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AIG Centennial Ins. Co. v. O'Neill

United States Court of Appeals, Eleventh Circuit

April 10, 2015

AIG CENTENNIAL INSURANCE COMPANY, Plaintiff - Counter Defendant - Appellee,
v.
J. BRIAN O'NEILL, CAROLINA ACQUISITION LLC, Defendants - Counter Claimants - Appellants, BANK OF AMERICA N.A., a.k.a. Bank of America Corp, Defendant - Appellant

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the Southern District of Florida. D.C. Docket No. 0:09-cv-60551-WJZ.

For AIG CENTENNIAL INSURANCE COMPANY, Plaintiff - Appellee: Andrew Warren Anderson, Chartwell Law Offices, LLP, MIAMI, FL; Adria G. Notari, McAlpin Conroy, PA, MIAMI, FL; Michelle Otero Valdes, Law Office of Michelle O. Valdes, CORAL GABLES, FL.

For J. BRIAN O'NEILL, CAROLINA ACQUISITION LLC, Defendants - Appellants: Ross Warren Bergethon, Bergethon, LLC, ATLANTA, GA; Hayden Pace, Stokes Wagner Hunt Maretz & Terrell, ATLANTA, GA.

For BANK OF AMERICA, N.A., Defendant - Appellant: James Randolph Liebler, Tricia Julie Duthiers, Reid Alan Schaeffer, Liebler Gonzalez & Portuondo, PA, MIAMI, FL.

Before TJOFLAT and JULIE CARNES, Circuit Judges, and DuBOSE,[*] District Judge. DuBOSE, District Judge, concurring in the judgment.

OPINION

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TJOFLAT, Circuit Judge:

This case involves a disputed marine insurance policy covering a sixty-six foot sport-fishing vessel, the Bryemere. It comes to us on appeal from an eight-day bench trial conducted in the United States District Court for the Southern District of Florida. Finding no reversible error, we affirm.

I.

A.

Brian O'Neill first set his sights on the Bryemere in 2006. He signed a purchase-and-sale agreement for the vessel in March 2007, which fixed its price at $1.575 million plus the trade of another vessel valued at $700,000. O'Neill's acceptance was contingent on a successful marine survey and sea trial to examine the Bryemere before purchase. O'Neill hired Thomas Price, a marine surveyor, to conduct the pre-purchase investigation. Price documented his findings and issued an initial report estimating the Bryemere 's market value at approximately $1.875 million. O'Neill's project manager for the transaction, L.J. Gallagher, later contacted Price to request an increase in the vessel's valuation. Price acquiesced, reissuing the initial pre-purchase investigation but upping the Bryemere 's market value to $2.35 million. The survey also revealed that the vessel was in working condition but in need of repairs. O'Neill knew he would be on the hook for procuring these improvements, so he sought a reduction in the purchase price. The seller agreed, lowering the cost of the vessel by $150,000 for an adjusted sale price of $2.125 million.

As he negotiated the Bryemere 's price, O'Neill began laying the ground work for its eventual purchase. He incorporated a limited-liability company in the state of Rhode Island, Carolina Acquisition, LLC (" Carolina" ) to take ownership of the vessel. O'Neill is Carolina's only shareholder, and Carolina is the Bryemere 's registered title owner. With Carolina at his side, O'Neill turned his focus toward two remaining tasks: financing and insuring the Bryemere.

B.

O'Neill applied for a preferred ship mortgage--a specific type of mortgage governed by federal law[1] --with Bank of America, N.A. (" BOA" ) to fund the Bryemere 's cost. Acting through a mortgage broker, Beacon Marine Credit (" Beacon" ), O'Neill submitted to BOA an initial loan request for $1.83 million. BOA granted the loan. Although it was O'Neill who filed the original application, O'Neill signed the mortgage in his capacity as managing member of Carolina.[2] With

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Carolina as the mortgagor, O'Neill assumed the role of guarantor in his personal capacity. The Bryemere, meanwhile, served as collateral: the loan agreement gave BOA a security interest in the vessel such that, in the event of default, BOA could repossess the Bryemere, sell it, and use the proceeds to pay down any outstanding debt. 46 U.S.C. § 31325(b)(1) (" On default of any term of the preferred mortgage, the mortgagee may enforce the preferred mortgage lien in a civil action in rem . . . ." ).

After submitting the initial application, O'Neill, acting through Beacon, asked for an increase in the loan amount from $1.83 million to $1.976 million; BOA granted that request. The loan amount was set, and the preferred ship mortgage was signed and dated on April 18, 2007.

C.

As a condition of the loan, BOA required proof of insurance for the Bryemere. In addition, BOA requested that the insurance policy contain a mortgage clause that would protect BOA's interests as a mortgagee in the event the underlying insurance policy was found void.[3] Unfortunately for ...


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