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Galilea, LLC v. Pantaenius America Ltd.

United States District Court, D. Montana, Billings Division

August 26, 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.

          ORDER STAYING CASE

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE

         Plaintiffs Galilea, LLC (“Galilea”) and Taunia Kittler (together “Plaintiffs”) brought this action against Defendants Pantaenius America Limited (“Pantaenius”) and Andrea M. Giacomazza (together “Broker Defendants”); and Defendants AGCS Marine Insurance Company, Liberty Mutual Insurance Company, and Torus Insurance Company (together “Insurer Defendants”). In the complaint, both Plaintiffs assert seven counts against the Broker Defendants relating to whether they properly procured insurance (Counts I-VII), and Mrs. Kittler brings seven counts individually against the Insurer Defendants relating to the denial of insurance coverage for loss of the sailing yacht Galilea (Counts VIII-XIV). (Doc. 1.).

         I. BACKGROUND

         Galilea 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. (Id.) The Insurer Defendants are the insurance companies who provided the coverage under the insurance policy at issue in this case. (Doc. 5-4.) Pantaenius specializes in obtaining and administering yacht insurance policies, and acts as an agent for the insurance underwriters. (Doc. 5-4; Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052, 1054 (9th Cir. 2018).) Giacomazza is an employee of Pantaenius. (Doc. 1 at ¶ 4.)

         On June 24, 2015, the Galilea ran ashore off the coast of Panama, and was deemed a complete loss. (Doc. 1 at ¶¶ 31, 33-34.) Mr. 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. (Doc. 5-1.) 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 I”). Ultimately, United States District Judge Susan P. Watters granted the Insurer Defendants' motion to compel arbitration in its entirety and dismissed the case. Galilea I, No. 15-cv-84-SPW, Docket No. 50 (D. Mont. Feb. 9, 2018). Subsequently, on April 23, 2018, Galilea asserted counterclaims in the arbitration proceedings.[1] (Doc. 4-1.) The counterclaims are nearly identical to the claims Galilea had alleged against the Insurer Defendants in Galilea I. (Compare Galilea I, No. 15-cv-84-SPW, Docket No. 1 with Doc. 4-1.)

         On June 22, 2018, Plaintiffs filed the instant action. (Doc. 1.) Mrs. Kittler's claims against the Insurer Defendants in this case are substantially identical to the counterclaims that Galilea and Mr. Kittler asserted in the arbitration proceedings. (Compare Doc. 1 at ¶¶ 82-127 with Doc. 4-1 at ¶¶ 46-54, 59-70, 77-81, 85-98.) Plaintiffs also bring claims against the Broker Defendants for the first time. (Doc. 1.) Plaintiffs' claims against the Broker Defendants are based on the same nucleus of facts as the counterclaims in the arbitration proceedings.

         On February 15, 2019, the Court issued Findings and Recommendations, recommending that Judge Watters compel Mrs. Kittler to arbitrate her claims against the Insurer Defendants because she was seeking direct benefits under the insurance policy. (Doc. 27.) The Court also recommended that Pantaenius' motion to compel arbitration be granted. (Id.) Thereafter, Mrs. Kittler sought to amend the Complaint to remove Counts VIII (declaratory relief) and IX (breach of contract) so that she could avoid arbitration. (Doc. 33.)

         On March 19, 2019, Judge Watters issued an order rejecting the undersigned's Findings and Recommendations. (Doc. 38.) Judge Watters granted the Insurer Defendants' Motion to Dismiss as to Counts VIII and IX. (Id.) As a result, the basis for the Court's determination that Mrs. Kittler must arbitrate her claims against the Insurer Defendants was removed. Judge Watters also denied Pantaenius' Motion to Compel Arbitration. (Id.) Judge Watters then recommitted this matter to the undersigned to determine the merit, if any, of the remainder of the Insurer Defendants' Motion to Dismiss and/or Stay the Action (Doc. 2), and Pantaenius' Motion to Dismiss and/or Stay the Action. (Doc. 6.)

         On April 9, 2019, Defendants filed a Notice of Final Arbitration Award with this Court, indicating the arbitration proceedings in New York have concluded. (Doc. 41.) The New York Arbitral Tribunal ruled: 1) all counterclaims made by Galilea and Mr. Kittler under the policy were denied with prejudice; 2) the policy was void ab initio due to Galilea and Mr. Kittler's failure to disclose previous Galilea insurance claims; and 3) Galilea and Mr. Kittler did not establish by a preponderance of the evidence that they notified the Insurer Defendants of their specific insurance requirements. (Doc. 41-1 at 36-37.) Specifically, the Arbitral Tribunal found Galilea and Mr. Kittler failed to establish that they communicated to Pantaenius, or any person working for Pantaenius, a specific request for expanded insurance coverage. (Id. at 34.) Therefore, the Arbitral Tribunal determined Galilea and Mr. Kittler were not entitled to coverage for the grounding of the Galilea. (Id. at 37.) The Broker Defendants were not parties to the New York arbitration proceedings.

         On June 20, 2019, Galilea and Mr. Kittler filed a Petition to Vacate the Arbitration Award in the United States District Court for the Southern District of New York. See Galilea, LLC v. AGCS Marine Insurance Company, No. 19-cv-5768-VEC, Docket No. 1 (S.D.N.Y June 20, 2019).[2] That action is currently pending. The Arbitration Award, therefore, has not been confirmed.

         II. DISCUSSION

         A. The Insurer Defendants' Motion to Dismiss and/or Stay

         The Insurer Defendants first argue that all claims pursued by Mrs. Kittler individually should be dismissed for lack of standing. They argue Galilea is the real party in interest, and that Mrs. Kittler has no standing to personally assert claims for damage to property owned by the LLC. The Insurer Defendants further point out that Galilea has already pursued its claims against them in the arbitration proceedings. The Insurer Defendants also argue Mrs. Kittler's individual claims each fail as a matter of law. Alternatively, the Insurer Defendants argue this action should be stayed ...


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