Maclean et al v. Travelers Insurance Company

Filing 19

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER, granting 6 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM MOTION to Dismiss for Lack of Jurisdiction filed by Travelers Insurance Company.(Lima, Christine)

United States District Court
District of Massachusetts
Kevin Maclean & Donna Maclean;
Plaintiffs,
v.
Travelers Insurance Company;
Defendant.

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Civil Action No.
16-11338-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves a dispute about coverage under an
insurance policy and, specifically, whether the owner of a speed
boat is indemnified with respect to a purported boating accident
that occurred in Boston Harbor.

Kevin & Donna Maclean

(“plaintiffs” or “the Macleans”) seek a declaratory judgment
that Travelers Insurance Company (“Travelers” or “defendant”) is
obligated to indemnify and defend William Fallon (“Fallon”), the
owner of the M/V NIKKI, in a tort action arising from that
incident.

The tort claim is the subject of a separate

proceeding, Maclean v. Boston Harbor Mini Speed Boats (14-cv14288) (“the underlying action”), which is also pending in this
session.

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Now before this Court is defendant’s motion to dismiss for
lack of subject matter jurisdiction and for failure to state a
claim upon which relief can be granted.

For the following

reasons, that motion will be denied with respect to subject
matter jurisdiction but allowed for failure to state a claim.
I.

Background
In August, 2013, the Macleans boarded the M/V NIKKI to

enjoy a “lightning speedboat adventure”.

According to the

Macleans, the speedboat was traveling at a high rate of speed
when it crossed the wake of another boat, tossing the plaintiffs
into the air.

They allege that when they crashed down onto the

vessel they were seriously injured.
The Commercial Marine Insurance Policy that is the subject
matter of this action was issued by Travelers Property Casualty
Company of America to William Fallon, effective from June 26,
2013 to June 26, 2014 (“the policy”).

Although the renewed

policy was in effect at the time of the alleged incident, the
vessel was operated by Martin Cahill who was not named as an
operator under the Named Operator Endorsement to the policy
until two days after the accident.

Travelers asserts that

Cahill’s operation of the vessel breached a policy warranty and,
accordingly, it owes no duty to indemnify or defend Mr. Fallon
in the underlying action.

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Plaintiffs filed the present complaint in June, 2016,
seeking 1) a declaration of rights that the policy covers the
plaintiff’s alleged injuries; 2) a declaration of rights that
Travelers is obligated to indemnify and defend Mr. Fallon; and
3) costs and other relief the Court deems fair and appropriate.
In response, the defendant filed the motion to dismiss currently
before the court.
Because the Court agrees that Mr. Cahill’s involvement
breached the Named Operator Warranty, defendant’s motion to
dismiss will be allowed.
II.

The Policy
This dispute turns on two provisions of the Commercial

Marine Insurance Policy.

First, the policy’s choice of law

provision provides that “[t]his policy shall be interpreted in
accordance with the provisions of Federal Maritime Insurance
Law.”
Second, the policy contains a Named Operator Endorsement,
which provides in relevant part:
Named Operator means the Named Insured and any other
person, so designated by the Named Insured and approved by
Us, to operate the insured vessel. Named Operators
approved to operate the insured vessel are listed on the
Named Operator Schedule included with this endorsement.
It is hereby warranted that all coverage provided under
this policy is null and void when the insured vessel is
operated by anyone other than those persons listed on the
Named Operator Schedule.

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In May, 2017, Fallon “unconditionally and irrevocably” and
“for good and valuable consideration received” assigned his
rights under the policy to the Macleans for purposes of
contesting Travelers’ denial of coverage.
III. Analysis
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.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).

In considering the merits of

a motion to dismiss, the Court may look only to the facts
alleged in the pleadings, documents attached as exhibits or
incorporated by reference in the complaint and matters of which
judicial notice can be taken. Nollet v. Justices of Trial Court
of Mass., 83 F. Supp. 2d 204, 208 (D. Mass. 2000), aff’d, 248
F.3d 1127 (1st Cir. 2000).

Furthermore, the Court must accept

all factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff's favor. Langadinos v.
Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000).

Although a

court must accept as true all of the factual allegations
contained in a complaint, that doctrine is not applicable to
legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662 (2009).

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A. Lack of subject-matter jurisdiction
Defendant contends that this Court lacks subject matter
jurisdiction over this case because plaintiffs lack standing and
that the declaratory judgment requested by plaintiffs is not yet
ripe.

Both contentions are misguided.

The “irreducible constitutional minimum of standing”
requires that a plaintiff 1) suffered an injury in fact, 2)
fairly traceable to the actions of the defendant that is 3)
likely to be redressed by a favorable judicial decision. Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547(2016).
William Fallon assigned his rights under the policy to the
Macleans “for purposes of contesting Travelers denial of
insurance coverage” for the incident.

Given that assignment,

plaintiffs have a legal interest, are potentially injured by
defendant’s conduct and would be redressed by a declaratory
judgment in their favor.

Plaintiffs have standing to bring this

action.
Defendant further contends that this declaratory judgment
action is not ripe because the claimant has yet to resolve the
underlying action against the tortfeasor.
fails.

That contention also

Even though the plaintiffs have not yet established that

“coverage extends to the claims against [the tortfeasor] does
not render the claim unripe.” Tocci Bldg. Corp. of New Jersey v.
Virginia Sur. Co., 750 F. Supp. 2d 316, 323 (D. Mass. 2010).
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Plaintiffs have standing and their claim is ripe.

The

defendant’s motion to dismiss for lack of subject matter
jurisdiction will be denied.
B.
Failure to state a claim upon which relief can be
granted
Defendant also maintains that plaintiffs have failed to
state a claim because it is clear from the complaint that the
named operator warranty in the policy was breached and thus
coverage was voided.

Plaintiffs respond that Massachusetts law

governs the policy, placing it within the ambit of M.G.L. c. 175
§ 186. Under that statute, they contend, the warranty was either
not breached or the breach did not void coverage.

In either

case, plaintiffs maintain, the policy covers the incident.
Plaintiffs’ theory is unavailing.

The clear language of

the contract unambiguously places the incident outside the
protection of the policy.
Maritime law, and not the law of the Commonwealth of
Massachusetts, governs the contract.

Federal courts sitting in

admiralty apply federal choice of law rules. Szafarowicz v.
Gotterup, 68 F. Supp. 2d 38, 43 (D. Mass. 1999)(citing State
Trading Corp. of India v. Assuranceforeningen Skuld, 921 F.2d
409, 414 (2d Cir.1990)) (additional citation omitted).

Under

those rules, where a maritime contract includes a choice of law
clause, that choice governs unless the jurisdiction has no

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substantial relationship to the transaction or parties, or the
law of that jurisdiction conflicts with the fundamental purposes
of maritime law. Cashman Equip. Corp. v. Kimmins Contracting
Corp., 2004 WL 32961, at *3 (D. Mass. Jan. 5, 2004) (citing
Stoot v. Fluor Drilling Servs., Inc., 851 F.2d 1514, 1517 (5th
Cir. 1988)) (additional citation omitted).
The policy contains an unambiguous choice of law clause
providing that “[t]his policy shall be Interpreted in accordance
with the provisions of Federal Maritime Insurance Law.”

Here,

maritime law has a substantial relationship to the parties and,
a fortiori, maritime law cannot conflict with the fundamental
purpose of maritime law. Cf. Lloyd's of London v. Pagan-Sanchez,
539 F.3d 19, 26 (1st Cir. 2008) (deferring to insurance policy’s
choice of law clause in maritime insurance dispute).
Under maritime law, “a breach of a promissory warranty in a
maritime insurance contract excuses the insurer from coverage.”
Id. at 24 (citations omitted).

The Named Operator Endorsement

is a promissory warranty because it is a provision “by which the
insured stipulates that something shall be done or omitted after
the policy takes effect and during its continuance.” Id.
(quoting 2 L.R. Russ & T.F. Segalla, Couch on Insurance § 81:14
(3d ed. 2008)).
Fallon acknowledged that the policy would be “null and void
when the insured vessel is operated by anyone other than those
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persons listed on the Named Operator Schedule.”

The incident

occurred when someone other than a listed operator was operating
the vessel.

The policy’s coverage does not extend to the

incident.
Plaintiffs present a time-insensitive alternative that
seeks to obscure the clear contractual text.

Although they

acknowledge that Mr. Cahill was not a named operator on August
12, 2013, the date of the accident, they emphasize that he was
added to the named operator schedule two days later.

They

contend the policy is silent about retroactive approval and,
because ambiguous insurance provisions are resolved against the
insurer, the warranty was not breached.

While the theory is

clever, it does not square with the clear text of the policy
which is void when operated by a non-listed operator.

This

Court declines to create ambiguity where none exists.
Accordingly, the Court concludes that Fallon breached the
warranty of the policy and that Travelers has no duty to
indemnify or defend him in this action.

The defendant’s motion

to dismiss for failure to state a claim upon which relief can be
granted will be allowed.

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ORDER
For the foregoing reasons, defendant’s motion to dismiss
(Docket No. 7) is ALLOWED.
So ordered.
/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated October 26, 2017

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