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Atlantic Marine Florida, LLC v. Evanston Ins. Co.

United States Court of Appeals, Eleventh Circuit

December 24, 2014

ATLANTIC MARINE FLORIDA, LLC, as successor in interest to Atlantic Marine, Inc., AMERICAN HOME ASSURANCE COMPANY, as Subrogated Underwriter, Plaintiffs - Appellees Cross Appellants,
v.
EVANSTON INSURANCE COMPANY, Defendant - Appellant Cross Appellee, HARTFORD CASUALTY INSURANCE COMPANY, Defendant

Appeals from the United States District Court for the Middle District of Florida. D.C. Docket No. 3:08-cv-00538-HES-TEM.

For ATLANTIC MARINE FLORIDA, LLC, as successor in interest to Atlantic Marine, Inc., AMERICAN HOME ASSURANCE COMPANY, as Subrogated Underwriter, Plaintiffs - Appellee-Cross Appellants: Andrew Warren Anderson, Gunner Richard Dornonville de la Cour, Chartwell Law Offices, LLP, Miami, FL.

For Evanston Insurance Company, Defendant - Appellant-Cross Appellee: Paul Lindsey Fields Jr., Gregory L. Mast, Richard E. Zelonka Jr., Fields Howell Athans & McLaughlin, LLP, Atlanta, GA; Richard M. Jones, Joseph H. Lowe, Michael Shelley, Klein Glasser Park Lowe & Pelstring, PL, Miami, FL.

For Hartford Casualty Insurance Company: Joseph H. Lowe, Klein Glasser Park Lowe & Pelstring, PL, Miami, FL; Lisa A. Oonk, Dalan Katz & Siegel, PL, Clearwater, FL; Stacey Lynn Papp, Litchfield Cavo, LLP, Tampa, FL.

Before TJOFLAT, COX, and ALARCÓ N,[*] Circuit Judges.

OPINION

Page 1269

TJOFLAT, Circuit Judge

In this case, a marine engineering firm purchased an architect's and engineer's professional liability insurance policy, which insured the firm against any liability it might incur in a tort action for the negligent preparation of working drawings used to build an oceangoing passenger vessel. After the vessel was launched and in operation, a tragic accident occurred when the bulkhead door in the vessel's forward engine room malfunctioned, causing the death of the ship's captain. The captain's personal representative, claiming that the engineering firm and the shipbuilder were independently at fault, brought an action against them in state court. Pursuant to the insurance policy, the insurance company provided the engineering firm a defense. The shipbuilder demanded that the insurance company provide it a defense as well, but the insurance company refused to do so on the ground that the policy did not cover the shipbuilder as an insured. The insurance company having denied coverage, the shipbuilder turned to its own insurance company for a defense. Its insurer had issued the shipbuilder a comprehensive marine liability policy, which insured the shipbuilder against any liability it might incur in a tort action based on its own negligence.

After the two insurance companies separately settled with the personal representative, the shipbuilder and its comprehensive

Page 1270

marine liability insurer brought this declaratory judgment action against the company that insured the engineering firm. The insurer sought reimbursement of the expenses incurred defending the shipbuilder, as well as the settlement monies it paid the personal representative. The District Court concluded that although the shipbuilder was not a named insured under the engineering firm's insurance policy, it was a third-party beneficiary of the insurance the policy provided. Thus, the court held, the shipbuilder was entitled to the same rights the policy afforded the policy's named insured, the engineering firm. The insurance company appeals the judgment. We reverse.

I.

A.

The engineering firm is Guido Perla & Associates (" GPA" ). In April 1998, GPA, pursuant to a contract with Delta Queen Steamboat Company (" Delta Queen" ), began preparing the specifications and guidance drawings to be used in the construction of two passenger vessels, the Cape May Light and the Cape Cod Light.[1] As this preparation was underway, Delta Queen assigned the contract to Coastal Queen Holdings, LLC (" Coastal Queen" ), which then, on May 1, 1999, entered into an agreement with American Marine, Inc. (" AMI" )[2] to construct the two vessels in accordance with GPA's guidance drawings.[3] Doc. 56-8, at 3.[4]

On January 12, 2000, AMI entered into a contract with GPA (" the AMI-GPA Agreement" or " the Agreement" ) under which GPA agreed to complete on behalf of AMI the design and engineering services called for by GPA's contract with Delta Queen. GPA agreed to do so " in a manner . . . consistent with all appropriate professional standards." Doc. 1-2, ¶ 2, at 2. The Agreement required GPA to obtain four separate forms of insurance. Two are relevant here: one would provide comprehensive general liability (" CGL" ) insurance; the other would provide architect's and engineer's professional liability (" A& E" ) insurance.[5] GPA would be the " named insured" in both policies, whereas

Page 1271

AMI would be designated an " additional insured" in only the CGL policy. GPA obtained a CGL insurance policy from The Hartford Casualty Insurance Company (" Hartford" ), but AMI was not added as an additional insured.[6] The policy covered GPA for its liability to third parties for personal injuries caused by its negligence.[7] It specifically excluded from coverage, however, liability resulting from its negligence in performing professional services.[8] GPA obtained an A& E insurance policy from Evanston Insurance Company (" Evanston" ).[9] The policy covered GPA for its liability to third parties for personal injuries caused by its negligence in performing professional services--the coverage the CGL policy specifically excluded.

B.

The Cape May Light was christened in Alexandria, Virginia, in April 2001. Later that year, on October 27, the ship was berthed in Green Cove Springs in Clay County, Florida, in anticipation of an extended lay-up period. At approximately 4:30 P.M., the ship's captain, Charles Beverly, and the port engineer were in the forward engine room. At one end of the room was a watertight forward bulkhead door, which was designed to shut automatically upon the loss of power. The port engineer left the room to secure the port fueling station, leaving Captain Beverly to cut the ship's power and disconnect its battery terminals. After Captain Beverly

Page 1272

did this, he became trapped in the forward bulkhead door in a position that prevented rescuers from accessing its emergency release mechanism. By the time help arrived, he had died from compression asphyxiation.[10]

C.

On October 25, 2002, Captain Beverly's personal representative, Ann Beverly (" Beverly" ), filed a wrongful-death action against IMUSA,[11] GPA, and AMI in the Fourth Judicial Circuit Court of Florida.[12] As amended, her complaint alleged that the bulkhead door that caused Captain Beverly's death was designed and manufactured by IMSUA and installed by AMI, and that GPA designed the Cape May Light, including the system of which the bulkhead door was a part. The complaint contained separate claims of strict liability and negligence against IMUSA (Counts I and II), AMI (Counts III and IV), and GPA (Counts V and VI). The claims of strict liability against IMUSA, AMI, and GPA were materially identical: the bulkhead door, Beverly alleged, was defective and unreasonably dangerous because it had been designed and manufactured so that a person caught or trapped in the door could not reach or activate a release mechanism to disengage or release it.[13] The claims of negligence against the three defendants were also materially identical, except that IMUSA was charged with negligence in designing and manufacturing the door, AMI was allegedly negligent in manufacturing and installing the door, and GPA was allegedly negligent in designing the watertight door and the system of which it was a part so that a person caught or trapped in the door could not activate a release mechanism to disengage or release the door.[14]

In February 2003, AMI demanded that GPA or its insurers, Evanston and Hartford, provide it with a defense to the claims of ...


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