United States District Court, S.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY
JUDGMENT [ECF NO. 70] AND DENYING MOTION TO STRIKE [ECF NO.
TED MOSKOWITZ Chief Judge, United States District Court.
Certain Interested Underwriters at Lloyd's, London
("Underwriters") has filed a motion for summary
judgment. (Underwriters' Mot. Summ. J.
("Underwriters' MS J"), ECF No. 70.) For the
reasons set forth below, the motion is granted.
action arises out of a marine insurance coverage dispute
relating to the destruction of a 102-foot motor vessel
("the Polar Bear") owned by Defendant,
Bear, LLC ("Bear").
Procuring the 2013 Policy
and 2011, Larry Jodsaas ("Jodsaas"), the owner and
managing member of Bear, and Roger Trafton
("Trafton"), the Polar Bear's captain,
sought Marsh USA's ("Marsh") agent, Kathy
Johnson's ("Johnson") assistance in securing an
insurance policy for the Polar Bear. (Underwriters
Ex. A-5, ECF No. 70-3, ¶ 24.) Marsh submitted requests
for insurance quotes for the Polar Bear to several
insurers, including Underwriters through Marsh's London
broker, Ropner Insurance Services ("Ropner").
(Underwriters Ex. A-6, ¶ 26.) Bear chose to purchase the
policy quoted by Underwriters. (Underwriters Ex. E-293, ECF
No. 70-3.) The policy was renewed twice more in 2012 and
2013. (Underwriters Ex. F-294, ECF NO. 70-3; Ex. G-295, ECF
2013 policy ("the Policy") contained the following
relevant provisions: CONDITIONS PRECEDENT
and Repair Clause
It is hereby understood and agreed that this insurance will
remain in full force whilst your yacht is undergoing annual
maintenance, repair of any part or replacement of any part
like for like.
Notwithstanding the foregoing it is a conditions precedent
that if the vessel is currently undergoing or may undergo
major refit or repairs, alterations, remodeling or where hot
work is being undertaken (other than soldering) or that the
yard has requested a waiver of subrogation from the Owner or
his Legal Representative(s), then prior agreement must be
obtained from participating insurers hereunder.
Furthermore the Owner or his Legal Representative(s) must
provide a copy of the current shipyards Ship Repairers Legal
Liability insurance documentation and a full update or
schedule of works being carried out during the period of this
insurance and obtain Underwriters specific agreement (in
Underwriters participating hereon reserve their rights to
amend the terms and conditions of this insurance and to
charge an appropriate additional premium.
NOTICE OF LOSS AND FILING OF PROOF
It is agreed by the Assured to report immediately to the
Assurers or to their representatives who shall have issued
this Policy every occurrence which may become a claim under
this Policy, and shall also file with the Assurers or their
representative, a detailed sworn proof of loss and proof of
interest and/or receipted bills in case of a partial loss,
within ninety (90) days from date of loss.
LEGAL REPRESENTATION AND CO-OPERATION
The Assured shall co-operate with the Assurers and shall not
assume any obligation, admit any liability or incur any
expense for which the Assurers may be liable, without the
written approval of the Assurers, except as may be necessary
and permitted to safeguard the Yacht under the "SUE AND
LABOR" clause in section "A" of this policy.
SUE AND LABOR CLAUSE
And in case of any loss of misfortune, it shall be lawful and
necessary for the Assured, their factors, servants and
assigns, to sue, labor and travel for, in and about the
defense, safeguard and recovery of the said yacht or any part
thereof, without prejudice to this insurance; the charges
whereof we, the Assurers, will pay. And it is especially
declared and agreed that no acts of the Assurer or Assured in
recovery, saving or preserving the property insured shall be
considered a waiver or acceptance of abandonment.
(Underwriters Ex. K-427, K-433, K-434, K-439, ECF NO. 70-3.)
August 22, 2013, Trafton, who acted as Jodsaas' agent,
signed an "Acknowledgment Form, " taking notice of
"important policy terms and conditions" in the
Policy. (Underwriters Ex. Y-569, ECF No. 70-4.) On August 28,
2013, Marsh sent Bear a "Cover Note" from Ropner,
evidencing insurance coverage under the Policy. (Underwriters
Ex. K-415.) On October 9, 2013, Marsh sent Jodsaas a letter
which enclosed the Policy for the Polar Bear
providing coverage from August 26, 2013 to August 25, 2014.
(Underwriters Ex. G.)
Destruction of the Polar Bear
4 or 5, 2014, the Polar Bear's forward stabilizer and its
actuator failed during a voyage from Cabo San Lucas, Mexico
to San Diego, California. (Underwriters Ex. A-15, ¶ 67.)
On May 6, 2014, the Polar Bear ran aground at the entrance of
the San Diego Harbor damaging the bottom of the hull, port
and starboard sides of the keel, and the aft port stabilizer
shaft. (Id. at ¶ 68.) Because of the damage,
water began to come in through the damaged area around the
stabilizer shaft. (Id.) The Polar Bear traveled on
its own to the Marine Group Boat Works, LLC
("MGBW") boatyard in Chula Vista where it was to be
repaired on May 7, 2014. (Id. at ¶ 69.) As a
safety measure, the Polar Bear was accompanied by a diver and
two small towboats. (Id.) MGBW was the only repair
facility for pleasure yachts in San Diego capable of lifting
the Polar Bear. (Underwriters Ex. A-16, ¶70.)
7, 2014, just before the Polar Bear was hauled out, Trafton
signed a written contract with MGBW. (Id. at ¶
71.) The service contract provided that the Polar Bear would
be hauled out, blocked and launched for a total of $3500.
(Underwriters Ex. A-162.) The contract was double-sided but
Trafton only signed the front-side. (Underwriters Ex. A-163.)
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.) Bear did not notify nor acquire
Underwriters1 consent prior to signing the contract.
May 22, 2014 through early June, 2014, Trafton executed
numerous work change orders for repairs to the Polar Bear,
including the May 22, 2014 order for hot work repairs to the
hull. (Underwriters Ex. A 165-71.) Bear did not notify nor
acquire Underwriters' consent prior to executing the work
change orders. (Underwriters Ex. B2-251, ECF No. 70-4
639:6-18.) 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. (Underwriters Ex.
KK-653, ECF No. 70-4.) He communicated to her that it
resulted in $250, 000 in damages, but had not filed a claim
with Kathy Johnson. (Id.) Grossinger advised him to
file a claim if costs got any higher. (Id.) On June
19, 2014, the Polar Bear caught fire while MGBW
subcontractors were performing hot work repairs to the steel
hull. (Underwriters Ex. A-21.) The fire resulted in the Polar
Bear's total loss. (Id.)
Communications After the Fire
19, 2014, Bear communicated a notice of loss to Marsh.
(Underwriters Ex. N-490, ECF No. 70-4, ¶ 23.) On June
30, 2014, Underwriters acknowledged Bear's notice of
loss, subject to a reservation of rights, and requested
information and documentation. (Underwriters Ex. A-173.) On
August 6, 2014, Underwriters sent Bear a reservation of
rights letter. (Underwriters Ex. A-179-88.) On March 20,
2015, Underwriters denied coverage on the ground that Bear
had failed to satisfy the conditions precedent set forth
under the Maintenance and Repair Clause ("Repair
Clause"). (Underwriters Ex. A-202.)
March 20, 2015, Underwriters filed this action seeking a
declaration that coverage does not exist under the Policy for
Bear's claim relating to the loss to the Polar Bear.
(Compl. ECF No. 1.) Bear filed counterclaims against
Underwriters for declaratory relief, breach of contract and
implied covenant of good faith and fair dealing, as well as a
third-party complaint against Marsh. (Bear's Second
Countercl. and Second Third-Part Compl., ECF No. 63.)