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Starr Indemnity & Liability Co. v. Marine Environmental Remediation Group, LLC

United States District Court, S.D. New York

July 27, 2018

STARR INDEMNITY & LIABILITY CO., Plaintiff,
v.
MARINE ENVIRONMENTAL REMEDIATION GROUP, LLC, Defendant.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, DISTRICT JUDGE:

         Plaintiff Starr Indemnity & Liability Company (“SILC”) brings this suit pursuant to Title 28 U.S.C. § 1333 against Defendant Marine Environmental Remediation Group (“MER”) seeking a determination of no coverage under a pollution liability insurance policy for losses caused by LONE STAR, a MER ship. MER moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. The motion is denied.

         I. BACKGROUND

         The following alleged facts are drawn from allegations in the Complaint and documents attached to or integral to the Complaint. Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016). The facts are construed in the light most favorable to Plaintiff as the non-moving party. Raymond Loubier Irrevocable Tr. v. Loubier, 858 F.3d 719, 725 (2d Cir. 2017).

         Plaintiff SILC sold a policy of pollution liability insurance (the “Policy”) for three vessels, including LONE STAR, to Defendant MER. During the policy period, MER began dismantling LONE STAR. This process stopped in November 2016. Around April 30, 2017, LONE STAR sank and discharged approximately 1, 800 gallons of waste oil. MER notified SILC of the incident.

         H. LEGAL PRINCIPLES

         A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

         In order to survive a motion to dismiss under Rule 12(b)(1), “the plaintiff has the burden of proving by a preponderance of the evidence that subject matter jurisdiction exists.” Katz v. Donna Karan Co., 872 F.3d 114, 120 (2d Cir. 2017). All material allegations in the Complaint are accepted as true, however, “argumentative inferences favorable to the party asserting jurisdiction should not be drawn.” Atl Mut. Ins., v. Balfour Maclaine Int'l Ltd, 968 F.2d 196, 198 (2d Cir. 1992); accord Lucas v. Fed. Bureau of Prisons, No. 17 Civ. 1184, 2018 WL 3038496, at *2 (S.D.N.Y. June 19, 2018). In considering 12(b)(1) motions, a court may rely on evidence outside the pleadings. See Cortlandt St. Recovery Corp. v. Hellas Telecomm.'s, S.a.r.l, 790 F.3d 411, 417 (2d Cir. 2015).

         B. Admiralty Jurisdiction

         “The U.S. Constitution extends the federal judicial power to ‘all Cases of admiralty and maritime jurisdiction.'” d'Amico Dry Ltd. v. Primera Mar. (Hellas) Ltd., 886 F.3d 216, 223 (2d Cir. 2018) (quoting U.S. Const. Art. III, § 2, cl. 1). “Congress has empowered federal district courts to hear ‘[a]ny civil case of admiralty or maritime jurisdiction.' This grant provides for jurisdiction over claims arising from maritime contracts.” Id. (quoting 28 U.S.C. § 1333(1)). The question of whether a contract is a maritime contract can be “deceptively simple” -- “[t]he question is clear, but the law is murky.” Id. When determining whether an agreement is a maritime contract:

[Ultimately the answer depends upon the nature and character of the contract, and the true criterion is whether it has reference to maritime service or maritime transactions. In other words, we ask whether the principal objective of the agreement is maritime commerce. The Supreme Court has cautioned that this inquiry is conceptual and not constrained by the location of contract performance or a vessel's involvement in the dispute. Our beacon is the purpose of the jurisdictional grant-to protect maritime commerce. Id. (quoting Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 24-25 (2004); Folksamerica Reinsurance Co. v. Clean Water of New York, Inc., 413 F.3d 307, 311 (2d Cir. 2005)) (internal citations and quotation marks omitted).

         The Second Circuit has “routinely conclude[d] that insurance policies covering marine risks fall within our maritime jurisdiction.” Id. at 225. For example, insurance “for pollution coverage for a [floating dry-dock, a] structure used in vessel repair and maintenance . . . directly implicate[d] the business of maritime commerce.” Fireman's Fund Ins. Co. v. Great American Ins. Co. of New York, 822 F.3d 620, 634 (2d Cir. 2016). Similarly, an insurance policy covering a ship tank cleaning company is a maritime contract. Folksamerica, 413 F.3d at 323.

         III. Discussion

         The Policy covers maritime risks that give rise to maritime jurisdiction. ...


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