# Southern-Owners Insurance Company v. Galati Yacht Sales, LLC

> District Court, M.D. Florida · May 9, 2022

URL: https://www.frixlaw.com/law-library/cases/10110065

## Case

- **Court:** District Court, M.D. Florida
- **Decided:** May 9, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10110065

## How later opinions describe it (automated extraction)

- explaining that, in enacting the Declaratory Judgment Act, Congress “sought to place a remedial arrow in the district court’s quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants”

## Opinion text

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

SOUTHERN-OWNERS INSURANCE COMPANY,

Plaintiff,

v. Case No. 8:21-cv-2567-VMC-SPF
GALATI YACHT SALES, LLC,
JEFFCO MARINE SERVICES, INC.,
and JEFFERSON FORAKER,

Defendants.
________________________________/
ORDER
This matter is before the Court on consideration of the
Motion to Dismiss filed by Defendant Galati Yacht Sales, LLC,
on January 31, 2022. (Doc. # 25). Defendants Jeffco Marine
Services, Inc. and Jefferson Foraker have expressed their
desire to join in Galati’s Motion. (Doc. # 29 at 1-3).
Plaintiff has responded. (Doc. ## 35, 39). For the reasons
described below, the Motion is denied.
I. Background
This case involves an insurance dispute and an
underlying lawsuit between some of the parties.
A. The Underlying Lawsuit
On August 19, 2021, Foraker sued Galati in Florida state
court for negligence (the “Underlying Lawsuit”). (Doc. # 1-
1). In his state-court complaint, Foraker alleged that,
through his business, Jeffco Marine Services, Inc., he
performed marine detailing work for Galati. (Id. at 1-2). On
or about October 9, 2020, Foraker boarded a vessel, the “Red

Lion,” at Galati’s request to perform some marine-detailing
work. (Id. at 3). Galati required its subcontractors, like
Foraker, to wear shoe coverings so as not to scuff the deck
of the boats. (Id.). Foraker alleged that, due to Galati’s
alleged negligence, he fell from the top of a tower or ladder
on the boat, sustaining significant injuries. (Id. at 3-4).
Manatee County Clerk of Court records indicate that the
Underlying Lawsuit is still open and active, with the state
court having scheduled a hearing for May 2022 on Galati’s
pending motion for summary judgment.
B. The Insurance Policy

According to the operative complaint, Plaintiff
Southern-Owners Insurance Company issued a Garage Liability
Policy (the “Policy”) to Defendant Jeffco that was effective
from March 25, 2020 until March 25, 2021. (Doc. # 6 at ¶ 12).
The Policy contains an Additional Insured Endorsement,
stating that Galati is an additional insured under the Policy
“but only with respect to liability arising out of [Jeffco’s]
work for that insured by or for [Jeffco].” (Id. at ¶ 20).
Pursuant to that endorsement, Galati sought a defense and
indemnification from Southern-Owners in the Underlying
Lawsuit. (Id. at ¶¶ 15, 17).
The Policy also contains an Employer’s Liability

Exclusion, which excludes from coverage “Bodily injury to:
(a) [a]n employee of any insured arising out of and in the
course of employment by any insured.” (Id. at ¶ 21); see also
(Doc. # 1-3 at 1).
Finally, the Policy also contains a Worker’s
Compensation Exclusion, which provides that the insurance
policy does not apply to “[a]ny obligations that would be
payable under . . . worker’s compensation law[.]” (Doc. # 6
at ¶ 22).
C. The Instant Complaint
Southern-Owners seeks a declaratory judgment on three

points. First, Southern-Owners claims that the allegations in
the Underlying Lawsuit arise out of Galati’s general business
practices and thus are excluded from coverage under the plain
language of the Policy. (Doc. # 6 at 5-6). Second, it argues
that the Employer’s Liability Exclusion serves to bar
coverage because Foraker was Jeffco’s employee, Foraker was
acting in the scope of his employment when he was injured,
and Foraker was thus Galati’s “statutory employee” for
purposes of Policy coverage. (Id. at 6-7). Third, Southern-
Owners alleges that the Worker’s Compensation Exclusion bars
coverage because Foraker was injured while performing work
requested by Galati, Foraker was therefore Galati’s

“statutory employee,” and Galati is liable under Florida’s
worker’s compensation law to Foraker. (Id. at 8-9).
Therefore, Southern-Owners seeks a declaration that: (1)
the Policy does not provide insurance coverage for the claims
alleged in the Underlying Suit or any and all other claims
arising from the incident that occurred on October 9, 2020;
and (2) that Southern-Owners has no duty to defend or
indemnify Galati for any and all claims alleged in the
Underlying Suit or any and all other claims arising from the
incident that occurred on October 9, 2020. (Id. at 6, 7-8,
9).

On January 31, 2022, Galati filed a motion to dismiss
the amended complaint. (Doc. # 25). Foraker and Jeffco have
both attempted to join in Galati’s Motion but, because the
Motion is due to be denied for the reasons explained below,
their request is moot. The Court solicited additional
information from the parties and has reviewed the material
provided.1 The Motion is now ripe for review.
II. Legal Standard
Southern-Owners brings the instant lawsuit pursuant to
the federal Declaratory Judgment Act, 28 U.S.C. § 2201. The
Declaratory Judgment Act provides, in relevant part:
In a case of actual controversy within its
jurisdiction . . . any court of the United States,
upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any
interested party seeking such declaration, whether
or not further relief is or could be sought. Any
such declaration shall have the force and effect of
a final judgment or decree and shall be reviewable
as such.

28 U.S.C. § 2201(a).
As the Supreme Court has explained, the Act vests federal
district courts with discretion “in determining whether and
when to entertain an action under the Declaratory Judgment

1 In reviewing a motion to dismiss, the district court may
consider extrinsic documents if they are (1) central to the
plaintiff’s claim and (2) their authenticity is not
challenged. SFM Holdings, Ltd. v. Banc of Am. Sec., LLC, 600
F.3d 1334, 1337 (11th Cir. 2010). The additional documents
that the Court considered here, including the insurance
policy and the state court documents, are at the very heart
of both Southern-Owners’ declaratory judgment claim and the
issue of whether this Court must abstain in favor of the state
court action. Thus, the Court will consider them. See Celtic
Ins. Co. v. Digestive Med. Histology Lab, LLC, No. 19-24252-
CIV, 2019 WL 13020860, at *2 (S.D. Fla. Dec. 20, 2019)
(considering county small-claims actions and other documents
in determining abstention in declaratory judgment case).
Act, even when the suit otherwise satisfies subject matter
jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515
U.S. 277, 282 (1995); see also Id. at 288 (explaining that,
in enacting the Declaratory Judgment Act, Congress “sought to
place a remedial arrow in the district court’s quiver; it
created an opportunity, rather than a duty, to grant a new
form of relief to qualifying litigants”). Consequently, “a

district court is authorized, in the sound exercise of its
discretion, to stay or to dismiss an action seeking a
declaratory judgment before trial or after all arguments have
drawn to a close.” Id. at 288. “[S]pecial flexibility is
called for in the declaratory judgment context, where the
normal principle that federal courts should adjudicate claims
within their jurisdiction yields to considerations of
practicality and wise judicial administration.” United
Purchasing Ass’n, LLC v. Am. Valve, Inc., No. 6:08-cv-515-
GAP-GJK, 2008 WL 2557559, at *1 (M.D. Fla. June 20, 2008)
(alteration added) (internal quotation marks and citations

omitted).
III. Analysis
Galati argues that the amended complaint should be
dismissed for lack of subject matter jurisdiction pursuant to
the abstention doctrine. (Doc. # 25 at 1). Galati argues that
this lawsuit is premature until such time as the Underlying
Lawsuit is resolved and the state court has determined
Galati’s liability. (Id. at 2-3). Galati maintains that the
policies of “efficiency, comity, and federalism” all weigh
heavily in favor of dismissal of this action. (Id. at 5).
Southern-Owners rejoins that the abstention doctrine2
does not apply because the Underlying Lawsuit (1) is not a

“parallel” proceeding presenting the same issues between the
same parties; (2) does not encompass the complete controversy
and does not address the insurance coverage issues at the
heart of this case; (3) will not resolve this federal
declaratory-judgment action; and (4) does not involve a
compelling state interest. (Doc. # 35).
The Declaratory Judgment Act “gives the federal courts
competence to make a declaration of rights; it does not impose
a duty to do so.” Ameritas Variable Life Ins. Co. v. Roach,
411 F.3d 1328, 1330 (11th Cir. 2005). Further, the Declaratory
Judgment Act is “an enabling Act, which confers a discretion

2 As the Eleventh Circuit has noted, the term “abstention” is
not technically correct because the decision to stay or
dismiss an action under the Declaratory Judgment Act does not
require the Court to reach for a judicially-created
abstention doctrine. Nat’l Tr. Ins. Co. v. S. Heating &
Cooling Inc, 12 F.4th 1278, 1282 n.2 (11th Cir. 2021). Rather,
the Act itself provides the Court with the necessary
discretion. Id.
on the courts rather than an absolute right upon the
litigant.” Wilton, 515 U.S. at 287 (internal quotation marks
and citations omitted). “Ordinarily it would be uneconomical
as well as vexatious for a federal court to proceed in a
declaratory judgment suit where another suit is pending in a
state court presenting the same issues, not governed by
federal law, between the same parties.” Brillhart v. Excess

Ins. Co. of Am., 316 U.S. 491, 495 (1942). The Eleventh
Circuit has provided the district courts with a series of
“guidepost” factors to aid in balancing state and federal
interests while deciding whether to exercise jurisdiction
over a declaratory judgment case:
(1) the strength of the state's interest in having the
issues raised in the federal declaratory action
decided in the state courts;

(2) whether the judgment in the federal declaratory
action would settle the controversy;

(3) whether the federal declaratory action would serve
a useful purpose in clarifying the legal relations
at issue;

(4) whether the declaratory remedy is being used merely
for the purpose of “procedural fencing” — that is,
to provide an arena for a race for res judicata or
to achieve a federal hearing in a case otherwise
not removable;

(5) whether the use of a declaratory action would
increase the friction between our federal and state
courts and improperly encroach on state
jurisdiction;
(6) whether there is an alternative remedy that is
better or more effective;

(7) whether the underlying factual issues are important
to an informed resolution of the case;

(8) whether the state trial court is in a better
position to evaluate those factual issues than is
the federal court; and

(9) whether there is a close nexus between the
underlying factual and legal issues and state law
and/or public policy, or whether federal common or
statutory law dictates a resolution of the
declaratory judgment action.

Ameritas, 411 F.3d at 1331. Not all of these guideposts are
required, nor is any one guidepost controlling. Id. Rather,
this Circuit follows a totality-of-the circumstances
standard.
The Eleventh Circuit revisited this topic just last
year, stating that “[w]hen a district court is deciding
whether to dismiss or stay a [Section] 2201(a) declaratory
judgment action in favor of a concurrent proceeding, we agree
that the degree of similarity between the proceedings is
significant,” such that “the greater the difference between
concurrent proceedings, the less likely refusing to exercise
jurisdiction will further the principles of wise judicial
administration, federalism, comity, and avoidance of
duplicative and officious federal proceedings.” Nat’l Tr.
Ins. Co. v. S. Heating & Cooling Inc, 12 F.4th 1278, 1285
(11th Cir. 2021). The degree of similarity between the
concurrent proceedings is not itself a “discrete” factor (or
a “tenth guidepost”) but, rather, is “encompassed by the
relevant Ameritas guideposts, and it is granted weight in the
balancing of those guideposts.” Id. at 1286.
Here, looking at the totality of the circumstances, the

Court concludes that this case is not sufficiently similar to
the Underlying Lawsuit to merit dismissal or a stay of this
matter. While they may arise from the same incident and
include some of the same parties, the essential dispute in
each is different. The state case involves a classic tort
claim — whether Galati negligently breached a duty of care
that it owed to Foraker and, if so, to what extent Foraker’s
damages can be attributed to Galati’s negligence. This
declaratory-judgment case, on the other hand, turns on the
interpretation of an insurance contract and the issue of
whether Galati may claim coverage under the subject Policy.

True, part of this case will be deciding whether Foraker was
Galati’s “statutory employee” such that he falls within
certain Policy exclusions and/or whether Galati’s liability
“arises out of” Jeffco’s or Foraker’s work for Galati. But
Galati has not demonstrated how the state court’s decision on
the tort claim would affect either of those determinations.
Indeed, as Defendants Jeffco and Foraker concede, “there are
no pending motions or otherwise in the state court action
which address the issues of Mr. Foraker’s employment status
with Galati, whether he was a ‘statutory employee,’ whether
he is eligible to receive worker’s compensation benefits,
and/or whether Mr. Foraker is foreclosed under Florida’s

Worker’s Compensation Law from bringing a negligence suit
against Galati, nor have any of these issues been raised as
an affirmative defense in that action.”3 (Doc. # 44 at 2-3).

3 In Florida, worker’s compensation is generally the exclusive
remedy available to an injured employee for the negligence of
his employer. Endurance Am. Specialty Ins. Co. v. United
Constr. Eng’g, Inc., 343 F. Supp. 3d 1274, 1278 (S.D. Fla.
2018). Under Florida’s Worker’s Compensation Law, an
“employee” is any person who receives remuneration from an
employer for the performance of any work or service. See Fla.
Stat. § 440.02(15)(a) (defining “statutory employee” under
the Workers’ Compensation Law). A contractor who sublets work
to a subcontractor becomes liable for the payment of
compensation to the subcontractor’s employees if the
subcontractor fails to secure worker’s compensation
insurance. Endurance, 343 F. Supp. 3d at 1279. In that
scenario, the contractor becomes the “statutory employer” of
the subcontractor’s employees. Id. And such “statutory
employees” are treated identically under the Florida Worker’s
Compensation Law to actual employees in relation to standard
employee exclusion clauses in insurance policies. Id. The
Court takes no position at this time on Foraker’s employment
status; it merely points out that this distinction could have
factored into the state court case. Upon review, it is
apparent that the state court will not be taking up this issue
– it was not raised as an affirmative defense or in Galati’s
motion for summary judgment.
Thus, looking to the Ameritas factors, the decision in
this case about whether Galati qualifies for insurance
coverage under the Policy would not settle in any way the
central questions of negligence and liability at issue in the
concurrent state proceeding. Relatedly, this federal
declaratory action would not serve a useful purpose in
clarifying the legal relations at issue in the state case.

And as the questions presented are so different, there is
little to no danger that the use of a declaratory action would
increase the friction between federal and state courts or
improperly encroach on state jurisdiction. Nor has Galati
demonstrated a close nexus between the underlying factual and
legal issues and state law and/or public policy, or whether
federal common or statutory law dictates a resolution of the
declaratory judgment action.
The Court’s decision is buttressed by Judge Brasher’s
concurring opinion in National Trust, in which he pointed out
that National Trust differed from those “run of the mill”

declaratory-judgment cases “that insurers reasonably expect
the federal courts to resolve” for two reasons. Nat’l Tr., 12
F.4th at 1290. First, the state law at issue there – whether
carbon monoxide is a “pollutant” under a pollution exclusion
in a liability insurance contract – was an open question under
Alabama law, which increased the state’s interest in
determining the issue of first impression. Id. at 1290-91.
Second, “unlike most declaratory judgment actions between a
liability insurer and its insured, this lawsuit turns more on
the facts of the alleged tort than an interpretation of the
insurance contract.” Id. at 1291. Indeed, in National Trust,
the relevant pollution policy exclusion had a “hostile fire

exception” which would apply if the tortfeasor’s misalignment
of the subject HVAC unit’s furnace burner caused the fire to
burn in the wrong place, thus causing the carbon monoxide
fumes which killed two people. Id. at 1282. As the Eleventh
Circuit explained, this decision created significant overlap
with the state court case:
So, even if carbon monoxide were a pollutant under
the insurance policy, the district court would
nevertheless be required to decide whether the
Hoges’ deaths fall within the hostile fire
exception. That inquiry would include determining
the alignment of the burner and the extent to which
any misalignment was responsible for the Hoges’
deaths. That analysis . . . would significantly
overlap with the factual evaluation that the
Alabama state court will undertake to determine
liability in the wrongful death action. Those and
other issues counseled against the district court
resolving National Trust’s declaratory judgment
action.

Id.
This case, however, presents none of the complicating
factors present in National Trust. See Id. The parties have
not pointed to any open or fragmented questions of state law
for this Court to decide in the first instance. And there is
no indication of the sort of factual overlap present in
National Trust. The circumstances, therefore, counsel against
the dismissal or stay of this action. See Auto-Owners Ins.

Co. v. Cymbal Props., LLC, No. 1:21-00111-KD-B, 2021 WL
4314458, at *7 (S.D. Ala. Sept. 22, 2021) (applying Ameritas
factors to find that federal court need not abstain from
deciding parameters of insurance policy where the resolution
of any disputed factual issues by the state court was
“irrelevant” to the resolution of the federal case nor was
there any overlap of the legal issues presented because “[t]he
issue of the insured’s liability has not been raised in the
federal case, and the issue of insurance coverage has not
been raised in the state-court case[]. While the cases are
related, they are separate – there is no reasonable risk of

inconsistent rulings, duplication of effort, or federal
entanglement with state court proceedings”); Northland Ins.
Co. v. Top Rank Trucking of Kissimmee, Inc., 823 F. Supp. 2d
1293, 1296 (M.D. Fla. 2011) (allowing insurer’s declaratory
judgment claim to proceed where the state court case involved
issues of negligence and vicarious liability whereas the
“only question” in the federal declaratory judgment case was
whether the plaintiff insurance company had an obligation
under its policy).
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
(1) Defendant Galati Yacht Sales, LLC’s Motion to Dismiss
(Doc. # 25) is DENIED.
(2) Defendant Galati’s answer to the complaint is due 14
days from the date of this Order.
DONE and ORDERED in Chambers in Tampa, Florida, this 9th
day of May, 2022.

VIRGINIA M. HERNANDEZ*COVINGTON
UNITED STATES DISTRICT JUDGE

15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10110065. Public record. Not legal advice.