The Hanover Insurance Company v. J&S Promotions, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

THE HANOVER INSURANCE

COMPANY,

Plaintiff,

v. Case No: 2:19-cv-835-JES-NPM

J&S PROMOTIONS, LLC, JAMES

F. SMITH, and STANNY R.

PARK,

Defendants.

OPINION AND ORDER

This matter comes before the Court on plaintiff's Motion for

Summary Final Judgment (Doc. #53) filed on December 1, 2020.

Defendants J&S Promotions, LLC and James F. Smith filed a Response

in Opposition (Doc. #55) on December 15, 2020, to which Plaintiff

filed a Reply (Doc. #59) on January 5, 2021. Defendant Stanny R.

Park (Park) has not filed a response to the motion, although she

was provided notice of the time to respond (Doc. #54) and of the

date and time of oral argument (Doc. #64). The Hanover Insurance

Company filed a Notice of Filing Underwriting Affidavit (Doc. #66)

on May 11, 2021. The Court heard oral arguments on May 12, 2021.

(Doc. #67.) With the permission of the Court (Doc. #68), the

parties (other than defendant Park) filed supplemental memoranda

on May 17, 2021. (Docs. ##71, 72.)

On November 20, 2019, the Hanover Insurance Company (Hanover)

filed a Complaint for Declaratory Judgment (Doc. #1) seeking

determinations of rights and responsibilities under an insurance

policy issued by Hanover to defendant J&S Promotions, LLC (J&S or

the Named Insured), whose president and sole member is defendant

James F. Smith (Smith). (Id. at ¶ 3.) The determinations relate to

the existence of coverage for bodily injury and property damage

allegedly resulting from the grounding of the insured yacht upon

a coral reef on or about December 28, 2017 (the Grounding

Incident). (Id., introductory paragraph.) Hanover seeks

declarations that for various reasons no coverage is available

under the policy for such injury or damage. For the reasons set

forth below, the Complaint is dismissed in part for lack of

jurisdiction and the motion for summary judgment as to the

remaining counts is granted in part and denied in part.

I.

Summary judgment is appropriate only when the Court is

satisfied that “there is no genuine dispute as to any material

fact and that the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(a). “An issue of fact is ‘genuine’ if

the record taken as a whole could lead a rational trier of fact to

find for the nonmoving party.” Baby Buddies, Inc. v. Toys “R” Us,

Inc., 611 F.3d 1308, 1314 (11th Cir. 2010). A fact is “material”

if it may affect the outcome of the suit under governing law.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “A

court must decide ‘whether the evidence presents a sufficient

disagreement to require submission to a jury or whether it is so

one-sided that one party must prevail as a matter of law.’”

Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th

Cir. 2004)(quoting Anderson, 477 U.S. at 251). In ruling on a

motion for summary judgment, the Court views all evidence and draws

all reasonable inferences in favor of the non-moving party. Scott

v. Harris, 550 U.S. 372, 380 (2007); Tana v. Dantanna’s, 611 F.3d

767, 772 (11th Cir. 2010).

Disputes involving marine insurance policies typically fall

within a district court's admiralty jurisdiction under 28 U.S.C.

§ 1333 and Article 3, Section 2 of the United States Constitution.

AIG Centennial Ins. Co. v. O'Neill, 782 F.3d 1296, 1302 & n.6 (11th

Cir. 2015); Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d

50 54 (1st Cir. 1995).1 See also (Doc. #1, ¶ 7.) “Article III of

1 Such disputes may also be brought under the district court's

diversity jurisdiction, 28 U.S.C. § 1332, but the Complaint fails

to adequately allege the citizenship of the individual defendants

because it refers only to residency, not citizenship. (Doc. #1,

¶¶ 4, 5, 8). See Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir.

1994). Contrary to the assertion in the Complaint (Doc. #1, ¶ 8),

the Federal Declaratory Judgment Act does not provide a basis for

federal jurisdiction but is procedural only. See Patel v. Hamilton

Med. Ctr., Inc., 967 F.3d 1190, 1194 (11th Cir. 2020); see also

Household Bank v. JFS Group, 320 F.3d 1249, 1253 (11th Cir. 2003).

Despite the agreement in the Final Pretrial Stipulation (Doc. #75,

pp., 1, 10-11), the parties may not consent to jurisdiction on a

basis which does not exist.

the Constitution limits federal courts' jurisdiction to certain

‘Cases’ and ‘Controversies.’” Clapper v. Amnesty Intern. USA, 568

U.S. 398, 408 (2013). This does not include every sort of dispute,

but only those “historically viewed as capable of resolution

through the judicial process.” Hollingsworth v. Perry, 570 U.S.

693, 700 (2013). See also Uzuegbunam v. Preczewski, 141 S. Ct.

792, 798 (2021). An actual controversy must exist not only at the

time the complaint is filed, but through all stages of the

litigation. Trump v. New York, 141 S. Ct. 530, 534 (2020);

Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 160 (2016), as revised

(Feb. 9, 2016). “In our system of government, courts have ‘no

business’ deciding legal disputes or expounding on law in the

absence of such a case or controversy.” Already, LLC v. Nike,

Inc., 568 U.S. 85, 90 (2013).

A claim for a declaratory judgment under the federal

Declaratory Judgment Act, 28 U.S.C. § 2202(a), requires the same

type of case-or-controversy under Article III. MedImmune, Inc.

v. Genentech, Inc., 549 U.S. 118, 127 (2007). “In all cases

arising under the Declaratory Judgment Act, the threshold question

is whether a justiciable controversy exists”. Atlanta Gas Light

Co. v. Aetna Cas. & Sur. Co., 68 F.3d 409, 414 (11th Cir. 1995)

(citation omitted). “Basically, the question in each case is

whether the facts alleged, under all the circumstances, show that

there is a substantial controversy, between parties having adverse

legal interests, of sufficient immediacy and reality to warrant

the issuance of a declaratory judgment.” Md. Cas. Co. v. Pac. Coal

& Oil Co., 312 U.S. 270, 273 (1941). “[A]ctions for declaratory

judgment on insurance coverage are generally not justiciable until

there has been at least a threat of a claim or lawsuit.”

Progressive Mountain Ins. Co. v. Middlebrooks, 805 F. App’x. 731,

734 (11th Cir. 2020) (citations omitted). Plaintiff must establish

a case-or-controversy as to each claim separately. Griffin v.

Dugger, 823 F.2d 1476, 1483 (11th Cir. 1987). Even if there is a

case or controversy, the Court has discretion not to exercise its

jurisdiction. Stevens v. Osuna, 877 F.3d 1293, 1311–12 (11th Cir.

2017).

II.

Hanover issued Hanover Yacht Policy No. IHP D262113 00 (the

Policy) with an insured period of May 5, 2017 to May 5, 2018. (Doc.

#1-2, p. 2.)2 The Policy applies to a 78-foot long, 2010 Marlow

78 Explorer motor yacht named “Quality Time” (the Insured Yacht).

(Id.) The Named Insured on the Policy is J&S. (Id.) In addition,

Smith qualifies as an Insured with respect to the liability

insurance provided in Section II because he was operating the

2 The page numbers refer to those generated by the Court’s

computer system upon filing (upper left-hand corner) and do not

always correspond with the page number at the bottom of the

document.

Insured Yacht with the permission of J&S when the Grounding

Incident occurred. (Doc. #1-2, p. 35.)

The Policy includes two coverage parts: Section I relates

to first-party property coverage, while Section II relates to

liability coverage. (Id., pp. 38-47). The Policy contains the

following relevant insuring agreement relating to damages:

We will pay damages caused by an occurrence to

which this coverage applies and for which the

insured shall become legally obligated to pay,

arising out of the ownership, maintenance or

use of the insured yacht and which results in

bodily injury, property damage, or pollution.

(Doc. #1-2, pp. 43 (emphasis in original).) The Policy also

contains the following relevant insuring agreement relating to

medical payments for bodily injuries:

We will pay the necessary medical expenses

resulting from a bodily injury to you or

others from an occurrence which occurs while

in, upon, boarding, or dis-embarking the

insured yacht . . ..

(Doc. #1-2, pp. 45 (emphasis in original).) Additional provisions

of the Policy will be discussed as necessary to resolve specific

issues.

According to Smith’s deposition (Doc. #53-4), on December 29,

2017, Smith, his wife, and five other persons (Brian Frye, Melissa

l/n/u, Lauren Kasper, Johnny Conser, and Stanny Parks) boarded the

Insured Yacht in Fort Myers, Florida. (Id., p. 7.) The group

intended to make the 5-6 hour trip to Dry Tortugas National Park,

stay there overnight on the Insured Yacht, then travel

approximately 70 miles east to Key West, and stay there for a

couple of days before returning to Fort Myers. (Id., pp. 9-10, 33-

34.) Although the original plan was to make the 105-mile trip in

the daylight, the party got a late start from Fort Myers due to

Ms. Park’s late arrival. (Id., pp. 9-10.)

Smith piloted the Insured Yacht upon their afternoon

departure from Fort Myers. (Id., p. 13.) About 40 miles outside

the Tortugas, Smith realized it was going to get dark before they

would arrive. (Id., p. 12.) Smith decided to continue at a very

slow speed overnight, so as to arrive the next morning. (Id.)

During this nighttime journey, the Insured Yacht was alternatively

operated by Smith and his wife and by Frye and Conser, in two-hour

shifts. (Doc. #53-4, pp. 13-15.) None of the individuals operating

the Insured Yacht during this time, or at any time during the trip,

was the Captain as defined and identified in the Policy. (Id., pp.

28-31, 34-35.)

In the morning of December 30, 2017, while Smith was operating

the Insured Yacht, it arrived at the Dry Tortugas National Park.

(Id., p. 5.) The Insured Yacht had been towing a dinghy through

the night, but upon arrival Smith and his crew put the dinghy on

board the Insured Yacht. (Id., p. 18.) As the Insured Yacht pulled

into the boundaries of the port, the crew offloaded the dinghy.

(Id., p. 17.)

At about 9:00 a.m. the Insured Yacht either ran aground on a

coral reef while approaching the channel into the Dry Tortugas

National Park, or “bumped” a rock, causing little or no damage to

the Insured Yacht.3 (Id., pp. 15-19, 25.) The dinghy was not tied

to the Insured Yacht at the time of the Grounding Incident, having

been disconnected moments before by Conser or Frye, or both. (Doc.

#53-4, pp. 18-19.) Additional facts will be discussed as necessary

to resolve specific issues.

III.

In the Complaint, Hanover requests a judgment declaring that

“there is no coverage under the Policy for any loss, liability,

damages, bodily injury, property damage or injury or damage of any

type in connection with the Grounding Incident.” (Doc. #1, p.

12.) Hanover now asserts it is entitled to summary judgment as

to the requested declaratory judgment (Doc. #53, pp. 15-16), while

defendants oppose the merits of the summary judgment motion and

assert the lack of subject matter jurisdiction in Affirmative

Defense Six. See (Docs. #42, p. 9; #55.) The Court first

addresses each count of the Complaint to determine if there is a

case or controversy as to that count.

3 Both versions are referred to as the Grounding Incident,

although the factual variation is not material to the resolution

of the summary judgment motion.

A. Count VI – First Party Claims For Damage to Insured Yacht

Defendants argue there is no case-or-controversy as to Count

VI, and they are correct. In Count VI, Hanover seeks a declaration

that there is no “First Party Property Coverage for Damage to

Insured Yacht.” (Doc. #1, p. 11.) Hanover asserts that post-

loss or post-occurrence obligations required the Named Insured to

give prompt notice of losses, submit a proof of loss statement,

permit Hanover to inspect the damaged property, and not incur any

expense without Hanover’s prior approval. (Id. at ¶ 52.) Hanover

asserts that Smith and J&S breached these obligations by failing

without excuse to report the loss until more than four months

after the Grounding Incident, failing without excuse to

submit a signed sworn proof of loss statement, depriving

Hanover of any opportunity to inspect the damage prior to

the Insured having the damage repaired, and incurring

repair expenses without first obtaining Hanover’s approval, all of

which prejudiced Hanover. (Id. at ¶ 54.) Because of these breaches,

Hanover asserts the first party property coverages of Section I of

the Policy are null and void. (Id. at ¶ 53.)

The record establishes that there is no case or controversy

as to first-party claims. The Insureds have not made a claim

under the Policy (Doc. #1, ¶ 25), and any claim would now be far

beyond the one-year period set forth in the Policy. (Doc. #1-2, p.

50.) There is simply no controversy between Hanover and its

Insureds: Hanover says the Insureds cannot file a first-party

claim based on the Grounding Incident, and the Insureds do not

intend to file such a claim. Accordingly, Count VI of the

Complaint is dismissed without prejudice for lack of subject matter

jurisdiction.

B. Count V – Untimely Notice of Loss or Occurrence

In Count V Hanover seeks a declaration that there is no

coverage because the Insured provided untimely notice of loss or

of the occurrence. (Doc. #1, p. 11.) Hanover asserts that the

Policy requires the Insured to give prompt notice of loss or

occurrence to Hanover, or to the Insured’s agent or broker, “as

soon as reasonably possible”. (Id. at ¶¶ 18, 48.) Hanover asserts

that Smith and J&S violated this condition by failing without

excuse to give notice of the loss and occurrence until more than

four months after the Grounding Incident, and that this delay

prejudiced Hanover. (Id. at ¶ 49.) Because such notice is a

condition precedent to coverage, Hanover asserts that the non-

compliance results in the coverages of the Policy being null and

void. (Id. at ¶ 48.)

The Policy contains certain post-loss or post-occurrence

responsibilities with which the Named Insured must comply “[i]n

case of a loss or an occurrence to which this insurance may apply

or if you and any insured person are sued in connection with a

loss or an occurrence which may be covered under this policy, . .

..” (Doc. #1-2, p. 49 (emphasis in original).) To the extent

Count V seeks a declaratory judgment as to First-Party claims, it

fails to state a case or controversy for the same reasons which

apply to Count VI, and is dismissed without prejudice to that

extent. To the extent Count V seeks a declaratory judgment as to

third party claims, the jurisdictional discussion below applies.

C. Counts I through IV, Portion of Count V – Third Party

Claims

Counts I through IV of the Complaint relate to coverage of

potential claims by third parties. Defendants argue that there

is no case or controversy relating to these counts because there

has been no third-party claim filed with Hanover or any lawsuit

filed by any claimant. (Doc. #55, pp. 10-12.) Hanover responds

that the undisputed facts are sufficient to establish a case or

controversy for all third-party coverage issues. (Doc. #59, pp.

4-7.)

Hanover identifies two relevant potential third-party

claimants. (Doc. #53, ¶¶ 17-18.) The National Parks Service (NPS)

sent Smith a letter dated June 14, 2018, asserting that its

preliminary investigation determined that the Grounding Incident

injured park resources, including coral reef habitat. (Doc. #1-

4, p. 2.) The letter stated that Smith may be liable under federal

law for response costs and damages. (Id.) Subsequent

correspondence from the NPA demanded more than $85,000 in damages.

(Doc. #59, Ex. 1.) The NPS has not filed any legal action to

pursue this matter. The NPS is not a party to this lawsuit,

however, and therefore will not be bound by its outcome. As to

the NPS, the current lawsuit seeks at best only a non-binding

advisory opinion. “[F]ederal courts do not issue advisory

opinions.” TransUnion LLC v. Ramirez, No. 20-297, 2021 U.S. LEXIS

3401, *17 (June 25, 2021). Therefore, there is no case or

controversy as to any of the counts based on NPS’s potential claim.

Counts I through V are dismissed without prejudice to the extent

they are premised on a possible claim by the NPS.

The attorney for Park sent Hanover’s agent a letter dated

April 23, 2018, asserting a claim against J&S for a traumatic brain

injury caused by the Grounding Incident. (Doc. #1-3, pp. 2-3.)

In her Answer to the Complaint, Park stated she “has made a claim

for damages arising from the December 28, 2017 [Grounding]

[I]ncident.” (Doc. #17, ¶ 5.) In her deposition, Park claimed

damages of $150,000, for which a demand was made. (Doc. #53-6,

pp. 20, 28-29.) Park has not filed a lawsuit arising from the

Grounding Incident, although the applicable statute of limitations

has not expired.4 The Court finds that Hanover has established a

4 Contrary to the Smith Defendants’ argument, simply waiting

for the statute of limitations to expire will not necessarily

eliminate the existence of a case or controversy. A complaint

need not negate a statute of limitations defense. La Grasta v.

First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

Additionally, most statutes of limitations are subject to

case or controversy as to those counts relating to Parks. Hanover

has established that a third-party claim has been made by Parks

and that there is at least a threat of a lawsuit. See

Middlebrooks, 805 F. App’x. at 734. Therefore, there is a case or

controversy between the Defendants and Hanover based upon Park’s

third-party claim as to Counts I, II, III, IV, and a portion of V.

IV.

The Court will address the merits of each count for which a

case or controversy has been established.

A. Count I: Employment of a Full-Time Captain

In Count I of the Complaint, Hanover asserts that the Policy

contains a Captain Warranty which is a condition precedent to

coverage. (Doc. #1, ¶¶ 15, 27; Doc. #53, pp. 12-13.) This Captain

Warranty, Hanover argues, required that a captain be employed on

a full-time basis to work solely on the Insured Yacht, and

specifically named Shane Wrey as that captain. (Doc. #53, pp. 12-

13.) Hanover asserts that the Captain Warranty was violated because

Smith and J&S failed to employ a captain on a full-time basis to

work solely on the Insured Yacht. (Id., p. 13.) Count I seeks a

declaration that because of this Policy violation “the coverages

statutory and equitable tolling, e.g. Fedance v. Harris, No. 20-

12222, 2021 U.S. App. LEXIS 18399, at *8 (11th Cir. June 21, 2021),

making such a potential defense fluid for someone such as Parks

who claims brain injury.

of the Hanover Policy are null and void.” (Doc. #1, ¶¶ 27-30.)

At oral argument, counsel for Hanover stated that Hanover was not

attempting to rescind the Policy. (Doc. #69, p. 14.) Rather,

Hanover is asserting that the Policy was null and void only for

the Grounding Incident, not claims involving other occurrences.

(Id., pp. 14-16.)

The record reflects that an undated Yacht Insurance Quotation

by Hanover provided that one of the Special Terms and Conditions

was that “[o]ne part-time paid captain” and “[o]ne part-time paid

crew Only” was required. (Docs. #1-2, p. 21; #66-1, p. 25.) The

Hanover Yacht Insurance Binder effective May 5, 2017, similarly

provided that one of the Special Terms and Conditions was that

“[o]ne part-time paid captain” and “[o]ne part-time paid crew only”

was required. (Docs. #1-2, p. 19; #66-1, p. 27.) The Policy’s

Declaration Page identifies the Captain as “SHANE WREY” and the

“Number of Crew (including Captain: 2 PARTTIME INCLUDING THE

CAPTAIN”. (Doc. #1-2, p. 3.)

The Policy, however, contains a different requirement, that

of a full-time captain. The Policy contains the following

“Captain Warranty” provision:

GENERAL CONDITIONS AND EXCLUSIONS APPLICABLE

TO ALL COVERAGES

CAPTAIN WARRANTY

You warrant that the captain;

1. will be employed by you on a full time basis

and shall work solely on the insured yacht;

2. shall be in command of the insured yacht at

all times when it is underway; and

3. may not, under any circumstances, have

other employment as a captain for any other

yacht or watercraft.

If any condition of this warranty is not fully

complied with, the coverages provided by this

policy are null and void.

(Doc. #1-2, p. 47 (emphasis in original).) The Policy defines

“Captain” as “the person approved by us and employed as the full

time captain of the insured yacht.” (Id., p. 35 (emphasis in

original.) The Declarations Page identifies the approved Captain

as “Shane Wrey.” (Id., p. 3.)5

The language of the Policy concerning the employment of a

full-time Captain is clear and unambiguous. The Named Insured

warranted that it would employ a captain on a full-time basis,

5 The Smith Defendants’ Fourth Affirmative Defense asserts

that the Policy contains ambiguities which must be construed

against Hanover. (Doc. #42, p. 9.) However, the Smith Defendants

have repeatedly stated that they were not asserting that the

Captain Warranty was ambiguous. (Doc. #55, p. 7; Doc. #69, p. 21;

Doc #75, p. 7.) It is generally not for the Court to raise an

issue which has not been asserted by a party. “In our adversarial

system of adjudication, we follow the principle of party

presentation. As this Court stated in Greenlaw v. United States,

554 U.S. 237, 128 S. Ct. 2559, 171 L. Ed. 2d 399 (2008), ‘in both

civil and criminal cases, in the first instance and on appeal ...,

we rely on the parties to frame the issues for decision and assign

to courts the role of neutral arbiter of matters the parties

present.’” United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579

(2020).

that the captain would work solely on the Insured Yacht, and that

the captain would not have employment as a captain for another

yacht or watercraft. The Policy specifically identified who that

captain was to be – Shane Wrey.

The undisputed facts show a clear violation of this portion

of the Captain Warranty. J&S and Smith hired a Captain only on an

as-needed, part time basis. (Doc. #53-4, pp. 35-36.) While this

was initially Shane Wrey, it later became someone else. (Id.)

Contrary to the Smith Defendants’ First Affirmative Defense and

argument (Doc. #55, pp. 12-14), the presence of three experienced

sailors on board the Insured Yacht does not create a material issue

of disputed fact as to Count I. The portion of the Captain Warranty

at issue in Count I concerned the full-time employment of a

Captain, not the operation of the vessel with or without a captain.

The issue remains as to the effect of the breach of the

Captain Warranty on coverage. Because disputes involving marine

insurance policies fall within a district court's admiralty

jurisdiction, federal maritime law controls. GEICO Marine Ins.

Co. v. Shackleford, 945 F.3d 1135, 1139 (11th Cir. 2019). In the

absence of an established or entrenched federal admiralty rule,

however, the Court relies on state law. Travelers Prop. Cas. Co.

of Am. v. Ocean Reef Charters LLC, 996 F.3d 1161, 1168 n.2 (11th

Cir. 2021); Quintero v. Geico Marine Ins. Co., 983 F.3d 1264, 1270–

71 (11th Cir. 2020). As the Eleventh Circuit has stated:

Marine insurance is a curious legal creature,

bearing the markings of both the state common

law of contracts and the federal common law of

admiralty. Although the Admiralty Clause of

the United States Constitution vests the

federal courts with jurisdiction to hear

maritime-contract cases, “it does not follow

... that every term in every maritime contract

can only be controlled by some federally

defined admiralty rule.” Wilburn Boat Co. v.

Fireman's Fund Ins. Co., 348 U.S. 310, 313, 75

S.C t. 368, 370, 99 L. Ed. 337 (1955). In the

absence of a “judicially established federal

admiralty rule,” we rely on state law when

addressing questions of marine insurance. Id.

at 314, 320–21, 75 S. Ct. at 370, 373–74.

AIG Centennial Ins. Co. v. O'Neill, 782 F.3d 1296, 1302 (11th Cir.

2015). The language of the Policy conforms with this law: “This

policy shall be construed in accordance with the General Maritime

Law or Admiralty Rule. If no General Maritime Law or Admiralty

Rule applies than the law of the Commonwealth of Massachusetts

will apply.” (Doc. #1-2, p. 51.)

Hanover asserts that federal maritime law applies, and

results in a lack of coverage because the Policy became null and

void due to the violation of the Captain Warranty. (Doc. #53, pp.

9-12.) In general, the strict compliance often required by a

Captain Warranty is not considered entrenched in admiralty law.

See Ocean Reef Charters LLC, 996 F.3d at 1168 (recognizing that to

hold that all express warranties in maritime insurance contracts

must be strictly construed in the absence of some limiting

contractual provision would “eviscerate Wilburn Boat and its

holding that there is no established federal maritime rule

requiring strict fulfillment of all warranties in marine insurance

policies.”). Looking at the specific warranty in this specific

Policy, however, establishes that the Captain Warranty is clear

and unambiguous as to the effect of a breach: “If any condition of

this warranty is not fully complied with, the coverages provided

by this policy are null and void.” (Doc. #1-2, p. 47.) Federal

maritime law, Florida law, and Massachusetts law would all enforce

such plain language in a contract. See, e.g., F.W.F., Inc. v.

Detroit Diesel Corp., 308 F. App'x 389, 392 (11th Cir. 2009)

(stating that the rules of contract interpretation under federal

maritime and Florida law are identical); S & S Packing, Inc. v.

Spring Lake Ratite Ranch, Inc., 702 F. App'x 874, 878 (11th Cir.

2017)(“Florida courts enforce contracts according to their plain

terms when those terms are unambiguous.”); A.L. Prime Energy

Consultant, Inc. v. Mass. Bay Transp. Auth., 479 Mass. 419, 428,

95 N.E.3d 547, 556 (2018) (“Our precedent instructs courts to

examine how a contract, by its plain language, defines the parties'

rights.”).

Accordingly, the Court determines that there is a case or

controversy as to Count I, and that Hanover is entitled to a

declaratory judgment that there is no coverage under the Policy as

to claims by third parties arising from the Grounding Incident

because the failure to hire a full-time captain as required by the

Policy renders the Policy null and void as to this occurrence.

B. Counts II and III: Lack of Captain When Yacht Was Underway

& During Nighttime Operation

In Count II, Hanover seeks a declaration that there is no

coverage because there was no captain in command when the Insured

Yacht was underway during the trip to the Dry Tortugas. (Doc. #1,

¶¶ 32-36; Doc. #53, pp. 13-14.) Hanover argues that the Captain

Warranty and the General Change Endorsement are conditions

precedent to coverage, but that Smith and J&S violated these

provisions by permitting persons, other than Captain Shane Wrey,

to operate the Insured Yacht during the multi-day, overnight trip,

which increased the risk of loss in connection with the operation

of the Insured Yacht. (Doc. #1, ¶¶ 32-33; Doc. #53, pp. 13-14.)

As a result, Hanover argues that coverages of the Policy are null

and void. (Doc. #1, ¶ 34; Doc. #53, p. 14.)

In Count III, Hanover seeks a declaration that there is no

coverage based upon the nighttime operation of the Insured Yacht

without a Captain on board. (Doc. #1, ¶¶ 38-41; Doc. #53, p. 14.)

Hanover asserts that the General Change Endorsement prohibits

operation of the Insured Yacht at night unless the Captain is on

board. (Doc. #1, ¶ 38; Doc. #53, p. 14.) Hanover asserts that Smith

and J&S violated the condition by operating the Insured Yacht on

the night of December 29, 2019 without Captain Shane Wrey aboard,

which increased the risk of loss in connection with the operation

of the Insured Yacht. (Doc. #1, ¶ 40; Doc. #53, p. 14.) Because

this condition precedent was not complied with, Hanover asserts

that the coverages of the Policy are null and void. (Doc. #1, ¶

39; Doc. #53, p. 14.)

The Captain Warranty not only requires the employment of a

full-time captain (specifically Shane Wrey), but provides that the

captain “shall be in command of the insured yacht at all times

when it is underway; . . .” (Doc. #1-2, p. 47.) The Policy contains

an endorsement, however, which supersedes this portion of the

Captain Warranty and allows the owner to operate the Insured Yacht

on day trips – i.e., “from sunrise to sunset” - without Captain

Wrey’s presence. (Doc. #1-2, p. 12.) The endorsement provides:

GENERAL CHANGE ENDORSEMENT

Effective 05/05/2017 it is hereby agreed that:

PERMISSION IS GRANTED FOR OCCASIONAL OWNER

OPERATION UNDER THE FOLLOWING CONDITIONS;

OWNER MAY OPERATE THE VESSEL WITHOUT THE

CAPTAIN ABOARD FOR DAY TRIPS ONLY

OWNER MAY OPERATE THE VESSEL FROM SUNRISE TO

SUNSET, NO OPERATION AT NIGHT UNLESS CAPTAIN

IS ABOARD

NO TOWING OF TENDERS UNLESS CAPTAIN IS ABOARD

WARRANTED THREE (3) EXPERIENCED INDIVIDUALS

ABOARD AT ALL TIMES WHILE UNDER WAY

OWNER WILL USE CAPTAIN FOR TRIPS LONGER THAN

DAY TRIPS

ALL OTHER TERMS AND CONDITIONS REMAIN

UNCHANGED

(Id.)

The record is undisputed that the Insured Yacht was operated

at night without Captain Wrey (or any licensed captain) on board

during a trip which was more than a day trip. (Doc. #53-4, pp. 7-

12, 35-37.) This is a clear violation of the Endorsement. Contrary

to the First Affirmative Defense, nothing in the Endorsement

provides that the presence of three experienced persons on board

allows operation of the Insured Yacht at night or on trips longer

than a day. Since “all other terms and conditions [of the Captain

Warranty] remain unchanged,” the effect of these breaches is that

the Policy is null and void for the Grounding Incident occurrence.

Accordingly, the Court determines that there is a case or

controversy as to Counts II and III, and that Hanover is entitled

to a declaratory judgment that there is no coverage under the

Policy as to claims by third parties arising from the Grounding

Incident because the failure to have a captain in command of the

Insured Yacht and the operation of the Insured Yacht at night

without a captain renders the Policy null and void as to this

occurrence.

C. Count IV: Towing Tender Without Captain Aboard

In Count IV, Hanover seeks a declaration that there is no

coverage because the Insured Yacht towed a Tender without the

Captain on board. (Doc. #1, ¶¶ 43-46; Doc. #53, p. 14.) Hanover

asserts that Smith and J&S violated this condition by towing a

Tender, i.e., a dinghy or smaller vessel on the night of December

29, 2019, without Captain Shane Wrey on board the Insured Yacht,

which increased the risk of loss in operation of the Insured Yacht.

(Doc. #1, ¶ 45; Doc. #53, p. 14.) Because this condition was

violated, Hanover asserts the coverages of the Hanover Policy are

null and void. (Doc. #1, ¶ 44; Doc. #53, p. 14.)

The General Change Endorsement of the Policy precludes the

towing of a “tender” unless the captain is on board. (Doc. #1-2,

p. 12.) A “tender” is defined as “any watercraft owned by you

[the insured] and is normally carried on board the [insured] vessel

. . ..” (Doc. #1-2, p. 36 (emphasis in original).) It is

undisputed that during the trip to the Dry Tortugas the Insured

Yacht towed a dinghy. (Doc. #53-4, p. 18.) It is also undisputed

that at the time of the incident the dinghy was not being towed.

(Id., pp. 18-19.)

The summary judgment record does not establish any connection

between the towing and the Grounding Incident. The record does

not establish that the improper towing was an independent breach

of the Captain Warranty (apart from the lack of the captain as

alleged in Counts II and III) which renders the Policy null and

void. As to this component of the Captain Warranty, federal

maritime law includes state law. Ocean Reef Charters LLC, 996

F.3d at 1169 (concluding that state law governed the effect of

Ocean Reef’s breaches of the captain and crew warranties). The

Policy directs that the State law to be applied is that of

Massachusetts. (Doc. #1-2, p. 51.) Massachusetts law, however,

directs that the Court apply the law of the State that the parties

to the Policy understood would be the principal location of the

insured risk, unless some other State has a more significant

relationship. OneBeacon Am. Ins. Co. v. Narragansett Elec. Co.,

90 Mass. App. Ct. 123, 125-26, 57 N.E.3d 18, 20-21 (2016). Here,

that state is Florida. The insured is domiciled in Florida, which

is generally sufficient. Onebeacon Am. Ins. Co., 57 N.E.3d at 20-

21. In addition, the vessel was kept in Florida, as permitted by

the Policy (Doc. #1-2, p. 2), and the occurrence at issue began in

Florida. Under Florida law, a breach which does not increase the

hazard does not void an insurance policy. Fla. Stat. § 627.409(2).

While Count IV alleges that the towing “increased the risk of loss”

(Doc. #1, ¶ 45), the facts submitted by Hanover do not establish

without dispute such an increased hazard. Therefore, summary

judgment is not available as to Count IV.

D. Count V: Notification of Third-Party Claims

As discussed earlier, Count V seeks a declaration that there

is no coverage because the Insured provided untimely notice of

loss or of the occurrence. (Doc. #1, p. 11.) Hanover asserts that

the Policy requires the Insured to give prompt notice of loss or

occurrence to Hanover, or to the Insured’s agent or broker, “as

soon as reasonably possible”. (Id. at ¶¶ 18, 48.) Hanover asserts

that Smith and J&S violated this condition by failing without

excuse to give notice of the loss and occurrence until more than

four months after the Grounding Incident, and that this delay

prejudiced Hanover. (Id. at ¶ 49.) Because such notice is a

condition precedent to coverage, Hanover asserts that the non-

compliance results in the coverages of the Policy being null and

void. (Id. at ¶ 48.)

The Policy contains certain post-loss or post-occurrence

responsibilities with which the Named Insured must comply “[i]n

case of a loss or an occurrence to which this insurance may apply

. . ..” (Doc. #1-2, p. 49 (emphasis in original).) This includes

giving notice of a claim “as soon as reasonably possible.” (Id.)

The Court finds that the record does not support a summary judgment

as to the unreasonableness of notice or any resulting prejudice.

E. Affirmative Defenses

The Smith Defendants also assert that there are five

affirmative defenses which have not been rebutted. (Doc. #55, pp.

3-4, 11-15.) Affirmative Defenses One, Four, and Six have been

discussed above. Concerning Defendants’ Second Affirmative

Defense, whether Plaintiff has suffered any prejudice due to the

Smith Defendants untimely notice remains to be an issue as to any

counts for which summary judgment was denied or to the extent such

counts were not dismissed due to lack of subject matter

jurisdiction. As to Affirmative Defense Eight, there is no

requirement that the claim or demand to an insurance company be

attached to the Complaint. See Fed. R. Civ. P. 8(a).

Accordingly, it is hereby

ORDERED:

1. Plaintiff's Motion for Summary Final Judgment (Doc. #53) is

DISMISSED IN PART, GRANTED IN PART, and DENIED IN PART.

(a) As to Count I:

(1) Count I is dismissed without prejudice for lack of

subject matter jurisdiction to the extent it is premised

on a possible claim by the National Parks Service.

(2) Count I sets forth a case or controversy as to a

declaratory judgment based on the claim of Stanny R.

Parks.

(3) Summary Judgment is granted in favor of Hanover as

to Count I. Hanover is entitled to a declaratory judgment

that there is no coverage under the Policy as to claims

by third parties arising from the Grounding Incident

because the failure to hire a full-time captain as

required by the Policy renders the Policy null and void

as to this occurrence.

(b) As to Count II:

(1) Count II is dismissed without prejudice for lack of

subject matter jurisdiction to the extent it is premised

on a possible claim by the National Parks Service.

(2) Count II sets forth a case or controversy as to a

declaratory judgment based on the claim of Stanny R.

Parks.

(3) Summary Judgment is granted in favor of Hanover as

to Count II. Hanover is entitled to a declaratory

judgment that there is no coverage under the Policy as

to claims by third parties arising from the Grounding

Incident because the failure to have a captain in command

of the Insured Yacht renders the Policy null and void as

to this occurrence.

(c) As to Count III:

(1) Count III is dismissed without prejudice for lack of

subject matter jurisdiction to the extent it is premised

on a possible claim by the National Parks Service.

(2) Count III sets forth a case or controversy as to a

declaratory judgment based on the claim of Stanny R.

Parks.

(3) Summary Judgment is granted in favor of Hanover as

to Count III. Hanover is entitled to a declaratory

judgment that there is no coverage under the Policy as

to claims by third parties arising from the Grounding

Incident because the operation of the Insured Yacht at

night renders the Policy null and void as to this

occurrence.

(d) As to Count IV, summary judgment is denied.

(e) As to Count V:

(1) Count V is dismissed without prejudice for a lack

of subject matter jurisdiction to the extent it is

premised on potential first-party claims.

(2) Count V is dismissed without prejudice for lack of

subject matter jurisdiction to the extent it is premised

on a possible claim by the National Parks Service.

(3) Summary judgment as to Count V is denied to the

extent Count V is premised on potential third party

claims.

(f) As to Count VI: Count VI is dismissed without prejudice

for lack of subject matter jurisdiction.

2. The Clerk shall withhold entry of judgment pending

resolution of Counts IV and V.

DONE and ORDERED at Fort Myers, Florida, this 29th day

of June, 2021.

JGHN E. STEELE

SHEIOR UNITED STATES DISTRICT JUDGE

Copies:

Counsel of Record