where it was struck by a ferry, the NIKKI V. Mr. Whitmer was seriously injured and was taken by Medivac helicopter to a hospital in Gainesville, Florida.
Seven months later, Ms. Castro received a letter from a law firm representing Mr. Whitmer; the firm demanded payment for medical bills and for the injuries that Mr. Whitmer had sustained in the collision. Exh. 35. When Ms. Castro's insurance company told Federal about the letter, Federal responded that it would not provide her with a defense. Exh. 4. She brought this declaratory judgment action on August 17, 1989.
The action in the Virgin Islands involves a number of parties. Mr. Whitmer brought suit against Castro Corp. and Varlack Ventures
on September 3, 1990 in the Virgin Islands district court. Castro Corp. brought a third party claim against La Vida Charterers, Inc., La Vida Management Co., Inc., Caribbean Ventures, Inc., and Captain Shelnut (the "La Vida defendants").
Federal provided the La Vida defendants with a defense and a promise of indemnification. On September 30, 1991, Varlack Ventures brought a third party action against the La Vida defendants and Ms. Castro. This third party action caused Ms. Castro again to request that Federal provide a defense; again, Federal refused.
I. Ms. Castro as a Disclosed Principal
Whether Federal has a duty to defend or to indemnify Ms. Castro depends on whether she was a disclosed principal of Captain Shelnut. If she is a disclosed principal, she may enforce the contract with La Vida, and the accompanying insurance policy, as though she were a party to it. See Restatement (Second) of Agency § 292 (1958); Comind, Companhia de Seguros v. Sikorsky Aircraft Div. of United Technologies Corp., 116 F.R.D. 397, 408 (D. Conn. 1907).
Ms. Castro intended to, and did, give Captain Shelnut full authority to charter a boat for her sons' spring vacation. She told Captain Shelnut that he would be in charge, and that she would pay all expenses. Tr. 61-62. She sent a personal check to Mr. Collins confirming the trip and paying for the charter, Exh. 7, and told Mr. Collins in an accompanying letter that Captain Shelnut "[would] be handling all details regarding this charter," Exh. 6.
The more difficult question is whether knowledge of the agency relationship may be imputed to La Vida. Ms. Castro never spoke with La Vida; Captain Shelnut signed the La Vida contract without explicitly stating that he was acting as Ms. Castro's agent. Nonetheless, La Vida received enough information concerning Ms. Castro's involvement that it was on notice of her function as principal under the contract.
The Restatement (Second) of Agency § 4 (1958) defines the concept of disclosed and undisclosed principals as follows:
(1) If, at the time of a transaction conducted by an agent, the other party thereto has notice that the agent is acting for a principal and of the principal's identity, the principal is a disclosed principal.