THE HANOVER INSURANCE COMPANY

v.

J&S PROMOTIONS, LLC

This matter comes before the Court on plaintiff's Motion for Summary Final Judgment (Doc. #53) filed on December¹, 2020. Defendants J&S Promotions, LLC and James F. Smith filed a Response in Opposition (Doc. #55) on December 15, 2020, to which Plaintiff filed a Reply (Doc. #59) on January⁵, 2021. Defendant Stanny R. Park (Park) has not filed a response to the motion, although she was provided notice of the time to respond (Doc. #54) and of the date and time of oral argument (Doc. #64). The Hanover Insurance Company filed a Notice of Filing Underwriting Affidavit (Doc. #66) on May 11, 2021. The Court heard oral arguments on May 12, 2021. (Doc. #67.) With the permission of the Court (Doc. #68), the parties (other than defendant Park) filed supplemental memoranda on May 17, 2021. (Docs. ##71, 72.) On November 20, 2019, the Hanover Insurance Company (Hanover) filed a Complaint for Declaratory Judgment (Doc. #1) seeking determinations of rights and responsibilities under an insurance policy issued by Hanover to defendant J&S Promotions, LLC (J&S or the Named Insured), whose president and sole member is defendant James F. Smith (Smith). (Id. at ¶ 3.) The determinations relate to the existence of coverage for bodily injury and property damage allegedly resulting from the grounding of the insured yacht upon a coral reef on or about December 28, 2017 (the Grounding Incident). (Id., introductory paragraph.) Hanover seeks declarations that for various reasons no coverage is available under the policy for such injury or damage. For the reasons set forth below, the Complaint is dismissed in part for lack of jurisdiction and the motion for summary judgment as to the remaining counts is granted in part and denied in part.

I.

Summary judgment is appropriate only when the Court is satisfied that “there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “An issue of fact is ‘genuine’ if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Baby Buddies, Inc. v. Toys “R” Us, Inc., 611 F. 3d 1308, 1314 (11th Cir. 2010). A fact is “material” if it may affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “A court must decide ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’” Hickson Corp. v. N. Crossarm Co., Inc., 357 F. 3d 1256, 1260 (11th Cir. 2004)(quoting Anderson, 477 U.S. at 251). In ruling on a motion for summary judgment, the Court views all evidence and draws all reasonable inferences in favor of the non-moving party. Scott v. Harris, 550 U.S. 372, 380 (2007); Tana v. Dantanna’s, 611 F. 3d 767, 772 (11th Cir. 2010). Disputes involving marine insurance policies typically fall within a district court's admiralty jurisdiction under 28 U.S.C. § 1333 and Article³, Section² of the United States Constitution. AIG Centennial Ins. Co. v. O'Neill, 782 F. 3d 1296, 1302 & n.6 (11th Cir. 2015); Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F. 3d 50 54 (1st Cir. 1995).1 See also (Doc. #1, ¶ 7.) “Article III of

734 (11th Cir. 2020) (citations omitted). Plaintiff must establish a case-or-controversy as to each claim separately. Griffin v. Dugger, 823 F. 2d 1476, 1483 (11th Cir. 1987). Even if there is a case or controversy, the Court has discretion not to exercise its jurisdiction. Stevens v. Osuna, 877 F. 3d 1293, 1311–12 (11th Cir. 2017).

II.

Hanover issued Hanover Yacht Policy No. IHP D262113 00 (the Policy) with an insured period of May⁵, 2017 to May⁵, 2018. (Doc. 1-2, p. 2.)² The Policy applies to a 78-foot long, 2010 Marlow 78 Explorer motor yacht named “Quality Time” (the Insured Yacht).

(Id.) The Named Insured on the Policy is J&S. (Id.) In addition, Smith qualifies as an Insured with respect to the liability insurance provided in Section II because he was operating the

We will pay damages caused by an occurrence to which this coverage applies and for which the insured shall become legally obligated to pay, arising out of the ownership, maintenance or use of the insured yacht and which results in bodily injury, property damage, or pollution. (Doc. #1-2, pp. 43 (emphasis in original).) The Policy also contains the following relevant insuring agreement relating to medical payments for bodily injuries: We will pay the necessary medical expenses resulting from a bodily injury to you or others from an occurrence which occurs while in, upon, boarding, or dis-embarking the insured yacht . . .. (Doc. #1-2, pp. 45 (emphasis in original).) Additional provisions of the Policy will be discussed as necessary to resolve specific issues. According to Smith’s deposition (Doc. #53-4), on December 29, 2017, Smith, his wife, and five other persons (Brian Frye, Melissa l/n/u, Lauren Kasper, Johnny Conser, and Stanny Parks) boarded the Insured Yacht in Fort Myers, Florida. (Id., p. 7.) The group intended to make the 5-6 hour trip to Dry Tortugas National Park, stay there overnight on the Insured Yacht, then travel approximately 70 miles east to Key West, and stay there for a couple of days before returning to Fort Myers. (Id., pp. 9-10, 33- 34.) Although the original plan was to make the 105-mile trip in the daylight, the party got a late start from Fort Myers due to Ms. Park’s late arrival. (Id., pp. 9-10.)

Smith piloted the Insured Yacht upon their afternoon departure from Fort Myers. (Id., p. 13.) About 40 miles outside the Tortugas, Smith realized it was going to get dark before they would arrive. (Id., p. 12.) Smith decided to continue at a very slow speed overnight, so as to arrive the next morning. (Id.) During this nighttime journey, the Insured Yacht was alternatively operated by Smith and his wife and by Frye and Conser, in two-hour shifts. (Doc. #53-4, pp. 13-15.) None of the individuals operating the Insured Yacht during this time, or at any time during the trip, was the Captain as defined and identified in the Policy. (Id., pp. 28-31, 34-35.)

In the morning of December 30, 2017, while Smith was operating the Insured Yacht, it arrived at the Dry Tortugas National Park. (Id., p. 5.) The Insured Yacht had been towing a dinghy through the night, but upon arrival Smith and his crew put the dinghy on board the Insured Yacht. (Id., p. 18.) As the Insured Yacht pulled into the boundaries of the port, the crew offloaded the dinghy. (Id., p. 17.) At about 9:00 a.m. the Insured Yacht either ran aground on a coral reef while approaching the channel into the Dry Tortugas National Park, or “bumped” a rock, causing little or no damage to the Insured Yacht.³ (Id., pp. 15-19, 25.) The dinghy was not tied to the Insured Yacht at the time of the Grounding Incident, having been disconnected moments before by Conser or Frye, or both. (Doc.

53-4, pp. 18-19.) Additional facts will be discussed as necessary to resolve specific issues.

III.

In the Complaint, Hanover requests a judgment declaring that “there is no coverage under the Policy for any loss, liability, damages, bodily injury, property damage or injury or damage of any type in connection with the Grounding Incident.” (Doc. #1, p. 12.) Hanover now asserts it is entitled to summary judgment as to the requested declaratory judgment (Doc. #53, pp. 15-16), while defendants oppose the merits of the summary judgment motion and assert the lack of subject matter jurisdiction in Affirmative

Defense Six. See (Docs. #42, p. 9; #55.) The Court first addresses each count of the Complaint to determine if there is a case or controversy as to that count.

Hanover asserts the first party property coverages of Section I of the Policy are null and void. (Id. at ¶ 53.) The record establishes that there is no case or controversy as to first-party claims. The Insureds have not made a claim under the Policy (Doc. #1, ¶ 25), and any claim would now be far beyond the one-year period set forth in the Policy. (Doc. #1-2, p. 50.) There is simply no controversy between Hanover and its Insureds: Hanover says the Insureds cannot file a first-party claim based on the Grounding Incident, and the Insureds do not intend to file such a claim. Accordingly, Count VI of the Complaint is dismissed without prejudice for lack of subject matter jurisdiction. B. Count V – Untimely Notice of Loss or Occurrence

In Count V Hanover seeks a declaration that there is no coverage because the Insured provided untimely notice of loss or of the occurrence. (Doc. #1, p. 11.) Hanover asserts that the Policy requires the Insured to give prompt notice of loss or occurrence to Hanover, or to the Insured’s agent or broker, “as soon as reasonably possible”. (Id. at ¶¶ 18, 48.) Hanover asserts that Smith and J&S violated this condition by failing without excuse to give notice of the loss and occurrence until more than four months after the Grounding Incident, and that this delay prejudiced Hanover. (Id. at ¶ 49.) Because such notice is a condition precedent to coverage, Hanover asserts that the non-

compliance results in the coverages of the Policy being null and void. (Id. at ¶ 48.) The Policy contains certain post-loss or post-occurrence responsibilities with which the Named Insured must comply “[i]n case of a loss or an occurrence to which this insurance may apply or if you and any insured person are sued in connection with a loss or an occurrence which may be covered under this policy, . . ..” (Doc. #1-2, p. 49 (emphasis in original).) To the extent Count V seeks a declaratory judgment as to First-Party claims, it fails to state a case or controversy for the same reasons which apply to Count VI, and is dismissed without prejudice to that extent. To the extent Count V seeks a declaratory judgment as to third party claims, the jurisdictional discussion below applies.

C. Counts I through IV, Portion of Count V – Third Party Claims Counts I through IV of the Complaint relate to coverage of potential claims by third parties. Defendants argue that there is no case or controversy relating to these counts because there has been no third-party claim filed with Hanover or any lawsuit filed by any claimant. (Doc. #55, pp. 10-12.) Hanover responds that the undisputed facts are sufficient to establish a case or controversy for all third-party coverage issues. (Doc. #59, pp. 4-7.) Hanover identifies two relevant potential third-party claimants. (Doc. #53, ¶¶ 17-18.) The National Parks Service (NPS) sent Smith a letter dated June 14, 2018, asserting that its preliminary investigation determined that the Grounding Incident injured park resources, including coral reef habitat. (Doc. #1- 4, p. 2.) The letter stated that Smith may be liable under federal law for response costs and damages. (Id.) Subsequent correspondence from the NPA demanded more than $85,000 in damages. (Doc. #59, Ex. 1.) The NPS has not filed any legal action to pursue this matter. The NPS is not a party to this lawsuit, however, and therefore will not be bound by its outcome. As to the NPS, the current lawsuit seeks at best only a non-binding advisory opinion. “[F]ederal courts do not issue advisory opinions.” TransUnion LLC v. Ramirez, No. 20-297, 2021 U.S. LEXIS

3401, *17 (June 25, 2021). Therefore, there is no case or controversy as to any of the counts based on NPS’s potential claim. Counts I through V are dismissed without prejudice to the extent they are premised on a possible claim by the NPS. The attorney for Park sent Hanover’s agent a letter dated April 23, 2018, asserting a claim against J&S for a traumatic brain injury caused by the Grounding Incident. (Doc. #1-3, pp. 2-3.) In her Answer to the Complaint, Park stated she “has made a claim for damages arising from the December 28, 2017 [Grounding] [I]ncident.” (Doc. #17, ¶ 5.) In her deposition, Park claimed damages of $150,000, for which a demand was made. (Doc. #53-6,

pp. 20, 28-29.) Park has not filed a lawsuit arising from the Grounding Incident, although the applicable statute of limitations has not expired.⁴ The Court finds that Hanover has established a

IV.

The Court will address the merits of each count for which a case or controversy has been established. A. Count I: Employment of a Full-Time Captain In Count I of the Complaint, Hanover asserts that the Policy contains a Captain Warranty which is a condition precedent to coverage. (Doc. #1, ¶¶ 15, 27; Doc. #53, pp. 12-13.) This Captain Warranty, Hanover argues, required that a captain be employed on a full-time basis to work solely on the Insured Yacht, and specifically named Shane Wrey as that captain. (Doc. #53, pp. 12- 13.) Hanover asserts that the Captain Warranty was violated because

Smith and J&S failed to employ a captain on a full-time basis to work solely on the Insured Yacht. (Id., p. 13.) Count I seeks a declaration that because of this Policy violation “the coverages statutory and equitable tolling, e.g. Fedance v. Harris, No. 20- 12222, 2021 U.S. App. LEXIS 18399, at *8 (11th Cir. June 21, 2021), making such a potential defense fluid for someone such as Parks who claims brain injury. of the Hanover Policy are null and void.” (Doc. #1, ¶¶ 27-30.) At oral argument, counsel for Hanover stated that Hanover was not attempting to rescind the Policy. (Doc. #69, p. 14.) Rather, Hanover is asserting that the Policy was null and void only for the Grounding Incident, not claims involving other occurrences. (Id., pp. 14-16.)

The record reflects that an undated Yacht Insurance Quotation by Hanover provided that one of the Special Terms and Conditions was that “[o]ne part-time paid captain” and “[o]ne part-time paid crew Only” was required. (Docs. #1-2, p. 21; #66-1, p. 25.) The Hanover Yacht Insurance Binder effective May⁵, 2017, similarly provided that one of the Special Terms and Conditions was that “[o]ne part-time paid captain” and “[o]ne part-time paid crew only” was required. (Docs. #1-2, p. 19; #66-1, p. 27.) The Policy’s Declaration Page identifies the Captain as “SHANE WREY” and the “Number of Crew (including Captain:² PARTTIME INCLUDING THE CAPTAIN”. (Doc. #1-2, p. 3.)

The Policy, however, contains a different requirement, that of a full-time captain. The Policy contains the following “Captain Warranty” provision:

GENERAL CONDITIONS AND EXCLUSIONS APPLICABLE

TO ALL COVERAGES

CAPTAIN WARRANTY

You warrant that the captain; 1. will be employed by you on a full time basis and shall work solely on the insured yacht; 2. shall be in command of the insured yacht at all times when it is underway; and 3. may not, under any circumstances, have other employment as a captain for any other yacht or watercraft. If any condition of this warranty is not fully complied with, the coverages provided by this policy are null and void. (Doc. #1-2, p. 47 (emphasis in original).) The Policy defines “Captain” as “the person approved by us and employed as the full time captain of the insured yacht.” (Id., p. 35 (emphasis in original.) The Declarations Page identifies the approved Captain as “Shane Wrey.” (Id., p. 3.)⁵ The language of the Policy concerning the employment of a full-time Captain is clear and unambiguous. The Named Insured warranted that it would employ a captain on a full-time basis,

Yacht was underway during the trip to the Dry Tortugas. (Doc. #1, ¶¶ 32-36; Doc. #53, pp. 13-14.) Hanover argues that the Captain Warranty and the General Change Endorsement are conditions precedent to coverage, but that Smith and J&S violated these provisions by permitting persons, other than Captain Shane Wrey, to operate the Insured Yacht during the multi-day, overnight trip, which increased the risk of loss in connection with the operation of the Insured Yacht. (Doc. #1, ¶¶ 32-33; Doc. #53, pp. 13-14.) As a result, Hanover argues that coverages of the Policy are null and void. (Doc. #1, ¶ 34; Doc. #53, p. 14.) In Count III, Hanover seeks a declaration that there is no coverage based upon the nighttime operation of the Insured Yacht without a Captain on board. (Doc. #1, ¶¶ 38-41; Doc. #53, p. 14.) Hanover asserts that the General Change Endorsement prohibits operation of the Insured Yacht at night unless the Captain is on board. (Doc. #1, ¶ 38; Doc. #53, p. 14.) Hanover asserts that Smith and J&S violated the condition by operating the Insured Yacht on the night of December 29, 2019 without Captain Shane Wrey aboard, which increased the risk of loss in connection with the operation of the Insured Yacht. (Doc. #1, ¶ 40; Doc. #53, p. 14.) Because this condition precedent was not complied with, Hanover asserts that the coverages of the Policy are null and void. (Doc. #1, ¶ 39; Doc. #53, p. 14.) The Captain Warranty not only requires the employment of a full-time captain (specifically Shane Wrey), but provides that the captain “shall be in command of the insured yacht at all times when it is underway; . . .” (Doc. #1-2, p. 47.) The Policy contains an endorsement, however, which supersedes this portion of the Captain Warranty and allows the owner to operate the Insured Yacht on day trips – i.e., “from sunrise to sunset” - without Captain Wrey’s presence. (Doc. #1-2, p. 12.) The endorsement provides:

GENERAL CHANGE ENDORSEMENT

Effective 05/05/2017 it is hereby agreed that:

PERMISSION IS GRANTED FOR OCCASIONAL OWNER

OPERATION UNDER THE FOLLOWING CONDITIONS;

OWNER MAY OPERATE THE VESSEL WITHOUT THE

CAPTAIN ABOARD FOR DAY TRIPS ONLY

OWNER MAY OPERATE THE VESSEL FROM SUNRISE TO

SUNSET, NO OPERATION AT NIGHT UNLESS CAPTAIN

IS ABOARD

NO TOWING OF TENDERS UNLESS CAPTAIN IS ABOARD

WARRANTED THREE (3) EXPERIENCED INDIVIDUALS

ABOARD AT ALL TIMES WHILE UNDER WAY

OWNER WILL USE CAPTAIN FOR TRIPS LONGER THAN

DAY TRIPS

ALL OTHER TERMS AND CONDITIONS REMAIN

UNCHANGED (Id.) The record is undisputed that the Insured Yacht was operated at night without Captain Wrey (or any licensed captain) on board during a trip which was more than a day trip. (Doc. #53-4, pp. 7- 12, 35-37.) This is a clear violation of the Endorsement. Contrary to the First Affirmative Defense, nothing in the Endorsement provides that the presence of three experienced persons on board allows operation of the Insured Yacht at night or on trips longer than a day. Since “all other terms and conditions [of the Captain Warranty] remain unchanged,” the effect of these breaches is that the Policy is null and void for the Grounding Incident occurrence.

Accordingly, the Court determines that there is a case or controversy as to Counts II and III, and that Hanover is entitled to a declaratory judgment that there is no coverage under the Policy as to claims by third parties arising from the Grounding Incident because the failure to have a captain in command of the Insured Yacht and the operation of the Insured Yacht at night without a captain renders the Policy null and void as to this occurrence. C. Count IV: Towing Tender Without Captain Aboard In Count IV, Hanover seeks a declaration that there is no coverage because the Insured Yacht towed a Tender without the Captain on board. (Doc. #1, ¶¶ 43-46; Doc. #53, p. 14.) Hanover asserts that Smith and J&S violated this condition by towing a Tender, i.e., a dinghy or smaller vessel on the night of December 29, 2019, without Captain Shane Wrey on board the Insured Yacht, which increased the risk of loss in operation of the Insured Yacht. (Doc. #1, ¶ 45; Doc. #53, p. 14.) Because this condition was violated, Hanover asserts the coverages of the Hanover Policy are null and void. (Doc. #1, ¶ 44; Doc. #53, p. 14.) The General Change Endorsement of the Policy precludes the towing of a “tender” unless the captain is on board. (Doc. #1-2, p. 12.) A “tender” is defined as “any watercraft owned by you [the insured] and is normally carried on board the [insured] vessel . . ..” (Doc. #1-2, p. 36 (emphasis in original).) It is undisputed that during the trip to the Dry Tortugas the Insured Yacht towed a dinghy. (Doc. #53-4, p. 18.) It is also undisputed that at the time of the incident the dinghy was not being towed. (Id., pp. 18-19.)

The summary judgment record does not establish any connection between the towing and the Grounding Incident. The record does not establish that the improper towing was an independent breach of the Captain Warranty (apart from the lack of the captain as alleged in Counts II and III) which renders the Policy null and void. As to this component of the Captain Warranty, federal maritime law includes state law. Ocean Reef Charters LLC, 996 F. 3d at 1169 (concluding that state law governed the effect of Ocean Reef’s breaches of the captain and crew warranties). The Policy directs that the State law to be applied is that of Massachusetts. (Doc. #1-2, p. 51.) Massachusetts law, however, directs that the Court apply the law of the State that the parties to the Policy understood would be the principal location of the insured risk, unless some other State has a more significant relationship. OneBeacon Am. Ins. Co. v. Narragansett Elec. Co., 90 Mass. App. Ct. 123, 125-26, 57 N.E. 3d 18, 20-21 (2016). Here, that state is Florida. The insured is domiciled in Florida, which is generally sufficient. Onebeacon Am. Ins. Co., 57 N.E. 3d at 20- 21. In addition, the vessel was kept in Florida, as permitted by the Policy (Doc. #1-2, p. 2), and the occurrence at issue began in Florida. Under Florida law, a breach which does not increase the hazard does not void an insurance policy. Fla. Stat. § 627.409(2). While Count IV alleges that the towing “increased the risk of loss” (Doc. #1, ¶ 45), the facts submitted by Hanover do not establish without dispute such an increased hazard. Therefore, summary judgment is not available as to Count IV. D. Count V: Notification of Third-Party Claims As discussed earlier, Count V seeks a declaration that there is no coverage because the Insured provided untimely notice of loss or of the occurrence. (Doc. #1, p. 11.) Hanover asserts that the Policy requires the Insured to give prompt notice of loss or occurrence to Hanover, or to the Insured’s agent or broker, “as soon as reasonably possible”. (Id. at ¶¶ 18, 48.) Hanover asserts that Smith and J&S violated this condition by failing without excuse to give notice of the loss and occurrence until more than four months after the Grounding Incident, and that this delay prejudiced Hanover. (Id. at ¶ 49.) Because such notice is a condition precedent to coverage, Hanover asserts that the noncompliance results in the coverages of the Policy being null and void. (Id. at ¶ 48.) The Policy contains certain post-loss or post-occurrence responsibilities with which the Named Insured must comply “[i]n case of a loss or an occurrence to which this insurance may apply . . ..” (Doc. #1-2, p. 49 (emphasis in original).) This includes giving notice of a claim “as soon as reasonably possible.” (Id.) The Court finds that the record does not support a summary judgment as to the unreasonableness of notice or any resulting prejudice.

E. Affirmative Defenses

The Smith Defendants also assert that there are five affirmative defenses which have not been rebutted. (Doc. #55, pp. 3-4, 11-15.) Affirmative Defenses One, Four, and Six have been discussed above. Concerning Defendants’ Second Affirmative Defense, whether Plaintiff has suffered any prejudice due to the Smith Defendants untimely notice remains to be an issue as to any counts for which summary judgment was denied or to the extent such counts were not dismissed due to lack of subject matter jurisdiction. As to Affirmative Defense Eight, there is no requirement that the claim or demand to an insurance company be attached to the Complaint. See Fed. R. Civ. P. 8(a). Accordingly, it is hereby ORDERED:

1. Plaintiff's Motion for Summary Final Judgment (Doc. #53) is DISMISSED IN PART, GRANTED IN PART, and DENIED IN PART. (a) As to Count I: (1) Count I is dismissed without prejudice for lack of

(2) Count I sets forth a case or controversy as to a Parks. (3) Summary Judgment is granted in favor of Hanover as to Count I. Hanover is entitled to a declaratory judgment

that there is no coverage under the Policy as to claims by third parties arising from the Grounding Incident because the failure to hire a full-time captain as required by the Policy renders the Policy null and void as to this occurrence. (b) As to Count II: (1) Count II is dismissed without prejudice for lack of

(2) Count II sets forth a case or controversy as to a Parks. (3) Summary Judgment is granted in favor of Hanover as to Count II. Hanover is entitled to a declaratory judgment that there is no coverage under the Policy as to claims by third parties arising from the Grounding Incident because the failure to have a captain in command of the Insured Yacht renders the Policy null and void as to this occurrence. (c) As to Count III: (1) Count III is dismissed without prejudice for lack of

(2) Count III sets forth a case or controversy as to a Parks. (3) Summary Judgment is granted in favor of Hanover as to Count III. Hanover is entitled to a declaratory judgment that there is no coverage under the Policy as to claims by third parties arising from the Grounding Incident because the operation of the Insured Yacht at night renders the Policy null and void as to this occurrence. (d) As to Count IV, summary judgment is denied. (e) As to Count V:

(1) Count V is dismissed without prejudice for a lack of subject matter jurisdiction to the extent it is premised on potential first-party claims. (2) Count V is dismissed without prejudice for lack of

(3) Summary judgment as to Count V is denied to the extent Count V is premised on potential third party claims. (f) As to Count VI: Count VI is dismissed without prejudice for lack of subject matter jurisdiction.

2. The Clerk shall withhold entry of judgment pending

resolution of Counts IV and V. DONE and ORDERED at Fort Myers, Florida, this 29th day of June, 2021.

JGHN E. STEELE

SHEIOR UNITED STATES DISTRICT JUDGE

Copies: Counsel of Record