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Galilea, LLC v. Pantaenius American Ltd.

United States District Court, D. Montana, Billings Division

February 15, 2019

GALILEA, LLC and TAUNIA KITTLER, Plaintiffs,
v.
PANTAENIUS AMERICAN LIMITED, ANDREA M. GIACOMAZZA, AGCS MARINE INSURANCE COMPANY, LIBERTY MUTUAL INSURANCE COMPANY, and TORUS INSURANCE COMPANY, Defendants.

          FINDINGS AND RECOMMENDATIONS OF U.S. MAGISTRATE JUDGE

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE.

         Plaintiffs Galilea, LLC (“Galilea”) and Taunia Kittler (“Kittler”) bring this action against Defendants Pantaenius America Limited (“Pantaenius”), Andrea M. Giacomazza, [1] and AGCS Marine Insurance Company, Liberty Mutual Insurance Company, and Torus Insurance Company (the “Insurer Defendants”). In the complaint, Galilea and Kittler assert seven counts against Pantaenius relating to whether it properly procured insurance as requested by Plaintiffs (Counts I-VII), and Kittler brings seven counts against the Insurer Defendants relating to the denial of insurance coverage for loss of the sailing yacht Galilea (Counts VIII-XIV). (Doc. 1.)

         Presently before the Court are the Insurer Defendants' Motion to Compel Arbitration, Motion to Dismiss and/or Motion to Stay (Doc. 2) and Panaenius' Motion to Compel Arbitration, Motion to Dismiss and/or Motion to Stay. (Doc. 6.) The motions are fully briefed and ripe for the Court's review. (Docs. 20, 21, 24, 25.)

         I. BACKGROUND

         Galilea, LLC is a Nevada limited liability company that was formed by Chris and Taunia Kittler for the purpose of owning their 60-foot sailing yacht, the Galilea. (Doc. 1 at ¶ 1.) The Kittlers are Montana residents and are the sole members of Galilea, LLC. (Id.)

         The Insurer Defendants are the insurance companies who provided the coverage under the insurance policy at issue in this case. (Doc. 7-4.) Pantaenius specializes in obtaining and administering yacht insurance policies, and acts as an agent for the insurance underwriters. (Doc. 7-4; Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052, 1054 (9th Cir. 2018).)

         On May 12, 2015, Taunia Kittler emailed an application for yacht insurance to Pantaenius. (Id. at ¶ 21.) The application listed Galilea, LLC as the insured. (Doc. 7-11.)

         The insurance application contained the following arbitration provision:

Any dispute arising out of or relating to the relationship between Pantaenius America Ltd and/or our participating underwriters and the insured shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The dispute shall be submitted to one arbitrator. This relationship shall be governed by the laws of the state of New York. The place of arbitration shall be New York, New York.

(Doc. 7-11.)

         On May 13, 2015, Pantaenius issued an insurance binder providing preliminary coverage, and the formal insurance policy was issued a day later. (Doc. 1 at ¶¶ 22-24, 27; Docs. 7-4; 71-12.) The policy provided:

A11: JURISDICTION AND CHOICE OF LAW
This insurance policy shall be governed by and construed in accordance with well established and entrenched principles and precedents of substantive United States Federal Maritime Law, but where no such established and entrenched principles and precedents exist, the policy shall be governed and construed in accordance with the substantive laws of the State of New York, without giving effect to its conflict of laws principles, and the parties hereto agree that any and all disputes arising under this policy shall be resolved exclusively by binding arbitration to take place within New York County, in the State of New York, and to be conducted pursuant to the Rules of the American Arbitration Association.

(Doc. 7-4 (emphasis added).)

         Both the insurance application and the policy set forth the covered “Cruising Area” as “Inland waters, bays and coastal waters east to 50° West Longitude and west to 135° West Longitude, and north to 52° North Latitude, and south to 30.5° North Latitude.” (Docs. 7-4; 7-11.) The policy further stated that “coverage is effective only when the insured vessel(s) are within the ‘cruising area' specified on the declaration sheets.” (Doc. 7-4.)

         On June 24, 2015, the yacht ran ashore off the coast of Panama, and was deemed a complete loss. (Id. at ¶¶ 31, 33-34.) Chris Kittler submitted a claim for insurance coverage the same day. (Id. at ¶ 35.) The Insurer Defendants denied coverage on the basis that the accident occurred outside of the cruising area identified in the policy. (Id. at ¶ 38.)

         After Galilea requested the Insurer Defendants to reconsider the coverage denial, the Insurer Defendants initiated arbitration proceedings in New York. In response, Galilea filed an action in this Court against the Insurer Defendants. See Galilea v. AGCS Marine Ins. Co., No. 15-cv-84-SPW, Docket No. 1 (D. Mont. August 28, 2015). Galilea asserted claims for declaratory relief, breach of contract, contract reformation, promissory estoppel, equitable estoppel, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, violation of Montana Unfair Trade Practices Act, negligent misrepresentation, constructive fraud, tortious interference with contract, and tortious interference with prospective economic advantage. Id.

         U.S. District Judge Susan P. Watters determined the choice of law and arbitration provision in the policy was valid and enforceable, and compelled arbitration as to the first two counts in the complaint, but denied it as to the others. Galilea, LLC v. AGCS Marine Ins. Co., 2016 WL 754221 (D. Mont. Feb. 24, 2016); Galilea, LLC v. AGCS Marine Ins. Co., 2016 WL 1328920 (D. Mont. April 5, 2016). The Ninth Circuit affirmed, but determined the Insurer Defendants' motion to compel arbitration should have been granted as to all counts. Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052 (9th Cir. 2018). On remand, Judge Watters granted the Insurer Defendants' motion to compel arbitration in its entirety and dismissed the case. Galilea, No. 15-cv-84-SPW, Docket No. 50 (D. Mont. Feb. 9, 2018).

         Taunia Kittler now brings this lawsuit in her individual capacity against the Insurer Defendants. Kittler's claims against the Insurer Defendants are substantially identical to the claims Galilea asserted against the Insurer Defendants in the prior action. (Compare Doc. 1 at ¶¶ 88-127 and Galilea, No. 15-cv-84-SPW, Docket No. 1 at ΒΆΒΆ 49-58; 63-74; ...


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