Opinion
Case No. 6:20-cv-875-PGB-DCI
2021-08-11
ASPEN AMERICAN INSURANCE COMPANY, Plaintiff, v. TASAL, LLC, Defendant.
Steven E. Goldman, Jacqueline Louise Goldman, Goldman & Hellman, Ft. Lauderdale, FL, for Plaintiff Aspen American Insurance Company. Stephen A. Marino, Jr., Benjamin C. Hassebrock, Ver Ploeg & Marino, PA, Miami, FL, Daniel Litman Gross, Office of State Attorney, West Palm Beach, FL, for Defendant Tasal, LLC.
Steven E. Goldman, Jacqueline Louise Goldman, Goldman & Hellman, Ft. Lauderdale, FL, for Plaintiff Aspen American Insurance Company.
Stephen A. Marino, Jr., Benjamin C. Hassebrock, Ver Ploeg & Marino, PA, Miami, FL, Daniel Litman Gross, Office of State Attorney, West Palm Beach, FL, for Defendant Tasal, LLC.
ORDER
RAUL G. BYRON, UNITED STATES DISTRICT JUDGE This cause comes before the Court on Plaintiff's Motion for Summary Judgment (Doc. 138), Defendant's Motion for Summary Judgment (Doc. 140), and the parties’ respective responses and replies thereto (Docs. 142, 144, 145, 146). Upon consideration, the Motions are due to be denied.
I. BACKGROUND
This contentious marine insurance dispute arises from a shipwrecked yacht, the unfortunate result of third-party Doug Koch's attempt to impress his female companion, Summer Foley, with a 3:00 A.M. joyride on Defendant Tasal, LLC's boat (hereinafter, the "Vessel "). (Doc. 143, ¶ 17).
The marine insurance policy at issue only covers Captain Kim Boxer, the named operator of the Vessel (the "Named Operator Provision "). (Doc. 88-2, pp. 1, 21 (the "Policy ")). However, the Policy broadly covers "accidental physical loss of, or damage to," the Vessel. (Doc. 88-2, p. 10 (the "Policy ")). Thus, although the Named Operator Provision generally bars coverage when anyone other than Captain Boxer steers the Vessel, this exclusionary clause does not apply in the event of theft. (Id. at pp. 1, 21).
Section L, the Policy's General Conditions and Warranties Section, states, "No coverage is provided under this policy when the insured vessel (s) is/are being operated by anyone other than those listed as operators." (Doc. 88-2, p. 21; Doc. 143, ¶ 15). Item 7 of the Policy's Declarations names one authorized operator of the Vessel: Captain Boxer. (Doc. 88-1, p. 1; Doc. 143, ¶ 14).
Plaintiff concedes that the Named Operator Provision is an exclusion for purposes of summary judgment. (Doc. 138, p. 8).
The parties do not challenge this interpretation of the Policy. (See Docs. 138, 140). Rather, Defendant claims that the Policy covers the damage because Mr. Koch stole the Vessel, and Plaintiff Aspen American Insurance Company counters that the Policy does not cover the damage because there is no evidence of theft. Accordingly, there is only one dispositive fact question at stake here: did Mr. Koch steal the Vessel?
II. STANDARD OF REVIEW
To prevail on a summary judgment motion, the movant must show "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) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "An issue of fact is ‘material’ if, under the applicable substantive law, it might affect the outcome of the case. An issue of fact is ‘genuine’ if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party." Harrison v. Culliver , 746 F.3d 1288, 1298 (11th Cir. 2014).
The Court must "view the evidence and all factual inferences therefrom in the light most favorable to the non-moving party, and resolve all reasonable doubts about the facts in favor of the non-movant." Davila v. Gladden , 777 F.3d 1198, 1203 (11th Cir. 2015) (quoting Carter v. City of Melbourne , 731 F.3d 1161, 1166 (11th Cir. 2013) (per curiam)). "A mere ‘scintilla’ of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Brooks v. Cnty. Comm'n of Jefferson Cnty. , 446 F.3d 1160, 1162 (11th Cir. 2006) (quoting Walker v. Darby , 911 F.2d 1573, 1577 (11th Cir. 1990) ). Summary judgment should only be granted "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
III. DISCUSSION
Resolution of this relatively simple factual dispute should be easy sailing, but the case is more complicated than it initially appears. First, the Policy does not define "theft." (See Doc. 88-2). Instead of offering a precise definition supported by applicable law, the parties bicker about tangential topics. Denial of both Motions is proper on this basis alone—the parties should direct the Court to the appropriate legal standard rather than rely on the Court's independent research to buoy their arguments.
Second, the parties dive into the nature and scope of the relationship between Mr. Koch and Shahab Karmely, Defendant's owner. (Doc. 143, ¶¶ 2, 5). Plaintiff unequivocally recognizes that it cannot use the Named Operator Provision to escape liability if Mr. Koch stole the Vessel and that Mr. Karmely's consent (or lack thereof) to Mr. Koch's operation of the Vessel is key to the theft determination. Yet it confusingly—and erroneously—asserts, at the same time, that Mr. Karmely's consent is irrelevant under an isolated reading of the Named Operator Provision.
Mr. Karmely owns KAR Properties, an umbrella organization for his various real estate construction and management companies. (Doc. 143, ¶ 2). KAR Properties owns Defendant, and Defendant, in turn, owns Tasal VQ 45, LLC, the registered owner of the Vessel. (Id. ¶¶ 2, 5–6). Mr. Karmely purchased the Vessel on January 8, 2020 via cash down payment, securing the remaining balance with a personal loan and registering it to Tasal VQ 45, LLC. (Id. ¶¶ 5–6).
Plaintiff then posits that Mr. Karmely's behavior implicitly gave Mr. Koch consent to use the Vessel, which Defendant adamantly opposes. The ensuing maelstrom of conflicting testimony and insinuations of perjury demonstrates that the issue of Mr. Karmely's consent is best addressed at the bench trial.
Finally, Defendant contends that Captain Boxer did not have authority to grant Mr. Koch access to the Vessel on February 23, 2020. Attempting to navigate around this point, Plaintiff again insists, incorrectly, that Captain Boxer's ability to consent on behalf of Mr. Karmely is moot under a strict interpretation of the Named Operator Provision. Because Plaintiff fails to produce any evidence that Captain Boxer possessed agency power to consent for Mr. Karmely, the Court does not need to examine whether Captain Boxer in fact did so.
For these reasons, both Motions are dead in the water.
A. The Definition of "Theft"
The Policy does not define "theft," and the parties do not identify the proper definition of "theft" under federal admiralty law or, pursuant to the Policy's choice of law provision, New York law. See Wilburn Boat Co. v. Fireman's Fund Ins. , 348 U.S. 310, 313–21, 75 S.Ct. 368, 99 L.Ed. 337 (1955) (holding that, generally, federal admiralty law governs marine insurance contracts and that, where there is no established rule of federal admiralty law, state law controls); Great Lakes Reinsurance (UK) PLC v. Yellow Fin 36 LLC , 736 F. Supp. 2d 1302, 1306 (M.D. Fla. 2010) ("Under federal maritime choice of law rules, contractual choice of law provisions are generally recognized as valid and enforceable, unless the choice of law is shown to be unreasonable and unjust, or in conflict with a fundamental purpose of maritime law."); (Doc. 88-2, p. 25). The parties jettison the ultimate issue—the meaning of "theft"—and quibble over inapposite arguments.
"The [Wilburn ] Court held that if there is no generally established rule of maritime law governing the issue in question, and in the absence of some compelling need to create a federal rule, federal courts should not create a rule but rather should apply state law. In marine insurance disputes, federal courts apply the following from Wilburn : A marine insurance contract will be interpreted in accordance with the law of the state in which it was formed unless there is a controlling and specific federal rule, or, in the absence of such rule, there is some compelling reason to create a federal rule." Robert Force, Admiralty and Maritime Law 192 (Kris Markarian ed., 2d ed., Federal Judicial Center 2013).
First, Defendant argues that federal admiralty law does not require any criminal intent to establish a covered loss for "theft," citing United States v. Henry , 447 F.2d 283 (3d Cir. 1971). (Doc. 140, p. 11 n.4). In Henry , the government charged the defendant with violation of 18 U.S.C. § 661 —which prohibits the taking and carrying away of any personal property of another with the intent to steal or purloin—for taking and sinking a third party's boat. Id. at 284. The defendant argued that § 661 codified common law larceny and, therefore, incorporates the essential element of intent to permanently deprive the owner of his property. Id. The government countered that § 661 was not a codification of common law larceny and that "a [f]ederal criminal statute describing an offense which was a crime at common law does not necessarily incorporate all of the elements of the common law crime." Id.
The Third Circuit agreed with the government, holding that § 661 did not codify common law larceny but rather broadened that offense. Id. at 285–86. The court ruled that the government did not need to prove that the defendant intended to permanently deprive the owner of his boat and upheld the district court's jury instruction, which stated "to steal or purloin means any taking whereby a person, by some wrongful act, willfully obtains or retains possession of property belonging to another without the permission or beyond any permission given with the intent to deprive the owner of the benefit of ownership." Id. at 286.
The Court notes that Henry interpreted a federal criminal statute —it does not establish a rule of federal admiralty law governing the meaning of "theft" in marine insurance contracts, and, consequently, it is inapplicable to this case. Thus, the Court cannot adopt Henry ’s upheld jury instruction on the definition of "to steal or purloin." Whereas Henry dealt with the federal penal code, this case applies either federal admiralty law or New York law.
Moreover, Henry refused to incorporate the common law larceny mens rea element into § 661 ’s definition of "to steal or purloin"—it did not nullify the criminal intent element of "theft" altogether. In fact, the Henry court explicitly defined "to steal or purloin" as including "the intent to deprive the owner of the benefit of ownership." See id. Defendant's argument is simply unmoored from Henry and, for that matter, common sense. Following Defendant's logic, any unauthorized taking would constitute a "theft," an outcome that the penal codes in this country do not contemplate.
Because the parties do not point to (and the Court does not find) any established rule of federal admiralty law defining "theft" in the marine insurance context, the Court turns to the meaning of "theft" under New York law. Plaintiff argues that an insured must establish the criminal intent element of common law larceny to obtain coverage, relying on Castner v. Ins. Co. of N. Am. , 40 A.D.2d 1, 337 N.Y.S.2d 52 (1972). But Castner is also distinguishable from this case. Whereas the automobile insurance policy at issue in Castner expressly required the owner to establish a criminal intent to permanently deprive her of the car, the instant Policy does not define "theft" at all, much less define the term to require the narrow common law larceny mens rea . Id. at 55.
The Castner court stated, "In order for appellant to recover for theft under the terms of the insurance policy , she was required to establish a criminal intent to deprive her aunt permanently of the automobile." 337 N.Y.S.2d at 55 (emphasis added).
Importantly, Plaintiff could have specifically defined this term in the Policy, but it did not do so. Therefore, the Court construes the Policy in favor of Defendant and refuses to equate "theft" with "larceny." See Great Lakes Reinsurance (UK) PLC v. Fortelni , 33 F. Supp. 3d 204, 208 (E.D.N.Y. 2014) (stating that "if the contract is ambiguous, particularly the language of an exclusion provision, the ambiguity is interpreted in favor of the insured" (internal citations omitted)); White v. Continental Cas. Co. , 9 N.Y.3d 264, 848 N.Y.S.2d 603, 878 N.E.2d 1019, 1021 (2007) ("If the terms of a policy are ambiguous, however, any ambiguity must be construed in favor of the insured and against the insurer.").
Additionally, in Castner , the court held: "There is a total absence of the requisite criminal intent when the insured vehicle is taken by one claiming ownership or right to use. Under the circumstances here, where the automobile was taken by the husband of the owner, it is fairly inferable that the automobile was taken under a claim of right, and that there was no felonious intent in the taking. In addition, the delay in reporting the alleged theft to the police or the insurance carrier supports the belief that Mr. Leonard had a legitimate claim of ownership or right to use the automobile." 337 N.Y.S.2d at 55 (internal citations omitted). By contrast, it is unclear whether Mr. Koch had a right to use the Vessel and whether, if he had such a right, he exceeded the parameters of Mr. Karmely's permission, as discussed infra .
A more recent New York Supreme Court decision bolsters the Court's conclusion. In Wirth v. Liberty Mut. Ins. , the insureds sought coverage for their son's theft and destruction of their truck and trailer under their automobile insurance policy, which covered "theft or larceny" but did not define those terms. 122 A.D.3d 1364, 997 N.Y.S.2d 552, 554 (2014). The insurer argued that "theft" had the same definition of "larceny," but the court disagreed. Id. It held: "[W]e give effect to the ordinary definition of ‘theft,’ as distinct from ‘larceny,’ and are guided by what would be the reasonable expectations and purpose of an ordinary [consumer] in making such a contract." Id. (internal quotations omitted). However, the Wirth court never delineated the "ordinary definition of ‘theft,’ as distinct from ‘larceny,’ " under New York law. Id.
Castner itself also bolsters the Court's conclusion. The Castner court cites to Van Vechten v. Am. Eagle Fire Ins. , where the Court of Appeals of New York opined: " ‘Theft,’ though often used as synonymous with ‘larceny,’ the proper term of art in the penal statutes of New York, is none the less a looser term, and one more colloquial or popular.... we do not say that theft is to be limited to what was larceny at common law.... Theft under this contract is theft as common thought and common speech would now image and describe it." 239 N.Y. 303, 146 N.E. 432, 433 (1925). Castner also cites to Botnick Motor Corp. v. N. Ins. Co., of N.Y. , wherein the Supreme Court of New York determined that "Elliott's act in driving away with the car on a country road at night, in violation of the command to stop, given by the agent who had possession, was an unlawful taking, and appropriation to his own use, and was theft both in law and within the terms of the contract of insurance; and the creditable evidence was ample to establish a criminal intent to deprive plaintiff permanently of its property." 253 A.D. 786, 300 N.Y.S. 1220, 1222 (1937). But the Botnick court did not expressly attribute the intent to permanently deprive to "theft"; it seems that the Botnick court merely recognized that a "theft" undoubtedly occurred because the evidence reflected the narrower criminal intent standard of common law larceny. Id.
Plaintiff also cites to Assocs. Disc. Corp. v. Ins. Co. of N. Am. , 54 Misc.2d 1027, 283 N.Y.S.2d 1006 (1967). This opinion observed that the plaintiff had the burden to establish "theft" and stated "[t]here must be direct or circumstantial evidence of the elements of larceny at common law, which include felonious intent." Id. at 1029. However, the Assocs. Disc. court also cited to Van Vechten and Botnick , and it did not necessarily require the specific intent of common law larceny to be applied to "theft." Id. Furthermore, this case is unpersuasive because it is a 1967 opinion from a lower court.
Notably, Defendant relies on Wirth for the proposition that New York law does not require criminal intent to establish a covered loss for "theft." (Doc. 140, p. 11 n.4). Again, this argument does not hold water. Wirth determined that, in the absence of a definition in the insurance policy, New York courts view "theft" and "larceny" as separate offenses. The New York Supreme Court never opined that "theft" lacks a mens rea standard entirely. "Theft" clearly involves some level of criminal intent, and Defendant's argument to the contrary borders on disingenuous.
In sum, because the parties fail to establish the "matter of law" entitling them to summary judgment, the Court must address this issue at the bench trial.
B. Consent to Use the Vessel
Plaintiff carries the burden of establishing that the Policy's Named Operator Provision applies and that the theft exception does not. AGCS Marine Ins. v. World Fuel Servs., Inc. , 187 F. Supp. 3d 428, 438 (S.D.N.Y. 2016) (applying New York law and stating that insurer must establish that an exclusion to an all-risk marine insurance policy is applicable, consistent with the broad coverage afforded by such policies).
"The insurer has the burden of showing the loss or damage was excluded from coverage and must prove affirmative defenses." Force , supra note 4, at 194.
Plaintiff presents several arguments in support of its Motion: (1) because the Policy, in no uncertain terms, excludes coverage for damage caused by an unlisted operator, the fact that Mr. Koch was not a named operator, alone, is sufficient to show that Defendant lacks coverage under the Policy, regardless of Mr. Karmely's and/or Captain Boxer's consent to Mr. Koch's operation of the Vessel; (2) Captain Boxer implicitly or explicitly consented to Mr. Koch's use of the Vessel on February 23, 2020; and (3) Mr. Karmely implicitly consented to Mr. Koch's use of the Vessel over the course of their professional and social relationship.
1. The Policy & Consent
Essentially, Plaintiff argues that it does not have to prove that Mr. Koch had either Mr. Karmely's or Captain Boxer's consent to use the Vessel. (Doc. 138, pp. 13–16; Doc. 144, p. 17). But, at the same time, Plaintiff recognizes that this isolated reading of the Named Operator Provision is at odds with the broad coverage afforded by the Policy. As stated in Plaintiff's brief, the Named Operator Provision does not apply in the event of theft. (Doc. 138, p. 14) ("The issue of consent is only relevant in determining whether or not the insured property was taken under such circumstances as constitute a theft, because if the Vessel was in fact stolen, then the Named Operator provision cannot be relied upon by [Plaintiff]."). Because consent to use the allegedly stolen property logically negates the existence of a "theft," Plaintiff must demonstrate that Mr. Koch had consent to operate the Vessel from either Mr. Karmely or Captain Boxer (or both).
Although the parties do not identify the definition of "theft," the common understanding of the term involves an "unauthorized taking." Consent is obviously relevant to the question of whether a "theft" occurred.
Plaintiff's citation to Pac. Indem. Co. v. Kohlhase in support of its argument is futile. 9 Ariz.App. 595, 455 P.2d 277 (1969). In Kohlhase , the insured gave an airport manager the keys to his airplane as well as instructions liming use of the airplane. Id. at 278. A flight instructor who worked at the airport allowed a student pilot with 33 flight hours to fly the airplane, and the student pilot crash-landed it. Id. at 278–80. The insured filed a claim under his all-risk airplane insurance policy, which excluded coverage for damage caused by unnamed pilots. Id. at 278–79. Because the policy only named Charles Kohlhase, Boyd Kohlhase, and certified Federal Aviation Administration pilots with at least 300 flight hours, the insurer denied coverage for the damage caused by the student pilot. Id.
The insured argued that neither he nor the airport manager consented to the student pilot's use of the airplane and, consequently, the student pilot's flight constituted a "theft." Id. at 280. The Court of Appeals of Arizona found that, under the plain language of the policy, "the insured's consent is not a prerequisite to the operability of the exclusion clause." Id. In other words, the exclusion clause bars coverage when any unnamed pilot operates the airplane, regardless of whether the insured consented to the flight or not.
However, the Kohlhase court also stated, "It has been held that when an article insured against theft is stolen and is subsequently damaged under circumstances which, but for the theft, would fall within an exclusionary provision, the loss represented by such damage is recoverable under the theft provision and the exclusionary clause is inapplicable." Id. It stated that, "where the word ‘theft’ is not defined in the insurance policy, [it] is [ ] give[n] [ ] a liberal construction, namely a common and ordinary meaning according to the understanding of persons in ordinary walks of life." Id. The Kohlhase court then determined that there was no evidence of "theft":
Here, concededly, the aircraft was taken without the consent of the owner. The evidence, however, is undisputed that the student pilot did have permission to fly the airplane—permission of the flying instructor who worked at the airport.... Under these circumstances, regardless of what the understanding may have been between the aircraft's owner and the airport manager as to the use of the airplane, and notwithstanding the broad scope afforded theft coverage, we cannot conceive that the pilot's use of the airplane constituted a theft.... The evidence having established that appellee's loss was an excluded risk, hence not covered under the policy, the trial court should have directed a verdict in favor of the insurer on the issue of its contractual liability.
Id. at 280–81 (internal citations omitted).
Plaintiff is partially correct—like Kohlhase , the Named Operator Provision is effective, regardless of Mr. Karmely's and/or Captain Boxer's consent to Mr. Koch's use of the Vessel. See id. But the inquiry does not end there. The Named Operator Provision is "inapplicable," and the damage to the Vessel is "recoverable," if there is evidence of theft. See id. Just as the Kohlhase court concluded that the student pilot did not steal the airplane because he had the flight instructor's permission to use the plane, whether Mr. Karmely and/or Captain Boxer consented to Mr. Koch's early-morning cruise is crucial to determining whether Mr. Koch stole the Vessel. See id.
Plaintiff states: "By arguing that only permission from someone with ‘authority’ (which derives from the principal) could make Mr. Koch's taking not a theft, the Defendant is arguing that any use which is not authorized by the insured (either directly or indirectly, i.e., from an agent with actual or apparent authority) is a theft." (Doc. 145, p. 5). Although the appropriate definition of "theft" is unknown at this juncture (see supra ), the offense obviously involves some level of criminal intent. That is, an unauthorized taking, alone, does not constitute "theft."
2. Captain Boxer's Consent
Alternatively, Plaintiff argues that Captain Boxer consented to Mr. Koch's operation of the Vessel. It is undisputed that Mr. Koch called Captain Boxer upon his arrival at the dock on February 23, 2020. (Doc. 143, ¶ 18). Plaintiff infers that Captain Boxer gave Mr. Koch permission to operate the Vessel during this phone call and, therefore, Mr. Koch did not steal the Vessel. (Doc. 138, pp. 9–10; Doc. 144, pp. 10–12).
Captain Boxer testified that he does not remember the substance of his 3:00 A.M. conversation with Mr. Koch, and Defendant adamantly disputes Plaintiff's inference. (Doc. 81-1, 49:3–17; Doc. 140, pp. 13–16). However, Defendant primarily focuses on a threshold issue: whether Captain Boxer possessed the authority to grant Mr. Koch access to the Vessel. Defendant argues that Captain Boxer lacked such authority and, therefore, his alleged consent to Mr. Koch's use of the Vessel is meaningless. (Doc. 140, pp. 15–16).
In response, Plaintiff reiterates its theory that Captain Boxer "let Mr. Koch take the Vessel" and indicates that it does not have to demonstrate Captain Boxer's authority to permit Mr. Koch's use of the Vessel under a strict reading of the Named Operator Provision. (Doc. 144, pp. 7, 17–18). Plaintiff again cites to Kohlhase in support of this contention, noting that the Court of Appeals of Arizona did not discuss the flight instructor's authority to grant the student pilot access to the airplane. (Id. at p. 17). It also speculates that the Kohlhase flight instructor did not have such authority because the insured entrusted the airport manager, not the flight instructor, with custody of the airplane. (Id. at pp. 17–18).
For the reasons stated above, a piecemeal interpretation of the Policy is improper, and Plaintiff again acknowledges the frivolousness of this argument. (Id. at p. 17) (stating that Mr. Koch's theft of the Vessel "brings the loss within coverage"). Moreover, while the Kohlhase court did not perform an in-depth analysis of the flight instructor's agency power, it emphasized that the student pilot had the flight instructor's permission to fly the airplane, noted that the flight instructor "was an independent operator in that he charged for flying instructions and the airport manger charged rental for the planes used by his students," and ruled that, "regardless of what the understanding may have been between the aircraft's owner and the airport manager as to the use of the airplane, ... we cannot conceive that the [student] pilot's use of the airplane constituted theft." Id. at 280. Thus, it is reasonable to assume that the flight instructor's authority, or perceived authority, contributed to the court's conclusion, and the Court will not engage in unnecessary conjecture beyond the facts outlined in Kohlhase .
Accordingly, the Court must resolve this threshold issue. Federal maritime law adopts general agency principles, which state that an agency relationship results from either actual authority or apparent authority. Monjasa A/S v. Mund & Fester GMBH & Co. KG , 477 F. Supp. 3d 112, 118 (S.D.N.Y. 2020). "Actual authority is created by the principal's manifestations of intent towards the agent," which can be express or implicit. Id. at 118–19. It only exists where " ‘the agent may reasonably infer from the words or conduct of the principal that the principal has consented to the agent's performance of a particular act.’ " Id. at 119 (quoting Minskoff v. Am. Express Travel Related Servs. Co. , 98 F.3d 703, 708 (2d Cir. 1996) ). Apparent authority exists " ‘when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations.’ " Id. at 118 (quoting ING Bank N.V. v. Temara , 203 F. Supp. 3d 355, 363 (S.D.N.Y. 2016), aff'd sub nom. ING Bank N.V. v. M/V TEMARA, IMO No. 9333929 , 892 F.3d 511 (2d Cir. 2018) ). " ‘[T]he existence and scope of an agency relationship can be resolved as matter of law only if: (1) the facts are undisputed; or (2) there is but one way for a reasonable jury to interpret them.’ " Id. at 117 (quoting Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc. , 697 F.3d 59, 71 (2d Cir. 2012) ).
Plaintiff also asserts that "[w]hether Mr. Karmely endowed [Captain] Boxer with the authority to [let Mr. Koch take the Vessel] is irrelevant." (Doc. 144, p. 7). Whether Mr. Karmely "endowed" Captain Boxer with the authority to "let Mr. Koch take the Vessel" is patently relevant. If Captain Boxer lacked the ability to consent to Mr. Koch's use of the Vessel on behalf of Mr. Karmely—via actual or apparent authority—then his supposed permission is immaterial.
Defendant argues that Captain Boxer lacked actual or apparent authority, citing to Mr. Karmely's testimony that both Mr. Koch and Captain Boxer were aware that the Vessel was not to be operated "by anybody other than Kim Boxer." (Doc. 85-2, 53:11–16). Mr. Karmely stated that Defendant purchased the Vessel for business use—specifically, the marketing of Miami real estate projects and the engagement of investors and clients—which Mr. Koch confirmed. (Doc. 77-1, 66:7–17; Doc. 85-2, 41:2–25). Mr. Koch further testified that "Mr. Karmely was always wanting to be clear on what was personal versus company" and that he did not ask Captain Boxer's permission to use the Vessel:
Q: No you're on the phone, you're making this call to Mr. Boxer. What did you say to him on the call?
A: I don't recall the exact conversation.
Q: Did you ask him if you were allowed to use the vessel?
A: I always—no. I had permission to always kind of use the vessel. Just like the day before and the day before, I didn't ask him to use it or ask him to move it off or anything like that. I just always operated under that procedure.
(Doc. 77-1, 61:19–21, 271:14–18). Defendant also points to Captain Boxer's testimony that: (1) he "did not ... have the authority to authorize anyone to take the boat out, slash, operate it—but operate myself"; and (2) Mr. Karmely reminded him and Mr. Koch that the Vessel was only for business uses approximately a month prior to the incident. (Doc. 61-1, 53:14–18, 78:7–20). Thus, Defendant asserts that Captain Boxer did not and could not reasonably believe he had authority to grant Mr. Koch access to the Vessel (much less grant him access to the Vessel at any time and for personal uses) and that Mr. Koch did not and could not reasonably believe that Captain Boxer had such authority.
Plaintiff contends that Mr. Karmely permitted personal uses of the Vessel and that Mr. Karmely had allowed Mr. Koch to operate the Vessel for personal uses prior to the incident (which Defendant denies, as discussed in more detail infra ). (Doc. 144, pp. 4–5). But this argument does not address whether Captain Boxer reasonably believed that he could authorize Mr. Koch's personal use of the Vessel or whether Mr. Koch reasonably believed that Captain Boxer could do so.
Plaintiff also argues that Mr. Koch "impliedly asked for" Captain Boxer's permission to operate the Vessel "by informing [Captain] Boxer of his intention to use the Vessel and then requesting the codes necessary to access the Vessel and the keys" during his 3:00 A.M. phone call with Captain Boxer on the day of the incident. (Doc. 144, p. 6). It cites to Mr. Koch's deposition, which describes this conversation:
Q: What did you say to [Captain Boxer]?
A: Well, it was eight months ago, but it was, "Kim, I'm taking the boat out. What's the combination for the gate, the key, the office? Where's the key in the office? What's the combination to put the key back in? I'll talk to you tomorrow."
(Doc. 81-4, 134:17–23). Defendant denies Mr. Koch's account; however, even if the Court takes this description of the phone call as true, Mr. Koch does not seem to be asking for Captain Boxer's permission to take the Vessel. Rather, according to Mr. Koch's testimony, he tells Captain Koch that he is "taking the boat out" and demands the gate combination and key. This evidence still does not show that Mr. Koch believed Captain Boxer had authority to grant him access to the Vessel—if anything, it supports his testimony that he thought he "always" had permission to use the Vessel, presumably from Mr. Karmely .
Finally, Plaintiff argues that Captain Boxer was Defendant's employee. (Doc. 144, p. 5). Defendant does not dispute this fact. (Doc. 143, ¶ 11). But an employee does not necessarily have the agency power to bind the principal.
There is no evidence that Mr. Karmely's words or conduct manifested an intent to vest Captain Boxer with the power to grant third parties, such as Mr. Koch, access to the Vessel, particularly for non-business-related uses, and there is no evidence that Captain Boxer reasonably believed he had this power. In fact, Captain Boxer clearly testified that he did not have any power to allow anyone to operate the Vessel. Moreover, Mr. Koch explicitly denied asking Captain Boxer for permission to access the Vessel on February 23, 2020, demonstrating that he did not believe that Captain Boxer had the authority to consent to his use of the Vessel. Thus, Captain Boxer did not have actual or apparent authority to consent to Mr. Koch's use of the Vessel, and the Court does not need to consider whether in fact he did so.
3. Mr. Karmely's Consent
Although Captain Boxer's consent is irrelevant here, Plaintiff asserts that Mr. Koch still did not steal the Vessel because Mr. Karmely gave him "permission to use [it] at any time he wished." (Doc. 144, p. 4; Doc. 145, p. 2; see Doc. 138, pp. 15–16). As a preliminary matter, Mr. Karmely clearly did not expressly consent to Mr. Koch's operation of the Vessel on February 23, 2020: Mr. Karmely was in New York at the time of the Vessel's destruction; Mr. Karmely did not have any advance knowledge of Mr. Koch's use of the Vessel that day; and Mr. Koch did not attempt to notify Mr. Karmely of his operation of the Vessel. (Doc. 140, p. 8; Doc. 144, p. 6). The parties only dispute whether Mr. Karmely implicitly consented to Mr. Koch's use of the Vessel.
Mr. Koch came aboard Mr. Karmely's company as an outside consultant in 2018, and they soon developed a friendship. (Doc. 143, ¶¶ 1–3). Plaintiff highlights Mr. Koch's testimony that he spent "nearly all [his] time with [Mr. Karmely]," indicating that they were relatively close. (Doc. 81-4, 21:14–15). Mr. Koch testified that they went to the gym and ate dinner together, and Mr. Karmely testified that Mr. Koch spent the Thanksgiving and Christmas holidays with him in 2019. (Doc. 81-4, 21:7–25; Doc. 85-2, 24:18–25:2).
Specifically, Mr. Koch began working for KAR Properties as an outside consultant. (Doc. 143, ¶ 1). Mr. Karmely owns KAR Properties, an umbrella organization for his various real estate construction and management companies, including Defendant. (Id. ¶ 2).
Defendant notes that Mr. Karmely frequently befriended his colleagues and employees and admits that Mr. Koch spent Christmas with Mr. Karmely in 2019. (Doc. 142, p. 2; Doc. 143, ¶ 3). But Defendant denies Mr. Koch's Thanksgiving 2019 visit, citing to a later portion of Mr. Karmely's deposition where he testified that Mr. Koch "swiped" his credit card and chartered a yacht without his permission during that time. (Doc. 85-2, 117:12–120:2). Given this conflicting evidence, it is unclear whether Mr. Karmely and Mr. Koch had a close friendship. But, even so, friendship alone does not show that Mr. Karmely implicitly consented to Mr. Koch's use of the Vessel whenever he wanted and for whatever purpose.
After Mr. Karmely purchased the Vessel and registered it to Tasal VQ 45, LLC ("Tasal VQ 45 "), Defendant's wholly owned subsidiary, Mr. Koch helped Defendant obtain the instant Policy. (Doc. 143, ¶¶ 5–7). But Plaintiff argues that Mr. Koch did much more.
Plaintiff points to correspondence between Mr. Koch, Tom Steentjes (the owner of Vanquish Yachts, the Vessel's manufacturer), and Karen Chin (an employee for Marine Documentation, Inc.). (Doc. 144-2). On January 8, 2020, Mr. Steentjes informed Ms. Chin that he sold the Vessel to Mr. Koch. On January 13, 2020, Mr. Koch sent Ms. Chin documentation information that listed himself and Mr. Karmely as managers of Tasal VQ 45, and he confirmed that he would sign the applications for Coast Guard documentation and Florida registration as a manager, copying Mr. Karmely to these emails. Mr. Koch testified that Mr. Karmely made him a manager of Tasal VQ 45 to circumvent the Coast Guard's rule limiting charters to 12 passengers unless an owner or member was on board. (Doc. 81-4, 61:17–64:10).
Plaintiff refers to Mr. Steentjes as the prior owner of the Vessel. (Doc. 138, p. 8). It appears that Mr. Steentjes actually owns the company that manufactured the Vessel. (Doc. 85-2, 47:21–22).
Mr. Koch also signed contracts on behalf of Defendant and Tasal VQ 45, and he testified that the Vessel was "ours" (meaning himself and Mr. Karmely) and that he "was an extension of Karmely, when he was not in South Florida, across the board." (Doc. 81-4, 61:16–23; 150:10–11; Doc. 144-2; Doc. 144-4). Plaintiff asserts that Captain Boxer believed Mr. Koch owned the Vessel, citing an email from Captain Boxer to Mr. Steentjes where he referred to the Vessel as "Dougs [sic] 45vq" and copied Mr. Koch to the message. (Doc. 144-5). Moreover, Plaintiff asserts that Mr. Karmely did not restrict the Vessel to business uses, underscoring: (1) Mr. Koch's testimony that he and Mr. Karmely used the Vessel for personal purposes; and (2) Mr. Karmely's testimony that he agreed to lend the Vessel to Mr. Steentjes on February 8, 2020 for display at a boat show. (Doc. 81-4, 239:19–25; Doc. 85-2, 101:4–23). Additionally, Plaintiff cites to a July 16, 2020 email from Captain Boxer to Mr. Karmely that logs the Vessel's uses since its purchase: "As per your request, I approximate the hours since purchase: left dock approximately 10 times (delivery from ft lauderdale, sea trails, photo shoot, personal use, moving from river arts to ORP dockage, miami boat show). Approximately 20-30 engine hours total." (Doc. 144-6).
Defendant emphasizes that: Mr. Koch did not have an ownership interest in or his own set of keys to the Vessel and testified as such; Mr. Koch testified that "Mr. Karmely was always wanting to be clear on what was personal versus company"; Captain Boxer agreed to operate the Vessel after discussing the role with Mr. Karmely; and Captain Boxer recalled Mr. Karmely's instruction that "anyone who uses the [Vessel], it needs to be business related." (Doc. 61-1, 23:3–8, 78:7–20; Doc. 77-1, 61:19–21, 64:8–10, 268:25–269:3). Although the record shows that Mr. Koch helped insure and document the Vessel, it is not clear whether Mr. Koch had implicit consent to use the Vessel, much less whether he had implicit consent to use the Vessel for personal purposes at any time.
Plaintiff further argues that Mr. Koch operated the Vessel on numerous occasions with Mr. Karmely's knowledge and without obtaining Mr. Karmely's explicit permission before doing so, relying on Mr. Koch's testimony to that effect. Mr. Koch testified that he operated the Vessel: (1) on January 25, 2020, when picking up the Vessel from Mr. Steentjes; (2) on February 5, 2020, with Captain Boxer present; (3) on February 21, 2020, when Mr. Koch went to Sunset Marina alone, called Mr. Karmely on arrival to tell him "Hey, the boat's here," and waved to Captain Boxer, who was conducting a charter on a different yacht; and (4) on February 22, 2020, when Mr. Koch moved the Vessel to allow Captain Boxer to access another yacht. (Doc. 81-4, 108:5–109:15, 110:3–1112:10, 244:20–251:11, 270:12–18). Mr. Koch also testified that he never discussed the Named Operator Provision with Mr. Karmely. (Id. 88:9–12).
Plaintiff states that certain text messages between Mr. Koch and Captain Boxer indicate that Captain Boxer "may have perjured himself when he claimed to know of no other instance, prior to the Incident, in which Mr. Koch operated the Vessel" and insinuates that Defendant behaved reprehensibly during discovery as to these messages. (Doc. 138, p. 8 n.1; see Doc. 81-1, 24:3–9). It cites to one message from Captain Boxer to Mr. Koch: "Capt Miguel is on the 74 if you need help tying up here. Be cautious it's windy. Maybe put two Brest lines on first from boat and then tie more if it's just you." (Doc. 138-5, p. 2).
"The Plaintiff was unable to depose [Captain Boxer] regarding these text messages because they were not produced to the Plaintiff until February of this year, after the close of discovery, following a discovery dispute in which it was revealed that these screenshots had been exchanged via email between counsel for the Defendant and counsel for [Captain] Boxer just two weeks prior to [Captain] Boxer's deposition." (Doc. 138, p. 8 n.1).
Defendant counters that Mr. Koch never operated the Vessel with Mr. Karmely's knowledge or permission. Mr. Karmely testified that: (1) he told Mr. Koch that he was not permitted to use the Vessel; (2) he told Mr. Koch that only Captain Boxer was authorized to operate the Vessel; (3) Mr. Koch never told him that he was operating the Vessel by himself; and (4) Mr. Koch never called him from the Vessel to notify him that he was onboard. (Doc. 85-2, 53:13–14, 111:18–112:1). Noting that there are no records confirming when Mr. Koch operated the Vessel, Defendant denies that Mr. Koch operated the Vessel on January 25, 2020. (Doc. 142, pp. 2–3). Mr. Koch testified that he did not operate the Vessel because he had been drinking, and Captain Boxer and Andrey Penev, a project manager for KAR Properties who was onboard that day, corroborated this account. (Doc. 61-1, 25:5–26:4; Doc. 77-1, 77:11–18, 236:8–237:22; Doc. 118-3, ¶ 3).
As to Mr. Koch's operation of the Vessel on February 21, 2020, Defendant cites to Mr. Koch's testimony that he "pulled up alongside" Captain Boxer, who was operating a different yacht, and that he called Mr. Karmely. (Doc. 77-1, 109:16–110:5, 249:16–250:21). Defendant then cites to Captain Boxer's testimony, who stated that he did not recall seeing Mr. Koch that day. (Doc. 61-1, 65:22–66:14). Mr. Karmely also testified that, to the best of his knowledge, Mr. Koch did not operate the Vessel on February 21, 2020. (Doc. 85-2, 52:23–53:7).
Furthermore, Defendant denies that Mr. Koch operated the Vessel on February 22, 2020, asserting that Mr. Koch only spent the day at Defendant's property and drank a few beers with one of Defendant's employees. Mr. Koch testified that he was at Defendant's property until "sundownish," and the employee stated that Mr. Koch "arrived at the property before [him] and was present while [he] worked on the property for much of the day" and that Mr. Koch drank a few beers with him before he left around 4:00 P.M. (Doc. 77-1, 253:14–17; Doc. 118-4, ¶ 6). Mr. Koch also testified that he did not recall operating the Vessel on February 22, 2020, but that he "believe[d]" he "took the vessel off, moored it across the street." (Doc. 77-1, 252:16–21).
Defendant argues that the text message identified by Plaintiff does not demonstrate that Captain Boxer perjured himself or that Mr. Koch operated the Vessel before February 23, 2020: "Captain Boxer's message only mentions securing an unidentified boat, not operating one, and he invites Koch to get assistance. [Plaintiff] seeks an inference where none is supported: the text messages do not suggest Koch operated the Vessel away from Tasal's property, much less than Captain Boxer ‘knew’ this to have occurred." (Doc. 142, p. 8).
In sum, it is unclear whether Mr. Koch operated the Vessel on these occasions, whether Mr. Karmely knew of these trips, and whether these alleged excursions were business-related. Therefore, it is still unclear whether Mr. Koch had implicit consent to use the Vessel to impress Ms. Foley on February 23, 2020.
Finally, Plaintiff argues that "Mr. Karmely's post-loss actions and fraudulent conduct further demonstrate that there was no theft." (Doc. 138, p. 18). After the Coast Guard released Mr. Koch and Ms. Foley around 8:00 or 9:00 A.M., Captain Boxer discovered that the Vessel was missing, went to Mr. Koch's apartment, and, after discussing the incident with Mr. Koch, filed a report with the Miami Police Department. (Doc. 143, ¶¶ 21–23). Plaintiff received Defendant's Notice of Claims, reporting that Mr. Koch had stolen the Vessel, at 6:44 P.M. (Id. ¶ 24). Plaintiff contends that Mr. Karmely, knowing "that he stood to lose more than $750,000 ... unless he was able to convince his insurance company that Mr. Koch had stolen the Vessel," coerced Captain Boxer to file a police report and "accuse[d] an innocent man (who was also a longtime friend and business associate) of theft." (Doc. 138, p. 18).
In support of this contention, Plaintiff cites to Mr. Koch's October 30, 2020 deposition. Mr. Koch describes a phone call between Mr. Karmely and Captain Boxer that he overheard while Captain Boxer was in his apartment:
Q: Did you hear Mr. Karmely threaten Mr. Boxer?
A: Yeah. I think he threatens in a way of—you know, he was talking about fiduciary responsibility; it was going to Kim's fault. You know, it was, "Hey, you're loyal to me, not to Doug." And, like I said, we were negotiating contracts for Kim to make pretty large sums of money; and, you know, that would go out the window if Kim didn't do what Karmely said.
...
Q: Can you be more precise? What did you hear? What did Mr. Karmely say to Mr. Boxer about fiduciary and loyalty? What did he say? What were his words?
...
A: Just that, "Hey, your loyalty is to me. Your fiduciary responsibility is from you to me, and you need to go do this and file a police report." I mean, he was basically forcing Boxer to go in and file a police report.
(Doc. 81-4, 145:13–23, 147:22–148:8). Plaintiff asserts that Ms. Foley's testimony corroborates Mr. Koch's account of this phone call:
Q: You said you understood that Karmely was angry?
A: Yes.
Q: Was he upset?
A: The only snippet of anything that was really said was he didn't want Kim or something—he didn't want them to be loyal I'm assuming to Mr. Koch.
Q: He didn't want them to be loyal to Mr. Koch?
A: Yes. I don't know what surrounded that.
Q: Did you overhear Mr. Karmely threaten Mr. Boxer in any way?
A: No.
Q: Did you hear Mr. Karmely threaten to, quote, ruin, unquote, Mr. Boxer if he didn't testify or give evidence against Mr. Koch?
A: I didn't hear that.
Defendant states that Plaintiff relies on Ms. Foley's April 28, 2020 recorded statement taken by Plaintiff's adjuster, which is inadmissible hearsay because she was not under oath and no attorneys were present. (Doc. 142, p. 5 n.2). Plaintiff cites to Ms. Foley's deposition here, and the Court only examines this evidence. (Doc. 81-5).
Defendant counters that Mr. Koch's April 24, 2020 Examination Under Oath contradicts this description of the phone call:
Q: ... [W]hat was your first—what was your first conversation with Mr. Karmely post-incident?
A: It was three or four days after.
...
Q: What did he say to you?
A: He was disappointed. He was upset.
...
A: [He was angry about] The fact that the boat crashed. And at that point was the first time he had ever said you didn't have authority to use the boat.
...
A: I was shocked because it was a change of events. A couple of days building up to this, you know, he was obviously upset, but he hadn't—he hadn't figured out I believe that the insurance wasn't going to cover it, at which time he was now changing his tune to the fact that I stole the boat because he felt he wasn't going to get repaid through insurance unless it was a theft.
...
Q: ... Are there other conversations between the 23rd of February and this one three or four days later in which is he not angry?
A: The only time I spoke with him directly before that was the morning of the incident when I saw Kim Boxer. He put Shahab on the phone, and I apologized. He asked if I was okay and wanted to make sure we were safe.
(Doc. 118-6, 71:3–73:2). Defendant implies that Plaintiff's theory (i.e. , that Mr. Karmely forced Captain Boxer to immediately file a police report to fraudulently collect insurance proceeds) is false under Mr. Koch's earlier narrative. Defendant argues that Mr. Karmely did not know whether the Policy would cover the damage and that he asked Captain Boxer to file a report with the Miami Police Department simply because Mr. Koch stole the Vessel. (Doc. 140, pp. 21–22).
Defendant also emphasizes that Ms. Foley, Captain Boxer, and Mr. Karmely denied any hostility between Captain Boxer and Mr. Karmely during the February 23, 2020 phone call. (Doc. 61-1, 62:9–63:8; Doc. 81-5, 27:21–28:2; Doc. 85-2, 68:9–17). Defendant also states that Ms. Foley did not overhear or understand the full conversation between Captain Boxer and Mr. Karmely because she "walked in as it was happening," she did not know "who called or how the call was organized," she did not realize that Mr. Karmely was on the phone until Mr. Koch informed her of that fact later, and she merely assumed that Mr. Karmely demanded Captain Boxer's loyalty. (Doc. 81-5, 27:5–20, 42:17–22). Thus, Defendant asserts that Plaintiff "may have sought to influence Koch's testimony" and that Plaintiff lacks evidentiary support for its "spurious allegations." (Doc. 140, pp. 21–23).
In sum, the Court is at sea with this conflicting evidence. Given Mr. Koch's conflicting and potentially self-serving testimony, Captain Boxer's testimony that Mr. Karmely never threatened him, and the weakness of Ms. Foley's statements, there are genuine disputes of material fact, and summary judgment is inappropriate here. The parties should batten down the hatches and prepare for the bench trial.
IV. CONCLUSION
For the aforementioned reasons, it is ORDERED and ADJUDGED that Plaintiff's Motion for Summary Judgment (Doc. 138) and Defendant's Motion for Summary Judgment (Doc. 140) are DENIED .
DONE AND ORDERED in Orlando, Florida on August 11, 2021.