In Trafalgar at Greenacres, Ltd. v. Zurich American Insurance Company, No. 4D11-1376, 2012 WL 3822215, *1 (Fla. 4th DCA Sept. 5, 2012), the Florida Fourth District Court of Appeal, applying Florida law, overturned the trial court’s summary judgment order and held that an appraisal award pursuant to an insurance contract can constitute a “favorable resolution” of an underlying breach of contract dispute for purposes of filing a bad faith cause of action.
In this breach of contract case, a policyholder who suffered property damage from Hurricane Katrina alleged that the insurer failed to pay all proceeds due from the related claim. In response, the insurer invoked the policy’s appraisal provision. An appraisal award was entered in the policyholder’s favor and the insurer paid it within the required time frame.
When the insurer moved for summary judgment on the breach of contract claim, the trial court granted the motion, but also granted the policyholder’s motion to amend its complaint to raise a statutory bad faith claim. This new claim alleged that the insurer “engaged in a pattern of delay and denial before and after litigation was filed.” To counter, the insurer again filed for summary judgment, arguing that the policyholder could not bring a bad faith claim because it had not obtained a “favorable resolution” from the underlying breach of contract action. The trial court agreed and granted the insurer’s motion. The appellate court reversed.
Under Florida law, before a policyholder can bring a bad faith claim, the underlying claim must be “resolved favorably for the insured.” The Trafalgarcourt noted that the requirement for a favorable resolution does not require a policyholder to obtain a court judgment in its favor – an arbitration award may also satisfy the condition. The Trafalgar court went on to hold that there was “no meaningful distinction” between an arbitration award and an appraisal award for the purposes of deciding whether an underlying action was “resolved favorably.” Thus, the court held that the policyholder’s appraisal award was a “favorable resolution,” and satisfied the necessary precondition for a bad faith claim.
The Trafalgar decision is significant because it reaches a conclusion different from that reached by other Florida courts that have held that a policyholder cannot bring a bad faith claim if an appraisal award is paid by the insurer within the requisite time frame. See e.g., North Pointe Insurance Co. v. Tomas, 999 So.2d 728 (Fla. 3d DCA 2008). In these situations, insurance carriers still may consider arguing that invoking a policy’s appraisal provision – and paying any award within the time prescribed – represents compliance with the policy and precludes a finding that the insurer has breached the policy, which should in turn preclude a finding that an underlying claim has been resolved in the policyholder’s favor.
If you are interested in receiving either the Trafalgar decision or the Tomasdecision, please do not hesitate to contact me at mov@chaloslaw.com.
Is a Houseboat a House or a Vessel?
The Daily Business Review lays out the story of Fane Lozman, the man who owned a houseboat, floating home or other item that floated off the Rivera Beach that the U.S. Supreme Court has now heard oral argument on. This case was debated during a recent meeting of the Florida Bar Admiralty and Maritime Law Committee on September 20th.
As background as laid out by the DBR, Lozman made a boatload of money off the tech bubble and decided to live the good life on a houseboat at a Riviera Beach marina. The city, though, had a $2.4 million redevelopment plan for the public marina with its easy access to the ocean. Lozman stood in the city's way and was determined to fight the city's use of eminent domain. Riviera Beach turned to federal maritime law to evict Lozman after he succeeded in state court, arguing he was being retaliated against for speaking out against the redevelopment plan.
Now the former Chicago financial trader is a cause celebre for fellow houseboat residents around the country, fighting his eviction all the way to the U.S. Supreme Court. The high court opened its fall session by hearing arguments in the case. The question for the nine justices was a simple one: whether a houseboat is a house or a boat. According to the DBR, their answer could have wide-ranging consequences for houseboat owners, floating casinos and government agencies. What the DBR forgets is the consequences for marinas and other necessaries providers to these houseboats.
According to the DBR, the intent of the houseboat owner should be what is looked at, rather than an objective test of what is a vessel. I query where this would take work platforms, work rafts and other equipment utilized by employers of maritime workers. If a worker is on these types of work platforms, can the employer simply state that these platforms were not intended to leave the work area, didn't have a motor, had no reasonable way of transporting itself and meant to stay in one location, as a way of avoiding Jones Act liability to crew of vessels? I wonder what the maritime plaintiffs' bar has to say about this? Barges are "motorless boats", do they now not become vessels if they are stationary and the owner says it was not intended to be a vessel?
The transcript of the oral argument before the U.S. Supreme Court is now available. It is quite interesting discourse for those following this case. If you are interested in receiving a copy of the transcript, please feel free to write to me at mov@chaloslaw.com to get your copy.
If you are interested in receiving a copy of the DBR article, you may also ask me for an electronic copy.
2013 Officers of the Fort Lauderdale Mariners Club
I am pleased to announce that I have been elected Program Chair of the Fort Lauderdale Mariners Club for the upcoming year. The Fort Lauderdale Mariners Club Officers for 2013 are the following:
Skipper - Matt Valcourt
First Mate - Charles Davant
Purser - Kristene Lundblad
Yeoman - Bryan Emond
Program Chair – Michelle Otero Valdes
Bos’n – Elaine Frawley
Historian – Terry Jones
Activities Chair – Arlene Weicher
Seminar Chair - Jonathan Dunleavy
I am excited with this new position and will be looking to my colleagues in the maritime community to be ready to speak about matters of interest to the Club.
If you have any interesting topics to present, please feel free to contact me at mov@chaloslaw.com.
Cruise Line Has No Right To Demand Arbitration Without Signing Arbitration Agreement
In CAPPELLO v. CARNIVAL CORPORATION, 23 Fla. L. Weekly Fed. D317a (S.D. Fla. Aug. 10, 2012) (J. Altonaga), a crewmember and his wife filed a lawsuit in state court againstCarnival Corporation (“Carnival”) alleging breach of warranty of seaworthiness, Jones Act negligence, failure to provide maintenance and cure, failure to provide prompt, proper and adequate maintenance and cure, common law negligence and loss of consortium. Carnival filed a Notice of Removal of the lawsuit attempting to compel the Plaintiff to arbitrate his claims against Carnival. The Plaintiffs in turn filed a Motion to Remand the case back to state court.
The District Court found that it lacked federal question jurisdiction over the seaman's action under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Convention because Convention does not apply. The court found that Carnival had not met the jurisdictional prerequisites of the Convention by presenting a signed arbitration agreement between parties and, instead, produced only an “Officer's Agreement” to which it is not a signatory. The District Court further held that the doctrine of equitable estoppel does not allow Carnival, as non-signatory to the document it relies on, to compel arbitration where it makes no showing of how the Plaintiffs' claims implicate terms of Officer's Agreement . The court reasoned that to extent Carnival contends the seaman was equitably estopped from avoiding arbitration because underlying incident giving rise to his claims arose while he was employed, and the seaman was employed by means of Officer's Agreement, Eleventh Circuit precedent forecloses this line of reasoning.
The court further found that there was no existential basis for federal jurisdiction under admiralty law, and Carnival alleged no other basis for federal jurisdiction. Therefore, the court held that because it lacked subject matter jurisdiction, remand was appropriate and it is therefore inappropriate to rule on substantive merits of claim and granted the Plaintiffs leave to address appropriateness of attorney's fees and costs for improper removal.
If you are interested in receiving a complete copy of this decision, please feel free to contact me at mov@chaloslaw.com.