The U.S. Court of Appeals for the Second Circuit has affirmed a district court's judgment in favor of an insurance company in a subrogation action, holding a marina and commercial ship repair business liable for the total loss of a dinner cruise boat during Superstorm Sandy.
The Case
National Union Fire Insurance Company of Pittsburgh, PA. (“NUFI”), which insured a dinner cruise boat (the “Star of America” or the “Star”), sued Garpo Marine Services, Inc., a marina and commercial ship repair business, as subrogee of the Star's owners, seeking damages for (1) breach of contract; (2) breach of bailment; (3) negligence; (4) breach of warranty of workmanlike service; and (5) breach of warranty.
After a four-day bench trial, the U.S. District Court for the Eastern District of New York ruled for NUFI on all five counts. The district court found that the Star's owners had made a repair agreement with Garpo under which the Star would be delivered on Sunday, October 28, 2012, and hauled to dry land before Superstorm Sandy hit on Monday evening, October 29.
The district court found, however, that the Star had not been hauled to land before Superstorm Sandy arrived and that, during the ensuing high winds and rains, the boat battered the staging dock to which it was tied, and ultimately sank.
The district court concluded that Garpo had a duty to take reasonable measures to protect the Star during the storm and that it had failed to do so.
Garpo appealed to the Second Circuit.
The Second Circuit's Decision
The circuit court affirmed.
In its decision, the Second Circuit found no error in the district court's conclusions that Garpo had made an “oral [agreement] to repair the Star” and that this had “created a bailment when the vessel was delivered to the marina,” giving rise to a presumption of negligence against Garpo when it returned the Star destroyed.
Garpo's authorization to the Star's owners “to dock the [Star] at the marina until it could be hauled onto dry land” on the morning before the storm was expected to arrive transferred control of the Star to Garpo for the purpose of hauling it from the water and storing it to await scheduled repairs was “a bailment for mutual benefit” that gave rise to “a presumption of negligence.”
Moreover, the circuit court found, the fact that the Star's owner kept the keys, rather than giving them to Garpo at delivery, did not negate this conclusion because the keys were not needed to remove the vessel from the water.
Finally, the Second Circuit rejected Garpo's contention that the district court had erred in concluding that, “Sandy's arrival and likely impact were foreseeable far enough in advance to allow Garpo to take protective measures.” The circuit court concluded that Garpo knew well before 10:00 a.m. on Monday to expect Superstorm Sandy's arrival and that it could have, and should have, taken measures to protect the Star before 10:00 on Monday morning – at a minimum, by securing it to the steel pontoon dock with additional lines.
The case is National Union Fire Ins. Co. v. Garpo Marine Services, Inc., No. 17-3286 (2d Cir. May 9, 2019). Attorneys involved include: FOR APPELLANT: JAMES W. CARBIN (Patrick Ryan McElduff, on the brief), Duane Morris LLP, Newark, N.J. FOR APPELLEE: EDWARD P. FLOOD, Lyons & Flood, LLP, New York, N.Y.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].