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Voorhees v. Ace American Insurance Co.

United States District Court, E.D. Wisconsin

March 24, 2017

DANIEL MATTHEW VOORHEES a/b/o M/Y BROADWATER, and BROADWATER MARINE, LTD., Plaintiffs,
v.
ACE AMERICAN INSURANCE COMPANY, Defendant.

          DECISION AND ORDER GRANTING DEFENDANT'S MOTION TO STAY AND COMPEL ARBITRATION (DKT. NO. 5)

          HON. PAMELA PEPPER, UNITED STATES DISTRICT JUDGE

         The plaintiffs, owners of the yacht M/Y Broadwater, filed a complaint in Milwaukee County Circuit Court alleging breach of contract and related causes of action regarding their coverage under a recreational marine insurance policy issued by the defendant. Dkt. No. 1-1. The defendant removed this case to this court, and filed a motion to stay the litigation and compel arbitration pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 3. Dkt. Nos. 1, 5. The court will grant the motion.

         I. Factual Background[1]

         The plaintiffs purchased M/Y Inevitable (renamed M/Y Broadwater), a 1990 163-foot Feadship custom motor yacht. Plaintiff Daniel Matthew Voorhees is a citizen of the District of Columbia. Dkt. No. 1 at ¶1. Plaintiff Broadwater Marine Ltd. is a holding company incorporated in the Cayman Islands, and has its principal place of business there. Id. at ¶2. Defendant ACE American Insurance Company is a Pennsylvania corporation with its principal place of business in Philadelphia. Id. at ¶3.

         In March 2014, a sea trial and extensive pre-purchase survey of the yacht were conducted in Fort Lauderdale, Florida; neither disclosed any engine or power issues. Id. at ¶9. In April 2014, the plaintiffs purchased the yacht moored in Nassau, Bahamas for $9.5 million, id. at 8, and had a $450, 000 contract to charter the yacht to Millennium Charters in West Palm Beach, Florida, id. at 13.

         After reviewing the yacht's pre-purchase survey, the defendant issued a recreational marine insurance policy (YMY YO9164510), with a $47, 500 deductible for property damage, to Broadwater Marine at a District of Columbia address. Dkt. No. 6-1, Ex. 1 at 9-34. The insured period began on April 17, 2014, and ended on April 17, 2015. Id.

         While sailing from Nassau to Fort Lauderdale in April 2014, the yacht experienced a sudden engine and power system failure, and became inoperable due to extensive generator, exhaust and power systems damage. Dkt. 6-1 at ¶ 5. This led to cancellation of the charter contract and extensive repair of the yacht during the following year. Id. at ¶¶ 6, 7.

         By a policy amendment effective July 10, 2014, Broadwater Marine's address of record changed to a Milwaukee, Wisconsin address. Id. at ¶ 2, Ex. 1 at 21. The plaintiffs gave defendant timely notice of the April incident. On August 29, 2014, the defendant informed the plaintiffs that it was denying coverage, because the generator failure pre-dated the policy period. Id. at ¶ 9, Ex. 2.

         In September 2014, the defendant withdrew the coverage denial and provided the plaintiffs with a proof-of-loss form, which plaintiffs timely completed. Id. at ¶ 10. During October, ACE requested additional damage documentation, access to the yacht for inspection, and an examination under oath. Id. at ¶ 11.

         In November 2014, while at Bahia Bar Marina in Fort Lauderdale, the yacht's hull and propulsion system were damaged, necessitating additional repairs. Id. at ¶ 12. Responding to the defendant's requests for information, the plaintiffs provided extensive documentary evidence regarding the April incident. Id. In January 2015, the defendant requested information regarding the November 2014 Bahia Bar Marina incident and a “complete, detailed sworn proof of loss.” Id. at ¶ 14, Ex. 7 at 55-56.

         In March of 2015, the defendant again requested specific information the plaintiffs had not provided, as well as a complete detailed proof of loss with respect to the April 2014 incident. Id. at ¶ 15. The defendant stated that its “preliminary analysis” failed to establish a relationship between the charges for removing and installing shore power units and related components and the generator/exhaust failures; however, “[o]ur investigation remains ongoing and we will be happy to consider any further documentation substantiating these charges.” Id. at ¶ 15, Ex. 8 at 58.

         On May 22, 2015, the plaintiffs sent the defendant a revised, and more detailed, proof of loss for the April incident and additional documents regarding the November incident, and they asked the defendant to enter into a tolling agreement. Id. at ¶ 16. The plaintiffs also stated:

[t]o the extent of any disputed portion of this claim, the insured is also making a request for arbitration so that we can get resolution of any disputed amounts without further delay.
Please give me a call so that we can discuss wrapping up this claim, payment on the undisputed portion, the tolling agreement, and the process and location for the ...

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