase price and the true costs of the work done to the Insured Vessel. (See id. ¶¶ 62, 65 (citing Usher Decl. ¶¶ 46–47, 50, 53)). In response, SEA 21 once more relies upon Mr. Fernandez, who testified to the authenticity and accuracy of numerous receipts for repairs to the Insured Vessel. (See Resp. 13 (citing Mar. 26, 2021 Fernandez Dep. 62, 95–132)).
The record evidence addressing SEA 21's misrepresentations of the Insured Vessel's purchase price and improvement costs does not demonstrate the absence of a genuine issue as to any material fact. Sea 21 is correct in its observation that "the dispute about the value of improvements is fact intensive" (id. ) and resolving all inferences in Sea 21's favor, summary judgment is not warranted. Trial is the more appropriate venue for the Court to ascertain the true value of the costs of repairs to the Insured Vessel's center engine and the costs of improvements. For these reasons, the Court cannot decide as a matter of law that SEA 21 materially misrepresented the purchase price of the Insured Vessel or the costs of subsequent improvements.
IV. CONCLUSION
At a trial, the Court will not be required to draw reasonable inferences in favor of Sea 21. It may very well be that Sea 21 misrepresented several of the material facts addressed in this Order, and that therefore under the doctrine of uberrimae fidei , the marine insurance Policies are voided even if the misrepresentations resulted from unintentional conduct, such as mistake, accident, or forgetfulness. But trial, not summary judgment, is the proper procedural mechanism for reaching that result given the present record.
For the foregoing reasons, it is ORDERED AND ADJUDGED that Plaintiff, Great Lakes Insurance SE's Motion for Summary Judgment [ECF No. 70] is DENIED .
DONE AND ORDERED in Miami, Florida, this 18th day of October, 2021.