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Trident International Ltd. v. American Steamship Owners Mutual Protection and Indemnity Association, Inc.

United States District Court, S.D. New York

September 19, 2014



PAUL A. CROTTY, District Judge.

Plaintiff Trident International Limited ("Trident") brings this action against Defendant American Steamship Owners Mutual Protection and Indemnity Association, Inc. ("American Club" or "the Club") for indemnity under a marine protection and indemnity ("P&I") contract issued by American Club to Imperial Majesty Cruise Line ("IMCL"), which named Trident as an additional insured.

Trident is a corporation organized under Bahamian laws with its office and principal place of business in Nassau, Bahamas. Trident provided food and beverage services on board the Ocean Breeze, a passenger cruise ship, operated by IMCL. Trident's contract with IMCL, dated May 12, 2000, provided in relevant part:

IMPERIAL [IMCL] as operator of the vessel shall secure from its insurance carrier Risk Insurance insuring Trident against all liability to its own employees or liability to third persons and all other risks normally covered under the terms and conditions of a standard Protection and Indemnity policy where said risks are applicable to TRIDENT, and to furnish TRIDENT a certificate evidencing said Protection and Indemnity Insurance to be in full force and effect and making TRIDENT as a co-insured under the coverage.

(Trident/IMCL Contract, Clause 10.)

IMCL in turn obtained insurance coverage from American Club, a non-profit assessable mutual marine protection association providing P&I insurance to its members at cost. Although American Club has its own Board of Directors, its day-to-day affairs are managed by the Shipowners Claims Bureau ("SCB"). Both American Club and SCB are located in New York City.

Trident sues American Club for $697, 208.48 together with interest, representing expenses it incurred in the defense and settlement of three separate personal injury claims which Trident claims are covered by its P&I contract. The three claimants, Mark Taylor, Roberto Cartaya, and Jorge Rivera, were all food and beverage staff employees on board the Ocean Breeze. The claims of these employees, for which Trident seeks indemnification, are summarized as follows:

1. Taylor Claim, May 22, 2000-Taylor slipped and fell on a wet floor while loading supplies, injuring his left knee and lower back. Trident paid $302, 757.75 in settlement and attorneys' fees for the claim.
2. Cartaya Claim, June 29, 2000-Cartaya sustained injuries while jumping from the Ocean Breeze to a tender. American Club paid Trident $194, 856.03 of the $359, 393.56 Trident paid on the claim, leaving an unpaid balance of $164, 537.53.
3. Rivera Claim, March 7, 2001-Rivera slipped on a galley floor, sustaining injuries to his right knee and lower back. Trident paid $201, 913.19 in settlement and attorneys' fees. American Club initially approved reimbursing Trident a total of $65, 000, but subsequently reversed the decision.

Based on these claims, Trident seeks reimbursement in the total amount of $669, 208.47.

American Club maintains that it owes Trident nothing for these claims. The Club's insurance contracts are governed by its By-Laws and Rules ("the Rules"). As this Court has previously described, the American Club Rules require the following conditions precedent to coverage: that the insured provide to American Club "prompt notice" of "any happening;" that the insured avert or minimize any expense or liability associated with the incident or happening, and disclose to the Club all relevant and related information; and that the insured neither settle any claim nor admit liability without prior approval from the Club. (Dkt. 76, July 24, 2008 Order at 8, quoting from Rule 1, ยง 13 in JX-3.) American Club argues that Trident failed to comply with these requirements and was properly denied coverage for that failure.

Both parties cross-moved for summary judgment. The Court denied their motions on July 24, 2008, finding that there were factual questions as to whether the communications sent from American Club to Trident were sufficiently specific and timely to disclaim coverage, and whether Trident complied with American Club's rules. On February 4, 2009, the Court found that, contrary to Trident's assertions, American Club did not waive its ability to deny coverage for the claims at issue, and could not otherwise be estopped from denying coverage, since "the members [ ] agreed that each will defend itself at its own cost and agreed to rules which allow the Club to deny coverage at any time." (Dkt. 84, February 4, 2009 Order at 3.)[1]

On February 9 and 10 of 2009, a bench trial was held to determine whether Trident breached conditions precedent to coverage. The Court explicitly described the questions for trial in its February 4, 2009 Order as follows:

The Court will review at trial the issue of whether Trident breached conditions precedent under a two-part analysis. First, was the Board's procedure fair? In other words, did Trident have fair notice and opportunity to present evidence to the Board, as well as a fair process of review? Second, was the Board's substantive decision to deny coverage incorrect?

(Dkt. 84 at 5.) The Court further described that, for both of these questions, the Plaintiff bears the burden of proof. Id .; see Century 21, Inc. v. Diamond State Ins. Co., 2006 U.S. Dist. LEXIS 56733, at *7 (S.D.N.Y. Aug. 10, 2006).

The Court concludes that Trident has not shown, based on a preponderance of the evidence, that Trident lacked fair notice and an opportunity to present evidence to the Board, or that the Board's substantive decisions to deny coverage were incorrect. Accordingly, judgment is to be entered for American Club.


The facts and conclusions in the introduction to this opinion and the following discussion constitute the Court's findings of fact and conclusions of law. Four witnesses testified at the bench trial in this case, held on February 9 and 10 of 2009. Kenneth Clausen, who is the owner of Trident, in a fiduciary capacity, testified that he had no personal knowledge of the insurance coverage provided by Defendant, nor did he have any knowledge of the three claims and how they were administered.[2] Norman Levitan, who worked for IMCL in positions of increasing responsibility, testified knowledgeably about the matters in this case. Paul Sa, who is the former Chairman of the American Club, testified about the meeting at which the American Club's Board of Directors considered Trident's requests for reimbursement. Finally, Charles Gornell, who is the vice president of SCB and the person responsible for rejecting each of Trident's claims for reimbursement, testified as to his work on each of the three claims and explained his reasons for SCB's actions on the claims.

In addition to these four witnesses who testified at trial, Trident and American Club submitted designated and cross-designated deposition testimony of the following witnesses: Alexander Fernandez, Halstead Hodgson, Reinhart Mairunteregger, William Milliken, David Horr, and Allan Kelley. The first three witnesses were Trident employees. The ...

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