READING THE FINE PRINT: FEDERAL COURT IN MIAMI ENFORCES POLICY’S DIVEBOAT LIMITATION EXCLUSION RIDER IN SCUBA DIVING ACCIDENT

Maritime Insurance Action turns on Exclusion’s “Plain Language”

By:  William L. Pardue

Travelers Prop. Cas. Co. of Am. v. Barkley, No. 16-61768-CIV, 2017 U.S. Dist. LEXIS 132886 * (S.D. Fla. Aug. 21, 2017); Travelers Prop. Cas. Co. of Am. v. Barkley, No. 16-61768-CIV, 2017 WL 3593953 (S.D. Fla. Aug. 21, 2017).This case proceeds from a now-settled 2014 wrongful death action of a scuba diver off Pompano Beach, Florida (the “2014 litigation”).[1] Plaintiff, Travelers Property Casualty Company of America (“Travelers”), moved for summary judgment seeking a judicial declaration that it owed no duty to provide a legal defense for defendant, Douglas Barkley (“Barkley”), in the 2014 litigation under a commercial marine insurance policy (the “Travelers’ Policy”).Barkley simultaneously sought a declaration from the court that Travelers had a duty to defend and indemnify him as well as his assignee, Certain Underwriters at Lloyd’s of London (“Lloyd’s”), against claims in the 2014 litigation, including reimbursement of Lloyd’s 50% pro rata share of costs incurred for Barkley’s defense. The court held that the “plain language” of the exclusion provision contained in the Diveboat Limitation Endorsement rider to the Travelers’ Policy barred coverage of the wrongful death claim, and thus precluded Barkley from asserting coverage under the Travelers’ Policy.In 2014, Joseph Grosso boarded the M/V SCUBATYME III (the "Vessel") for a diving excursion off Pompano Beach, Florida. During his second dive, the captain maneuvered the Vessel away from Grosso to retrieve other divers. When the Vessel returned, Grosso was found tangled in the dive line, without a respirator, and unresponsive. He died as a result of the accident.Grosso’s estate brought the 2014 litigation against several defendants including Barkley, the mate and deckhand onboard the Vessel responsible for supervising the divers. Both Travelers and Lloyd’s each provided a separate defense for Barkley under separate policies.  Both policies named Barkley as an insured. Travelers, however, reserved its right to withdraw its defense in the 2014 litigation if the underlying claim was excluded by the Diveboat Limitation Endorsement.The court’s analysis focused on two issues in the Travelers’ Policy.  The first issue centered around the language regarding the loss of life clause which stated that Travelers “will pay sums that . . . [an insured] . . . become[s] legally obligated to pay as a result of the ownership, operation or maintenance of the insured vessel because of bodily injury or loss of life.” The second issue, and on which the case turned, focused specifically on the language in the Diveboat Limitation Endorsement attached as a rider to the Travelers’ Policy, which excluded from coverage “[b]odily injury, loss of life, or illness of any person while in the water or arising as a consequence of being in the water.” (emphasis added) Travelers posited two arguments why it withdrew coverage for Barkley on those two issues.First, Travelers asserted that Grosso’s death was not covered because it was not “a result of the . . . operation . . . of the insured vessel.” After extensive analysis, the court concluded that the policy language as to this issue was not dispositive. It also acknowledged that Grosso's death would have been a result of the operation of the vessel if his death "originated from, grew out of, flowed from, was incident to or had a connection with the operation of the Vessel" that was "more than a mere coincidence." As such, the court concluded on this issue that there was no clear indication that Grosso's death was “causally related to his abandonment.”As to the second issue, Travelers’ asserted that the Diveboat Limitation Endorsement excluded coverage, because Grosso's death occurred while he was in the water. The court noted that the plain language of the rider exclusion was uncontroverted.Barkley followed with three arguments as to the exclusion issue, namely that (i) the exclusion provision was too broad and illusory as to coverage for bodily injury and death as result of negligent operation of the Vessel, (ii) the exclusion was ambiguous as to coverage for liability arising out of the operation of a scuba diving charter that resulted in the death of a passenger, and that (iii) Travelers had effectively confessed to liability by providing and paying for a defense and portion of the global settlement in the 2014 litigation.The court rejected Barkley’s arguments holding that the exclusion was not illusory because it applied strictly to a subset of claims occurring in the water, and not to injury or death occurring onboard the vessel. Second, the court recognized that the Diveboat Limitation Endorsement language "plainly excluded coverage for injuries and loss of life in [the] water,” and as such no ambiguity existed.  Finally, the court stated that Travelers’ payment of a portion of the global settlement in the 2014 litigation did not constitute a confession of liability, because Travelers withdrew its defense based on the plain language exclusion of the Travelers’ Policy which barred coverage for Grosso's drowning death. As such, Travelers did not have a duty to defend Barkley in the 2014 litigation, nor was it obligated to reimburse Lloyd's expenses therefor.In conclusion, this court’s opinion affirms that “[w]here the plain language of an agreement is susceptible to only one interpretation, it is ‘unnecessary to analyze the unstated intentions of the parties or the purposes of the provision.’"[2][1] Travelers Prop. Cas. Co. of Am. v. Salt ‘N Blue LLC, 2017 U.S. Dist. LEXIS 103525 (S.D. Fla. Jan. 12, 2017).[2] Travelers Prop. Cas. Co. of Am. v. Barkley, No. 16-61768-CIV, 2017 U.S. Dist. LEXIS 132886, at *20 (S.D. Fla. Aug. 21, 2017) (citing Key v. Allstate Ins. Co., 90 F.3d 1546, 1549 (11th Cir. 1996).