Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 1 of 11 PageID #: 1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE ACE American Insurance Company, ) ) Plaintiff, ) ) v. ) Civil Action No.: ) Eugene O. Willard; Carolyn Willard; ) Christopher S. Pizey and Sally Handy; ) COMPLAINT FOR DECLARATORY JUDGMENT Now comes Plaintiff ACE AMERICAN INSURANCE COMPANY (hereinafter ACE ), pursuant to Rule 57 of the Federal Rules of Civil Procedure and 28 U.S.C. 2201, and submits the following Complaint for Declaratory Judgment, alleging as follows: PARTIES 1. Plaintiff ACE is an insurance company organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business in 436 Walnut Street, P.O. Box 1000, Philadelphia, Pennsylvania 19106-3703. 2. Defendant Eugene O. Willard is, upon information and belief, a resident located at 67 Colchester Drive, S. Portland, Maine 04106. 3. Defendant Carolyn Willard is, upon information and belief, a resident located at 67 Colchester Drive, S. Portland, Maine 04106. Eugene and Carolyn Willards shall hereinafter be collectively referred to as Willard or defendant. 4. Defendant Christopher S. Pizey is, upon information and belief, a resident located at 7 Veteran Street, Peaks Island, Maine 04108-1451.
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 2 of 11 PageID #: 2 5. Defendant Sally Handy is, upon information and belief, is a resident of the State of Colorado, located at 930 Lincoln, Boulder, Colorado 80302. JURISDICTION AND VENUE 6. This court has jurisdiction of the subject matter of this action pursuant to 28 U.S.C. 1332 in that the amount in controversy exceeds $75,000.00, exclusive of interest and costs, and is between citizens of different states. 7. This court also has jurisdiction pursuant to 28 U.S.C. 1333 in that this dispute arises from the interpretation of a certain marine insurance policy which necessarily invokes admiralty and maritime jurisdiction. 8. Venue is proper in the United States District Court for the District of Maine in that the events giving rise to this action occurred on Casco Bay in Cumberland County, Maine, and at least one of the defendants is located in the waters off Cumberland County, Maine. 9. An actual case in controversy of a justifiable nature exists between the parties involving the rights and liabilities under a certain marine insurance policy, in which litigation is imminent and inevitable, and which controversy may be determined by a judgment of this, without other, action. GENERAL ALLEGATIONS ABOUT THE COLLISION 10. Capt. Eugene Willard works as a caption for the Casco Bay Island Transit District. He also runs a side business called Portland Water Taxi, which involves picking up and dropping off individuals and their baggage in and around the various small islands in Casco Bay. Willard owns and operates three (3) motor boats, called Portland Express, The Water Taxi and Bay Express. The Bay Express is the 24 2004 Osprey Expedition, H.I.N. OFO24X51G305 and will hereinafter be referred to as the Vessel. 2
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 3 of 11 PageID #: 3 11. On September 7, 2013, Willard received a booking to pick up a group of individuals from Chebeague Island to Portland, Maine, a roughly four and a half mile trip. This group included Congresswoman Chellie Pingree, a member of the United States Congress House of Representatives for the State of Maine, and certain members of her staff. 12. Willard s two regular boats, Portland Express and The Water Taxi, were either unavailable due to repairs or deemed unsuitable for this type of trip so Willard elected to use the Vessel to perform this particular job. 13. Willard was unable to perform the trip himself so he asked his friend and colleague, Kyle Jacobs to perform the job. 14. While navigating back to Portland harbor, the Vessel collided head-on with another vessel, named the Miss M. The U.S. Coast Guard has yet to issue its report on the incident, but ACE has been advised that Willard and the Vessel have meritorious defenses, including but not limited to: (a) the Miss M did not have its running lights turned on; (b) a Portland Fire Department report which identified the operator, Mr. Christopher S. Pizey as being intoxicated and (c) the Miss M was in violation of the Nautical Rules of the Road, i.e. Mr. Pizey was driving his vessel in the wrong direction for the area in which the collision occurred. 15. Defendants Christopher S. Pizey and Sally Handy have filed claims for personal injuries and damages against Willard and Willard s company, Portland Water Taxi. No one associated with the Pingree party has filed any claim for injuries or damages arising from the September 7, 2013 collision, as of the date of the within complaint. GENERAL ALLEGATIONS ABOUT WILLARD S INSURANCE POLICIES 16. From July 28, 2013 until the date of the within rescission, ACE provided marine insurance coverage to Willard under a Yachtsman Policy of Insurance, Policy Number YKR Y 3
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 4 of 11 PageID #: 4 07853427 (hereinafter the Policy ). A true and correct copy of the Policy is attached hereto as Exhibit A. The Policy attached as Exhibit A provided marine insurance coverage to Willard and a 2004 24 Osprey Expedition Motor Yacht with Hull Identification Number OFO24X51G305 (hereinafter referred to as the Vessel ) for the periods July 28, 2013 to July 28, 2014. This type of policy is referred to as a YAR within the ACE nomenclature and refers to a recreational marine type coverage for an individual s personal usage of a vessel. 17. ACE had issued a total of four (4) marine insurance policies to Willard. 18. The first policy, number Y07453978 was cancelled on September 15, 2004 due to the vessel being a total loss. 19. The second policy, Number Y07262334 was cancelled on May 13, 2007. This policy was a YAR and ACE cancelled once the insured advised he intended to use the vessel as a commercial water taxi. ACE s basis of cancellation was a material change in risk. 20. The third policy, Number Y07269742 was issued as a SPC, or special chartering policy, but was later cancelled and reissued under Policy Number Y07853427 as a YAR. This last policy number is the one on which defendants issued a claim. 21. The Policy contained the following terms and conditions: GENERAL CONDITIONS AND EXCLUSIONS CHOICE OF LAW/CONFORMITY OF STATE LAW: This Policy shall be construed in accordance with the General Maritime Law or Admiralty Rule. If no General Maritime Law or Admiralty Rule applies, the law of the State appearing in your address as contained upon the Declarations Page will apply without regard to the conflict of laws provisions thereof PRIVATE PLEASURE USE ONLY: This policy only provides coverage while the Insured Vessel is used for private pleasure purposes. However, this 4
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 5 of 11 PageID #: 5 limitation on use does not apply while you are operating or using the Insured Vessel to entertain business associates or clients or other types of use wherein no monetary or other directly related renumeration is received by you in relation to operation or use of the Insured Vessel. CONCEALMENT, MISREPRESENTATION OR FRAUD: All coverage provided by us will be voided from the beginning of the Policy Period in any case of fraud by you. It is also void if you conceal or misrepresent any material fact or circumstance relating to this contract of insurance, or the application for such insurance, whether before or after a loss. DISHONEST, ILLEGAL OR INTENTIONAL ACTS: We do not pay for loss or damage caused by the dishonest, illegal or intentional acts of any Covered Person, or any person to whom the Insured Vessel is entrusted, regardless of whether or not such person is convicted of such an act by a criminal court. PAYMENT OF LOSS: We will pay for any claim of covered Property Damage or damage to Person Property you incur under this policy to the Named Insured, and any loss payee However:... c. the loss payee s rights are no greater than those of the Named Insured under this Contract. GENERAL PROVISIONS IN THE EVENT OF LOSS ASSISTANCE AND COOPERATION: Any Covered Person making a claim must: a. cooperate with us in the investigation, settlement or defense of any claim or suit under this policy. b. assist us in the enforcement of any right of contribution or indemnity against any person or organization which may be liable to any Covered Person. c. allow us to inspect and appraise all damaged property, not stolen or otherwise unrecoverable, before it is repaired or disposed of. 5
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 6 of 11 PageID #: 6 e. submit to examinations under oath as often as requested by us; (emphasis added). 22. Willard applied for insurance coverage through an insurance agent known as the Marsh Agency, located at 560 Brighton Avenue, Portland, Maine 04102. 23. Marsh Agency is not an agent of ACE. Marsh applied for insurance coverage with ACE through ACE s authorized agent, Global Marine Insurance Agency, Inc., located in Traverse City, Michigan. ACE duly notified Willard of all changes in coverage under the ACE policies. Upon information and belief, Marsh Agency also notified Willard of any changes in coverage under the ACE policies. 24. Willard also has a commercial marine policy with another insurance company called Seacoast Specialty Administrators. The authorized agent for the Seacoast policy is Wells & Co. Marine Insurance. Upon information and belief, the policy number for the Seacoast policy is #6314440900 and provided commercial marine coverages for Portland Express and The Water Taxi. Bay Express (i.e. the Vessel) was not listed as an insured vessel on the Seacoast policy. WILLARD S BREACHES AND MISREPRESENTATIONS 25. On September 9, 2013, ACE received a notice of loss advising that the Vessel was crossing Portland Harbor when another vessel collided with it. 26. On September 10, 2013, ACE commenced an investigation of this incident. 27. As part of this investigation, ACE learned a number of facts and circumstances leading up to this collision. 28. Willard painted TAXI in bold letters on both sides of the hull of the Vessel. 6
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 7 of 11 PageID #: 7 29. Willard also affixed a black and yellow checkered design on both sides of the hull of the Vessel. 30. Willard occasionally used the Vessel to pick up and drop off passengers. 31. Willard occasionally used the Vessel for commercial purposes. 32. Willard occasionally used the Vessel for non-recreational purposes. 33. Willard occasionally used the Vessel for non-personal pleasure purposes. 34. Willard never advised ACE of using the Vessel occasionally for commercial or non-recreational or non-personal pleasure purposes. 35. On September 7, 2013, Willard accepted a booking of the Vessel from someone associated with Congresswoman Pingree. 36. Willard felt obligated to honor his commitment by complete the booking for Congresswoman Pingree even though he personally had another engagement. 37. Willard asked his friend and colleague, Kyle Jacobs to complete the booking with Congresswoman Pingree. 38. Congresswoman Pingree and her staff were never business associates or clients or friends or acquaintances of Willard. 39. Congresswoman Pingree and her staff were not aboard the Vessel for entertainment purposes or some other similar type of use. 40. Congresswoman Pingree s staff contacted Willard because he operates a business known as Portland Water Taxi. 41. Willard did not invite Congresswoman Pingree and her staff aboard the Vessel for a harbor cruise or other similar type of entertainment or use. 42. On September 7, 2013, Willard used the Vessel for a commercial purpose. 7
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 8 of 11 PageID #: 8 43. On September 7, 2013, Willard operated the Vessel in breach of the Policy s Private Pleasure Use Only Limitation. 44. Willard was aware of the difference between commercial and recreational or private pleasure use because ACE had previously cancelled its policy in 2007 when he advised ACE that he wanted to use a vessel as a commercial water taxi. 45. Willard was aware of the difference between commercial and recreational or private pleasure use because ACE mailed a copy of the Policy to Willard. 46. Willard was aware of the difference between commercial and recreational or private pleasure use because Willard had commercial marine insurance coverage for his two other vessels, Portland Water Taxi and The Water Taxi. 47. Willard never advised ACE of the existence of the Seacoast policy and, but for its investigator s conversation with the Marsh Agency, ACE would never have discovered that Willard also had commercial marine insurance coverage for his two (2) other vessels with Seacoast. 48. Willard sought to conceal from ACE his occasional use the Vessel for commercial or non-recreational or non-personal pleasure purposes. 49. Willard never disclosed to ACE that he intended to use the Vessel for a commercial, rather than, recreational or personal purpose. 50. Willard breached his duty of utmost good faith, or ubberimae fidea, by failing to fully and voluntarily disclosing to ACE all facts material to the risk, whether or not inquired into by ACE. 51. Willard misrepresented the Vessel s commercial usage to ACE. 52. Willard misrepresented the Vessel s occasional commercial usage to ACE. 8
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 9 of 11 PageID #: 9 53. During ACE s investigation, Willard falsely represented that he did know the nature and extent of coverage under the Policy. 54. Willard misrepresented the nature and extent of insurance coverages for his fleet of vessels because he wanted to conceal his prior knowledge of the difference between commercial and recreational/private pleasure usage. 55. Based upon various misrepresentations made by Willard, the Policy is void ab initio. 56. Based upon the various material misrepresentations made by Willard, the Policy is void ab initio. 57. The claims by Willard are expressly excluded under the Policy. 58. Willard failed to comply with the conditions of the Policy. 59. ACE has no obligation to cover claims by Willard under the Policy. 60. ACE has no obligation to cover claims by Pizey or Handy under the Policy. DECLARATORY JUDGMENT 61. ACE repeats and realleges the allegations of paragraphs 1 through 60 as though fully set forth herein. 62. ACE seeks declaratory relief that it has no obligation to cover any and all claims arising from any claim arising from the September 7, 2013 collision, and/or from any claim by Willard, Pizey or Handy because: (a) (b) (c) (d) The Policy is void ab initio; The claims are expressly excluded under the Policy; Willard failed to comply with the conditions of the Policies; Willard breached his duty of utmost good faith; 9
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 10 of 11 PageID #: 10 (e) Willard materially misrepresented the risk when obtaining insurance coverage from ACE; and (f) For such other reasons as may be shown at trial. WHEREFORE, ACE prays the Court for the following relief: (a) To declare the Policy void ab initio; (b) To declare that ACE has no obligation under the Policy to cover claims lodged by Willard; (c) (d) To declare that the Policy has been rescinded as of the date of this Complaint; To construe the Policy and declare that the claims lodged by Willard are excluded; (e) To construe the Policy and declare that Willard failed to comply with certain conditions or warranties; (f) (g) To declare Willard misrepresented materially the risk to ACE; To declare that ACE is entitled to recover its costs and expenses in this action, including reasonable attorney fees, as well as all costs incurred while dredging, recovering, surveying, inspecting, preserving and storing the Vessel; and (h) For such other and further relief as this Court deems just and proper. 10
Case 2:14-cv-00045-GZS Document 1 Filed 02/04/14 Page 11 of 11 PageID #: 11 Dated this 4 th day of February 2014. MONAGHAN LEAHY LLP By: /s/ Kenneth D. Pierce KENNETH D. PIERCE Attorneys for Plaintiff ACE AMERICAN INSURANCE COMPANY 95 Exchange Street Portland, Maine 04112-7046 Tel. No.: (207) 774-3906 kpierce@monaghanleahy.com COZEN O CONNOR 45 Broadway, Suite 1600 New York, NY 10006-3792 Tel. No.: (212) 509-9400 Attention: David Y. Loh dloh@cozen.com LEGAL\18136813\1 00011.0020.000/341443.000 11