United States District Court, D. Minnesota
St. Paul Fire & Marine Insurance Company, Plaintiff,
Abhe & Svoboda, Inc., Defendant.
A. Haws, Esq., and John Paul J. Gatto, Esq., HKM Law Group,
and James W. Carbin, Esq., and P. Ryan McElduff, Esq., Duane
Morris LLP, counsel for Plaintiff.
Christopher L. Lynch, Esq., and Thomas C. Mielenhausen, Esq.,
Barnes & Thornburg LLP, counsel for Defendant.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK United States District Judge
plaintiff-insurer filed a complaint seeking a declaration
that it was not obligated to cover the
defendant-insured's claim for damages arising from its
barge sinking. The plaintiff moved for summary judgment and
to strike certain claims. (Doc. No. 69.) The defendant moved
for partial summary judgment. (Doc. No. 84.) For the reasons
outlined below, the Court grants in part and denies in part
the plaintiff's motion, and the Court grants the
St. Paul Fire & Marine Insurance Company (“St. Paul
Fire”) filed a complaint seeking a declaration that it
was not obligated to cover the losses of Defendant Abhe &
Svodoba, Inc. (“ASI”). ASI is a Minnesota company
that repairs and paints “industrial structures,
communication towers, dams, bridges and other
infrastructure.” (ASI.'s Partial MSJ Br. at
2010, ASI was hired to repair and paint Pell Bridge over the
Narragansett Bay in Rhode Island. (Id.) In August
2010, ASI chartered two “dumb” barges from
Sterling Equipment, Inc. As part of the charter, ASI was
required to have the barges professionally surveyed and to
repair anything identified by the survey. As relevant here,
the survey found that barge SEI-34 (the “Barge”)
had “numerous small wastage pinholes about the
deck.” (Doc. No. 109 ¶ 16, Ex. 15.) The survey did
not recommend any repairs. St. Paul Fire & Marine
Ins. Co. v. Abhe & Svoboda, Inc., 798 F.3d 715, 717
(8th Cir. 2015).
2011, ASI applied to St. Paul Fire for insurance for the
Barge (and other ships). St. Paul Fire issued a Marine Hull
(generally, the “Hull Policy”) and Protection and
Indemnity Policy (generally, the “P&I
Policy”) effective July 1, 2011, through July 1, 2012.
On October 29, 2011, a severe nor'easter rolled through
the Newport area. During the storm, the Barge sank.
after the sinking, the Coast Guard informed ASI that the
Coast Guard would federalize the wreck if ASI did not remove
the wreck by a certain deadline. ASI notified St. Paul Fire.
ASI then contacted Donjon Marine Co., Inc.-a marine salvage
company-to negotiate a contract to remove the sunken barge.
Before the contract was finalized, St. Paul Fire took over
the negotiations for the final version. On December 9, 2011,
Donjon raised the Barge along with any equipment still
attached to it, but Donjon refused to collect any equipment
that had fallen off. With the Coast Guard's deadline
quickly approaching, ASI hired a second company to remove the
was not fully paid for its work and filed for arbitration. In
the arbitration, ASI counterclaimed for the added removal
costs caused by Donjon abandoning the project. ASI tendered
the defense of the arbitration, but St. Paul Fire denied
coverage. ASI ultimately prevailed in the arbitration and
recovered some of its costs.
20, 2012, while the arbitration with Donjon was ongoing, St.
Paul Fire filed a complaint seeking declaratory relief.
(See Doc. No. 1.) ASI filed four counterclaims,
including one that alleged St. Paul Fire negligently
negotiated the salvage contract with Donjon.
February 28, 2014, St. Paul Fire moved for summary judgment
on a number of grounds, including that ASI violated its duty
of utmost good faith by failing to disclose the survey of the
Barge. On April 29, 2014, Judge Paul A. Magnuson granted
summary judgment for St. Paul Fire finding that the insurance
policy was void ab initio due to ASI's failure
to disclose the survey. (Doc. No. 143 at 7-9.) ASI appealed.
(Doc. No. 145.) The Eighth Circuit concluded that a genuine
issue of material fact remained regarding whether St. Paul
Fire actually relied on ASI's failure to disclose the
survey. (Doc. No. 152 at 11.) The Eighth Circuit remanded the
case for further proceedings.
remand, the parties identified the remaining issues from
their motions. Left from ASI's motion for partial summary
judgment is whether the P&I Policy contained an express
warranty of seaworthiness. Left from St. Paul Fire's
motion are the following issues: (1) if the P&I Policy
contained an express warranty of seaworthiness, then whether
the Barge was seaworthy; (2) whether ASI is collaterally
estopped from seeking damages from St. Paul Fire because the
arbitrator already found those damages were not recoverable
from Donjon; (3) assuming that St. Paul Fire negligently
negotiating the Donjon contract, whether St. Paul Fire could
be the legal cause of ASI's damages from Donjon breaching
the contract; (4) whether ASI is entitled to a jury for any
of its claims; and (5) whether ASI can seek its attorney fees
for defending this action.
judgment is appropriate if the “movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Courts must view the evidence, and the
inferences that may be reasonably drawn from the evidence, in
the light most favorable to the nonmoving party. Weitz
Co., LLC v. Lloyd's of London, 574 F.3d 885, 892
(8th Cir. 2009). However, “[s]ummary judgment procedure
is properly regarded not as a disfavored procedural shortcut,
but rather as an integral part of the Federal Rules as a
whole, which are designed ...