Summary
In Viking Power, 608 F. Supp. 3d at 1227, this District Court evaluated a Fire Suppression Warranty that is identical to the one in this case.
Summary of this case from Clear Spring Prop. & Cas. Co. v. Big Toys LLCOpinion
CASE NO. 21-62306-CIV-ALTONAGA/Strauss
2022-03-11
CLEAR SPRING PROPERTY AND CAUSALTY COMPANY, et al., Plaintiffs, v. VIKING POWER LLC, et al., Defendants.
Aaron Michael Dmiszewicki, Charles Stuart Davant, Davant Law, P.A., Fort Lauderdale, FL, for Plaintiffs. Joanne M. Foster, Guy Yudin & Foster, LLP, Stuart, FL, Michael K. Spotts, Stuart, FL, for Defendant Viking Power LLC.
Aaron Michael Dmiszewicki, Charles Stuart Davant, Davant Law, P.A., Fort Lauderdale, FL, for Plaintiffs.
Joanne M. Foster, Guy Yudin & Foster, LLP, Stuart, FL, Michael K. Spotts, Stuart, FL, for Defendant Viking Power LLC.
ORDER
CECILIA M. ALTONAGA, CHIEF UNITED STATES DISTRICT JUDGE
THIS CAUSE came before the Court on Defendants, Viking Power LLC and M & T Bank's [Rule] 12(b)(6) Motion to Dismiss Plaintiff's Amended Complaint [ECF No. 35], filed on February 7, 2022. Plaintiffs, Clear Spring Property and Casualty Company and Certain Underwriters at Lloyd's of London Subscribing to Cover Note No. B0507RN2100289 ("Underwriters"), filed a Response [ECF No. 36], and Defendants filed a Reply [ECF No. 39]. The Court has carefully considered the Amended Complaint [ECF No. 33] and its attachments, the parties’ written submissions, and applicable law.
I. BACKGROUND
This insurance dispute stems from a fire that damaged the Miss Dunia, a hull owned by Viking Power, and surrounding property. (See Am. Compl. ¶¶ 12, 14). The Court draws the facts, as it must, from the Amended Complaint. Plaintiffs issued an insurance Policy to Viking Power on May 13, 2021. (See id. ¶ 15; id. , Ex. A, Policy [ECF No. 33-1] 2). The Policy was effective for one year beginning on May 28, 2021 and provided coverage for losses related to the Miss Dunia — up to $1,925,000 for damage to the hull itself and up to $2,000,000 for liability to third parties. (See Am. Compl. ¶¶ 15–17). In the event of a covered loss, the Policy made M & T Bank a payee. (See Am. Compl. ¶¶ 55–57; Policy 2).
The Policy conditioned coverage on the satisfaction of several warranties, two of which matter here. (See Policy 12–15). First, a fire-suppression warranty guaranteed that any "fire extinguishing equipment" aboard the Miss Dunia was "properly installed and ... maintained in good working order." (Id. 13 (alteration added)). Proper maintenance "include[d] the weighing of tanks once a year, certification/tagging and recharging as necessary." (Id. (alteration added)). Second, a survey-compliance warranty provided that if Plaintiffs requested a survey of the Miss Dunia and the survey made "any recommendations with respect to" the Miss Dunia, Defendants warranted "that all such recommendations [would be] completed prior to any loss giving rise to any claim hereunder[.]" (Id. (alterations added)).
The Policy made these warranties vital to the parties’ agreement and, as a result, to obtaining coverage for any loss. Under the Policy's general conditions, a breach of either warranty would "void th[e] policy from inception." (Id. 14 (alteration added)). As further protection, general condition "m" declared the Policy "null and void in the event of a non-disclosure or misrepresentation of a fact or circumstances material to [Plaintiffs’] acceptance or continuance" of coverage. (Id. 13 (alteration added)).
Plaintiffs allege that Defendants breached both the fire-suppression warranty and the survey-compliance warranty. (See Am. Compl. ¶¶ 66, 77). As for the fire-suppression warranty, Plaintiffs claim that the Miss Dunia's fire-extinguishing equipment had not been weighed, recertified, retagged, or recharged between 2018 and August 30, 2021, the day of the fire. (See id. ¶¶ 62–65). The Amended Complaint includes an image of a tag attached to a fire extinguisher on the Miss Dunia. (See id. ¶¶ 25–27). The tag lists every year between 2018 and 2022 in a separate box. (See id. ). Only the box marked "2018" is hole-punched. (See id. ).
As for the survey-compliance warranty, Plaintiffs allege that Viking Power submitted a survey with the original insurance application. (See id. ¶ 71; see generally id. , Ex. I, Report of Marine Survey [ECF No. 33-9]). The survey identified three categories of "deficiencies": (1) Tier 1 deficiencies, or problems "that should be corrected in a timely manner to avoid structure, system, or equipment failure"; (2) Tier 2 deficiencies, or minor issues that "do not require immediate service"; and (3) one safety hazard deficiency — the lack of recertification of the Miss Dunia's life rafts — that required prompt correction. (Id. ¶¶ 72–75 (quotation marks omitted)).
Viking Power also sent Plaintiffs a Letter of Compliance. (See id. ¶ 75). The Letter of Compliance indicated that as of May 2020, recertification of the Miss Dunia's life rafts was the only "outstanding recommendation" from the survey that remained to be implemented. (Id. (quotation marks omitted); see id. , Ex. L, Letter of Compliance [ECF No. 33-12]). Viking Power expected recertification to be complete by August 2020. (See Am. Compl. ¶ 75; Letter of Compliance). Plaintiffs allege "[u]pon information and belief" that the Letter of Compliance "was inaccurate, and not all survey recommendations had been complied with by the time of the fire." (Am. Compl. ¶ 76 (alteration added)).
On August 30, 2021, the Miss Dunia caught fire. (See id. ¶ 13). The fire burned for several hours and damaged the Miss Dunia, a nearby dock, and a landing craft. (See id. ¶¶ 13–14). Viking Power now faces several fire-related claims from third parties. (See id. ¶¶ 24–25). It also risks liability to individuals who were on board the Miss Dunia at the time of the fire for complications stemming from smoke inhalation. (See id. ¶ 23). Recently, the company filed suit in the United States District Court for the District of Massachusetts to seek exoneration of liability. (See id. ¶ 24).
Since the fire, two captains of the Miss Dunia — Sam Solberg and Charles Violissi — have stated in signed affidavits that the hull's fire-extinguishing system was properly maintained. (See Am. Compl., Ex. F, Solberg Aff. [ECF No. 33-6] ¶¶ 9–10; id. , Ex. G, Violissi Aff. [ECF No. 33-7] ¶¶ 12–17). Their affidavits are attached to the Amended Complaint. (See generally Solberg Aff.; Violissi Aff.).
Plaintiffs seek a declaration that Defendants are not entitled to coverage for losses that resulted from the fire. (See generally Compl.). In support of that request, Plaintiffs assert four claims: (1) breach of the Policy's fire-suppression warranty (see id. ¶¶ 58–66) (Count I); (2) breach of the Policy's survey-compliance warranty (see id. ¶¶ 67–77) (Count II); (3) breach of the duty of uberrimae fidei (see id. ¶¶ 78–88) (Count III); and (4) breach of the Policy's general condition "m" (see id. ¶¶ 89–96) (Count IV). Defendants now move to dismiss all counts for the failure to state claims for relief. (See generally Mot.).
The doctrine of uberrimae fidei "requires that an insured fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk." HIH Marine Servs., Inc. v. Fraser , 211 F.3d 1359, 1362 (11th Cir. 2000) (citations omitted).
II. LEGAL STANDARD
"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (alteration added; quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A pleading withstands a motion to dismiss if it alleges "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "The mere possibility the defendant acted unlawfully is insufficient to survive a motion to dismiss." Sinaltrainal v. Coca-Cola Co. , 578 F.3d 1252, 1261 (11th Cir. 2009) (citation omitted), abrogated on other grounds by Mohamad v. Palestinian Auth. , 566 U.S. 449, 132 S.Ct. 1702, 182 L.Ed.2d 720 (2012). A complaint's "well-pled allegations must nudge the claim ‘across the line from conceivable to plausible.’ " Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).
This pleading standard "does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Pleadings must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citation omitted).
When considering a motion to dismiss, courts must construe the complaint in the light most favorable to the plaintiff and take its well-pleaded factual allegations as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc. , 116 F.3d 1364, 1369 (11th Cir. 1997) (citing SEC v. ESM Grp., Inc. , 835 F.2d 270, 272 (11th Cir. 1988) ). Courts generally may not consider facts or evidence beyond the four corners of the complaint, including any attached exhibits. See Fin. Sec. Assurance, Inc. v. Stephens, Inc. , 500 F.3d 1276, 1284 (11th Cir. 2007) (citing Brooks , 116 F.3d at 1368 ); see also Fed. R. Civ. P. 10(c).
III. DISCUSSION
A. Choice of Law
The Policy contains a choice-of-law clause. (See Policy 16). Under the clause, disputes about coverage must "be adjudicated according to well established, entrenched principles and precedents of substantive United States Federal Admiralty law and practice[.]" (Id. (alteration added)). Absent any such "well established, entrenched precedent[,]" the clause requires application of New York law. (Id. (alteration added)).
This is an admiralty case. (See Am. Compl. ¶ 2). Therefore, "federal maritime conflict of laws control." Cooper v. Meridian Yachts, Ltd. , 575 F.3d 1151, 1161 (11th Cir. 2009) (citation omitted); see also GEICO Marine Ins. Co. v. Shackleford , 945 F.3d 1135, 1139 (11th Cir. 2019). Typically, if no "judicially established federal admiralty rule" resolves a question of maritime law, federal courts "rely on state law when addressing questions of maritime insurance." Shackleford , 945 F.3d at 1139 (quotation marks omitted; quoting Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 314, 75 S.Ct. 368, 99 L.Ed. 337 (1955) ; other citation omitted). State law thus may "fill[ ] any gaps" left by federal maritime law. Id. (alteration added). A choice-of-law clause in a maritime insurance contract may specify the gap-filling state law unless application of that law "would be unreasonable or unjust." Great Lakes Reinsurance (UK), PLC v. Rosin , 757 F. Supp. 2d 1244, 1251 (S.D. Fla. 2010) (quotation marks and footnote call number omitted; quoting Great Lakes Reinsurance (UK) PLC v. Durham Auctions, Inc. , 585 F.3d 236, 242 (5th Cir. 2009) ).
No party here contests that the choice-of-law clause governs this dispute. (See Mot. 5; Resp. 3–4). So, the Court will apply New York law to fill any gaps left by entrenched federal maritime law.
As it turns out, that task is relatively straightforward. The Eleventh Circuit recently held that entrenched federal maritime law requires strict compliance with navigational and seaworthiness warranties. See Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters LLC , 996 F.3d 1161, 1168–69 (11th Cir. 2021). But there is no firmly established federal maritime precedent governing express fire-suppression or survey-compliance warranties. See Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 314–16, 75 S.Ct. 368, 99 L.Ed. 337 (1955). New York law therefore governs Counts I and II.
See also Ocean Reef Charters , 996 F.3d at 1168 (recognizing Wilburn Boat ’s "holding that there is no established federal maritime rule requiring strict fulfillment of all warranties in marine insurance policies" (citation omitted)); Guam Indus. Servs., Inc. v. Zurich Am. Ins. Co. , 787 F.3d 1001, 1004 n.1 (9th Cir. 2015) ("In Wilburn Boat Co. v. Fireman's Fund. Ins. Co. , the Supreme Court declared that no established federal rule addressed marine insurance warranty clauses, and that the clauses should be interpreted using state law." (citation omitted)).
Conversely, the doctrine of uberrimae fidei is entrenched federal maritime law. See HIH Marine Servs., Inc. v. Fraser , 211 F.3d 1359, 1362 (11th Cir. 2000) (citations omitted). And Plaintiffs maintain that Count IV (for breach of general condition "m") is essentially coextensive with Count III (for breach of the duty of uberrimae fidei ). (See Resp. 10). Thus, federal maritime law determines the fate of Counts III and IV.
B. Breach of the Fire-Suppression Warranty (Count I)
Defendants argue that Count I should be dismissed because the fire-suppression warranty is ambiguous and because the Miss Dunia's fire-extinguishing system was properly maintained, as evidenced by its functioning during the fire. (See Mot. 5–8). Neither of these arguments persuades.
First, Defendants are incorrect that the fire-suppression warranty is ambiguous. A contract is ambiguous if it is reasonably susceptible to more than one interpretation. See Universal Am. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. , 25 N.Y.3d 675, 16 N.Y.S.3d 21, 37 N.E.3d 78, 80 (2015) (citations omitted). In Lloyd's of London v. Pagan-Sanchez , 539 F.3d 19 (1st Cir. 2008), the First Circuit held that an identically worded fire-suppression warranty was not ambiguous. Id. at 22–23. The court explained that the warranty was simply "a promissory warranty on the part of the insured" and that, by virtue of the warranty, the insured guaranteed "upon entering into the policy that the tanks have been weighed once a year and, if necessary, recharged[.]" Id. at 23 (alteration added). Curiously, Defendants do not identify what about the fire-suppression warranty is ambiguous, point out alternative readings of the warranty that would make it ambiguous, or address Pagan-Sanchez in their briefing. (See Mot. 5–6; Reply 1–2).
As the First Circuit recognized in Pagan-Sanchez , nothing about the fire-suppression warranty is ambiguous. See 539 F.3d at 22–23. And even if the last clause of the warranty (which requires "certification/tagging and recharging as necessary") were ambiguous, the preceding clause (which requires "the weighing of tanks once a year") certainly is not. (Policy 13). Plaintiffs squarely allege that when the Miss Dunia caught on fire, the tanks had not been weighed since 2018. (See Am. Compl. ¶¶ 27, 62). They need not allege anything more.
Second, Defendants’ contention that the fire-extinguishing system was properly maintained is misplaced. Specifically, Defendants argue that Solberg and Violissi's affidavits, which are attached to the Amended Complaint, prove that the fire-extinguishing system "functioned perfectly" during the fire. (Mot. 6). That argument is both premature and beside the point.
It is premature because it essentially asks the Court to make credibility determinations in deciding a motion to dismiss. See Bilal v. GEO Care, LLC , 981 F.3d 903, 914 n.10 (11th Cir. 2020) (observing that courts "do not make credibility determinations in reviewing a motion to dismiss"). Solberg and Violissi might have attested that the fire-extinguishing system was properly maintained, but Plaintiffs allege that neither captain is qualified to offer an authoritative opinion on the system's maintenance. (See Am. Compl. ¶¶ 29–46). Indeed, Plaintiffs allege that they conducted their own internal investigation into the fire's cause and the fire-extinguishing system was not properly maintained. (See id. ¶¶ 26–27, 62–66). The Court declines Defendants’ invitation to accept Solberg and Violissi's account of what happened in the face of contrary allegations and without the benefit of a factual record. See Bilal , 981 F.3d at 914 n.10 ; Doe v. Roe , No. 17-23333-Civ, 2019 WL 1316041, at *2 (S.D. Fla. Mar. 12, 2019) (noting that courts may not "resolve questions of fact, weigh evidence, and make credibility determinations ... at the motion to dismiss stage of the proceedings" (alteration added; footnote call number omitted)). Defendants’ argument is beside the point because Solberg and Violissi's affidavits, even if true, do not foreclose the possibility that Defendants breached the fire-suppression warranty. New York law requires that express promissory warranties be "literally complied with[.]" Jarvis Towing & Transp. Corp. v. Aetna Ins. Co. , 298 N.Y. 280, 82 N.E.2d 577, 577 (1948) (alteration added; citations omitted). In fact, "noncompliance forbids recovery, regardless of whether the omission had causal relation to the loss." Id. (citations omitted). Therefore, it does not matter whether the fire-extinguishing system's alleged defects causally contributed to the fire or the damage caused by the fire. All that matters is whether the fire-suppression warranty was breached. See id. ; see also Great Lakes Ins. SE v. Aarvik , No. 18-cv-60705, 2019 WL 201258, at *4 (S.D. Fla. Jan. 15, 2019) (quoting Rosin , 757 F. Supp. 2d at 1257–58 ).
Further, the affidavits at most prove that the fire-extinguishing system was adequately maintained. (See Solberg Aff. ¶¶ 9–10; Violissi Aff. ¶¶ 12–17). They do not prove that anyone weighed the Miss Dunia's tanks once a year, as required by the fire-suppression warranty. (See Policy 13).
To bottom-line it, Plaintiffs have adequately alleged breach of the fire-suppression warranty, and neither the warranty's language nor the Amended Complaint's attachments conclusively show that Defendants complied with the warranty.
C. Breach of the Survey-Compliance Warranty (Count II)
Defendants next seek dismissal of Count II on several grounds: (1) the survey-compliance warranty is ambiguous; (2) Defendants did not breach the warranty; and (3) "the loss of [the] Miss Dunia by fire would not be giving rise to any claim ‘hereunder’, [sic] meaning related to [the survey-compliance warranty]." (Mot. 6 (alterations added)). Again, these arguments miss the mark.
To begin, Defendants again fail to explain what about the survey-compliance warranty is ambiguous. Nowhere do they identify a reasonable, alternative reading of the warranty that would entitle them to coverage. (See Mot. 6); see also Universal Am. Corp. , 37 N.E.3d at 80 (noting that a contract is ambiguous when "its terms are subject to more than one reasonable interpretation" (citations omitted)). And "Defendants’ conclusory argument[ ] cannot support a motion to dismiss." Deeb v. Saati , No. 1:17-cv-21204, 2017 WL 8890872, at *1 (S.D. Fla. Nov. 8, 2017) (alteration added; other alteration adopted; citation and quotation marks omitted); see also Fed. R. Civ. P. 7(b)(1)(B) (requiring that motions "state with particularity the grounds for seeking" relief).
Moreover, it is too early to decide whether Defendants breached the survey-compliance warranty. Defendants’ argument that they did not breach the warranty rests on cherry-picked quotes from the survey — "Regular maintenance is up to date" — that suggested the Miss Dunia was in good repair. (Mot. 6 (quotation marks omitted; quoting Report of Marine Survey 28)). But a motion to dismiss is not an occasion for Defendants to curate the exhibition: under the warranty's plain language, the relevant question is whether Defendants complied with all survey recommendations (see Policy 13), and Plaintiffs allege that Defendants did not implement all the recommendations (see Am. Compl. ¶ 76; Letter of Compliance). For now, at least, the Court must accept Plaintiffs’ allegations as true. See Gates v. Khokhar , 884 F.3d 1290, 1296 (11th Cir. 2018) (citation omitted).
Arguably, the Court need not accept Plaintiffs’ allegation that Defendants failed to satisfy the survey-compliance warranty because it is a conclusory "upon information and belief" allegation that is unsupported by other plausible allegations. See Mann v. Palmer , 713 F.3d 1306, 1315 (11th Cir. 2013) (citing Twombly , 550 U.S. at 551, 557, 127 S.Ct. 1955 ). But Defendants never made this argument. (See Mot. 6). "[A]nd the Court will not entertain it by implication" because "[t]here is no burden upon the district court to distill every potential argument that could be made based upon the materials before it." Madinya v. Portfolio Recovery Assocs. , LLC , No. 18-cv-61138, 2018 WL 4510151, at *5 (S.D. Fla. Sept. 20, 2018) (alterations added; other alteration adopted; citation and quotation marks omitted).
Finally, the Court does not understand Defendants’ argument that "the loss of [the] Miss Dunia by fire would not be giving rise to any claim ‘hereunder’, [sic] meaning related to [the survey-compliance warranty]." (Mot. 6 (alterations added)). Perhaps Defendants read "hereunder" as a reference to the survey-compliance warranty rather than the Policy as a whole. (See Policy 13). But that reading would make little sense. Claims for insurance are made "under" a coverage grant, not under a warranty or any other exclusionary clause. See Aquatectonics, Inc. v. Hartford Cas. Ins. Co. , No. 10-cv-2935, 2012 WL 1020313, at *8 (E.D.N.Y. Mar. 26, 2012) (noting that under New York law, "exceptions to exclusionary clauses cannot be relied upon to create coverage" (alteration adopted; quotation marks and citation omitted)). So, the most natural reading of the warranty treats "hereunder" as a reference to the entire Policy, especially its provisions on coverage.
In sum, Defendants provide no basis for dismissing Count II.
D. Breach of the Duty of Uberrimae Fidei (Counts III and IV)
"[T]he marine insurance doctrine of uberrimae fidei is the controlling law of this circuit." HIH Marine Servs. , 211 F.3d at 1362 (alteration added; citations and footnote call number omitted). "Uberrimae fidei requires that an insured fully and voluntarily disclose to the insurer all facts material to a calculation of the insurance risk." Id. (citations omitted). A breach of that duty "on an application for marine insurance is grounds for voiding the policy." Id. at 1363 (citation omitted).
Plaintiffs allege that even though Viking Power represented that it had implemented (or would implement) all the survey recommendations, it never did so and never submitted documentation that proved otherwise. (Am. Compl. ¶¶ 83–85, 92–93). Plaintiffs also allege that they would not have issued the Policy, or would have issued it on different terms, if they had known that Viking Power would not follow the survey recommendations or that it would not use "licensed, certified individuals ... to conduct necessary fire system and maintenance inspections." (Id. ¶¶ 86–87, 94–95 (alteration added)).
Defendants premise their request to dismiss Counts III and IV on two arguments: first, that the Letter of Compliance establishes that Viking Power recertified the life raft; and second, that the Tier 1 and Tier 2 deficiencies identified in the survey were not material to Plaintiffs’ issuance of the Policy. (See Mot. 6–7). But these fact-laden arguments fail to account for both the Amended Complaint's allegations and the Rule 12(b)(6) standard.
Defendants argue that Count IV should be dismissed for essentially the same reasons as Count III. (See Mot. 6–7). And Plaintiffs admit that Counts III and IV are coextensive with each other. (See Resp. 10). Thus, the Court addresses both claims together. See Great Lakes Ins. SE v. Sunset Watersports, Inc. , No. 20-61629-Civ, 570 F.Supp.3d 1252, 1263 (S.D. Fla. Nov. 8, 2021) (concluding that a warranty identical to general condition "m" "warrants application of uberrimae fidei principles").
First up is Defendants’ contention that Viking Power recertified the life rafts as the Letter of Compliance suggested it would. (See id. ; Letter of Compliance). In the Letter of Compliance, Viking Power promised that it would eventually recertify the life rafts — not that it had already done so. (See Letter of Compliance). And even if the Letter of Compliance had advised Plaintiffs that the life rafts were recertified, the Court would not be free to simply take Viking Power's word for it and dismiss the case. See Robinson v. Affirmative Ins. Holdings, Inc. , No. 2:12-cv-2159, 2014 WL 1278121, at *3 (N.D. Ala. Mar. 27, 2014) (recognizing that "the court cannot simply take defendants’ word for it" in evaluating facts underlying a motion to dismiss).
Plaintiffs allege that Viking Power did not follow the survey's recommendations and did not offer documentation to prove that it did so. (See Am. Compl. ¶¶ 84–85, 92–93). If Defendants disagree, they are free to prove those allegations false in a summary judgment motion on undisputed facts or at trial. But they may not obtain dismissal before a factual record is developed.
Next is Defendants’ assertion that the Tier 1 and Tier 2 deficiencies are not material. As a threshold matter, the parties dispute the correct standard for determining the materiality of undisclosed information. (See Mot. 6; Resp. 10–11). Defendants contend that the Court must assess "whether a reasonable person in the assured's position would know that the particular fact is material." Jefferson Ins. Co. of New York v. Cassella , 261 F. Supp. 2d 160, 166 (E.D.N.Y. 2003) (citation omitted), vacated in part by 2003 WL 23411876 (E.D.N.Y. Oct. 21, 2003) ; (see Mot. 6). Plaintiffs, by contrast, assert that the insurer's perspective is what counts: a material fact is one that " ‘could possibly influence the mind of a prudent and intelligent insurer in determining whether he would accept the risk.’ " HIH Marine Servs. , 211 F.3d at 1363 (quotation marks omitted; quoting Kilpatrick Marine Piling v. Fireman's Fund Ins. Co. , 795 F.2d 940, 942–43 (11th Cir. 1985) ); (see Resp. 11).
Plaintiffs’ position is the better one under governing law. As explained, uberrimae fidei is entrenched federal maritime law in the Eleventh Circuit. See HIH Marine Servs. , 211 F.3d at 1362 (citations omitted); Sunset Watersports, Inc. , 570 F.Supp.3d at 1261. Thus, the Eleventh Circuit's standard — not New York's standard — applies. And the Eleventh Circuit's uberrimae fidei standard unquestionably requires evaluating materiality from the insurer's point of view. See HIH Marine Servs. , 211 F.3d at 1363 ; Kilpatrick Marine Piling , 795 F.2d at 942–43 ; see also Great Lakes Reinsurance (UK) PLC v. Gonzalez , No. 10-21138-Civ, 2011 WL 13115484, at *1 (S.D. Fla. Sept. 12, 2011) (granting motion for reconsideration of previous order because insurer was "correct that the standard is whether a reasonable insurer , not insured, would find the misrepresentation material" (citation omitted; emphasis in original)). Defendants effectively concede this point, as they do not address it in their Reply. (See generally Reply).
Especially with this disclosure standard in mind, the Court cannot dismiss Counts III and IV. Here, as in other contexts, "[m]ateriality ... is a question of fact that may rarely be resolved at the motion to dismiss stage." In re Unicapital Corp. Secs. Litig. , 149 F. Supp. 2d 1353, 1364 (S.D. Fla. 2001) (alteration added; citation omitted); see also, e.g. , Hill v. Resurgent Cap. Servs., L.P. , 461 F. Supp. 3d 1232, 1239 (S.D. Fla. 2020) (concluding that materiality determination "at the motion to dismiss stage is premature" as to Fair Debt Collection Practices Act claim); Brady v. Medtronic, Inc. , No. 13-62199-Civ, 2015 WL 11181971, at *7 (S.D. Fla. Mar. 30, 2015) (concluding that "determining materiality on a motion to dismiss stage [sic] is premature" as to state-law fraud claim). A defense-friendly materiality assessment would be particularly premature in this case, given that the relevant frame of analysis is materiality from an insurer's perspective — a perspective that, for obvious reasons, Defendants are in a poor position to evaluate. See HIH Marine Servs. , 211 F.3d at 1363.
Making matters simpler still, Plaintiffs have plainly alleged materiality. (See Am. Compl. ¶¶ 86–87, 94–95). And the Court must accept those allegations as true and draw all reasonable inferences in Plaintiffs’ favor. See Khokhar , 884 F.3d at 1296 ; Brooks , 116 F.3d at 1369.
Finally, even if Defendants could theoretically offer a proper Rule 12(b)(6) argument that the alleged nondisclosures were not material, they have not done so. Defendants simply declare, without citing the Amended Complaint or a case, that correction of the Tier 1 and Tier 2 deficiencies was not material to Plaintiffs’ decision to accept the risk of insurance. (See Mot. 7). That bald conclusion cannot support dismissal. See Deeb , 2017 WL 8890872, at *1. Also, even if compliance with those recommendations were not material, Plaintiffs allege that Defendants breached their duty of uberrimae fidei by failing to disclose information other than the Tier 1 and Tier 2 deficiencies. (See Am. Compl. ¶¶ 83, 87).
For these reasons, the Motion is denied as to Counts III and IV.
IV. CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED that Defendants, Viking Power LLC and M & T Bank's [Rule] 12(b)(6) Motion to Dismiss Plaintiff's Amended Complaint [ECF No. 35] is DENIED .
DONE AND ORDERED in Miami, Florida, this 11th day of March, 2022.