Galilea, LLC et al v. Pantaenius America Limited et al
Filing
43
ORDERED: The Insurer Defendants Motion to Stay (Doc. 2) and Pantaenius Motion to Stay (Doc. 6) are GRANTED and this action is STAYED pending the outcome of the Petition to Vacate the Arbitration Award in the Southern District of New York, and any subsequent arbitration proceedings that may occur. IT IS FURTHER ORDERED that within fourteen (14) days after the conclusion of proceedings before the Southern District of New York in Galilea, LLC v. AGCS Marine Insurance Company, Case No. 19-cv-5768-VEC (S.D.N.Y June 20, 2019), the parties shall file a Status Report. Signed by Magistrate Judge Timothy J. Cavan on 8/26/2019. (HEG)
8/26/2019
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
GALILEA, LLC and TAUNIA
KITTLER,
CV 18-131-BLG-SPW-TJC
Plaintiffs,
ORDER STAYING CASE
vs.
PANTAENIUS AMERICAN
LIMITED ANDREA M.
GIACOMAZZA, AGCS MARINE
INSURANCE COMPANY, LIBERTY
MUTUAL INSURANCE COMPANY,
and TORUS INSURANCE
COMPANY,
Defendants.
Plaintiffs Galilea, LLC (“Galilea”) and Taunia Kittler (together “Plaintiffs”)
brought this action against Defendants Pantaenius America Limited (“Pantaenius”)
and Andrea M. Giacomazza (together “Broker Defendants”); and Defendants
AGCS Marine Insurance Company, Liberty Mutual Insurance Company, and
Torus Insurance Company (together “Insurer Defendants”). In the complaint, both
Plaintiffs assert seven counts against the Broker Defendants relating to whether
they properly procured insurance (Counts I-VII), and Mrs. Kittler brings seven
counts individually against the Insurer Defendants relating to the denial of
insurance coverage for loss of the sailing yacht Galilea (Counts VIII-XIV). (Doc.
1.).
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I.
BACKGROUND
Galilea is a Nevada limited liability company that was formed by Chris and
Taunia Kittler for the purpose of owning their 60-foot sailing yacht, the Galilea.
(Doc. 1 at ¶ 1.) The Kittlers are Montana residents and are the sole members of
Galilea. (Id.) The Insurer Defendants are the insurance companies who provided
the coverage under the insurance policy at issue in this case. (Doc. 5-4.)
Pantaenius specializes in obtaining and administering yacht insurance policies, and
acts as an agent for the insurance underwriters. (Doc. 5-4; Galilea, LLC v. AGCS
Marine Ins. Co., 879 F.3d 1052, 1054 (9th Cir. 2018).) Giacomazza is an
employee of Pantaenius. (Doc. 1 at ¶ 4.)
On June 24, 2015, the Galilea ran ashore off the coast of Panama, and
was deemed a complete loss. (Doc. 1 at ¶¶ 31, 33-34.) Mr. Kittler
submitted a claim for insurance coverage the same day. (Id. at ¶ 35.) The
Insurer Defendants denied coverage on the basis that the accident occurred
outside of the cruising area identified in the policy. (Id. at ¶ 38.)
After Galilea requested the Insurer Defendants to reconsider the
coverage denial, the Insurer Defendants initiated arbitration proceedings in
New York. (Doc. 5-1.) In response, Galilea filed an action in this Court
against the Insurer Defendants. See Galilea v. AGCS Marine Ins. Co., Case
No. 15-cv-84-SPW, Docket No. 1 (D. Mont. August 28, 2015) (“Galilea I”).
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Ultimately, United States District Judge Susan P. Watters granted the Insurer
Defendants’ motion to compel arbitration in its entirety and dismissed the
case. Galilea I, Case No. 15-cv-84-SPW, Docket No. 50 (D. Mont. Feb. 9,
2018). Subsequently, on April 23, 2018, Galilea asserted counterclaims in
the arbitration proceedings.1 (Doc. 4-1.) The counterclaims are nearly
identical to the claims Galilea had alleged against the Insurer Defendants in
Galilea I. (Compare Galilea I, Case No. 15-cv-84-SPW, Docket No. 1 with
Doc. 4-1.)
On June 22, 2018, Plaintiffs filed the instant action. (Doc. 1.) Mrs. Kittler’s
claims against the Insurer Defendants in this case are substantially identical to the
counterclaims that Galilea and Mr. Kittler asserted in the arbitration proceedings.
(Compare Doc. 1 at ¶¶ 82-127 with Doc. 4-1 at ¶¶ 46-54, 59-70, 77-81, 85-98.)
Plaintiffs also bring claims against the Broker Defendants for the first time. (Doc.
1.) Plaintiffs’ claims against the Broker Defendants are based on the same nucleus
of facts as the counterclaims in the arbitration proceedings.
On February 15, 2019, the Court issued Findings and Recommendations,
recommending that Judge Watters compel Mrs. Kittler to arbitrate her claims
against the Insurer Defendants because she was seeking direct benefits under the
insurance policy. (Doc. 27.) The Court also recommended that Pantaenius’
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Mr. Kittler also joined the arbitration as an additional party. (Doc. 4 at ¶¶ 4, 7.)
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motion to compel arbitration be granted. (Id.) Thereafter, Mrs. Kittler sought to
amend the Complaint to remove Counts VIII (declaratory relief) and IX (breach of
contract) so that she could avoid arbitration. (Doc. 33.)
On March 19, 2019, Judge Watters issued an order rejecting the
undersigned’s Findings and Recommendations. (Doc. 38.) Judge Watters granted
the Insurer Defendants’ Motion to Dismiss as to Counts VIII and IX. (Id.) As a
result, the basis for the Court’s determination that Mrs. Kittler must arbitrate her
claims against the Insurer Defendants was removed. Judge Watters also denied
Pantaenius’ Motion to Compel Arbitration. (Id.) Judge Watters then recommitted
this matter to the undersigned to determine the merit, if any, of the remainder of
the Insurer Defendants’ Motion to Dismiss and/or Stay the Action (Doc. 2), and
Pantaenius’ Motion to Dismiss and/or Stay the Action. (Doc. 6.)
On April 9, 2019, Defendants filed a Notice of Final Arbitration
Award with this Court, indicating the arbitration proceedings in New York
have concluded. (Doc. 41.) The New York Arbitral Tribunal ruled: 1) all
counterclaims made by Galilea and Mr. Kittler under the policy were denied
with prejudice; 2) the policy was void ab initio due to Galilea and Mr.
Kittler’s failure to disclose previous Galilea insurance claims; and 3) Galilea
and Mr. Kittler did not establish by a preponderance of the evidence that
they notified the Insurer Defendants of their specific insurance requirements.
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(Doc. 41-1 at 36-37.) Specifically, the Arbitral Tribunal found Galilea and
Mr. Kittler failed to establish that they communicated to Pantaenius, or any
person working for Pantaenius, a specific request for expanded insurance
coverage. (Id. at 34.) Therefore, the Arbitral Tribunal determined Galilea
and Mr. Kittler were not entitled to coverage for the grounding of the
Galilea. (Id. at 37.) The Broker Defendants were not parties to the New
York arbitration proceedings.
On June 20, 2019, Galilea and Mr. Kittler filed a Petition to Vacate
the Arbitration Award in the United States District Court for the Southern
District of New York. See Galilea, LLC v. AGCS Marine Insurance
Company, Case No. 19-cv-5768-VEC, Docket No. 1 (S.D.N.Y June 20,
2019). 2 That action is currently pending. The Arbitration Award, therefore,
has not been confirmed.
II.
DISCUSSION
A.
The Insurer Defendants’ Motion to Dismiss and/or Stay
The Insurer Defendants first argue that all claims pursued by Mrs. Kittler
individually should be dismissed for lack of standing. They argue Galilea is the
real party in interest, and that Mrs. Kittler has no standing to personally assert
2
The Court takes judicial notice of the record from the United States District Court
for the Southern District of New York pursuant to Fed. R. Evid. 201.
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claims for damage to property owned by the LLC. The Insurer Defendants further
point out that Galilea has already pursued its claims against them in the arbitration
proceedings. The Insurer Defendants also argue Mrs. Kittler’s individual claims
each fail as a matter of law. Alternatively, the Insurer Defendants argue this action
should be stayed pending the outcome of the arbitration in New York because Mrs.
Kittler seeks the same alleged damages as Galilea and Mr. Kittler seek in the
arbitration.
Plaintiffs respond that Mrs. Kittler has standing to assert claims against the
Insurer Defendants. Plaintiffs further argue this action should not be stayed
because it does not overlap with the arbitration proceedings.
B.
Pantaenius’ Motion to Dismiss and/or Stay
Pantaenius likewise argues Mrs. Kittler’s individual claims should be
dismissed for lack of standing. In addition, Pantaenius argues both Mrs. Kittler
and Galilea’s joint claims fail because they are based on an inaccurate
characterization that Pantaenius acted as Plaintiffs’ insurance broker. Pantaenius
cites to declarations the Kittlers filed in Galilea I, in which they both stated: “I also
did not engage the services of an insurance broker in conjunction with Galilea,
LLC’s application for and purchase of the subject insurance policy.” (Docs. 7-13;
7-14.) Pantaenius states that it was actually an agent of the Insurer Defendants,
and was not Plaintiffs’ insurance broker.
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In the alternative, Pantaenius requests this action be stayed pending the
conclusion of the New York arbitration.
Plaintiffs counter that Pantaenius’ arguments inappropriately rely on
materials outside of the pleadings. Plaintiffs further argue a stay is inappropriate
because the Broker Defendants are not parties to the New York arbitration.
C.
Stay Pending the Resolution of the Arbitration Proceedings is
Appropriate
“A stay is not a matter of right…. It is instead ‘an exercise of judicial
discretion’ … [that] ‘is dependent upon the circumstances of the particular case.’”
Nken v. Holder, 556 U.S. 418, 433 (2009) (internal citations omitted) (quoting
Virginia Ry. Co. v. United States, 272 U.S. 658, 671-73 (1926). “The party
requesting a stay bears the burden of showing that the circumstances justify an
exercise of that discretion.” Nken, 556 U.S. at 433-34. Traditionally, four factors
are assessed in determining whether to stay proceedings: 1) whether the party
seeking a stay has made a strong showing that it is likely to succeed on the merits;
2) whether the movant will be irreparably injured if a stay is not imposed; 3)
whether a stay will substantially injure other parties interested in the proceedings;
and 4) where the public interest lies. Nken, 556 U.S. at 434.
Here, the Court finds a stay is appropriate. First, Mrs. Kittler’s remaining
individual claims against the Insurer Defendants in this case are identical to the
counterclaims asserted by Galilea and Mr. Kittler in the arbitration proceedings.
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Compare Doc. 1 (Count X - promissory estoppel; Count XI - equitable estoppel;
Count XII - breach of fiduciary duty; Count XIII - negligent misrepresentation; and
Count XIV – constructive fraud); with Doc. 4-1 (Count IV – promissory estoppel;
Count V – equitable estoppel; Count VII – fiduciary duty; Count IX – negligent
misrepresentation; and Count X – constructive fraud). The Arbitral Tribunal has
issued an Arbitration Award resolving the claims in the Insurer Defendants’ favor,
which tends to support the Defendants’ argument that they will likely succeed on
the merits here. (See Doc. 41-1.) But Galilea and Mr. Kittler are presently
challenging the Arbitration Award in the Southern District of New York. See
Galilea, LLC v. AGCS Marine Insurance Company, Case No. 19-cv-5768-VEC
(S.D.N.Y June 20, 2019). Therefore, at the present time, the Arbitration Award is
not final.
Second, although the Broker Defendants were not parties to the New York
arbitration proceedings, Plaintiffs’ claims against the Broker Defendants are based
on the same underlying facts and circumstances as the counterclaims in the
arbitration. Plaintiffs also allege the same “damages in excess of $1,566,500” as
Galilea claimed in the arbitration. Further, the Arbitral Tribunal has made factual
findings that directly relate to Plaintiffs’ claims against the Broker Defendants.
For example, Plaintiffs allege in this case that they “requested that the Broker
Defendants assist in acquiring appropriate insurance coverage for the Galilea,” and
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they assert they communicated to the Broker Defendants that the Galilea was
sailing in the Caribbean toward the Panama Canal, on the way to its destination in
the San Diego area. (Doc. 1 at ¶¶ 19, 46.) But the Arbitral Tribunal found the
Kittlers:
Have not established by a preponderance of the evidence, that they made the
following communications to Pantaenius or to any person working for
Pantaenius:
1. That the Galilea was undertaking or attempting to undertake a journey
from the east coast of Florida through the Caribbean, along the coast of
South America, through the Panama Canal, up the coast of Central America
and Mexico to San Diego.
2. That insurance coverage for such voyage was being sought or was
requested.
(Doc. 41-1 at 34.) The Arbitral Tribunal also found “in 2015 the Kittlers decided
not to avail themselves of the services of an insurance broker as they sought
insurance coverage for their yacht.” (Id. at 28.)
The Supreme Court of the United States has described § 2 of the Federal
Arbitration Act as reflecting a “liberal federal policy favoring arbitration.” Moses
H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). That
policy favors staying this action until the New York arbitration, which involves all
of the same claims and underlying facts at issue in this case, has been finalized.
Firm resolution of the arbitration proceedings and confirmation of the Arbitration
Award will likely guide the Court’s decision here. The Insurer Defendants have
indicated they intend to file a motion to dismiss regarding the res judicata and/or
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collateral estoppel effect of the Arbitration Award. In light of the fact Galilea and
Mr. Kittler have filed a Petition to Vacate the Arbitration Award, however, the
finality of the arbitration has yet to be determined. Therefore, depending on the
outcome of the proceedings in the Southern District of New York, it is possible the
claims in this case may be rendered moot. See e.g. C.D. Anderson & Co. v. Lemos,
832 F.2d 1097, 1100 (9th Cir. 1987) (noting “[a]n arbitration decision can have res
judicata or collateral estoppel effect”). Further, if the Court were to proceed in this
action before the Arbitration Award is confirmed, there is a potential for
inconsistent findings on the merits of the parties’ claims and defenses. Consistent
judgments favor not only both parties, but also the public interest.
Additionally, the Plaintiffs have not alleged or presented any evidence to
suggest that they, or any other interested party, will be substantially injured by a
stay.
Accordingly, in the interest of judicial economy and the exercise of the
Court’s discretion, the Court finds this case should be stayed pending the outcome
of the proceedings in the Southern District of New York.
III.
CONCLUSION
Based on the foregoing, IT IS HEREBY ORDERED that the Insurer
Defendants’ Motion to Stay (Doc. 2) and Pantaenius’ Motion to Stay (Doc. 6) are
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GRANTED and this action is STAYED 3 pending the outcome of the Petition to
Vacate the Arbitration Award in the Southern District of New York, and any
subsequent arbitration proceedings that may occur.
IT IS FURTHER ORDERED that within fourteen (14) days after the
conclusion of proceedings before the Southern District of New York in Galilea,
LLC v. AGCS Marine Insurance Company, Case No. 19-cv-5768-VEC (S.D.N.Y
June 20, 2019), the parties shall file a Status Report.
IT IS ORDERED.
DATED this 26th day of August, 2019.
_______________________________
TIMOTHY J. CAVAN
United States Magistrate Judge
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Because the motions to stay this action are “not dispositive of either the case or
any claim or defense within it,” the Court has authority to determine the motions
under 28 U.S.C. § 636(b)(1)(A). S.E.C. v. CMKM Diamonds, Inc., 729 F.3d 1248,
1259-60 (9th Cir. 2013) (holding that where a motion to stay civil proceedings
does not result in the denial of any relief sought, then the matter is nondispositive,
and the motion may be resolved by an order issued by a magistrate judge).
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