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White Knight Yacht LLC v. Certain Lloyds At Lloyd's London

United States District Court, S.D. California

September 10, 2019




         California-based Plaintiff White Knight Yacht LLC (“White Knight”) arranged for transportation of a Yacht-White Knight-from Victoria, Canada to Ensenada, Mexico, pursuant to a shipping contract (“Shipping Contract”) with Washington state-based Raven Offshore Shipping LLP (“Raven”). Raven is not a party to this lawsuit.[1]

         Raven further contracted with Delaware and Florida-based Defendant United Yacht Transport LLC (“UYT”) to perform the actual transport. The Yacht was insured under an insurance policy through non-party International Marina Underwriters (“IMU”) (the “Marine Policy”), but because IMU told Plaintiff certain Shipping Contract provisions would void the Marine Policy during transport, Plaintiff contracted with Raven for additional insurance during transport.

         Thus, the Shipping Contract included the cost of cargo insurance to cover White Knight during transport. UYT obtained a cargo insurance policy (the “Cargo Policy”) via England-based Defendant insurance broker H.W. Wood Limited (“H.W. Wood”), who obtained the Cargo Policy from England-based Defendant Certain Lloyds at Lloyd's London and Other London Market Insurers (“Lloyds”).

         When the Yacht was allegedly damaged during transport, Plaintiff sought recovery from: non-party IMU, non-party Raven, and now, in this lawsuit, UYT, H.W. Wood, and Lloyds.

         Lloyds and H.W. Wood each move to dismiss Plaintiff's claims on various grounds, including that the Cargo Policy's forum selection clause provides for exclusive jurisdiction in the Courts of England and Wales. (ECF Nos. 11, 13, 22, 26.) Plaintiff opposes in a consolidated opposition. (ECF No. 19.) H.W. Wood also moves to strike Plaintiff's request for punitive damages. (ECF Nos. 12, 24.) Plaintiff opposes. (ECF No. 18.) And, after filing an answer to the Complaint, UYT separately moves to dismiss Plaintiff's claims against it for lack of personal jurisdiction and improper venue. (ECF Nos. 33, 35.) Plaintiff opposes. (ECF No. 34.) For the reasons herein, the Court: (1) grants Defendants Lloyds' and H.W. Wood's motions to dismiss based on the Cargo Policy's forum selection clause; (2) terminates H.W. Wood's motion to strike punitive damages, and (3) grants UYT's motion to dismiss for lack of personal jurisdiction.


         A. Factual Background

         Plaintiff is a limited liability company organized and existing under Delaware law. (ECF No. 1, Compl. ¶ 2.) Plaintiff sought to have the Yacht transported from Victoria, Canada to Ensenada, Mexico in April 2017. (Id. ¶¶ 7-8, Ex. B at 1, Ex. C at 1.) Chris Ashby, Plaintiff's president and CEO, is not a named plaintiff, but he entered into the Shipping Contract on Plaintiff's behalf and tendered Plaintiff's payment for the contract's cost. (ECF No. 19-2, Chris Ashby Decl. ¶ 1.)

         Each of the Defendants has some relationship with the Cargo Policy. Lloyds is the insurer that issued the Cargo Policy. (Compl. ¶¶ 3, 11, Ex. C (copy of the Cargo Policy).) H.W. Wood is the insurance broker that acquired the Cargo Policy. (Id. ¶¶ 5, 10, Ex. C at 2.) And UYT's vice president allegedly signed the Cargo Policy “for the purposes of binding [Lloyds] to the insurance contract.” (Id. ¶ 11.)

         1. The Shipping Contract and Cargo Policy

         The Yacht was insured under an insurance policy through non-party IMU (the “Marine Policy”) at the time of the Yacht's shipment from Canada to Mexico. (Compl. ¶ 7, Ex. A.) However, IMU apparently represented to Plaintiff that certain Shipping Contract provisions would have the effect of voiding the Marine Policy during its transport. (Id. ¶¶ 9-10.)

         Plaintiff alleges that “prior to entering the Shipping Contract, Rick Gladych, on behalf of Raven, represented to Chris Ashby that the cargo insurance offered by [Lloyds] and included in the price of the shipping contract bearing Policy No. C21867/2016 (the ‘Cargo Policy'), would cover White Knight from the time the Yacht was moved to the place for loading until it was delivered.” (Id. ¶ 10.) The Shipping Contract reflects a total transport price of $48, 876.00 USD, which included the cost of Lloyds' cargo insurance. (Compl. Ex. B at 1, 7-9.) Plaintiff entered into the Shipping Contract with Raven. (Compl. ¶ 8, Ex. B.) Ashby reviewed the Shipping Contract's terms and signed the Shipping Contract on April 5, 2017, which he then returned to Raven. (Id. at 2, 15; Ashby Decl. ¶ 13.)

         The Cargo Policy was effectuated after Ashby's initial review of the Shipping Contract, but before Ashby tendered Plaintiff's payment for the Shipping Contract. The Policy indicates that H.W. Wood, “acting on behalf of United Yacht Transport, ” deposited a certificate of insurance with Lloyds in accordance with a general insurances contract H.W. Wood possessed with Lloyds. (Compl. Ex. C at 1.) Under the certificate, Plaintiff would be insured up to $700, 000 for the April 25, 2017 shipment of the Yacht. Gail Ryan, UYT's vice president, signed the Cargo Policy on April 25, 2017, which rendered the Cargo Policy valid. (Id.) The Cargo Policy indicates that any claim notice under the policy should be provided to Lloyds' agent Pablo Ruiz Lara, for whom the certificate provides contact information. (Id.) The Cargo Policy indicates that “[i]n the event of loss or damage which may result in a claim under this Insurance, immediate notice must be given to the [Lloyds'] agent at the port or place where the loss or damage is discovered in order that they may examine the goods and issue a survey report.” (Id.) The Cargo Policy also provides that “[t]his insurance is subject to the law and practice of England and Wales and to the exclusive jurisdiction of the Courts of England and Wales.” (Id. at 3.) The day after Ryan signed the Cargo Policy, Ashby tendered Plaintiff's payment for the Shipping Contract, inclusive of the Cargo Policy's cost, by wiring money to Raven. (Compare Compl. Ex. C, with ECF No. 19-1 Ex. 2.)

         2. Plaintiff's Discovery of Alleged Damage to the Yacht During Shipment and Its Attempts to Seek Coverage for Repair Cost

         Plaintiff alleges that the Yacht suffered damage to its hull and interior “while being loaded and shipped by UYT under the Shipping Contract.” (Compl. ¶ 12.) The damage occurred “after delivery of the vessel to the place for immediate loading and continued throughout transit due to rain water intrusion.” (Id.) Upon seeing the alleged damage, Ashby confronted Gladych, who initially “assured [] Ashby that he [on behalf of Raven] would pay to have the damage to White Knight repaid, ” but Gladych, at some point, “revoked his promise once he learned the extent of the damage.” (Id. ¶ 14.) Plaintiff also tendered a claim under its Marine Policy to IMU to cover the cost to repair the damage, which IMU denied on the ground that certain provisions of the Shipping Contract voided Plaintiff's coverage. (Id. ¶ 15.)

         Apparently after these unsuccessful attempts and over eight months after the date of the alleged loss, Plaintiff “formally tendered the loss to [Lloyds]” to Pablo Ruiz Lara on January 4, 2018. (Id. ¶ 16, Ex. C at 3.) During this period, the entity Plaintiff contracted to repair the Yacht ceased work on the repairs because there was no source of payment. (Id. ¶ 18.) Plaintiff sent a follow-up letter to Lara on February 7, 2018. (Id. ¶ 16.) That day, Plaintiff's counsel was advised by another employee at the company where Lara worked that “[w]e are a company of surveyors and we have not been assigned this claim[.]” (ECF No. 19-1 Ex. 5.) The employee indicated that Lloyds had identified Sarah Martin of H.W. Wood as the proper correspondent for future correspondence regarding the claim. (Id.)

         Plaintiff then forwarded its claim to Martin on February 8, 2018. (Compl. ¶ 20.) Plaintiff sent a follow-up letter dated February 27, 2018 after receiving no response. (Id.) Martin advised Plaintiff on February 28, 2018 that “Frilot Law”- an entity known to Plaintiff as Frilot LLC and with which Plaintiff “was familiar” because the entity represented Raven under Raven's “CGL Policy”-was dealing with the matter. (Id. ¶ 21.) Plaintiff communicated with Frilot LLC for a few weeks until a partner informed Plaintiff that Frilot LLC was not handling potential liability under the Cargo Policy, but only represented Raven under Raven's general liability policy. (Id. ¶¶ 22-25.)

         Plaintiff alleges that on March 19, 2018, Martin informed Plaintiff that she had never tendered the claim to Lloyds “as directed.” (Id. ¶ 28). Plaintiff demanded that “she immediately tender the claim as [Plaintiff] had directed back in January[.]” (Id. ¶ 29.) Thereafter, Martin advised that she was in communication with Lloyds. (Id. ¶ 30.) On May 8, 2018, Martin emailed Plaintiff stating, “[Lloyds] have advised they are awaiting a full response from ‘their' insured, UYT, as they have still not formally informed us that they have received a claim in this regard.” (Id. ¶ 31.) On July 30, 2018, after Plaintiff threatened suit against Lloyds absent a coverage position, Martin “stated that she was the insurance broker acting on behalf of UYT, ” and she was “confused and concerned” about Plaintiff referring “to a policy containing the named assured of White Knight subject to the conditions of the policy number C21867/2016[.]” (Id. ¶ 33.) Plaintiff alleges that this is the same policy under which it had been attempting to make a claim since January 2018. (Id. ¶ 34.)

         B. Procedural History

         Following its multiple unsuccessful attempts to obtain coverage for the cost to repair the alleged damage to the Yacht, Plaintiff initiated this lawsuit against Lloyds, H.W. Wood, and UYT on November 14, 2018. (ECF No. 1.)

         At the heart of this suit is the Cargo Policy. In the first instance, Plaintiff raises two contract-based claims against Lloyds for (1) allegedly breaching its duty of good faith and fair dealing under the Cargo Policy, (id. ¶¶ 36-45), and (2) allegedly breaching the Cargo Policy “by refusing to properly handle” Plaintiff's claim and “refusing to properly compensate” Plaintiff's “insured loss, ” (id. ¶¶ 46- 52).

         Against the backdrop of these contract-based claims, Plaintiff raises two tort claims against both H.W. Wood and UYT for alleged intentional and negligent interference with the relationship between Plaintiff and Lloyds under the Cargo Policy. Specifically, Plaintiff claims that H.W. Wood intentionally interfered with the Cargo Policy because Martin allegedly “misdirected” Plaintiff “regarding the parties responsible for the claim” and “misdirected” Plaintiff “as to her role in the claim, ” which “contributed to the undue delay in” Lloyds processing Plaintiff's claim. (Id. ¶¶ 53-57.)

         Plaintiff similarly claims that UYT intentionally interfered “with the insurance contract between [Plaintiff] and [Lloyds].” (Id. ¶¶ 58-64.) UYT allegedly did so by failing to respond to Plaintiff's claim-despite that Lloyds, Raven, and Plaintiff had contacted UYT “regarding [UYT's] purported duty to report the claim to [Lloyds][.]” (Id. ¶¶ 58-64.) Plaintiff also claims that H.W. Wood negligently interfered with Plaintiff's prospective economic advantage because H.W. Wood knew of the Cargo Policy and allegedly “failed to act with reasonable care” regarding Plaintiff's claim, “fail[ed] to report a claim to [Lloyds] that they were under an obligation to report, ” and “misdirect[ed] [Plaintiff] regarding the status of their claim.” (Id. ¶¶ 65-73.) UYT allegedly negligently interfered with Plaintiff's “economic relationship” with Lloyds because UYT “failed to act with reasonable care” “by failing to report a claim to [Lloyds] that they were under an obligation to report[.]” (Id. ¶¶ 74-82).

         On March 26, 2019, H.W. Wood moved to dismiss Plaintiff's intentional and negligent interference with economic advantage claims pursuant to Rule 12(b) on various grounds, including that: (1) this Court lacks jurisdiction because the Cargo Policy is subject to exclusive jurisdiction in the Courts of England and Wales pursuant to the Cargo Policy's forum selection clause and because Plaintiff fails to adequately invoke federal maritime jurisdiction under 28 U.S.C. § 1333; (2) venue in the Southern District of California is improper under the federal venue statute, 28 U.S.C. § 1391; and (3) Plaintiff fails to state claims against H.W. Wood because Plaintiff is not a party to the Cargo Policy. (ECF No. 11.) H.W. Wood filed a separate Rule 12(f) motion to strike Plaintiff's requests for punitive damages. (ECF No. 12.)

         On the same day, Lloyds moved to dismiss Plaintiff's breach of contract and breach of the duty of good faith and fair dealing claims against it. (ECF No. 13.) Lloyds argues that: (1) the Court lacks personal jurisdiction over Lloyds; (2) alternatively, the Cargo Policy's forum selection clause means that venue is improper; (3) Plaintiff's California tort claims must be dismissed because the only claims Plaintiff can raise are under the laws of England and Wales; and (4) this action must be dismissed under the doctrine of forum non conveniens, as modified in the context of a forum selection clause. (Id.)

         After the completion of briefing on Lloyds' and H.W. Wood's motions to dismiss, UYT answered the Complaint on April 5, 2019. (ECF No. 27.) UYT raised lack of personal jurisdiction and improper venue as “affirmative defenses.” (Id. at 12.) UYT then moved to dismiss Plaintiff's claims on June 17, 2019 for lack of personal jurisdiction over UYT under Rule 12(b)(2) and improper venue under Rule 12(b)(3). (ECF No. 33). The Court turns to the merits of Defendants' motions.


         Although H.W. Wood and Lloyds raise multiple grounds for dismissal of Plaintiff's claims, the Court finds dispositive their arguments regarding the Cargo Policy's forum selection clause. Accordingly, the Court limits its analysis to the forum selection clause. The Court's analysis is further limited to these Defendants because UYT does not move to dismiss for forum non conveniens based on the forum selection clause.

         A. ...

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