Travelers must pay a $2 million claim by the owner of a 92-foot-long yacht that was sunk by Hurricane Irma because Florida law does not allow insurers to deny claims based on inconsequential technicalities.
A panel of the 11th Circuit Court of Appeals on Friday affirmed a District Court decision that granted summary judgment for Ocean Reef Charters LLC. The opinion says a Florida law, known as an “anti-technical statute,” bars Travelers Property Casualty Co. of America from refusing payment solely because the owner did not have a full-time captain assigned to the the yacht as required by a warranty included with the insurance policy.
The decision cites two previous rulings by a Florida state appellate court and the 11th Circuit against insurers that denied claims because the policyholder did not comply with a warranty.
“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,” the opinion says.
The motorized yacht known as My Lady did not have a full-time captain assigned to it in September 2017, when Hurricane Irma approached South Florida. Richard Gollel, whose company operated the yacht, asked the previous captain to temporarily retake the helm and drive the boat to safer waters.
Capt. Michael McCall initially agreed to fly down from Massachusetts, but after watching weather reports decided that there was no safe place to take the My Lady because Hurricane Irma was forecasted, at the time, to turn to the north and take a path “straight up the east coast.”
Gollel decided to tie the boat up behind his home on the Intracoastal Waterway in Pompano Beach. Wind from Hurricane Irma a category 4 storm, tossed the boat until a mooring pile broke loose and My Lady struck a concrete seawall, breaking open its hull.
The yacht was a total loss. Gollel’s company filed a claim seeking the $2 million policy limit.
Travelers tried to steer the case to New York, where Gollel’s company is based in Rochester. The carrier filed a lawsuit seeking declaratory judgment in the Western District of New York.
New York law, like federal law and the laws of most states, requires insureds to strictly comply with warranties such as the full-time captain requirement, according to the opinion. The district court in New York, however, transferred the case to the Southern District of Florida, finding it a more suitable jurisdiction because of the location of the accident and witnesses.
The Southern Florida court initially ruled that federal law applies and granted a summary judgment motion in favor of Travelers. The 11th Circuit reversed, however, holding that Florida law applies to the claim.
On the second time around, the Southern Florida District Court ruled in favor of the insured because Travelers did not produce an expert witness who said that the hurricane damage could have been avoided if a licensed captain had been operating the yacht. Ocean Reef Charters called two expert witnesses who testified that having a professional captain would have made no difference because Gollel, an experienced boat pilot although not a licensed captain, had taken all the proper precautions.
On appeal, Travelers argued that it was not required to call an expert witness to show that the lack of compliance did increase the risk of damage to the yacht. But the 11th Circuit panel said the trial court made the right call.
“The effect of Ocean Reef’s failure to retain a full-time captain and crew leading up to and during Hurricane Irma is exactly the kind of issue that requires expert testimony,” the opinion says.
The panel explained that the question of whether the presence of a full-time captain would have avoided the damage is hypothetical. The ability to answer hypothetical questions is what separates expert witness from lay testimony, the opinion says.
“A lay witness cannot offer a hypothesis about what caused the My Lady to sink or what professional captains or crews might have done to change the outcome,” the panel said. “Indeed, the question here is what experts would have done differently to avoid the accident.”
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