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In re Complaint of Blue Crest Holding Asset, Inc.

United States District Court, S.D. Florida

May 16, 2018

IN THE MATTER OF THE COMPLAINT OF BLUE CREST HOLDING ASSET, INC., as Owner and Operator of the M/Y MIMI, for Exoneration from and/or Limitation of Liability, Petitioner.

          ORDER SETTING FORTH FINDINGS OF FACT AND CONCLUSIONS OF LAW

          CECILIA M. ALTONAGA UNITED STATES DISTRICT JUDGE

         Third-Party Plaintiff, Miami Beach Marina Associates, Ltd. (“MBM”) filed a Motion to Enforce the Settlement Agreement with Blue Crest Holding Asset, Inc. and Maximilian Camino [ECF No. 197] on January 5, 2018. By Order [ECF No. 210] dated January 29, 2018, the Court denied the Motion to Enforce and directed the parties to schedule the matter for an evidentiary hearing. That hearing took place on March 14 and 15, 2018. (See [ECF Nos. 250 & 252]). At the evidentiary hearing, MBM called six witnesses to testify: John Alder, John Hopwood, John Keller, Maximilian Camino, Marlin Kareem Green, and Janice McIntyre. Neither BCH nor Mr. Camino called any witnesses.

         The Court has carefully considered the testimony of the witnesses, the exhibits admitted, the parties' written submissions, and applicable law. Based on its review of the record and pursuant to Federal Rule of Civil Procedure 52(a)(1), the Court makes the following findings of fact and conclusions of law.

         I. FACTUAL FINDINGS

         1. On March 17, 2017, Petitioner, Blue Crest Holding Asset, Inc. (“BCH”), filed a Verified Complaint for Exoneration from or Limitation of Liability [ECF No. 1].

         2. BCH was an owner of the M/Y MIMI, an 80-foot Hatteras Motor Yacht. The Vessel is the subject of this Limitation of Liability Proceeding due to an incident that occurred on October 2, 2016. Underwriters at Lloyd's (“Blue Crest Lloyd's”) appointed Mr. Green to bring the Limitation Action.

         3. The only claims asserted directly against BCH are those of MBM; James Terry, and Certain Underwriters at Lloyd's of London Under Binding Authority: B0901LC1616622000 subscribing to Policy Number: 500061-ACH as the subrogee of FCM (BVI) Trading as Sunsail and The Moorings Limited, the owner, charterer and/or operator of the M/Y LAZY SUSAN and M/Y ANDIAMO (collectively “Claimant Lloyd's”).

         4. Mr. Green, attorney-in-fact for BCH, verified the Complaint. (See Compl. 8). Mr. Green brought the Limitation Action on behalf of Blue Crest Lloyd's, insurers for the MIMI. Mr. Green reports to both the primary and excess leads for Blue Crest Lloyd's.

         5. Mr. Green received instructions from both the primary and excess insurers[1] with regard to defending the case. At some point there was a shift as to which insurer, the primary or excess, would give Mr. Green instructions to file the Limitation Action. Mr. Green never informed anyone there was a switch from primary to excess underwriters; he never indicated to MBM's counsel that control of the case was being handed to someone else.

         6. With its Complaint, BCH issued the following Ad Interim Stipulation of Value:

. . . Petitioner, as principal, and Certain Underwriters at Lloyd's, London, as sureties, hereby undertake the sum of ONE HUNDRED THIRTY SEVEN THOUSAND AND NO/100 DOLLARS ($137, 000.00) and such increases or decreases in such amount as this Court may time to time order and that they agree that they will file in this proceeding a Stipulation to Abide Decree or Stipulation For Value in such amount as this Court may from time to time order and that they agree that they will file in this proceeding a Stipulation to Abide Decree or Stipulation For Value in such amount as the Court may direct, with interest at the rate of 6% per annum from the date hereof, and that pending the filing of a Stipulation to Abide Decree or the giving of a Stipulation for Value therefor, this Stipulation shall stand as security for all claims in the limitation proceeding.
* * *
Petitioner and said surety hereby commit themselves to the jurisdiction of the Court and agree to abide by all orders of the Court, interlocutory and final, and to pay the amount awarded, if any, by the Final Judgment rendered by this Court, or an appellate court if an appeal intervenes, not to exceed the amount of ONE HUNDRED THIRTY SEVEN THOUSAND AND NO/100 DOLLARS ($137, 000.00) with interest at the rate of 6% per annum, unless a Stipulation to Abide Decree or Stipulation for Value therefor shall be given as aforesaid in the meantime, in which event this Ad Interim Stipulation shall be void.

(Compl. Ex. B, 14-15[2] (alteration added)).

         7. The Ad Interim Stipulation was signed on March 17, 2017 by BCH, and Certain Underwriters at Lloyd's, London. By the terms of the Ad Interim Stipulation, Blue Crest Lloyd's is a surety to BCH.

         8. In the Ad Interim Stipulation, Mr. Green did not identify which Certain Underwriters at Lloyd's were being bound as sureties. He also did not have the sureties countersign the Ad Interim Stipulation. There was an acknowledgment in the Ad Interim Stipulation that Mr. Green had authority to bind Blue Crest Lloyd's.

         9. BCH never separately filed a claim for damages to the MIMI against MBM. BCH filed a counterclaim against MBM but did not assert any damages to the MIMI. Instead, BCH asserted indemnity and contribution for any claims BCH might be required to pay as a result of other lawsuits filed against it in the Limitation Action.

         10. On October 2, 2016, Blue Crest Lloyd's provided Hull Machinery and Equipment, Protection and Indemnity (“P&I”) coverage and other insurance coverage for BCH and the MIMI.

         11. BCH had both a primary insurance policy and an excess insurance policy for the MIMI. The primary policy, B0621MMILYBY15096, attaching to delegated underwriting contract number B0621MMILYBY15CVA, effective February 16, 2016, had P&I coverage for the MIMI valued at $1, 000, 000. The primary policy is subject to the American Yacht Form R12.

         12. The American Yacht Form R12 states insurers will not only pay the cost and expenses of the defense, but if they name the lawyers, the insurers have discretion and control. As such, the insurers have a duty to pay for the defense and defend the insured. Primary insurers have the duty to pay for the defense, separate and apart from the policy limits.

         13. The excess policy, attaching to the unique market reference of B0621MMILXPI16025, effective February 16, 2016, had excess insurance coverage for the MIMI valued at $3, 000, 000. Prior to this litigation, neither BCH nor Third-Party Defendant, Maximilian Camino, informed MBM there was an excess policy for the MIMI.

         14. The excess and primary policies for the MIMI list the Lloyd's syndicates and managing agents (collectively “syndicates”) for each policy. There are common syndicates for both policies. For example, Munich Re Syndicate, Limited (“Munich Re”) and Ace Underwriting Agencies Limited are listed on the primary and excess policies.

         15. According to Mr. Green, his client for purposes of the excess policy was the lead of that policy, Munich Re. Mr. Green stated his client for purposes of the primary policy was the lead of that policy “Chubb, ” now known as Ace Underwriting Agencies Limited.

         16. Mr. Green undertook BCH's defense at the expense of Blue Crest Lloyd's, in addition to being the attorney for marine surveyor John Alder, who signed the Affidavit of Value accompanying the Complaint. (See Compl. Ex. A 10-11). Mr. Green was hired to undertake the defense of Blue Crest Lloyd's' insureds.

         17. MBM operates the Miami Beach Marina, a public marina located in Miami Beach. RCI Marine Inc. is an affiliated company to MBM and operates select aspects of the marina. The property on which the marina is situated is owned by the City of Miami Beach.

         18. MBM is insured by Travelers Property Casualty Company of America, which issued a policy that was in effect on October 2, 2016.

         19. Mr. Camino was an owner of the MIMI. He is a corporate lawyer and businessman, has incorporated over ten companies, and sits on several corporate boards. Mr. Camino has held positions with several corporations as corporate secretary, director, managing member, and president.

         20. Throughout this litigation, Mr. Camino has taken the position he is the authorized representative for BCH. He was not aware BCH filed this Limitation Action on March 17, 2017, nor was he consulted on the filing of the lawsuit.

         21. When Mr. Camino was served with MBM's Third-Party Complaint, he contacted his personal attorney, Stephen Gillman of Shutts & Bowen. Nevertheless, the MIMI's insurers are paying Mr. Green to defend Mr. Camino in the suit.

         22. Mr. Camino signed four contracts with MBM for dockage of the MIMI, each listing him as owner. All contracts include the same material language.

         23. Dock Space Lease and License Agreements signed by Mr. Camino for dockage of the MIMI were entered on May 1, 2014, October 1, 2014, and October 1, 2015. Mr. Camino did not qualify his signature on the documents by stating he was signing as a representative for someone, including BCH.

         24. On October 1, 2016, Mr. Camino entered a fourth Dock Space Lease and License Agreement with MBM (“MIMI Marina Agreement”) for dockage of the MIMI commencing October 1, 2016. Again, he did not qualify his signature in the MIMI Marina Agreement by writing that he was signing on behalf of BCH. The MIMI Marina Agreement was in effect at the time of the incident that occurred on October 2, 2016.

         25. Under the MIMI Marina Agreement, Mr. Camino agreed:

At all times, OWNER retains exclusive care, custody and control of, and is solely responsible for, VESSEL, its engines, appurtenances and contents. MARINA is not a bailee of VESSEL, its engines, appurtenances or contents and assumes no responsibility for safe operating condition, tie up, dockage or maintenance of VESSEL. OWNER is solely responsible for security of VESSEL and for preventing entry by unauthorized persons on VESSEL.

(MBM Hr'g Ex. 16, 2).

         26. The MIMI Marina Agreement also states:

If the person signing this APPLICATION is not the OWNER, such person: (a) must fully name and identify OWNER in this APPLICATION, (b) warrants and represents his/her authority to obligate OWNER and VESSEL to this AGREEMENT, (c) agrees to be bound personally, jointly and severally, with OWNER and VESSEL pursuant to this AGREEMENT, and (d) certifies that he/she has lawful custody and control of VESSEL as Captain/Agent of OWNER.

(Id. 1). Mr. Camino did not name and identify BCH as “owner” in the MIMI Marina Agreement. He represented his authority to bind BCH to the MIMI Marina Agreement and agreed to be personally, jointly and severally bound.

         27. Blue Crest Lloyd's, both primary and excess underwriters, appointed marine surveyor John Alder. Throughout the litigation, Mr. Alder represented himself as Blue Crest Lloyd's' inspector, surveyor and “authorized representative.” In email correspondence with MBM, Mr. Alder stated he was representing Lloyd's of London. Mr. Green never had any concern about Mr. Alder signing his emails as the representative of Lloyd's of London, nor did Mr. Green ever correct Mr. Alder.

         28. MIMI's hull and liability underwriters appointed Mr. Alder, and since October 3, 2016, he has been working on behalf of the Lloyd's syndicates for the MIMI. He never specified to MBM which Lloyd's insurers he was appointed by.

         29. Mr. Alder was paid by Blue Crest Lloyd's through JLT Insurance, a London broker that placed the insurance risk for the MIMI. JLT's Robert Williams would refer Mr. Alder's reporting to Blue Crest Lloyd's.

         30. On October 2, 2016, the MIMI was docked at the marina when in the late-night hours, an unidentified individual attempted to operate the MIMI out of her slip. The individual caused extensive damage to MBM and other vessels at the marina. MBM sustained damages when the MIMI collided with pilings and other structures of the marina.

         31. Captain Brenda Bedell was the captain of the MIMI on October 2, 2016, responsible for the safety and security of the MIMI. While onboard the MIMI, Mr. Camino would instruct Captain Bedell on where he wanted the MIMI to go.

         32. On October 3, 2016, Mr. Alder went to the marina instructed by Blue Crest Lloyd's to assess the damage to the MIMI, to other vessels, and to the marina itself.

         33. Mr. Alder was directly involved in arranging for the MIMI's salvage. Resolve Salvage and Fire Americas Inc. (“Resolve Salvage”) was contracted to undertake removal of the MIMI. Mr. Alder was issued a salvage plan on behalf of the MIMI's owners and insurers. Mr. Alder never distinguished between MIMI's primary and excess underwriters in his dealings with Resolve Salvage.

         34. Part of the salvage plan for the MIMI involved bringing in a barge. On behalf of Blue Crest Lloyd's, Mr. Alder contracted with salvors and salvor sub-contractors, including Kearns Construction Company (the company that provided the barge for removal of the MIMI), in an effort to remove the wreckage of the MIMI from the marina.

         35. Mr. Alder asked Kearns Construction to send its invoices to him so he could remit payment directly. Kearns Construction sent an invoice dated December 23, 2016 for payment to “John Alder/Lloyd's.” (MBM Hr'g Ex. 7). In issuing payment, Mr. Alder issued a check to Kearns Construction in the amount of $2, 000.00 for the MIMI salvage operation.

         36. Mr. Alder made several payments to Kearns Construction for the MIMI's removal. He received the money to pay Kearns Construction from the Lloyd's syndicates who underwrote the risks for the MIMI.

         37. Mr. Alder evaluated the amount claimed by Resolve Salvage for the removal of the MIMI. Mr. Green was involved in this process, communicating with Mr. Alder regarding the amounts claimed by Resolve Salvage. On January 10, 2017, Mr. Alder wrote Resolve Salvage advising he had audited the billing and found it excessive. As a result, Resolve Salvage filed an arbitration proceeding against BCH. Mr. Green defended BCH in the arbitration, resulting in an award against BCH.

         38. Blue Crest Lloyd's paid Mr. Green for the defense of BCH in the salvage or removal of the MIMI, although he does not know which insurer made the payments.

         39. Mr. Alder was asked by Mr. Green's firm to pay Resolve Salvage with funds from his trust bank account, a sum of approximately half a million dollars. The MIMI's insurers paid the arbitration award that ...


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