Nautilus Insurance Company v. Captain Pip's Holdings, LLC

USCA11 Case: 24-12440 Document: 44-1 Date Filed: 07/29/2025 Page: 1 of 11

[DO NOT PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 24-12440

Non-Argument Calendar

____________________

NAUTILUS INSURANCE COMPANY,

Plaintiff-Appellant,

versus

CAPTAIN PIP’S HOLDINGS, LLC,

Defendant-Appellee,

DANIEL COUCH, et al.,

Defendants.

____________________

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2 Opinion of the Court 24-12440

Appeal from the United States District Court

for the Southern District of Florida

D.C. Docket No. 4:23-cv-10093-JEM

____________________

Before NEWSOM, GRANT, and WILSON, Circuit Judges.

PER CURIAM:

Plaintiff-Appellant Nautilus Insurance Company (Nautilus)

appeals the district court’s order granting Defendants-Appellees

Captain Pip’s Holdings, LLC (Captain Pip’s) and Daniel Couch’s

motion to dismiss for lack of subject matter jurisdiction.

On appeal, Nautilus first argues the district court abused its

discretion when it dismissed its duty to defend claim for lack of

ripeness. Next, Nautilus argues the district court erred in applying

the Brillhart1/Wilton2 abstention doctrine for declaratory relief ra-

ther than the stricter Colorado River 3 doctrine applicable to coercive

claims. After careful review, we find the district court erred because

the duty to defend claims are ripe, and the district court should ex-

ercise jurisdiction over the coercive rescission claim subject only to

Colorado River abstention. Therefore, we reverse and remand.

1 Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942).

2 Wilton v. Seven Falls Co., 515 U.S. 277 (1995).

3 Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1979).

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I. Factual Background and Procedural History

A. The Insurance Policy

In 2021, Captain Pip’s applied to Nautilus for a Commercial

General Liability Insurance policy. The application asked whether

the applicant is “currently active in joint ventures.” Captain Pip’s

answered “No.” It also asked whether Captain Pip’s had “other

business ventures for which coverage is not requested,” to which

Captain Pip’s did not respond. The policy includes a Water-Related

Recreational Equipment Exclusion that precludes coverage for

bodily injury arising out of the use of any water-related recreational

equipment.

B. The Underlying Action

In June 2023, the underlying action was filed by Srinivasrao

Alaparthi as Personal Representative of the Estate of Supraja

Alaparthi and as parent and natural guardian of Ak. A, a minor

child, and Ravikumar Sadda and Asritha Ravala, as parents and nat-

ural guardians of V.S., a minor child (Underlying Plaintiffs) against

Captain Pip’s, Couch, and Tanner Helmers. According to the com-

plaint, the Underlying Plaintiffs “contacted Lighthouse Parasail,

Inc. and/or Captain Pip’s Holdings, LLC, and booked parasailing

activities.” Couch and Helmers were the crew on the boat and

were “employed or contracted by” Captain Pip’s. While the Under-

lying Plaintiffs were on the boat, the crew lost control of the para-

sail due to the poor weather conditions and cut the towline that

connected the parasail to the boat. The untethered parasail dragged

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4 Opinion of the Court 24-12440

the Underlying Plaintiffs across the water before colliding with a

bridge, resulting in death and injury.

The Underlying Plaintiffs allege that Captain Pip’s “oper-

ated, controlled, and/or sold various watersports activities that

were based out of its marina and resort,” including parasailing; that

these activities were conducted “through partnerships or joint ven-

tures with . . . Lighthouse”; that Captain Pip’s “held itself out to be

in partnership or a joint venture” with Lighthouse; and that Cap-

tain Pip’s “marketed, advertised, and sold its marina, resort, and

aforementioned watersports activities through partners or joint

ventures, including Lighthouse.” Based on these allegations, the

Underlying Plaintiffs assert claims against Captain Pip’s for negli-

gence and vicarious liability. Nautilus is defending Captain Pip’s in

the underlying action with a reservation of rights.

C. The Instant Action

Nautilus sued Captain Pip’s, Couch, Helmers, 4 and the Un-

derlying Plaintiffs for a declaration that it does not have a duty to

defend or indemnify Captain Pip’s, Couch, or Helmers. Nautilus

alleged that the Watercraft Exclusion applies (Count I), that the

Water-Related Recreational Equipment Exclusion applies (Count

III), and that Couch (Count II) and Helmers do not qualify as “in-

sureds” under the policies.

4 Helmers stipulated with Nautilus that he does not qualify as an insured. The

district court entered a final order of dismissal as to Helmers.

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Nautilus also requested a rescission of the policies (Count

IV) based on material misrepresentations in the renewal applica-

tion. Those being Captain Pip’s “No” answer to whether it was

“currently active in joint ventures” and its non-response to

whether Captain Pip’s had “other business ventures for which cov-

erage is not requested.” Captain Pip’s moved to dismiss based on

the lack of subject matter jurisdiction, or alternatively to stay

claims for declaratory relief as to the duty to indemnify and rescis-

sion. The district court granted Captain Pip’s motion finding that it

lacked subject matter jurisdiction on ripeness and abstention

grounds. Nautilus timely appealed.

II. Jurisdiction

As a threshold matter, we must always determine our own

jurisdiction. Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 410

(11th Cir. 1999). We only review final decisions, and to constitute

a final decision supporting an appeal under 28 U.S.C. § 1291, the

district court must adjudicate all claims against all parties. Corsello

v. Lincare, Inc., 276 F.3d 1229, 1230 (11th Cir. 2001) (per curiam).

Captain Pip’s argues the district court’s order dismissed

Nautilus’ claims against Captain Pip’s only, leaving the claims

against Couch and the Underlying Plaintiffs. But the district court

found that it lacked subject matter jurisdiction over all the counts

in the Amended Complaint. After the dismissal, there are no re-

maining counts against any parties, and this is a final judgment. We

therefore have jurisdiction.

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III. Duty to Defend Claims

“We review the district court’s dismissal of [a] declaratory

judgment action for abuse of discretion.” Ameritas Variable Life Ins.

v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005) (per curiam). “An

abuse of discretion occurs when a district court commits a clear

error of judgment, fails to follow the proper legal standard or pro-

cess for making a determination, or relies on clearly erroneous find-

ings of fact.” Yellow Pages Photos, Inc. v. Ziplocal, LP, 846 F.3d 1159,

1163 (11th Cir. 2017) (per curiam).

Duty to defend claims, unlike indemnification claims, are

ripe prior to the adjudication of the underlying suit. See James River

Ins. v. Rich Bon Corp., 34 F.4th 1054, 1058 (11th Cir. 2022). Under

Florida law the duty to defend “‘depends solely on the allegations

in the complaint filed against the insured.’” Trizec Properties, Inc. v.

Biltmore Const. Co., 767 F.2d 810, 811 (11th Cir. 1985) (quoting Trop-

ical Park, Inc. v. United States Fidelity and Guar. Co., 357 So.2d 253,

256 (Fla. 3d Dist. Ct. App. 1978)).

Declaratory judgments play an invaluable role in duty to de-

fend cases, “clarifying insurance companies’ liability quickly and di-

rectly.” James River, 34 F.4th at 1058. The Declaratory Judgment

Act, 28 U.S.C. § 2201(a), “vests courts with discretion to say

whether declaratory relief is appropriate.” Id. at 1056. But insurers

“reasonably expect the federal courts to resolve run-of-the-mill dis-

putes about their duties to defend and indemnify against claims

made in an underlying tort action. In fact, allowing a declaratory

action by an insurer to establish nonliability under casualty

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insurance was one of the prime purposes of the Declaratory Judg-

ment Act.” Id. at 1062. (Brasher, J., concurring) (internal quotation

marks omitted).

District courts should consider the “guideposts” from Ameri-

tas “when deciding whether to dismiss a federal declaratory judg-

ment action that overlaps with a state case.” Id. at 1059. A district

court abuses its discretion when it does not consider all claims dur-

ing its Ameritas analysis. Id. at 1061.

The district court found a lack of subject matter jurisdiction

for Counts I–III because an insurer’s “duty to indemnify is not ripe

for adjudication in a declaratory judgment action until the insured

is in fact held liable in the underlying suit.” The underlying state

court case is ongoing; thus, Nautilus may not be liable for any dam-

ages in the underlying action so the indemnification claims are not

ripe. This is correct.

However, the district court further found that the duty to

defend claims are not ripe “because this assumes that the state

court will rule in Nautilus’ favor on the duty to defend.” Because

the duty to defend claims are ripe and the district court did not con-

sider the Ameritas factors, it abused its discretion when it dismissed

the duty to defend claims. See James River Ins., 34 F.4th at 1060–61;

Trizec Props, 767 F.2d at 812 (“The duty to defend is separate and

apart from the duty to indemnify.”). Thus, we remand to the dis-

trict court for consideration of the duty to defend claims in Counts

I, II, and III. Next, we move to which abstention doctrine applies

to the rescission claim in Count IV.

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IV. Abstention

We review the application of abstention doctrines for abuse

of discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 289 (1995). “A

district court will abuse its discretion if it makes an error of law or

makes a clearly erroneous factual finding.” Jackson-Platts v. Gen.

Elec. Cap., 727 F.3d 1127, 1133 (11th Cir. 2013).

“[A]bstention ‘is an extraordinary and narrow exception to

the duty of a District Court to adjudicate a controversy properly

before it.’” Id. (quoting Colorado River Water Conservation Dist. v.

U.S., 424 U.S. 800, 813 (1976)). Colorado River abstention applies

only in rare circumstances “where the order to the parties to repair

to the state court would clearly serve an important countervailing

interest.” 424 U.S. at 813.

But this is not so for declaratory judgment suits as the Su-

preme Court announced in Brillhart and Wilton. This is “because

that statute vests courts with discretion to say whether declaratory

relief is appropriate in the underlying conflict.” James River, 34 F.4th

at 1056. “So while federal courts normally have an ‘unflagging ob-

ligation’ to exercise our jurisdiction, where declaratory judgments

are concerned this imperative yields to considerations of practical-

ity and wise judicial administration.” Id. at 1059 (internal quotation

marks omitted). In these cases, the more deferential Ameritas fac-

tors should be considered. See id.

In mixed complaints, complaints that include both declara-

tory and coercive claims, three tests have arisen in the federal

courts to determine which abstention doctrine applies. The first

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approach is to find that the Brillhart/Wilton discretionary standard

(as operationalized in this circuit through the Ameritas factors) is

per se replaced by the harsher Colorado River test whenever an ac-

tion includes both declaratory and non-frivolous coercive claims.

See Kelly Inv. Inc. v. Cont’l Common Corp., 315 F.3d 494, 497 n.4 (5th

Cir. 2003); VonRosenberg v. Lawrence, 781 F.3d 731, 735 (4th Cir.

2015); Vill. of Westfield v. Welch’s, 170 F.3d 116, 124 n.5 (2d Cir.

1999). Another is to apply Colorado River if the coercive claims can

exist independently of requests for declaratory relief, such that they

could survive even if the declaratory claims vanished. See United

Nat. Ins. v. R & D Latex Corp., 242 F.3d 1102, 1112–13 (9th Cir. 2001);

R.R. St. & Co., Inc. v. Vulcan Materials Co., 569 F.3d 711, 716–17 (7th

Cir. 2009); Rarick v. Federated Service Ins. Co., 852 F.3d 223, 229 (3d

Cir. 2017). The third avenue is to look to the “heart of the action,”

meaning “if the outcome of the coercive claims hinges on the out-

come of the declaratory ones, Wilton’s standard governs; con-

versely, if the opposite applies, Colorado River’s standard controls.”

Lexington Ins. v. Rolison, 434 F. Supp. 2d 1228, 1236–37 (S.D. Ala.

2006); Royal Indem. Co. v. Apex Oil Co., 511 F.3d 788, 795–96 (8th Cir.

2008).

Here, in Count IV, Nautilus asks for rescission of the con-

tract based on alleged material misrepresentations made by Cap-

tain Pip’s in the renewal application. The district court applied the

Ameritas factors and determined they favored abstention and thus

dismissed the claim. This dismissal was in error.

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Rescission is a coercive claim, see Occidental Life Ins. of Cal. v.

Nichols, 216 F.2d 839, 842 (5th Cir. 1954), 5 where Colorado River ab-

stention doctrine would typically apply. That said, the complaint

here contained claims for both declaratory and coercive relief,

making this a mixed complaint. The rescission claim is based on

alleged material misrepresentations of “joint ventures,” while the

declaratory relief claims are based on the watercraft exclusions.

Our circuit has yet to adopt a test for determining which abstention

doctrine applies in the case of mixed complaints, and we do not

have an occasion to announce one today. Under any of the three

approaches, the district court should have applied Colorado River

abstention. The complaint contains a non-frivolous coercive claim,

the rescission claim is based on different provisions in the contract

than the declaratory judgment claims and can exist independently.

Lastly, the outcome of the rescission claim does not depend on the

outcome of the duty to defend claim. If the district court finds that

Nautilus does have a duty to defend, notwithstanding the exclu-

sions, Nautilus could still seek rescission of the policy based on the

alleged material representations. If the district court finds Nautilus

does not to have a duty to defend, they may still seek rescission of

the entire policy. Therefore, the district court has a duty to exercise

jurisdiction subject only to Colorado River abstention. The district

court abused its discretion in applying the wrong legal test.

5 All decisions rendered by the Fifth Circuit prior to the close of business on

September 30, 1981, are binding precedent in the Eleventh Circuit. Bonner v.

City of Pritchard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).

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V. Conclusion

In sum, we reverse the district court’s finding that it lacks

subject matter jurisdiction because the duty to defend claims are

ripe, and the district court should exercise jurisdiction over the co-

ercive rescission claim subject only to Colorado River abstention.

REVERSED AND REMANDED.