Parr v. Yachtinsure, LTD

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ALLAN T. PARR, JR., et al. CIVIL ACTION

VERSUS NO. 24-438

YACHTINSURE, LTD SECTION: “G”(4)

ORDER AND REASONS

Before the Court is Defendant Yachtinsure, Ltd.’s (“Defendant”) “Rule 12(b)(6) Motion to

Dismiss Plaintiffs’ Amended Complaint.”1 This litigation involves a maritime insurance coverage

dispute following the partial sinking of a vessel owned by Plaintiffs Allan T. Parr, Jr. and Parr T,

LLC (collectively “Plaintiffs”).2 Defendant argues that Plaintiffs have failed to state a claim

because Plaintiffs allegedly violated express warranties contained in the insurance policy.3 In

opposition, Plaintiffs argue that the alleged violations of the express warranties did not cause the

sinking of the vessel, and said warranties are prohibited by New York law.4 Accepting all of the

allegations in the Complaint as true, and for the reasons stated herein, the Court finds that coverage

was properly denied. Accordingly, considering the motion, the record, and the applicable law, the

Court grants the motion.

1 Rec. Doc. 9.

2 Rec. Doc. 1.

3 Rec. Doc. 14.

4 Rec. Doc. 12.

1

I. Background

Plaintiff Parr T, LLC (“Parr T”) owns and operates a 2016 77-foot Marquis Open Bridge

Motor Yacht, the M/V AFTER PARR T (“the Vessel”).5 Plaintiff Allan T. Parr, Jr. (“Parr”) is the

sole member of Parr T and an owner/operator of the Vessel.6 On April 3, 2023, Defendant issued

an insurance policy to Plaintiffs providing hull and machinery, liability, and pollution coverage

for the Vessel.7 The policy provides for the application of general maritime law, and when general

maritime law is unavailable, the laws of the State of New York shall be applied in determining

“coverage or amount.”8

On July 3, 2023, the Vessel left the port in Key West, Florida for a voyage with Parr and

his family on board.9 Parr, an approved operator listed on the policy, was operating the vessel.10

Soon after the vessel departed, water began entering the vessel.11 The Complaint alleges that an

unseated hose clamp caused water to enter the hull via the propeller shaft.12 Parr called for

assistance, and a salvor arrived and identified the source of the leak.13 The salvor packed the

5 Rec. Doc. 1 at 1–2.

6 Id. at 2.

7 Id. at 3.

8 Id. at 5.

9 Id. at 9.

10 Id. at 6.

11 Id. at 9.

12 Id.

13 Id.

2

opening of the leak with rags, and he was able to pump the water from the Vessel.14 The Vessel

was immediately transferred to a shipyard where the Vessel’s condition was stabilized, and the

damage was repaired.15

Plaintiffs allege the Vessel was seaworthy at the commencement of the voyage, the Vessel

was routinely inspected, and the loose hose clamp was never discovered.16 The Complaint alleges

the partial sinking of the Vessel was not caused by negligence, Parr’s operation, or any

unseaworthy condition of the Vessel.17

On July 26, 2023, after receiving timely notice of loss, Defendant denied the claim based

upon several policy exclusions.18 Plaintiffs repeatedly requested that Defendant reconsider the

denial and proposed mediation, to which Defendant was unresponsive.19

On February 21, 2024, Plaintiffs filed a Complaint against Defendant alleging violations

of Louisiana Revised Statute §§ 22:1892 and 22:1973.20 Plaintiffs seek payment of insurance

proceeds for property damages, consequential damages, bad faith penalties, attorney’s fees, and

interest.21 On March 5, 2024, Plaintiffs filed an Amended Complaint.22

14 Id.

15 Id.

16 Id. at 10.

17 Id.

18 Id. at 11.

19 Id. at 12.

20 Id. at 15–19.

21 Id. at 22–23.

22 Rec. Doc. 7.

3

On March 27, 2024, Defendant filed the instant motion.23 On April 15, 2024, Plaintiffs

filed an opposition to the motion.24 On April 29, 2024, Defendant filed a reply memorandum in

further support of the motion.25

On July 16, 2024, the Court ordered that the parties submit additional briefing regarding

the applicability of Thanh Long Partnership v. Highlands Insurance Co.,26 specifically, the Fifth

Circuit’s statement that “[b]reach of warranty, either express or implied, is insufficient to deny

recovery unless the breach is also the cause of the loss.”27 On July 30, 2024, Defendant filed a

supplemental memorandum.28 On August 5, 2024, Plaintiffs filed a supplemental memorandum.29

II. Parties’ Arguments

A. Defendant’s Arguments in Support of the Motion

Defendant argues the Complaint contains admissions that Plaintiffs breached express

warranties contained in the insurance policy.30 Defendant contends binding Fifth Circuit precedent

firmly establishes that a breach of an express warranty in a maritime insurance contract renders

the coverage void.31 Defendant asserts the policy makes clear that an approved operator and mate

23 Rec. Doc. 9.

24 Rec. Doc. 12.

25 Rec. Doc. 19.

26 32 F.3d 189, 194 (5th Cir. 1994).

27 Rec. Doc. 23.

28 Rec. Doc. 24.

29 Rec. Doc. 25.

30 Rec. Doc. 9-1 at 7.

31 Id.

4

must have been operating the vessel for it to be seaworthy.32 At the time of the partial sinking,

Defendant avers Parr was single-handily operating the vessel in breach of the insurance policy.33

Defendant submits the insurance policy is clear that this breach voids the policy from inception.34

Defendant argues that Parr’s failure to have an approved captain onboard the vessel also

demonstrates a lack of due diligence and a breach of the implied warranty of seaworthiness, which

results in voiding of coverage.35 Defendant contends federal maritime law is applicable and

supports a denial of coverage based on breach of the express captain and crew warranty contained

in the insurance policy and the implied warranty to maintain the Vessel in a seaworthy condition.36

B. Plaintiffs’ Arguments in Opposition to the Motion

Plaintiffs cites Fifth Circuit precedent holding that a “breach of warranty, either express or

implied, is insufficient to deny recovery unless the breach is also the cause of the loss.”37 Plaintiffs

contend the partial sinking was unavoidable and caused by a water seal that became loose on the

voyage.38 Plaintiffs aver the incident occurred in the normal operation of the vessel, and the alleged

warranties that were breached were not the cause of the loss.39 Plaintiffs rely on Travelers Property

Casualty Company of America v. Ocean Reef Charters, LLC, an Eleventh Circuit case holding that

32 Id. at 9.

33 Id. at 10.

34 Id.

35 Id.

36 Id. at 10–11.

37 Rec. Doc. 12 at 3 (citing Thanh Long P'ship v. Highlands Ins. Co., 32 F.3d 189, 194 (5th Cir. 1994)).

38 Id.

39 Id.

5

Florida law prohibited insurers from relying upon warranty violations unless such breach or

violation increased the hazard by any means within the control of the insured.40

Plaintiffs contend general maritime law does not recognize captain and crew warranties,

and thus, New York law is applicable.41 Plaintiffs argue New York law specifically prohibits

named operator endorsements.42 Plaintiffs cite a decision by a federal district judge in New York

holding that New York law prohibits the enforcement of named operator endorsements unless the

insured vessel is classified as an oceangoing vessel.43 Based upon the geographical limitations set

out in the insurance policy, Plaintiffs aver the vessel cannot be considered an oceangoing vessel.44

For these reasons, Plaintiffs argue the named operator warranty is invalid and unenforceable.45

Plaintiffs also argue that they did not breach the implied warranty to maintain the Vessel

in a seaworthy condition.46 Plaintiffs argue general maritime law only requires that the vessel be

reasonably fit for its intended purpose.47 Plaintiffs contend the insurance policy also defines

seaworthy as “fit for the insured vessel’s intended purpose.”48 Plaintiffs assert that their only duty

is to prove that the vessel was seaworthy upon inception of the policy and that the vessel was

40 Id. at 4–5 (citing Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters LLC, 996 F.3d 1161 (11th Cir.

2021)).

41 Id. at 6.

42 Id.

43 Id. at 7 (citing Jefferson Ins. Co. of New York v. Cassella, 261 F. Supp. 2d 160, 165 (E.D.N.Y. 2003),

opinion vacated in part on reconsideration, No. 00-5898, 2003 WL 23411876 (E.D.N.Y. Oct. 21, 2003)).

44 Id.

45 Id. at 8.

46 Id.

47 Id.

48 Id. at 9.

6

adequately maintained.49 Plaintiffs aver that an unexpected failure of the vessel mid-voyage does

not create an unseaworthy condition at the inception of the policy, nor does it indicate a failure to

maintain a seaworthy vessel.50 Plaintiffs argue that any determination of seaworthiness would

require a presentation of evidence and a factual determination.51

C. Defendant’s Arguments in Further Support of the Motion

According to Defendant, the insurance policy clearly states that compliance with all

warranties, including crew composition, is essential to the vessel’s coverage.52 Defendant contends

it is well-established in maritime insurance law that a breach of an express warranty, regardless of

its direct impact on a loss, voids coverage from inception if stipulated in the policy.53 Defendant

avers Florida law was applied in the case relied on by Plaintiffs in support of their argument that

causation is required to deny coverage based on breach of express warranty.54 Defendant asserts

that under New York law, Plaintiffs’ violation of the express warranties voids coverage.55

Contrary to Plaintiffs’ assertions, Defendant contends the subject vessel is an ocean-going

vessel under the insurance policy.56 Defendant asserts the express navigation limits in the policy

authorize the vessel to operate beyond inland waters, lakes, rivers, bays, tributaries, or sounds

49 Id. at 10.

50 Id.

51 Id. at 12.

52 Rec. Doc. 19 at 2.

53 Id.

54 Id. at 3 (citing Ocean Reef Charters LLC, 996 F.3d 1161).

55 Id.

56 Id. at 4.

7

designated by the geographical limits provided in Jefferson Ins. v. Cassella.57 Defendant avers the

insurance policy authorizes navigation up to 250 miles offshore and within the Atlantic Ocean,

which qualifies the vessel as ocean-going.58

D. Defendant’s Supplemental Memorandum

In its supplemental memorandum, Defendant contends that Plaintiffs’ argument regarding

causation is irrelevant.59 Based on New York law and the plain terms of the policy, Defendant

asserts Plaintiffs’ breach of the warranty voids the policy from inception.60

Defendant contends that Thanh Long61 is fundamentally different from the present case

due to the difference in applicable state laws.62 Defendant states that Louisiana law governed the

maritime insurance contract in Thanh Long.63 Under Louisiana law, Defendant avers a breach of

warranty must also be the cause of the loss to deny recovery.64 Defendant argues New York law

does not require a causal connection between breach of warranty and loss to void coverage.65

57 Jefferson, 261 F. Supp. 2d at 165.

58 Rec. Doc. 19 at 5.

59 Rec. Doc. 24 at 1.

60 Id.

61 32 F.3d at 189.

62 Rec. Doc. 24 at 2.

63 Id.

64 Id.

65 Id. at 3.

8

Defendant avers New York law applies to the present case.66 Defendant cites Great Lakes

Insurance, S.E. v. Gray Group Investments, LLC.,67 wherein the court applied New York law and

held that the insured’s breach of the warranty voided the contract without considering causation.68

Under New York law, Defendant contends courts interpreting the terms of an insurance contract

must give effect to the intent of the parties as expressed in the clear language of the contract.69

Defendant asserts New York courts have consistently recognized that express warranties in

maritime insurance contracts must be literally complied with, and that noncompliance forbids

recovery, regardless of whether the omission had a causal relation to the loss.70 Defendant contends

this matter is more akin to Great Lakes, and this Court should likewise find that Plaintiffs’ breach

of the express warranty voids the policy.71

E. Plaintiffs’ Supplemental Memorandum

According to Plaintiffs, Thanh Long held that causation is required in a breach of warranty

evaluation pursuant to general maritime law, and Defendant has been unable to point to any case

that holds otherwise.72 Since there is general maritime law that controls the causation aspect of the

66 Id.

67 577 F. Supp. 3d 466, 482 (E.D. La. 2021), aff’d 76 F.4th 341 (5th Cir. 2023).

68 Rec. Doc. 24 at 3.

69 Id.

70 Id. at 4.

71 Id. at 5–6.

72 Rec. Doc. 25 at 1–2.

9

insurance coverage evaluation, Plaintiffs contend New York law is inapplicable.73 Plaintiffs states

that New York law only applies in an absence of federal precedent.74

The insurance policy provides that in the absence of federal maritime law, any dispute as

to coverage shall be resolved according to the applicable law of the State of New York.75 Plaintiffs

state that the Fifth Circuit’s holding in Thanh Long trumps New York law based on Supreme Court

precedent and the terms of the insurance policy.76

Plaintiffs contend that Great Lakes is inapplicable because the court in Great Lakes did not

address the issue of causation.77 Plaintiffs state the Fifth Circuit’s holding in Great Lakes did not

take any position that changed the binding precedent found in Thanh Long.78 Plaintiffs contend

New York law prohibits named operator endorsements.79 Plaintiffs aver that the named operator

endorsement included in the instant insurance policy is invalid and unenforceable.80

III. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) provides that an action may be dismissed for

“failure to state a claim upon which relief can be granted.”81 A motion to dismiss for failure to

73 Id. at 2.

74 Id.

75 Rec. Doc. 25 at 3.

76 Id. at 4.

77 Id. at 6.

78 Id. at 7.

79 Id.

80 Id. at 8.

81 Fed. R. Civ. P. 12(b)(6).

10

state a claim is “viewed with disfavor and is rarely granted.”82 “To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’”83 “Factual allegations must be enough to raise a right to relief above the

speculative level.”84 A claim is facially plausible when the plaintiff has pleaded facts that allow

the court to “draw the reasonable inference that the defendant is liable for the misconduct

alleged.”85

On a motion to dismiss, asserted claims are liberally construed in favor of the claimant,

and all facts pleaded are taken as true.86 However, although required to accept all “well-pleaded

facts” as true, a court is not required to accept legal conclusions as true.87 “While legal conclusions

can provide the framework of a complaint, they must be supported by factual allegations.”88

Similarly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

statements” will not suffice.89 The complaint need not contain detailed factual allegations, but it

must offer more than mere labels, legal conclusions, or formulaic recitations of the elements of a

cause of action.90 That is, the complaint must offer more than an “unadorned, the-defendant-

82 Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

83 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

84 Twombly, 550 U.S. at 555.

85 Iqbal, 556 U.S. at 663 (citing Twombly, 550 U.S. at 556).

86 Leatherman v. Tarrant Cnty. Narcotics Intel. & Coordination Unit, 507 U.S. 163, 164 (1993); see also

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007).

87 Iqbal, 556 U.S. at 678–79.

88 Id. at 679.

89 Id. at 678.

90 Id.

11

unlawfully-harmed-me accusation.”91 From the face of the complaint, there must be enough

factual matter to raise a reasonable expectation that discovery will reveal evidence as to each

element of the asserted claims.92 If factual allegations are insufficient to raise a right to relief above

the speculative level, or if it is apparent from the face of the complaint that there is an “insuperable”

bar to relief, the claim must be dismissed.93

IV. Analysis

According to Defendant, the Complaint contains admissions that Plaintiff breached express

warranties within the insurance policy by single-handedly operating the vessel at the time of the

partial sinking.94 Defendant contends the denial of coverage is justified based on said breach.95

Plaintiff argues the alleged breach of warranty must cause the loss to justify denial of recovery.96

Plaintiff also asserts that general maritime law does not recognize crew warranties, and New York

law specifically prohibits named operator endorsements.97

A. Whether Plaintiffs’ Breach of the Express Warranty Voids the Policy

According to the Complaint, the vessel was being operated by Parr alone at the time of the

partial sinking.98 While Parr is a listed operator on the policy, this clearly breaches the express

91 Id.

92 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009).

93 Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 2007); Moore v. Metro. Hum. Serv. Dist., No. 09-6470,

2010 WL 1462224, at * 2 (E.D. La. Apr. 8, 2010) (Vance, J.) (citing Jones v. Bock, 549 U.S. 199, 215 (2007)).

94 Rec. Doc. 9-1 at 7.

95 Id.

96 Rec. Doc. 12 at 3.

97 Id. at 6.

98 See Rec. Doc. 1.

12

warranty in the policy requiring a “minimum of one underwriter approved operator and one

underwriter approved mate on board the Vessel at all times during navigation.”99 Whether said

breach voids the policy is the question before the Court. To answer this question, the Court must

first determine whether federal common law or New York law applies. The briefing by the parties

is less than clear on this point. Defendant initially argued for the application of federal common

law, while Plaintiff argued for the application of New York law.100 However, in the supplemental

briefs the parties switched course, with Defendant arguing for the application of New York law

and Plaintiff arguing for the application of federal common law.101

The dispute in this case concerns a marine insurance policy issued for a vessel, giving rise

to federal admiralty jurisdiction.102 “Although the courts typically rely upon federal common law

to resolve maritime disputes, state law occasionally can be used to supplement or even supersede

maritime law.”103 In Wilburn Boat Co. v. Fireman’s Fund Insurance Co., the United States

Supreme Court concluded that the regulation of marine insurance is properly left with the states

where there is no established federal maritime rule governing the issue at hand.104 As courts and

legal commentators have recognized, for over 60 years the rule created in Wilburn Boats has sown

much confusion with respect to the treatment of warranties in marine insurance policies.105

99 Rec. Doc. 1-1 at 3.

100 Rec. Docs. 9, 12.

101 Rec. Docs. 19, 24, 25.

102 Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 n.2 (5th Cir. 1991) (internal citations omitted) (“It is

well settled that a marine insurance policy is a maritime contract within federal admiralty jurisdiction.”).

103 Id. at 886.

104 See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 321 (1955).

105 Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters LLC, 996 F.3d 1161, 1162 (11th Cir. 2021)

(citing 2 Thomas Schoenbaum, Admiralty and Maritime Law § 19:15 (6th ed. 2020); Gerard J. Mangone, United

13

Pursuant to Wilburn Boat, the Fifth Circuit has ruled that “the interpretation of a contract

of marine insurance is—in the absence of a specific and controlling federal rule—to be determined

by reference to appropriate state law.”106 The Fifth Circuit has called the presumption that state

law applies to marine insurance policies “axiomatic.”107 “State law, therefore, governs the

interpretation of marine insurance policies unless an available federal maritime rule controls the

disputed issue.”108

The instant maritime insurance policy contained a choice-of-law provision which states:

[A]ny and all such litigation between you and us is to be resolved by reference to

the well-established, entrenched principles of the federal maritime law of the

United States. Only in the event that there is no such well-established, entrenched

principle(s) of federal maritime law of the United States then only then shall the

dispute as to coverage or amount be resolved according to the applicable law of the

State of New York.109

The parties primarily rely on two Fifth Circuit cases in support of their arguments, Great

Lakes110 and Thanh Long.111 Great Lakes is a recent case involving a dispute over insurance

coverage of a yacht that sustained damage during a hurricane.112 The insurer denied coverage

States Admiralty Law 247 (1997); I Alex L. Parks, The Law and Practice of Marine Insurance and Average 13 (1987).

106 Ingersoll–Rand Financial Corp. v. Employers Ins. of Wausau, 771 F.2d 910, 912 (5th Cir. 1985).

107 Anh Thi Kieu, 927 F.2d at 886 (quoting INA of Texas v. Richard, 800 F.2d 1379, 1380 (5th Cir. 1986)).

108 Id.

109 Rec. Doc. 1-2 at 14.

110 Great Lakes, 76 F.4th 341.

111 Thanh Long, 32 F.3d 189.

112 Great Lakes, 577 F. Supp. 3d at 472.

14

alleging that the insured was in breach of the policy.113 The insurance policy in Great Lakes

contained a choice-of-law provision nearly identical to the instant insurance policy, stating that:

[A]ny dispute arising hereunder shall be adjudicated according to well established,

entrenched principles and precedents of substantive United States Federal

Admiralty law and practice, but where no such well-established, entrenched

precedent exists, this insuring agreement is subject to the substantive laws of the

State of New York.114

The district court in Great Lakes applied New York law, reasoning “[t]here is no federal

maritime rule governing the construction of maritime insurance contracts. Furthermore, neither

party argues for the application of federal maritime law, nor does either party cite any maritime

authority on the construction of maritime insurance contracts.”115 Ultimately, applying New York

law, the district court in Great Lakes held that the insurer’s breach of the express warranty to dock

the vessel in a specific marina rendered the policy void,116 and the Fifth Circuit affirmed that

determination.117 In the reply brief, Defendant argues that this Court should adhere to the Fifth

Circuit’s reasoning in Great Lakes, apply New York law, and dismiss Plaintiffs’ claims based on

the breach of the express warranty.118

Plaintiff primarily relies on a statement in Thanh Long, a case decided by the Fifth Circuit

in 1994, stating “[b]reach of the express warranty in this maritime insurance policy voids coverage

113 Id.

114 Id. at 471.

115 Great Lakes Ins., S.E. v. Gray Grp. Invs., LLC, 550 F. Supp. 3d 364, 371 (E.D. La. 2021) (citing

Higginbotham v. South Central Towing Co., Inc., No. 09-390, 2010 WL 2921637, at *2 (W.D. La. July 16, 2010).

116 Great Lakes, 577 F. Supp. 3d at 482.

117 Great Lakes, 76 F.4th at 352.

118 Rec. Doc. 19 at 2–4.

15

under either Louisiana law or federal maritime precedent.”119 In Thanh Long, the insurer sought

to void coverage for the vessel sinking because the insured breached the express warranty of

having an operable bilge alarm.120 The Fifth Circuit held “that Thanh Long’s breach of the express

warranty to maintain an operable high water bilge alarm voids coverage as to this casualty.”121

The Fifth Circuit then stated “[b]reach of warranty, either express or implied, is insufficient

to deny recovery unless the breach is also the cause of the loss.”122 Notably, the Fifth Circuit did

not cite any authority for this blanket statement, and it did not explain whether this statement is a

statement of Louisiana law, federal law, or both. Additionally, this statement appears to be dicta,

as the Fifth Circuit had already found that the breach of the warranty voided coverage, without

discussing causation. Nevertheless, the Fifth Circuit concluded there was sufficient evidence to

support the district court’s factual finding that the breach caused the loss.123 Plaintiffs argue that

this Court should adhere to the Fifth Circuit’s reasoning in Thanh Long and deny Defendant’s

motion because Plaintiffs’ breach of the express warranty did not cause the loss.

Both Great Lakes and Thanh Long provide limited value in resolving the issue of whether

to apply New York law or federal common law to the captain and crew warranty, as neither

involved a breach of a captain and crew warranty. Wilburn Boat instructs courts “to look to see if

the specific warranty at issue is (or should be) the subject of a uniform or entrenched federal

119 32 F.3d at 194.

120 Id. at 191–92.

121 Id. at 194.

122 Id.

123 Id.

16

admiralty rule.”124 The parties do not cite, and the Court has been unable to locate, any Fifth Circuit

authority addressing named operator warranties, which are also known as captain and crew

warranties. Recently, the Eleventh Circuit held that there are no entrenched federal maritime rules

governing captain and crew warranties.125 The Eleventh Circuit cited two cases addressing the

breach of a captain warranty, both of which applied state law.126 The Eleventh Circuit concluded

that Florida law should apply to the breach of the captain and crew warranties at issue in that

case.127

The Fifth Circuit has identified three factors for courts to consider when deciding whether

to apply state or federal law under Wilburn Boat.128 Specifically, the Fifth Circuit directed a district

court faced with making such a determination to consider: (1) whether the federal maritime rule

constitutes “entrenched federal precedent” consistently used to control the conduct of maritime

actors, (2) whether the state has a substantial and legitimate interest in having its law applied, and

(3) whether the state rule is materially different from the federal rule.129 “These factors are merely

instructive and not dispositive.”130

These factors weigh in favor of applying New York law to the named operator (captain and

crew) warranty. First, the proposition of law in Thanh Long relied on by Plaintiffs, which requires

124 Ocean Reef, 996 F.3d at 1167 (citation omitted).

125 Id. at 1169.

126 Id. (citing Yu v. Albany Ins. Co., 281 F.3d 803, 808-09 (9th Cir. 2002) (Hawaii law); Northern Assurance

Co. of America v. Rathbum, 567 F.Supp.2d 316, 319 (D. Conn. 2008) (Connecticut law)).

127 Id. at 1170.

128 Anh Thi Kieu, 927 F.2d at 886.

129 Id. (internal citations omitted).

130 Id. (internal citations omitted).

17

the insured’s breach of the express warranty to be the cause of loss to deny recovery, has only been

cited by two courts since 1994.131 By any standard, such authority hardly can be termed an

“entrenched federal precedent” consistently used to control the conduct of maritime actors.132 This

rule is contrary to numerous other opinions holding that breach of a warranty in a marine insurance

policy constitutes an absolute bar to coverage—notwithstanding that the loss was not caused by

the breach.133

Second, the Fifth Circuit has recognized that states have a “substantial and legitimate

interest in the application of [their] law[s].”134 The “regulation of insurance relationships,

including marine insurance relationships, has historically been a matter of state concern.”135 The

Fifth Circuit concluded that “states are far better equipped to balance the risks that each party to

131 See D & L Marine Transp. Inc., 2003 WL 22384952 at *4 n. 14 (E.D. La. Oct. 14, 2003); see also ING

Insurance SA v. Pagan Sanchez, 2007 WL 9735533 at *3 (D. Puerto Rico Mar. 26, 2007).

132 See e.g., 5801 Associates, Ltd. v. Continental Ins. Co., 983 F.2d 662, 665 (5th Cir. 1993).

133 Openwater Safety IV, LLC v. Great Lakes Ins. SE, 435 F. Supp. 3d 1142, 1155 (D. Colo. 2020) (“The rule

pursuant to federal admiralty law, if one exists, is that breach of a warranty in a marine insurance policy constitutes

an absolute bar to coverage—notwithstanding that the loss was not caused by the breach.”); Maclean v. Travelers Ins.

Co., 299 F. Supp. 3d 231 (D. Mass. 2017) (applying federal admiralty law and granting marine insurer’s motion to

dismiss after finding that the insured breached a named operator warranty, despite the fact that breach played no role

in the loss); Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters, LLC, 396 F. Supp. 3d 1170, 1177 (S.D. Fla.

2019) (applying a “well-entrenched” federal admiralty law that “all express warranties in maritime contracts are to be

strictly construed.”); Lexington Ins. Co. v. Cooke’s Seafood, 835 F.2d 1364, 1366 (11th Cir. 1988) (“[A]dmiralty law

requires the strict construction of express warranties in marine insurance contracts; breach of the express warranty by

the insured releases the insurance company from liability even if compliance with the warranty would not have avoided

the loss”); Aguirre v. Citizens Cas. Co. of New York, 441 F.2d 141, 143–45 (5th Cir. 1991), cert. denied, 404 U.S.

829, 92 S.Ct. 65, 30 L. Ed. 2d 58 (1971) (applying “solidly entrenched” federal admiralty law and concluding that the

“owners’ breach of their express warranty...suspended coverage under the insurance policy.”); Home Ins. Co. v.

Ciconett, 179 F.2d 892 (6th Cir. 1950) (applying admiralty law and concluding that “[i]t is settled that a warranty in

a contract of insurance must be literally complied with; that the only question in such cases is whether the thing

warranted to be performed was or was not performed; and that a breach of the warranty releases the [insurer] from

liability regardless of the fact that a compliance with the warranty would not have avoided the loss.”).

134 Anh Thi Kieu, 927 F.2d at 887.

135 Id. (citing Wilburn Boat Co., 348 U.S. at 316).

18

an insurance contract endures.”136 Similarly, New York has a substantial and legitimate interest in

the application of its own insurance laws.

The final factor delineated by the Fifth Circuit is whether the state’s rule is materially

different from the federal maritime rule.137 When considering this factor, the Fifth Circuit found

the fundamental nature of both laws to be the same where both “share[d] the concern of federal

maritime law that an assured should not profit from her material misrepresentations to the

underwriter.”138 Plaintiff has not demonstrated that application of New York law is materially

different from any federal maritime rule. As discussed above, there is no entrenched federal

precedent requiring that a breach be the cause of the loss. Accordingly, the Court looks to New

York law to determine whether the named operator.

B. Whether the Captain and Crew Warranty is Enforceable Under New York Law

Defendant argues that denial of coverage was proper based on Plaintiffs admitted breach

of express captain and crew warranty in the policy. In opposition, Plaintiff argues New York law

prohibits operator named endorsements like the captain and crew warranties.

The insurance policy states the following regarding approved operators and mate. Item 15

on the Policy Declaration reads, “Special Conditions… Warranted there is a minimum of one

underwriter approved mate on board the vessel at all times during navigation.”139 Item 7 on the

136 Id.

137 Id.

138 Id.

139 Rec. Doc. 1-1 at 3.

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Policy Declaration lists as operators Captain Jose Hernan Maciel and Alan Parr (approved

mate).140

Paragraph 9 of the “General Exclusions” section of the policy states:

All policy coverages are excluded in their entirety when the insured vessel is being

operated by anyone other than those listed as named operators including those listed

on any bareboat charter agreement. Except in the event a listed named operator is

incapacitated and/or is otherwise unavailable due to injury or illness, when

coverage is extended to a substitute operator for the duration of the voyage.141

Paragraph 14 of the “General Exclusions” section of the policy states:

Unless it is agreed between us and you in writing and upon payment of the

additional premium and the appropriate endorsement issued, this insuring

agreement does not cover any loss howsoever caused and or any liability incurred

whilst the insured sailing vessel hereon is operated by one person only, i.e. “single

handed”. This exclusion does not apply to operation of the insured vessel without

sail(s) aloft within the confines of a marina.142

Plaintiff argues that New York law prohibits named operator endorsements like the

provisions here, and thus, the captain and crew warranty in the insurance policy is

unenforceable.143 Plaintiff cites New York Insurance Law § 3420(e), which states:

(e) No policy or contract of personal injury liability insurance or of property

damage liability insurance, covering liability arising from the ownership,

maintenance or operation of any motor vehicle or of any vehicle as defined in

section three hundred eighty-eight of the vehicle and traffic law, or an aircraft, or

any vessel as defined in section forty-eight of the navigation law, shall be issued or

delivered in this state to the owner thereof, or shall be issued or delivered by any

authorized insurer upon any such vehicle or aircraft or vessel then principally

garaged or principally used in this state, unless it contains a provision insuring the

named insured against liability for death or injury sustained, or loss or damage

occasioned within the coverage of the policy or contract, as a result of negligence

140 Id. at 1.

141 Rec. Doc. 1-2 at 4.

142 Id. at 4.

143 Id. at 6–7.

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in the operation or use of such vehicle, aircraft or vessel, as the case may be, by any

person operating or using the same with the permission, express or implied, of the

named insured.144

Plaintiffs rely on Jefferson145 in support of their argument. In Jefferson, the boat was being

operated, with permission of the owner, by a person not named on the insurance policy.146 The

policy contained a term that stated “[t]he person(s) listed on the following schedule is/are to be the

sole operator(s) of the insured vessel. If the insured vessel is operated by any other person(s), this

insurance is null and void.”147 The insurer denied coverage because the person operating the vessel

was not listed on the insurance policy. The court found that the language of the endorsement

directly violated N.Y. Ins. § 3420(e).148 “Where a provision of the insurance policy does not

comport with the public policies codified in N.Y. Ins. § 3420(e), it is void.”149 Thus, the court

concluded that the endorsement provision was unenforceable.150

In finding that the endorsement provision violated N.Y. Ins. § 3420(e), the court in

Jefferson considered whether the vessel was oceangoing, which would trigger the exclusion

enunciated in N.Y. Ins. § 3420(i). The New York Insurance Law does not define the term “ocean-

going vessel.” Courts have concluded that “[t]he policy itself determines whether it is the kind

144 N.Y. Ins. Law § 3420(e) (McKinney’s 2023).

145 Jefferson, 261 F.Supp. 2d 160.

146 Id.

147 Id. at 165.

148 Id.

149 Id. (citing Royal Indem. Co. v. Providence Washington Ins. Co., 92 N.Y.2d 653, 658, 684 N.Y.S.2d 470,

707 N.E.2d 425 (1998) (“the exclusion violates our public policy and is void.”)).

150 Id.

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intended to cover ‘oceangoing vessels.’”151 In Jefferson, the court looked to the geographical limits

of the policy to determine whether the vessel was oceangoing. There, the vessel was to be confined

to the “[w]aters of Long Island Sound and Great South Bay.”152 The court concluded that the vessel

was not an ocean-going vessel, and thus, N.Y. Ins. § 3420(e) applied to the policy.

In contrast, the insurance policy in the instant matter defines the navigational limits of the

subject vessel as “[w]aters of Eastport Maine to Brownsville Texas and the Bahamas (excluding

Cuba) not exceeding 250 miles offshore.”153 This includes waters within the North Atlantic Ocean

and goes beyond inland waters, lakes, rivers, bays, bays, tributaries, or sounds.154 As such, the

Court finds that the subject vessel is oceangoing, and thus, N.Y. Ins. § 3420(e) is inapplicable. For

this reason, the captain and crew warranty is enforceable under New York law.

Under New York law, courts interpreting the terms of an insurance contract must give

effect to the intent of the parties as expressed in the clear language of the contract.155 “If the

‘language is unambiguous, the court will discern the parties’ intent from the document itself as a

matter of law.’”156 “Under New York law, ‘warranties in maritime insurance contracts must be

strictly complied with, even if they are collateral to the primary risk that is the subject of the

151 Progressive NE Ins. Co. v. Am. Ins. Co., 2001 WL 959183, at *3 (S.D.N.Y. Aug. 21, 2001) (quoting N.Y.

Ins. § 2117(b)(3)(B)).

152 Jefferson, 261 F. Supp. 2d at 162.

153 Rec. Doc. 1-1 at 1.

154 See Progressive Northeastern, 2001 WL 959183 at *3.

155 Great Lakes Ins., 577 F. Supp. 3d at 473.

156 Id. at 473–74 (quoting Jefferson Block 24 Oil & Gas, L.L.C. v. Aspen Ins. UK Ltd., 652 F.3d 584, 589 (5th

Cir. 2011) (applying New York law)).

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contract, if the insured is to recover.’”157 “As explained by the Second Circuit, ‘the rule of strict

compliance with warranties in marine insurance contracts stems from the recognition that it is

peculiarly difficult for marine insurers to assess their risk, such that insurers must rely on the

representations and warranties made by insureds regarding their vessels’ condition and usage.’”158

New York courts have consistently recognized that express warranties in maritime

insurance contracts must be literally complied with, and that noncompliance forbids recovery,

regardless of whether the omission had a causal relation to the loss.159 Accepting all the allegations

in the Complaint as true, Plaintiffs admit they violated the captain and crew warranty because Parr

was operating the vessel alone at the time of the partial sinking. Under New York law, this breach

of the express warranty voids coverage, regardless of whether the breach caused the loss.

Therefore, the Court finds that coverage was properly denied, and the case must be dismissed.

V. Conclusion

For the reasons stated herein, Plaintiffs’ undisputed breach of the express captain and crew

warranty voided coverage under applicable New York law. Defendant’s properly denied coverage

when the vessel partially sank. Thus, Plaintiff’s claim must be dismissed. Accordingly,

157 Id. at 482 (quoting Commercial Union Ins. Co. v. Flagship Marine Servs., 190 F.3d 26, 31 (2d Cir. 1999)).

158 Id. (quoting Commercial Union, 190 F.3d at 31).

159 Ins. Co. of N. Am. v. Zaglool, 526 F. Supp. 2d 361, 366 (E.D.N.Y. 2007) (named operator warranty, inter

alia, barred coverage); Commercial Union, 190 F.3d at 31 (breach of tow warranty barred coverage); Triple Diamond

Café, Inc. v. Certain Underwriters at Lloyd’s London, 124 A.D.3d 763 (N.Y. 2015) (breach of alarm system warranty,

violating requirement for fully operational status, barred coverage); Jarvis Towing & Transp. Corp. v. Aetna Ins. Co.,

298 N.Y. 280 (1948) (breach of express warranty requiring thorough and frequent vessel inspections, including bilges,

while moored, barred coverage).

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IT IS ORDERED that the Motion to Dismiss!©° is GRANTED. Plaintiffs’ claims are

hereby DISMISSED WITH PREJUDICE.

NEW ORLEANS, LOUISIANA this _ 26th day of February, 2025.

NANNETTE J he BROWN

CHIEF JUDGE

UNITED STATES DISTRICT COURT

160 Rec. Doc. 9.

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