BARRY TED MOSKOWITZ, Chief Judge.
Third-Party Defendant Marsh, USA Inc. ("Marsh") has filed a motion for summary judgment. (Marsh's Mot. Summ. J. ("Marsh's MSJ"), ECF No. 71.) For the
This action arises out of an insurance coverage dispute under a marine insurance policy that Marsh brokered for a 102-foot motor vessel ("the Polar Bear") owned by Third-Party Plaintiff, Bear, LLC ("Bear").
In 2006, Mr. Larry Jodsaas ("Jodsaas"), the owner and managing member of Bear, with the help of Roger Trafton ("Trafton"), the Polar Bear's captain, entered into a contract with Aleutian Yachts, LLC to build the Polar Bear. (Decl. of Roger Trafton, in Supp. of Bear's Opp'n to Marsh's MSJ ("Bear Opp'n"), ECF No. 101-14, ¶ 5.) After construction for the Polar Bear was completed in 2011, marine surveyors valued the Polar Bear at $17 million. (Marsh's Ex. 23 in Supp. of Marsh's MSJ ("Marsh's Ex."), ECF No. 71-4.) Having contracted for personal and yacht insurance with Marsh before, Jodsaas sought to obtain insurance for the Polar Bear through Marsh's Yacht Group. (Trafton Decl. ¶ 9.) The yacht insurance was handled by its broker and Client Advisor, Kathleen Harris Johnson ("Johnson"). (Id.) Marsh submitted requests for insurance quotes for the Polar Bear to several insurers, including Plaintiff Underwriters, Chartis, ACE, Chubb, Travelers, and LEAD. (Marsh's Ex. 7, ECF No. 71-3.) On November 2, 2010, Marsh provided Bear with a "Yacht Insurance Proposal" ("2010 Proposal"), which outlined the key terms and provided a comparison of the coverage and exclusions contained in four different policies. (Marsh's Ex. 9, ECF No. 71-3.) On November 8, 2010, Johnson held a conference call with Jodsaas and Trafton and discussed the 2010 Proposal. (Marsh's Ex. 56, Tr. of Kathleen S. Johnson's Dep. 245:11-246:6; 246:21-247:10, ECF No. 71-7.) The 2010 Proposal specifically warned Bear of policy conditions that applied during yard periods, including the "Maintenance and Repair Clause" ("Repair Clause") contained within the Underwriters policy. (Marsh's Ex. 9, 139-140.) In August 2011, Jodsaas authorized Marsh to bind coverage with Underwriters. (Marsh's Ex. 26, 246, ECF No. 71-4.) On August 23, 2011, Jodsaas signed an "Acknowledgment Form" with Marsh, acknowledging, among other things, that he understood that the policy contained warranties. (Id. at 248.)
On October 20, 2011, Johnson forwarded Jodsaas a copy of the 2011-2012 policy along with a cover note which reminded Jodsaas "to keep in mind the warranties and exclusions of the policy, especially those related to liabilities assumed under contract which are excluded unless approved by underwriters beforehand." (March's Ex. 28, ECF No. 71-4.)
In August 2012, Johnson sent Bear a "Yacht Insurance Renewal Proposal" ("2012 Proposal") which outlined the renewed terms of the Underwriters policy. (Marsh's Ex. 31, ECF No. 71-4.) The 2012 Proposal again warned Bear about the Repair Clause. Bear decided to renew its coverage with Underwriters. (Marsh's Ex. 32, 348, ECF No. 71-5.) On September 27, 2012, Johnson sent Bear a copy of the 2012-2013 policy. (Marsh's Ex. 33, ECF No. 71-5.) That letter also advised Bear to keep in mind the policy's warranties and exclusions. (Id.)
In August 2013, Johnson obtained a renewal quote from Underwriters and sent
Maintenance and Repair Clause:
(Id. (emphasis in original).)
On August 22, 2013, Trafton, who acted as Jodsaas' agent, signed an "Acknowledgment Form," taking notice of "important policy terms and conditions" in the policy. (Marsh's Ex. 39, ECF No. 71-5.) On August 23, 2013, Johnson sent Bear a Confirmation of Coverage, which contained the same warning regarding the Repair Clause as the 2013 Proposal did. (Marsh's Ex. 40, 464, ECF No. 71-6.) Lastly, on October 9, 2013, Johnson emailed Bear a copy of the 2013 policy with a cover letter that again advised Jodsaas to "keep in mind the warranties and exclusions of the policy...." (Marsh's Ex. 41, ECF No. 71-6.)
The 2013 policy contained the following relevant provisions:
(Marsh's Ex. 42, 489.)
On May 6, 2014, the Polar Bear ran aground at the entrance of the San Diego
On May 7, 2014, just before the Polar Bear was hauled out, Trafton signed a written contract with MGBW. (Id. at ¶ 74.) The service contract provided that the Polar Bear would be hauled out, blocked and launched for a total of $3500. (Marsh's Ex. 44, 540, ECF No. 71-6.) The contract was double-sided but Trafton only signed the front-side. (Id.) The back-side contained several provisions, including an "owner assumption of risk" clause, an "owner's exclusive remedy" clause, and an "indemnity, insurance and waiver of subrogation" clause. (Id. at 541.) Bear did not notify nor acquire Underwriters' consent prior to signing the contract. (Marsh's Ex. 55, Tr. of Roger Trafton's Dep. 640:10-641:7, ECF No. 71-7; Trafton Decl. ¶ 84.)
From May 22, 2014 through early June, 2014, Trafton executed numerous work change orders for repairs to the Polar Bear, including a May 22, 2014 order for hot work repairs to the hull. (Marsh's Ex. 44, 543-565, ECF No. 71-6.) Bear did not notify nor acquire Underwriters' consent prior to executing the work change orders. (Marsh's Ex. 55, Trafton's Dep. Tr. 647:3-23.) On June 17, 2014, Jodsaas spoke with Patrice M. Grossinger of Marsh and informed her that the Polar Bear hit some rocks as it traveled back from Mexico. (Decl. of Jeffrey M. Posner, in Supp. of Bear's Opp'n, Ex. E, ECF No. 101-28.) He communicated to her that it resulted in $250,000 in damages, but that he had not filed a claim with Johnson. (Id.) Grossinger advised him to contact Johnson if costs got any higher. (Id.) On June 19, 2014, the Polar Bear caught fire while welders were performing hot work. (Trafton Decl. ¶ 90.) The fire resulted in the Polar Bear's total loss. (Id. at ¶ 6.)
On June 20, 2014, Marsh confirmed that the Polar Bear had been consumed by a fire and provided Underwriters with a notice of loss thereafter. (Marsh's Ex. 47, ECF No. 71-6.) On March 20, 2015, Underwriters denied coverage on the grounds that Bear had failed to satisfy the conditions precedent under the Repair Clause. (Marsh's Ex. 50, 593-600, ECF No. 71-7.)
In March 2015, Underwriters filed this action seeking declaratory relief that it justifiably denied coverage for Bear's claim relating to the losses suffered to the Polar Bear. (Compl. ECF No. 1.) Bear filed counterclaims against Underwriters and a third-party complaint against Marsh, asserting claims for breach of oral contract, breach of fiduciary duty, and negligence. (Bear's Second Countercl. and Second Third-Part Compl., ECF No. 63.)
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute as to a
A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case on which the nonmoving party bears the burden of proving at trial. Id. at 322-23, 106 S.Ct. 2548. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
Once the moving party establishes the absence of genuine issues of material fact, the burden shifts to the nonmoving party to demonstrate that a genuine issue of disputed fact remains. Celotex, 477 U.S. at 314, 106 S.Ct. 2537. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Rather, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by `the depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting Fed. R.Civ.P. 56(e)).
The court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "Credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when] he [or she] is ruling on a motion for summary judgment." Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
Bear asserts a claim against Marsh for a breach of an oral contract to procure insurance coverage for the Polar Bear.
Under Florida law
To support its position, Marsh submits that Underwriters themselves interpret the policy to provide $17,250,000 in coverage for the Polar Bear and all other property insured under the policy, assuming that Bear satisfies the terms and conditions
Bear also alleges that Marsh breached its contract by failing to fulfill several promises, such as failing to provide the "best risk solution for [Bear's] exposures," failing to "ensure that the most comprehensive and cost-effective insurance program is purchased," failing to obtain insurance "specifically designed to address the exposures and risks unique to yachts and their owners," failing to "work on Bear's behalf to provide efficient and effective claims resolution in the event of any incident with the Polar Bear," and failing to be "accountable for the service" it provides. (Bear's Opp'n 12.) The alleged contract at issue is an oral one. Under Florida law, a plaintiff asserting a breach of oral contract must prove that the parties "mutually assented to a certain and definite proposition and left no essential terms open." W.R. Townsend Contracting, Inc. v. Jensen Civil Constr., Inc., 728 So.2d 297, 301 (Fla. Dist. Ct. App. 1999) (internal citations omitted). Bear takes statements
As such, the Court grants summary judgment in Marsh's favor on Bear's breach of oral contract claim.
To prevail on a claim for breach of fiduciary duty, a plaintiff must prove that: (1) a fiduciary duty exists; (2) the duty was breached; and (3) the breach proximately caused plaintiff's damages. Gracey v. Eaker, 837 So.2d 348, 353 (Fla. 2002). Under Florida law, an insurance broker has a fiduciary relationship with the insured that requires the broker to inform and explain the coverage it has secured at the client's directions. Wachovia Ins. Servs. v. Toomey, 994 So.2d 980, 987 (Fla. 2008).
Marsh moves for summary judgment on Bear's second claim for breach of
Here, the Court declines to apply the rule because it cannot find that the inconsistencies between Trafton's testimony and deposition are "clear and unambiguous." Notwithstanding Bear's dispute with the substance of the November 8, 2014 conference call, the Court finds that as a matter of law, Marsh fulfilled its fiduciary duty to inform and explain the coverage it secured for Bear.
Marsh warned and advised Bear of the policy's warranties and conditions precedent numerous times and over the course of three years. In its insurance proposals it explained to Bear the conditions precedent attached to major repairs, hot work or when a shipyard required a waiver of subrogation. During his deposition, Trafton acknowledged that he and Jodsaas read and discussed the 2010 insurance proposal to determine the cost of insurance for the Polar Bear. (Marsh's Ex. 55, Trafton's Dep. Tr. 446:6-22; 450:20-22.) Additionally, before binding coverage, Marsh required Bear to sign acknowledgment forms certifying Jodsaas and/or Trafton's understanding of the policy. It is undisputed that Jodsaas and Trafton willingly signed these forms. Marsh also provided Bear with warnings in the confirmations of coverage it sent to Bear after binding coverage every year, as well as the cover letters attached to the actual policies it sent to Bear. Contrary to Bear's argument, these warnings were not buried in insurance materials. Given that the majority of their communications occurred via letters and emails, it was reasonable for Johnson to have warned Bear of these provisions in these documents. Trafton also testified that he was aware that when the Polar Bear went in for a yard visit, he was supposed to notify Marsh so that Marsh in turn, notified the insurer. (Marsh's Ex. 55, Trafton's Dep. Tr. 647:7-17.) Finally, though Johnson could not recall the exact date, she testified to having warned Jodsaas and Trafton about the limitations applied to yard periods specifically. (Marsh's Ex. 56, Johnson's Dep. Tr. 300:13-301:17.)
Bear argues that Trafton did not read the insurance proposals and as such, Marsh's breach of duty is not overcome by Bear's failure to read the underlying documentation.
The Court finds that as a matter of law, Marsh satisfied its fiduciary duty by providing Bear with over a dozen explanations and warnings. As such, Marsh's motion for summary judgment as to Bear's breach of fiduciary duty claim with respect to the procurement of the policy is granted.
Under Florida law, an insurance broker has a duty "to use reasonable skill and diligence" when procuring the insurance coverage requested by the insured. Warehouse Foods, Inc. v. Corporate Risk Management Services, Inc., 530 So.2d 422, 424 (Fla. Dist. Ct. App. 1988). As already discussed above, the undisputed facts demonstrates that Marsh obtained the requested coverage for $17 million, and adequately informed and explained to Bear the terms and conditions of the policy.
Therefore, as a matter of law, it did not breach its duty of reasonable care in performing the agreement to procure insurance coverage for the Polar Bear. Accordingly, Marsh's motion for summary judgment as to its negligence claim with respect to the procurement of the policy is granted.
Bear also seeks to impose a heightened duty on Marsh to advise and recommend certain policies based on its needs. Relying on an alleged "special relationship," Bear argues that Marsh breached both its fiduciary and common law duties by failing to advise and recommend the Chubb and/or Shipyard Repairer's Liability ("SRL") policies.
Ordinarily, an insurance broker has no duty to advise an insured as to the insured's coverage needs. Tiara Condo. Ass'n v. Marsh, USA Inc., 991 F.Supp.2d 1271, 1280 (S.D. Fla. 2014). However, as the court in Tiara Condo. Ass'n v. Marsh, USA Inc. recognized, there is a "special relationship" exception to the general rule of no duty to advise. Id. "The exception becomes operative when an insurance broker encourages and engages in a `special relationship' with its client, thereby triggering an enhanced duty of care to advise the client about the amount of coverage prudently needed to meets its complete insurance needs." Id. at 1281. After reviewing cases supporting a finding of a "special relationship," the court identified several factors for a trier of fact to consider when determining whether a broker shared a "special relationship" with its clients: "(1) representations by the broker about its expertise; (2) representations by the broker about the breadth of coverage
Here, the parties dispute whether a special relationship exists. Bear argues that "[b]ecause it is undisputed that Marsh held itself out as an expert in yacht insurance and Bear relied on that expertise," Marsh owed Bear an enhanced duty of care. (Bear's Opp'n 17.) Marsh, on the other hand, argues that such a duty should not be imposed. Bear has presented evidence of a long-term relationship with Marsh, as well as its reliance on Marsh's expertise in making its purchasing decisions. These facts, therefore, could support a finding by the trier of fact of a special relationship. And if a special relationship did exist, there is evidence on which a trier of fact could conclude that Marsh breached its duty for failing to advise against a policy with the Repair Clause for a steel hull vessel.
Notwithstanding a dispute of fact as to a "special relationship," Marsh argues that summary judgment is appropriate because Bear cannot establish that a recommendation of the Chubb or SRL policies would have resulted in coverage.
Bear argues that Marsh breached its fiduciary duty by failing to recommend the Chubb policy over the Underwriters policy in 2010, which would have allegedly covered the loss. Marsh moves for summary judgment on this claim because it argues that Bear cannot establish causation. The causation question depends on several factual issues. It requires a trier of fact to determine: (1) would Bear have chosen the Chubb policy had Marsh recommended it in 2010, despite its concerns about pricing; (2) whether Chubb would have renewed on the same terms every year and Bear would have elected it every year; and (3) whether the Chubb policy would have covered the loss despite Bear's failure to notify.
To prove that Bear would have elected the Chubb policy had Marsh recommended it, Bear submits as evidence Trafton's Declaration. Trafton states that "[i]f Johnson had pointed out the superior coverage aspects of the Chubb policy, together with the huge gap in coverage created by the Maintenance and Repair Clause, and recommended the purchase of the Chubb policy, I would have concurred, and believe that Johnson would have done so as well. We had a $17 million boat at stake, and had already experience a fire caused by welding while the Polar Bear was being built." (Trafton Decl. ¶ 27.) Bear also submits the testimony of Michael Fitzgerald who submits that it is highly probable that Chubb would have continued to offer the same policy, Bear would have continued to renew it, and it would have covered the loss. (Decl. of Michael Fitzgerald, in Supp. of Bear's Opp'n to Marsh's MSJ ("Bear Opp'n"), ECF No. 101-31, ¶¶ 53-56.) At this stage, there is a material dispute of fact on this issue. Thus, Marsh's motion for summary judgment on this claim is denied.
Because the Court finds that there is a triable case as to Bear's claim for breach of an enhanced duty, at least as it relates to the Chubb policy, the Court need not consider Plaintiff's SRL theory.
Bear also alleges that Grossinger, while acting as its agent, had a duty to take appropriate action after its June 17, 2014 conversation with Jodsaas. It contends
To establish the existence of an agency relationship, a plaintiff must show: (1) acknowledgment by the principal that the agent will act on his or her behalf; (2) acceptance by the agent; and (3) control by the principal over the agent's actions. Graham v. Lloyd's Underwriters at London, 964 So.2d 269, 275 (Fla. Dist. Ct. App. 2007). Alternatively, "such authority may be presumed from a long course of dealing between the parties." Id. (internal citations omitted). Under Florida law, it is well-settled law that once a broker or agent procures the insurance requested by the insured, his or her employment and duty end. Graham, 964 So.2d at 275. However, where "a broker or agent is instructed by an owner with the duty of keeping the owner's property insured, taking out policies thereon, and authorized to obtain insurance in lieu of expired or canceled policies, the broker or agent is the general agent of the owner in these respects as to the latter's insurance." Cat'N Fiddle, Inc. v. Century Ins. Co., 213 So.2d 701, 704 (Fla. 1968) (quoting Stuyvesant Ins. Co. v. Barkett, 226 Ky. 424, 11 S.W.2d 87, 89 (Ky. Ct. App. 1928)).
Here, Bear relies on Marsh's insurance proposals as well as its internal professional standards to argue that Marsh, and specifically Grossinger, expressly agreed to act as Bear's agent after procuring insurance. As discussed above, the statements made in Marsh's insurance proposals fall short of oral contracts. Thus, they cannot be construed as the parties' express agreement of Marsh's general agency. Bear also does not cite to any legal authority to support its claim that Marsh should be bound by its internal professional standards.
While Bear did have a long history of obtaining yacht insurance policies through Marsh, it obtained these policies through Marsh's Yacht Group and worked with Johnson as its broker. Grossinger, on the hand, brokered Jodsaas' personal insurance lines. She was never involved, in any capacity, with the procurement of the yacht insurance for the Polar Bear. (Marsh's Ex. 57, Tr. of Patricia Grossinger's Dep. 63:8-14.) Accordingly, Bear has failed as a matter of law to establish the existence of a general agency relationship. See Burgos v. Indep. Fire Ins. Co., 371 So.2d 539, 541 (Fla. Dist. Ct. App. 1979) (affirming a lower court's grant of summary judgment on a claim for failure to procure replacement coverage where the record contained no evidence that the insurance broker acted as a general agent for the insurer). On these facts, Grossinger was under no duty to inform Underwriters or Johnson of Jodsaas' phone call, or to maintain adequate coverage for the Polar Bear.
The Court grants summary judgment as to this claim.
Both parties raise objections to several declarations, exhibits, and undisputed material
Because the Court did not rely on the remaining materials in reaching its decision, it overrules those objections as moot.
Additionally, on September 30, 2016, pursuant to this Court's chambers rules, Bear filed a sur-reply addressing evidentiary matters arising out of Marsh's reply brief. (ECF No. 105.) On October 12, 2016, Marsh filed a motion to strike certain portions of Bear's sur-reply, arguing that its scope goes beyond merely responding to the objections in Marsh's reply brief. (ECF No. 111.) The rule provides in relevant part:
Hon. Barry Ted Moskowitz Civ. Chambers Rules at 2, Objections, (Feb. 24, 2015), https://www.casd.uscourts.gov/Rules/SitePages/Home.aspx.
Having reviewed Bear's sur-reply brief, the Court finds that pages 3:23-5:23 of Bear's response exceed the permitted scope under the chambers rules. However, there is no prejudice to Marsh. Accordingly, Marsh's motion to strike certain portions of Bear's sur-reply brief is
For the reasons discussed above, Marsh's motion for summary judgment (ECF No. 71) is
