Nieto-Vincenty et al v. Valledor et al

Filing 73

MEMORANDUM AND ORDER re 66 Motion to Dismiss. The complaint and cross-claim do not state a plausible claim for relief against Lexington. Lexington's motion to dismiss is GRANTED and Lexington is DISMISSED as a defendant in this case. Signed by Judge Francisco A. Besosa on 12/12/2013. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
RAFAEL ISMAEL NIETO-VICENTY, et
al.,
Plaintiffs,
Civil No. 12-1585 (FAB)

v.
RONALD JOSE VALLEDOR, et al.,
Defendants.

MEMORANDUM AND ORDER
BESOSA, District Judge
Before the Court is defendant Lexington Insurance Company’s
(“Lexington”) motion to dismiss the complaint and cross-claim
against it.

(Docket No. 66.)

Having considered that motion, and

plaintiffs’ and cross-plaintiff’s oppositions, (Docket Nos. 67, 68,
&

71),

the

Court

GRANTS

Lexington’s

motion

to

dismiss.

Accordingly, the parties’ pending motions in compliance regarding
Lexington’s status as a party, (Docket Nos. 61, 62, 63, 64 & 65),
are MOOT.
I.

Background
On July 20, 2012, twenty-eight plaintiffs filed a complaint in

admiralty and maritime jurisdiction against thirteen defendants,1
including Lexington, alleging injuries resulting from the sinking

1

This Court has admiralty and maritime jurisdiction over
plaintiffs’ claims pursuant to 28 U.S.C. § 1333.

Civil No. 12-1585 (FAB)

2

of the M/V Sea Watch on July 24, 2011.

(Docket No. 1.)

The

complaint alleges that the vessel at issue was owned by Zurqui,
Inc. (“Zurqui”), which in turn had a marine insurance policy with
Lexington.

(Docket No. 1 at p. 7.)

Specifically, plaintiffs

alleged that Lexington “had issued and in force a policy of marine
insurance to ZURQUI covering [the Sea Watch] . . . providing
Property and Liability Insurance and is jointly and severally
liable to the Plaintiffs as a matter of law . . . .”

(Docket No. 1

at ¶ 27.)
On March 11, 2013, co-defendant Palmas del Mar Yacht Club and
Marina

(“PDMYC”)

filed

a

cross-claim

against

the

defendants,

including Lexington, seeking indemnification and contribution from
the defendants should a judgment be entered against PDMYC. (Docket
No. 34). The allegations in PDMYC’s claim against Lexington state:
To the extent that the policy of insurance issued by
Lexington covers the losses alleged by the plaintiffs,
then Lexington is liable also to PDMYC, or the plaintiffs
directly, under the Puerto Rico direct action statute, 26
L.P.R.A. §§ 2001 and 2003, for any judgment or moneys
paid by PDMYC in the above captioned action.
(Docket No. 34 at ¶ 15.)
On September 1, 2011, prior to the filing of the complaint,
Lexington

filed

a

declaratory

judgment

action

against

Zurqui

seeking a judgment that Zurqui breached one or more warranties of
its policy,

voiding

July 24, 2011.

the

policy

coverage

for

the

incident

(Case number 11-cv-01862, Docket No. 1.)

on

Pursuant

to a consent decree, a judgment was entered by Judge Carmen

Civil No. 12-1585 (FAB)

3

Consuelo Cerezo on June 13, 2013 declaring that Zurqui’s breach of
the passenger limitation warranty relieved Lexington from providing
coverage for the maritime insurance claim.

(Docket No. 53.)

Lexington filed a motion to dismiss on September 5, 2013.
(Docket No. 66.)

PDMYC filed an opposition on September 18, 2013,

(Docket No. 67), and the plaintiffs filed an opposition adopting
PDMYC’s

opposition

Lexington
(Docket

filed

No.

a

71.)

on

September

consolidated
No

other

22,

2013,

reply

remaining

on

(Docket

September

defendant

-

No.
30,

68).
2013.

including

defendant Zurqui - filed a response to Lexington’s motion to
dismiss.
II.

Legal Analysis
A.

Rule 12(b)(6) Standard
“The question confronting a court on a motion to dismiss

is whether all the facts alleged, when viewed in the light most
favorable to the plaintiffs, render the plaintiff’s entitlement to
relief plausible.” Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d 1,
14 (1st Cir. 2011) (internal citations omitted) (emphasis in
original).

Plaintiffs faced with a motion to dismiss cannot

“‘proceed perforce’ by virtue of allegations that merely parrot the
elements of the cause of action.”

Id. at 12.

A court must treat

any non-conclusory factual allegations in the complaint as true,
“even if seemingly incredible.”

Id.

In ruling on such a motion,

the Court may consider “(a) ‘implications from documents’ attached

Civil No. 12-1585 (FAB)
to

or

fairly

susceptible

4

‘incorporated

to

‘judicial

into

the

notice,’

complaint,’

and

(c)

(b)

‘facts’

’concessions’

plaintiff’s ‘response to the motion to dismiss.’”

in

Schatz v.

Republican State Leadership Comm., 669 F.3d 50, 55-6 (1st Cir.
2012) (citing Arturet-Velez v. R.J. Reynolds Tobaccos Co., 429 F.3d
10, 13 n.2 (1st Cir. 2005)); see also Field v. Trump, 850 F.2d 938,
949 (2d Cir. 1988) (considering documents that were annexed to
defendants’ motion to dismiss and integral to plaintiff’s claims).
A court’s review on a a motion to dismiss is limited to the
allegations contained in complaint itself.

Glaros v. Perse, 628

F.2d 679, 681 (1st Cir. 1980).
Lexington asks the Court to consider documents pertaining
to Zurqui’s maritime insurance policy because they were integral to
the plaintiffs’ claims against Lexington and referenced in the
complaint.
insurance

(Docket Nos. 66 & 66-1.)
policy

documents

attached

The Court agrees that the
to

Lexington’s

motion

to

dismiss can be considered without converting the motion into one
for summary judgment.

“Otherwise, a plaintiff with a legally

deficient claim could survive a motion to dismiss simply by failing
to attach a dispositive document on which it relied.”

Pension

Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192,
1196 (3d Cir. 1993) (internal citation omitted).
Lexington

argues that

the

complaint

and

cross-claim

against it should be dismissed because Zurqui violated one or more

Civil No. 12-1585 (FAB)

5

warranties in its insurance policy with Lexington, voiding its
insurance coverage for the incident in question.
B.

Maritime Insurance Law
Lexington

contends

that

the

policy

contains

two

promissory warranties — (1) the passenger limitation warranty and
(2) the compliance warranty — and that a violation of either
warranty by the insured Zurqui would void the insurance policy’s
coverage for the incident in question. (Docket No. 66.) PDMYC and
the plaintiffs do not contest that the warranties at issue are
promissory, but rather argue, incorrectly, that Puerto Rico law
governs the maritime insurance issues in this case. (Docket No. 67
at pp. 3-4.)
The First Circuit Court of Appeals has determined that
federal law governs maritime insurance contract issues, and “that
a breach of a promissory warranty in a maritime insurance contract
excuses the insurer from coverage.”

Lloyd’s of London v. Pagan-

Sanchez, 539 F.3d 19, 24-6 (1st Cir. 2008) (applying the Supreme
Court’s choice of law analysis in Norfolk S. Ry. Co. v. Kirby, 543
U.S. 14 (2004)).

Federal maritime law defines a warranty as a

“promise ‘by which the assured undertakes that some particular
thing shall or shall not be done, or that some condition shall be
fulfilled, or whereby he affirms or negatives the existence of a
particular state of facts.’” Commercial Union Ins. Co. v. Flagship
Marine Serv., Inc., 190 F.3d 26, 31 (2d Cir. 1999) (citing Leslie

Civil No. 12-1585 (FAB)

6

J. Buglass, Marine Ins. & Gen. Average in the U.S. 27 (2d ed.
1981)).
Lexington’s

policy

contains

“PASSENGER LIMITATION WARRANTY:

a

section

that

states:

Warranted by You that the number

of Passengers on board shall not exceed the number stated on the
Declaration

Page

Crewmember(s).”

at

any

one

time

excluding

(Docket No. 66-1 at p. 13.)

Captain

and/or

The next section in

the policy states:
COMPLIANCE WARRANTY: Warranted by You that all
necessary licenses, permits and certificates
pertaining to the use and operation of the
Vessel remain in full force and effect
throughout the period of this policy. You
further warrant that during all such times You
will
comply with
all
laws,
rules
and
regulations that apply to the use(s) to which
You employ the Vessel.
Id.

The policy defines “warranty” as follows:
“Warranty” is a term of the policy whereby the
Insured Person undertakes to do or not do
something or to fulfill some condition, or by
which a Warranty exists as to a particular
state of fact. If the Insured Person does not
strictly comply with the terms of a Warranty,
cover under this policy does not exist and any
loss that occurs at that time or thereafter
will not be paid.

Id. at pp. 3-4.

Lexington’s certificate of insurance for the

policy states, in the “Liability Insurance” section, “Maximum
Number of Passengers:

6.”

Id. at p. 1.

Because the warranties, in their effect and by policy
definition, constitute “promise[s] ‘by which the assured undertakes

Civil No. 12-1585 (FAB)

7

that some particular thing shall or shall not be done,’” Commercial
Union Ins. Co., 190 F.3d at 31, the Court finds that they are
promisory warranties.

Pursuant to federal maritime insurance law,

a finding that the insured violated one or both of these warranties
during the time in question would void the policy’s coverage.
The complaint and the cross-claim premise Lexington’s
liability on its insurance policy with Zurqui.
¶ 27; 34 at ¶ 15.)

(Docket Nos. 1 at

Both the plaintiffs’ complaint and PDMYC’s

cross-claim allege that the Sea Watch was carrying more than six
passengers during the incident upon which the complaint is based.
(Docket Nos. 1 at ¶ 59; 34 at ¶ 2.)
by

any

of

the

parties,

would

This allegation, not disputed

constitute

a

violation

of

the

passenger limitation warranty of Zurqui’s insurance policy with
Lexington. PDMYC contends that there are unresolved issues of fact
regarding the nature of the trip, cites Puerto Rico law in support
of this argument, and points to evidence outside of the complaint
or integral documents.

(Docket No. 67.)

These arguments are

unavailing; PDMYC invokes improper legal standards and asks the
Court to consider evidence that cannot properly be considered at
the motion to dismiss stage.

Accepting the factual allegations

contained in the complaint as true, plaintiffs fail to state a

Civil No. 12-1585 (FAB)

8

claim for relief against Lexington due to the breach of the
passenger limitation warranty.2
III. Conclusion
For the reasons stated above, the complaint and cross-claim do
not

state

a

plausible

claim

for

relief

against

Lexington.

Lexington’s motion to dismiss is GRANTED and Lexington is DISMISSED
as a defendant in this case.
IT IS SO ORDERED.
San Juan, Puerto Rico, December 12, 2013.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE

2

The Court is not persuaded by Lexington’s argument that the
compliance warranty provides an independent ground for dismissal.
The factual allegations in the complaint and cross-claim do not
establish that this warranty was violated. Rather, they raise an
issue regarding the nature of the trip - commercial or private.
Because dismissal is premised on the passenger limitation warranty,
the Court need not rule on Lexington’s second proposed ground for
dismissal.