United States District Court, D. Rhode Island
NATIONAL LIABILITY & FIRE INSURANCE COMPANY and BOAT OWNERS ASSOCIATION OF THE UNITED STATES, Plaintiffs,
NATHAN CARMAN, Defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
J. McCONNELL, JR. UNITED STATES DISTRICT JUDGE.
National Liability & Fire Insurance Company and Boat
Owners Association of the United States (collectively
"National") issued a yacht insurance policy
("the Policy") to Defendant Nathan Carman, insuring
a thirty-one-foot recreational sport fishing boat he
purchased in December 2015. Nine months later, Mr.
Carman's boat sank while he and his mother were out on a
fishing trip off the coast of Long Island, New York; the boat
was never recovered. He made a claim for the boat's
insured value under the Policy. National investigated and
denied his claim, filing this lawsuit for declaratory
judgment and asking the Court to determine that the Policy
does not cover Mr. Carman's loss. Mr. Carman filed
Counterclaims against National about the Policy and its
parties presented their claims and defenses to the Court in a
bench trial. Considering all the documentary evidence and
witnesses' testimony, the Court finds that the Policy
does not cover Mr. Carman's loss. Because the facts show
that Mr. Carman made improper and faulty repairs to his boat
that contributed to its sinking, Exclusion D in the Policy
excludes the claimed loss.
litigation brought to light certain facts about Mr. Carman,
his family, his boat, and the events leading up to and after
the boat sank. To focus on the claims at issue during this
bench trial, however, the Court recites only the relevant
facts underlying its inquiiy into whether Mr. Carman's
boat insurance covered his property loss and whether Mr.
Carman has proven any of his Counterclaims asserting breach
of contract and bad faith.The Boat
Brian Woods, a lifelong boat builder and refurbisher,
purchased a used lobster boat in 2007, which was originally a
JC 31' plug. A plug is a mold that a boat manufacturer
uses to manufacturer hulls. Mr. Woods named the boat
Woods installed forward bulkheads of marine plywood to each
side of the boat. He affixed the curved bottom of the plywood
by fiberglass to the hull in the bilge, the top of the
plywood butted to the deck above it, and the inboard
perpendicular was tight and sealed with "3M Marine
Adhesive Sealant 5200" against the fish box.
Woods testified that bvdkheads on the boat provided
structural strength and integrity to the boat and added some
buoyancy because they formed air pockets in the event of
flooding in the boat.
Woods installed two bilge pumps, one at the stern and one at
the port cockpit hatch.
Woods also installed Bennett Marine trim tabs on the transom
of the boat, to help trim the vessel by the bow. He installed
them by following the manufacturer's directions. He
drilled fourXA inch diameter holes through the
transom, about 3-4 inches above the waterline, for thru-hull
hydraulic connections to the four actuators that controlled
the pitch of the trim tabs. The four 34 inch diameter holes
were below the aft cockpit deck level and opened into the
bilge, a few inches below the scuppers that are even with the
aft cockpit deck.
December 2015, Mr. Woods sold the boat to Nathan Carman for
Court found Mr. Woods' testimony to be credible.
National Liability & Fire Insurance Company sold
insurance through a marine insurance program with its general
agent Boat Owners Association of the United States (d/b/a
Carman received an insurance quotation for a $66, 200 agreed
hull value policy ("the Quote"). The Quote
indicated that it was an "all risk" Policy
"subject to policy limits, warranties and
exclusions." A few days later, Mr. Carman received a
Marine Insurance Binder ("the Binder"), containing
the terms from the Quote. The Binder showed that it was
"A TEMPORARY INSURANCE CONTRACT' that would be
"cancelled when replaced by a policy."
Before issuing the insurance, National hired marine surveyor
Bernard J. Feeney to review the boat's condition to
determine if it was seaworthy. Mr. Feeney inspected the boat
and found the boat to be in good shape and seaworthy. The
Court found Mr. Feeney's testimony to be credible.
Yacht Policy (Policy No. 3985989-15) (Exhibit
25.3) was mailed to Mr. Carman's home. The
Policy echoed the language in the Quote and the Binder,
covering property damage to his boat from any accidental
cause up to the agreed amount subject to the limitations and
exclusions in the Policy. It was in effect for one-year
beginning December 22, 2015.
Carman asserts that he did not accept the terms of the
Policy, including its exclusions, because he never received
the Policy (just the Binder). This assertion, however, is
belied by the facts of the case. Mr, Carman effectively
corresponded with National in March 2016, three months after
the Policy went into effect, to increase the insured value to
$85, 000 following some upgrades, including his purchase of
an autopilot, chart plotter, VHF radio, automatic
identification system, and a life raft. Mr. Carman also made
a claim with National in April 2016 against the Policy for
engine damage and National paid him $33, 489.33.
Court finds from the record that this Policy (Exhibit 25.3)
was the polic}' in effect at the time of the loss.
National made all information about the Policy, including its
terms and exclusions, available to Mr. Carman. In its
communications with Mr. Carman about the Policy, National
never misrepresented any material fact.
Policy contained much of the standard property insurance
policy language and exclusions. Relevant to this case,
Exclusion D excluded coverage for "any loss, damage,
expense or cost of repair caused directly or indirectly by
incomplete, improper or faulty repair," Repairs Mr.
Carman made to the Boat Bulkheads
Carman removed the forward bulkheads.
Tab Removal and Repair
Saturday September 17, 2016, the day he left Ram Point Marina
to go fishing with his mother, Mr. Carman removed the trim
tabs using an electric power drill. He took off the actuator
from the transom leaving four half*dollar-size holes in the
transom. At one point upon removing the three screws at the
top of each trim tab, he had also to remove a fitting behind
for the piston to come out to finish the job of removing the
tabs. Mr. Carman drilled larger holes at each of those spots
to enable him to remove that fitting through the hull.
Left with these larger holes in the hull and with a plan to
fish that day, Mr. Carman bought a package of Epoxy Putty
Stick and a Fiberglass Boat Repair Kit. He did not follow the
package instructions on how to make the repairs to the holes.
Instead, he filled the holes in the boat with the epoxy
putty, using about % of the stick from the package. The holes
had no backing on them. He did not place the fiberglass mat
fabric on the outside of the hull to seal the holes. Simply
putting epoxy into the holes without a backing meant that the
epoxy could get pushed through the holes.
Carman replaced the port bilge pump after it ...