Transcript of Charlie Davant csd@fowler-white - SCAA Home · Last radar image from Hurricane...
Charlie Davant
csd@fowler-white.com
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*2017 Hurricane Season*Act of God Defenses*Other Issues
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No Shortage of Events This Year Active Market Why we must always be prepared
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2014 Nothing in Florida Much of the Caribbean is spared
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2015 Again - Nothing in Florida No significant activity
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2016 Inset - Hurricane Matthew Back to 2015 compare 2016
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2017 8=Harvey 9=Irma 13=Maria
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For Comparison May remember 2004 and 2005 Storms
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2005
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1989 – Hurricane Hugo (SC)
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1992 – Hurricane Andrew
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Last radar image from Hurricane Andrew Radar blew off from it in Miami
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Paraquita Bay, BVI
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Paraquita Bay, BVI
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Post Irma Losses
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Key Largo
Moving Object Presumptively At Fault•Exceptions:•Fault of the Stationary Object•Moving Vessel Acted Reasonably
•Allision Was Unavoidable (force majeure)
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Drifting Vessel Presumptively Liable for Damages under the rule of the Louisana - Stuart Cay Marina v. M/V SPECIAL DELIVERY, 510 F. Supp. 2d 1063, 1069 (S.D. Fla. 2007) (citing The Louisiana, 3 Wall. 164, 70 U.S. at 173). This presumption can be rebutted by demonstrating that either: (1) the allision was the fault of the stationary object; (2) the moving vessel acted with reasonable care; or (3) the allision was an unavoidable accident. Fischer v. S/Y NERAIDA, 508 F.3d 586, 593 (11th Cir. 2007) (citing Bunge Corp. v. Freeport Marine Repair, Inc., 240 F. 3d 919, 923 (11th Cir. 2001).
*Fault of Stationary Object
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Fault of Stationary Object – lighting issues Blackwell – moving vessel hit stationary vessel – blamed stationary vessel’s anchor light Could also have unlit dock or barge Generally this does not arise in hurricane claims
*Applied to the context of hurricane preparations, reasonable care amounts to whether the owner used all reasonable means and took proper action to guard against, prevent or mitigate the dangers posed by the hurricane.*Fact Intensive Inquiry*Owner Experience*Weather*Hurricane Plan*Location
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Fischer v. S/Y NERAIDA, 508 F.3d 586, 593 (11th Cir. 2007). Reasonable precautions under the circumstances Fact Intensive in US Legal System = Legal and Expert Fees
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Owner Experience Experience often relates to wealth Captain Ron (movie) Captain from the Love Boat (US TV show)
*Reasonable Precautions
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Reasonable Precautions Did you haul out? Could you have hauled out? Why? Why not?
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Fire hose – low cost
*Reasonable Precautions
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US National Hurricane Center has an advisory archive for every named storm Relates to location Where was the operator or person responsible for the vessel Where was the vessel When, in relation to where the storm was predicted to
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Irma Landfall - Sept. 10-11
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Must also take into consideration the storm’s wind field
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Wind field important because of storm surge NOAA – CAT 1 Storm Surge
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NOAA Storm Surge CAT 5
*Stuart Cay Marina v. M/V Special Delivery
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Hurricane Frances (2004) Marina v. Vessel Vessel did not follow pre-planned safe harbor Court’s opinion ultimately denied SJ filed by Marina but court considered: Hurricane watches and warnings and detailed advisories Experience and decisions of captains Bridge openings/closings Canal access and openings/closings Water depth Draw of vessel Type of pilings Type of line used (nylon vs poly) Chafing gear and placement
*Stuart Cay Marina v. M/V Special Delivery
*Stuart Cay Marina v. M/V Special Delivery
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This was the hurricane plan
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Paraquita Bay, BVI
*Bunge Corp v. Freeport Marine Repair, Inc.
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Hurricane Opal 1995 Freeport Marine Repair final stages of casino vessel near Freeport, Florida Hull No. 40 broke loose and collided with a grain-loading conveyor system owned by Bunge Corp.
*Bunge Corp v. Freeport Marine Repair, Inc.
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Freeport demonstrated it: Ran 5 steel cables from seven cleats and two deckrail stanchions to mooring points consisting of 11-inch pilings and other fixed mooring points Expert testimony saying this should have not sufficient Court found insufficient evidence as to how the vessel was moored, Did not preserve the cables that broke and employee testimony insufficient Freeport argued that it was a vis major act of God defense: Party raising force majeure defense has the burden of showing existence of phenomena and reasonableness of preparations Court found that Opal was a significant hurricane but that there was insufficient evidence to demonstrate winds in excess of 103.5 mph and insufficient evidence to establish that a microburst or tornado caused Hull 40 to break free from her moorings Thus, Court could not conclude that Hull 40 was subjected to such force that no reasonable precautions would have prevented her from breaking free of her moorings
*Fischer v. S/Y Neraida
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Hurricane Frances Claim Court found vis major, but reasonable precautions were made Affirmed by the 11th Circuit Court of Appeals
*Fischer v. S/Y Neraida
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S/Y anchored in Lake Worth, drifted east across lake and came to rest against a dock owned by David Fisher, substantially damaged dock Court fond that while it was not a vis major, there were reasonable precautions made Set two anchors, secured sails and masts Court also found it was a vis major
*Named Captain Warranties
Hurricane Plans
Claims From Marinas
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In Florida – will come down to this under Statute 627.409(2) Are they enforceable? Yes – under limited circumstances
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*§ 627.409(2), Fla. Stat. provides:*“(2) A breach or violated by the insured of a
warranty, condition, or provision of a wet marine or transportation insurance policy, contract of insurance, endorsement, or application does not void the policy or contract, or constitute a defense to a loss thereon, unless such breach or violation increased the hazard by any means within the control of the insured.”
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Translation – fact based (potentially expensive) inquiry Purpose of statue is to prevent insurer from getting out on a technical omission playing no part in the loss – Pickett v. Woods, 5th DCA IMPORTANT – this deals with post-risk Loss – not pre-risk loss
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*The burden of proving an increase of the hazard is on the insurer.
*A "hazard", refers to danger to the insured vessel
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E. Ins. Co. v. Austin, 396 So. 2d 823, 825 (Fla. 4th DCA 1981). Florida law important b/c no established federal maritime precedent on named operator warranties
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Great Lakes v. Rosin 36-foot Doral
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Great Lakes v. Rosin, 757 F. Supp. 2d 1244 (S.D. Fla. 2010) Boat needs repairs during policy period Owner’s son living in Ohio took vessel on canal (Red) rather than in ICW (Green) Boat ran aground, canal 20-40 yards wide, sank, total loss Artificial body of water = no lights, no channel markers Paul Rosin = 25 yrs boating experience, no accidents, operated this vessel 40-50 times (but at trial said 3-4 times) Pled guilty to reckless operation of a watercrat, passed too close to another boat – Marijuana “May” have been on the boat Underwriter – would never have written the risk and would have said Never allow Paul to operate
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* Increased Risk Because:* Operator did not have same experience as mother;* Paul had not taken the same safety courses as his mother; * Paul had pled guilty to reckless operation of a watercraft; * Paul made the "reckless" decision to navigate the New South
River Canal; * Insurer would not have provided coverage if Paul was a
named operator, or at least would have prohibited his operation of the vessel as a condition of issuing the policy;
* person operating the vessel was material to the insurer's assessment of risk, as evidenced by the questions on the application concerning operators.
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Great Lakes Reinsurance (UK), PLC v. Rosin case considered named captain warranty – 11th Circuit No entrenched General Maritime Law – State Law used The Court concluded that all of those facts "indicate that the risk of the 'Queen of Hearts' having an accident…was increased due to Paul's operation, a matter that was within the control of Ms. Rosin." Rosin, 757 F. Supp. 2d at 1259.�
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*Gamez Hassun Suarez & “Patchey”
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Gamez v. ACE, 638 Fed.Appx. 850 (11th Cir. 2016) Gamez purchases and applies for insurance Hassun takes possession with full permission Hassun loans to Suarez and his fishing companion “Patchey” Boat is never seen again Court voided coverage b/c of material misrepresentation on insurance application BUT – court said insured could have one on breach of named operator where increase hazard could NOT be proved by ACE
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*Warranted in Policy?*Part of the Application?*Virtually No Reported Decisions
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If Warranted – then could rely on it if increased hazard – increased hazard = prior analysis Part of Application or Named Captain on Application – Uberrimae Fidei
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*Vessel warranted to be laid up – sank in the water
*Warranted for private pleasure, occasional sale of fish
*Crew size limited, mutiny on board
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AXA Global Risks (UK) Ltd. v. Webb, 2000 WL 33179617 (M.D. Fla. July 28, 2000) Hazard clearly increased b/c vessels don’t sink on shore Eastern Ins. Co. v. Austin, 396 So.2d 823 (Fla. 4th DCA 1981) Occasional sale of fish did not increase the hazard Fireman’s Fnd Ins. Co. v. Cox, 742 F. Supp. 609 (1989) Captain and mate attacked by two other crew members, clearly increased the risk Mutiny!
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*Uberrimae Fidei (Utmost Good Faith)*Historically, no rapid communication*Reliance upon what an individual represented as it was not
always possible to sight vessel
*Misrepresentations*Applicant for insurance has an affirmative duty to disclose
every material fact known to them in the ordinary course of business
*“Courts have defined it to be a situation where the insured fully and voluntarily discloses to the insurer all the facts material to a calculation of an insurance risk” HIH Marine Services, Inc. v. Fraser, 211 F.3d 1359 (11th Cir. 2000)
**Why?
*Requiring a marine insurer to investigate each and every vessel applying for coverage would be time consuming and expensive
*The insured, as owner of the vessel, is in the best position to provide relevant information
*Especially historically
**Material Fact
*Fact which will effect the decision of a reasonable underwriter in accepting risk, premiums, terms, and conditions attached to risk
* If it does not effect the decision, then it is not material* If it was not asked on the application, then it is likely not material
to the risk* If insurer would have written the policy under different terms or for
a different premium fact will likely be material
*Common “Material” Facts*Purchase Price of Vessel*Prior Losses and Claims*True Owner of the Yacht
**Consequences
* If an insured misrepresents a fact material to the risk, then the Court will void the insurance policy in its entirety and there will be no coverage
*No better entrenched precedent than Uberrimae Fidei Steelmet v. Caribe Industries (11th Cir. 1987)
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*Marinas Trying to Force Vessels to Leave*Florida Statute Ch. 327.59(1):*“After June 1, 1994, marinas may not adopt,
maintain, or enforce policies pertaining to evacuation of vessels which require vessels to be removed from marinas following the issuance of a hurricane watch or warning, in order to ensure that protecting the lives and safety of vessel owners is placed before interests of protecting property.”
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In Burklow & Associates, Inc. v. Belcher, 719 So.2d 31 (1st DCA 1998), the Court considered whether this statute was preempted by general maritime law. It concluded it was not and set forth the relevant duties as between a marina and vessel owner in these circumstances: “The trial court properly construed section 327.59 as barring the marina owner's action for property damage based solely upon the failure of the defendant boat owners to move their vessels from the marina after issuance of a hurricane watch or warning. We find as a matter of law that, during the period prior to issuance of any hurricane watch or warning, these boat owners owed a duty to the marina owner to exercise reasonable care for the protection of marina property, but that duty did not include an obligation to remove their boats upon the request of the marina owner.”
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*Limitation of Liability Act *Policy Language
*Make warranty a part of the application (material misrepresentation)