Major appellate win for Shareholder Marlin Green and Senior Associate Cody Frank
Court of Appeals had appellate jurisdiction, pursuant to Section 1292(a)(3) over default judgment on liability (but not damages) against the vessel’s owner’s broker under the marine insurance policy issued for the owner’s vessel; District Court’s subject matter jurisdiction was not divested by forum-selection clause in the policy; default was set aside because the complaint did not plausibly allege a claim against the broker for breach of contract based on the policy; TWC Acqua Ltd. v. RFIB Group Ltd, No. 23-12100, 2024 U.S. App. LEXIS 28292 (11th Cir. Nov. 7, 2024) (per curiam).
TWC Acqua Ltd. bought a marine insurance policy through its broker, RFIB Group, to insure TWC’s motor yacht ACQUA. The ACQUA was docked in Ft. Lauderdale when heavy rain created leaks in the yacht that resulted in water damage to the interior. TWC presented a claim but did not receive payment for the damage. TWC then brought this suit in federal court in Florida against RFIB for breach of contract. RFIB did not answer the complaint, and the clerk entered a default against RFIB. A week later, RFIB appeared and moved to set aside the entry of default, attaching a declaration from RFIB’s former counsel that TWC’s counsel consented to extensions of time to file a responsive pleading (however, RFIB’s former counsel did not file anything with the court concerning the extension. Judge Singhal declined to set aside the default, reasoning that FRIB had failed to show good cause because the agreements for an extension were not self-executing and required court approval, which was not sought by RFIB. RFIB also moved to transfer venue based on a forum-selection clause in the policy, but Judge Singhal denied the motion as moot. RFIB moved for reconsideration, arguing that TWC had “reneged” on its agreement in an act of “clandestine gamesmanship,” and TWC moved for entry of judgment. RFIB responded that it was not the insurer and could not be liable for breach of contract under the policy, but Judge Singhal declined to grant reconsideration as no motion for extension had been filed, and he granted judgment in favor of TWC as to liability for breach of contract but declined to award damages without more evidence. RFIB appealed, and the Eleventh Circuit first considered whether there was appellate jurisdiction as an interlocutory admiralty appeal under Section 1292(a)(3). The appellate court agreed that the default made a complete determination of RFIB’s liability as to TWC, so the court had jurisdiction over the appeal (the court had pendent appellate jurisdiction over the other orders of the district court). RFIB argued that the district court lacked subject matter jurisdiction because the policy contained a forum-selection clause specifying New York as the proper forum to hear a case under the policy. The Eleventh Circuit disagreed, reasoning that a forum-selection clause presents an issue of improper venue and does not divest the court of subject matter jurisdiction, which was proper based on the claim for breach of a maritime contract. The Eleventh Circuit did agree to set aside the default judgment because TWC’s complaint failed to plausibly allege a claim for breach of contract against RFIB. TWC’s complaint alleged that RFIB failed to investigate, respond to, and indemnify losses under the policy, and TWC attached a copy of the policy. However, the policy provided that RFIB is “Lloyd’s Broker” and that the underwriters are three Lloyd’s Syndicates. Accordingly, the Eleventh Circuit held that RFIB could not breach the policy in the manner that TWC alleged, and the appellate court reversed the default judgment and remanded the case with instructions to dismiss the complaint for failure to state a claim (without prejudice).
