TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA v. OCEAN REEF CHARTERS LLC; FLYHOPCO LLC, et al.; STONEGATE BANK
No. 21-14509
United States Court of Appeals For the Eleventh Circuit
June 23, 2023
[PUBLISH]
D.C. Docket No. 9:18-cv-81270-RAR
Before NEWSOM, LUCK, and TJOFLAT, Circuit Judges.
TJOFLAT, Circuit Judge:
This is the second time this Court has considered this insurance coverage dispute between Travelers Property Casualty Company of America (“Travelers“) and Ocean Reef Charters LLC, (“Ocean Reef“), a Florida Limited Liability Company. Ocean Reef owned a 92-foot yacht, the M/Y My Lady, which was destroyed during Hurricane Irma in September 2017. Ocean Reef had a $2 million insurance policy with Travelers covering property damage to the yacht. One of the My Lady‘s representatives for Ocean Reef with respect to the boat, Richard Gollel, moored the yacht to a dock behind his Pompano Beach, Florida residence as the hurricane approached. But the yacht was destroyed by what registered as a Category 4 storm.
Travelers tried to avoid paying for the loss by preemptively seeking a declaratory judgment that the policy did not cover the loss because Ocean Reef did not have a full-time, licensed captain
The Western District of New York granted Ocean Reef‘s motion to transfer the case to the Southern District of Flоrida under
On cross-motions for summary judgment, the District Court granted summary judgment for Travelers, agreeing with it that federal law applied, and that Ocean Reef therefore forfeited its insurance coverage. On appeal, we reversed, holding that under Wilburn Boat Co. v. Fireman‘s Fund Insurance Co., 348 U.S. 310 (1955), Florida law applied because we did not find that any “entrenched federal maritime rules governing captain or crew warranties” existed. Travelers, 996 F.3d at 1169, 1171. That meant Travelers would have to prove on remand that the failure to retain a full-time captain “play[ed] [a] part in the loss” under Florida‘s anti-technical statute. Id. at 1170 (quoting parenthetically Pickett v. Woods, 404 So. 2d 1152, 1153 (Fla. 5th Dist. Ct. App. 1981)).
I.
A.
Ocean Reef first obtained insurance from Travelers for the My Lady in 2014. Coverage under that plan ran from October 10, 2014, through October 10, 2015. Ocean Reef renewed its policy for two more terms, so that in September 2017, it was covered by a policy running from October 10, 2016, through October 10, 2017. The policy covered Ocean Reef for up to $2,000,000 of property damage.
Ocean Reef‘s insurance policy had contained two express warranties since Ocean Reef first insured the My Lady with Travelers in 2014. One was called the “Captain Warranty.” The Captain Warranty provides:
It is warranted you employ a professional captain for the yacht shown on the Declarations Page of this policy. Such captain shall be employed full timе and approved by us. We will pay up to $1,500 for the cost of hiring a replacement captain, approved by us, if
your captain is unable to perform his regular duties due to a medically certified cause.
The other warranty was called the “Crew Warranty.” The Crew Warranty provides:
You employ 1 full time or part time professional crew for your yacht shown on the Declarations Page of this policy. We also provide coverage for any additional, temporary crew you employ.
Travelers initially issued the insurance policy with the Captain and Crew Warranties only after Ocean Reef amended its application to represent that it would employ Jason Gabriel—a professional, licensed captain—as the full-time captain. Gabriel resigned later that year. Ocean Reef then hired Caрtain Michael McCall—another licensed, professional captain—in January 2015. Captain McCall accompanied Gollel and his family on a two-week trip to the Bahamas shortly after he began his duties. He remained captain of the My Lady until April 2015, though he noted in his deposition that he did not consider the role a “full-time assignment” after the Bahamas trip.
The parties generally dispute the extent to which Ocean Reef complied with the Captain and Crew Warranties between April 2015 and September 2017; they also dispute Travelers’ willingness to pay out claims in prior cases when Ocean Reef was non-compliant. Travelers paid a claim for damages to the yacht caused by a lightning strike in 2016, though it now claims it only “honored” the claim “after Ocean Reef provided proof that it had a pro-
On the other hand, Travelers denied a claim for the loss of a jet ski that was stolen from the yacht in June 2017 while the My Lady was in the Bahamas. Travelers denied coverage “because the Vessel did not have a professional, licensed captain approved by Travelers at the time of the theft.” Ocean Reef does not dispute the facts surrounding the denial of coverage for the theft of the jet ski. By August 2017, a Travelers underwriter had emailed management recommending that the company not renew Ocean Reef‘s coverage—which would expire on October 10, 2017—due to a “very shady” claims history.4 Travelers then sent Ocean Reef a “notice of nonrenewal of insurance” dated August 14, 2017.
The following afternoon, McCall called Gollel back.5 McCall testified at his deposition that he “told him that after looking at the latest forecast, that [he] didn‘t see a safe place to take the boat.” The hurricane forecast had changed, and it was projected “to go close to south Florida and then turn and go straight up the east coast.” Gollel “agreed and told [McCall] that he had called a marina close by and he was waiting to hear back from them.”
On September 6, Gollel then had his insurance agent reach out to Travelers’ agent to request Travelers’ permission to move his yacht, even though, per the email, Gollel was “in between captains.” The email said Gollel was “requesting to be able to move the vessel himself, to a safe harbor in the vicinity, for the approaching Hurricane Irma.” The email said Gollel “has been boаting his whole life” and ultimately wanted advice on whether he should instead “leave it where it is & just secure it with additional lines, bumpers, etc.”
Later that morning, Gollel‘s agent responded to Travelers’ agent. She said: “[T]he insured is leaving the vessel docked where it is usually docked in lieu of moving it to inside the [Intracoastal waterway] where he feels it will be safer & suffer less damage.” She then asked if there was “any way” the agent could get Travelers’ underwriting department “on the phone quickly to see if they would prefer he move the vessel.” Early that afternoon, Travelers’ agent relayed the following from the insurer: “Given the impending weather threat and short notice given by the insured, the policy cannot be changed.” Gollel explained in his deposition that he thought the nearby Intracoastal waterway would be a “more protected” place during the storm—presumably meaning “more protected” from waves and wind.
Gollel ended up securing the yacht to the dock behind his residence before the hurricane struck. His two sons assisted. Gollel testified at his deposition that they “tied the boat up with extra
Hurricane Irma struck between September 10 and 11. During the storm, the My Lady sank. The parties describe the sinking‘s cause differently but generally agree that a mooring pile came loose, the boat hit Gollel‘s cement sea wall—which caused the hull to break—and it sank. The boat sustained enough damage to amount to a “total loss” under Ocean Reef‘s policy.
B.
Within a day after the hurricane, Ocean Reef submitted a claim for coverage of the loss of the My Lady аnd requested that Travelers front the money for raising the yacht out of the water. Travelers considered this request, and then informed Gollel on September 21 that it would front the money for raising the vessel but would still investigate whether it would cover the loss. Travelers then sent Ocean Reef a “reservation of rights” letter dated September 25, 2017, informing Ocean Reef that it reserved the right to deny coverage and to seek reimbursement for fronting the cost of raising the yacht out of the water.
On September 26, Travelers filed for a declaratory judgment in the Western District of New York—where it claimed Ocean Reef‘s principal place of business was located. The action sought a
On November 9, 2017, Travelers sent Gollel a letter indicating it would cоntinue to front the money to finish raising and securing the vessel, but that it declined coverage for his claim because he failed to comply with the Captain Warranty and Crew Warranty. The letter also noted that Travelers had filed for a declaratory judgment in the Western District of New York “in support of th[e] Declination.”
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As indicated supra, Travelers likely engaged in a strategy to avoid the application of Florida‘s anti-technical statute,
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In October 2017, Gollel spoke with Captain McCall. McCall then emailed Gollel and Lisa Steinhoff, a manager at Ocean Reef. The email explained McCall‘s arrangement with Gollеl as Irma approached:
I Captain Mike McCall was hired by Mr. Gollel on September 5 thru September 15 2017 as temporary Captain. At that time I was on another boat in New England but was going to make arrangements to fly down. Due to uncertainty of where to move the boat, Hurricane forecast, and miscommunications with Mr. Gollel I never made the arrangements and therefore [was] not present at the time.
Ocean Reef never compensated Captain McCall for this temporary captain assignment.
Neither party disclosed Captain McCall as an expert witness. So, at trial, he could only testify based on his “personal knowledge.”
When Travelers deposed Caрtain McCall, it asked him about his prior experience preparing various boats for hurricanes as their captain. It also asked, in various ways, whether it is “generally” better to move a boat out of the path of a hurricane. The following exchange illustrates:
Travelers’ Counsel: Would you leave a vessel like the My Lady tied up to a concrete bulkhead during the storm that was anticipated?
McCall: If that was the only option, yes.
Travelers’ Counsel: If there was—would there be an[y] preferable options that you can think of to leaving a vessel tied to a concrete bulkhead in the conditions that you were anticipating?
McCall: Yes. To move the vessel.
Travelers’ Counsel: What sort of locations would you consider to be a better option?
[intervening objection to form]
McCall: A long ways away from where the storm was projecting to hit.
McCall also noted that whether the Ocean Reef Marina would be “an appropriate place to leave the My Lady during hurricane conditions” would “depend[] on the conditions” and the particular circumstances of the storm.
Travelers did not disclose an expert witness for its case-in-chief to discuss what a captain would have done with the My Lady during Irma. On January 28, 2019, however, Travelers disclosed a rebuttal expert, Captain Joseph Ahlstrom, notifying Travelers that “Captain Ahlstrom may be called to rebut any testimony that Ocean Reef Charters LLC had a full-time, professional captain at any relevant time.” It made this disclosure assuming a federal strict-compliance rule applied.
On February 25, 2019, Ocean Reef disclosed Captain Thomas Danti and Allister Dredge, a marine surveyor, as expert witnesses. They attached both experts’ reports to the disclosure. The disclosure included both experts’ qualifications, their opinions, and the bases for their opinions. See
Captain Danti fleshed out his opinion when Travelers’ counsel deposed him. Danti answered various questions about moving boats away from hurricanes. The upshot of his answers was that there is “no magical formula” to preparing for a hurricane “except to try to do the best you can to protect your vessel in a particular location. So you have to take that into consideration, the size of the vessel, where it‘s located, how congested it is in the area,” along with the weather conditions and how the vessel could be secured.
Captain Danti also discussed how finding an available place fоr a boat as a hurricane approaches can be challenging. He noted that, “if you go down any of the canals in Florida today, you‘ll see that they‘re all developed, that the ability to even put a boat in the mangroves has gone away because of development.” As to the Intracoastal waterway, it “is very congested today, loaded with private docks and private yachts and is very limited as far as any locations that may be applicable for use that I know of.” And as to whether hauling a boat out of the water is better than securing it in the water, he explained that “[t]he vessels that were damaged during Hurricane Irma in the islands, a lot of those boats were hauled out of the water and then once the storm came through, it was like a domino effect.”
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After we remanded the case for consideration under
Travelers responded to Ocean Reef‘s motion on Ahlstrom‘s report by making two arguments pertinent to this appeal. One was titled, “Travelers Timely Disclosed Captain Ahlstrom as its Expert, and any Delay in Producing Captain Ahlstrom‘s Rebuttal Report was Harmless” under Federal Rule of Civil Procedure Rule 37. See
The District Court granted Ocean Reef‘s motion to exclude Ahlstrom from testifying in Travelers’ case-in-chief and then
II.
We review the District Court‘s grant of summary judgment de novo. Penley v. Eslinger, 605 F.3d 843, 848 (11th Cir. 2010). Summary judgment is propеr when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Travelers bore the burden of proof under Florida law. See infra, Part II.A. In moving for summary judgment, Ocean Reef bore “the initial responsibility of informing the district court of the basis for its motion,” and then Rule 56 “mandate[d] the entry of summary judgment, after adequate time for discovery and upon
This case boils down to two issues. One is whether, under Florida‘s anti-technical statute, the insurance company must prove that the breach of the Captain Warranty “contribute[d] to” the specific accident. Pickett, 404 So. 2d at 1153. Travelers claims that all it must show is that the lack of a full-time captain generally makes vessels more susceptible to damage from hurricanes. Under Travelers’ theory, Florida law does not require it to prove that Ocean Reef‘s noncompliance with the Captain Warranty actually caused this accident to any extent.
The second, related issue is whether, in meeting its burden of proof under Florida law, Travelers needed to introduce expert testimony in its case-in-chief about what would have been different if Ocean Reef had complied with the applicable warranties. Trav-
Travelers is wrong on all counts. We address each issue in turn.
A.
The Florida anti-technical statute we must apply provides:
A breach or violation 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.
The Florida District Court of Appeal discussed the significance of the state‘s anti-technical statute in Pickett. There, an insurance company tried to avoid covering a claim for a death in a plane crash.8 Pickett, 404 So. 2d at 1152-53. The insurer claimed that the loss was not covered because the policy did not apply to an insured “who operates or permits the operation of the aircraft, while in flight, unless its airworthiness certificate is in full force and effect.” Id. at 1152. After the jury found, on a special verdict form, that the plane lacked a valid airworthiness certificate during the accident, the trial court entered judgment for the insurance company. Id.
The Florida District Court of Appeal reversed and remanded. The court explained that, “[f]rom the facts as stated” by the insured, “the crash was due to pilot error,” as “the plane flew
We recently applied Florida‘s anti-technical statute in a case involving the destruсtion of a yacht during Hurricane Dorian. See Serendipity at Sea, 56 F.4th at 1282. There, the insurer, not the insured, hired Captain Danti as an expert witness. Id. The insurer claimed Captain Danti offered “undisputed testimony” that the insured‘s failure to “employ a full-time licensed captain in violation of the policy‘s Captain Warranty” increased the hazard to the yacht. Id. In essence, he opined that a full-time captain would have moved the boat away from the Bahamas—where the yacht was moored, and where the hurricane hit head on—and back to Cape Canaveral, the yacht‘s primary mooring location. Id. at 1287. The District Court found Captain Danti‘s opinion on the matter undisputed because the insured did not offer an opposing expert and granted summary judgment to the insurer. Id.
The rule from these cases is clear: to meet its burden under Florida‘s anti-technical statute, the insured must show that, under the circumstances of the specific accident at issue, the breach of the warranty had some material effect on the loss. Otherwise, the insurer could “avoid[] coverage on a technical omission playing no part in the loss.” Pickett, 404 So. 2d at 1153.
B.
The next question is whether Travelers has admissible evidence that raises a genuine issue of material fact about whether the lack of a full-time captain or crew played a material role in causing the My Lady‘s sinking. Because Travelers did not disclose an expert to testify in its case-in-chief, it lacks evidence from which a jury could reasonably find in its favor.
As Rule 701 provides, a lay witness could not competently offer an opinion on what a captain would have done with the My Lady if one were in charge. Federal Rule of Evidence 701, Opinion Testimony by Lay Witnesses, states:
If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:
(a) rationally based on the witness‘s perception;
(b) helpful to clearly understanding the witness‘s testimony or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.
So, a lay witness can only speak to what he in fact observed. Rule 701 permits opinions, but only those “rationally based on the
Travelers’ attempts to avoid this fundamental problem with its case-in-chief do not work. There is no such thing as “hybrid fact-expert witness testimony” in the sense that Travelers claims. Appellant‘s Br. at 23. Of course, a properly disclosed and qualified expert can testify as both an expert and a fact witness. But the Advisory Committee‘s note to the 2000 amendment to Rule 701—the amendment that added Rule 701(c)—explicitly says that the amendment was designed to “eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in lay witness clothing.” Fed. R. Evid. 701 advisory committee‘s note to 2000 amendment. And so, “[b]y channeling testimony that is actually expert testimony to Rule 702, the amendment also ensures that a party will not evade the expert witness disclosure requirements set forth in Fed. R. Civ. P. 26 and Fed. R. Crim. P. 16 by simply calling an expert witness in the guise of a layperson.” Id.
True, a lay witness who has a job requiring expertise may acquire first-hand, “particularized knowledge” of probative facts
a witness‘s lay opinion is based on specializеd knowledge, it seems clear that the witness‘s personal perception will remain a fundamental prerequisite to admissibility.“).
Accordingly, Captain McCall—whom Travelers did not disclose as an expert witness—could not provide his opinion on what would have happened to the My Lady if a licensed, professional captain were employed full-time. He could discuss the weather forecasts he observed and relate what Gollel asked of him. But those facts would leave the jury to speculate about what a captain would have done differently to avoid the storm under the specific circumstances of this case.
Finally, Travelers cannot rely on potential testimony from Captain Ahlstrom to avoid summary judgment because it only disclosed him as a rebuttal expert. If the case went to trial, Travelers would first present its case-in-chief as plaintiff. It would need to prove that the lack of a captain had some material effect on the My Lady‘s demise. It would not have an expert to present in its case-in-chief. After it rested, Ocean Reef would move for judgment as a matter of law under Rule 50 of the Federal Rules of Civil Procedure. The District Court would grant the motion because “a reasonable jury would not have a legally sufficient evidentiary basis to find for” Travelers.
III.
Travelers’ remaining argument is that the District Court abused its discretion in refusing to consider Captain Ahlstrom‘s report for summary judgment purposes. Specifically, Travelers argues that it was “effectively seeking to use a rebuttal expert as a primary expert, [which] was akin to a motion to add or substitute an expert.” Appellant‘s Br. at 39. Travelers emphasizes that after
When reviewing the District Court for abuse of discretion, we must affirm unless the District Court made a legal error—such as “appl[ying] an incorrect legal standard” or “follow[ing] improper procedures in making a determination“—or made “clearly erroneous” factual findings. Equal Emp. Opportunity Comm‘n v. Eberspaecher N. Am. Inc., 67 F.4th 1124, 1130 (11th Cir. 2023) (internal quotation marks and citation omitted). The District Court did not consider a motion to redesignate Captain Ahlstrom as an expert for Travelers’ case-in-chief because Travelers did not file one. In its response to Ocean Reef‘s motion to exclude Captain Ahlstrom‘s report, Travelers asked the District Court not to strike Ahlstrom‘s rebuttal report as untimely. And it argued that his report rebutted Captain Danti‘s opinions as if it did not have the burden of proof or did not need an expert to meet that burden. The District Court did not strike the report. But Travelers did not move the Court to
IV.
All told, without expert testimony about what a professional captain would have done differently to avoid harm to the My Lady during Hurricane Irma, the jury would have had to speculate to find for Travelers under Florida‘s anti-technical statute. And we see no need to give Travelers another bite at the apple. The District Court‘s grant of summary judgment is
AFFIRMED.