In a recent maritime case, Reliable Marine Towing and Salvage LLC v. John Thomas, et al., No. 19-10503 (11th Cir. 2019), the United States Court of Appeals for the Eleventh Circuit affirmed the lower court’s decision, finding for the defense, citing that the insurance policy language was clear and unambiguous.
Reliable Marine Towing and Salvage LLC v. John Thomas, et al – Background
A storm in the Gulf partially sank the boat of John Thomas, who was insured by State Farm Fire and Casualty (“State Farm”). Reliable Marine Towing and Salvage, LLC (“Reliable”) provided emergency rescue services to Thomas, and brought his boat to shore. Thomas would later file a claim with State Farm.
Thomas’ boat was declared a total loss, and State Farm paid him the full $6,750.00 policy limits. Two weeks later, Reliable sent State Farm an invoice totaling $3,109.84 for the rescue services. Thomas’ marine policy provided additional coverage for wreck removal of up to 5% of the insured value of the vessel ($337.50) and $500.00 for emergency services. The policy required payment directly to Thomas, unless another party “was legally entitled to receive payment.” Thus, State Farm sent Thomas a second check in the amount of $837.50 ($337.50+$500.00). Thomas did not pay Reliable.
Reliable Files Suit in the U.S. District Court for the Middle District of Florida
Reliable filed suit in the U.S. District Court for the Middle District of Florida, alleging that it was a third-party beneficiary of Thomas’ policy, and that State Farm breached the policy. It also asserted a separate claim against Thomas directly for salvage. Thomas consented to judgment and assigned any claims he might have against State Farm to Reliable. In turn, Reliable alleged that State Farm breached the insurance policy by not reimbursing Thomas for the full cost of Reliable’s emergency services.
The Middle District denied Reliable’s Motion for Summary Judgment and ruled in favor of State Farm.
Realiable Appeals to United States Court of Appeals for the Eleventh Circuit
Reliable appealed, contending that (1) the $837.50 in removal and emergency services should have been paid directly to Reliable, as State Farm was aware that Reliable was entitled to that sum, and (2) it was entitled to the full $3,109.84 for rescue services under Florida law and the insurance policy’s “sue and labor” clause.
The United States Court of Appeals for the Eleventh Circuit AFFIRMED the district court’s decision. While the Court agreed that State Farm did, in fact, know that Reliable provided rescue services (as evidenced by the fact that they wrote an additional check for wreck removal and emergency services), it held that Reliable failed to show any evidence that it was “legally entitled” to those funds. The policy language was clear that Thomas was to be paid directly, unless another party could show “legal entitle[ment],” and Reliable failed to provide any evidence that its invoice to State Farm created a legal entitlement.
Furthermore, the Court found that State Farm was not required under Florida law or its policy language to reimburse Reliable or Thomas for the full amount of the emergency services. Under the terms of the policy, Thomas was required to “protect the [insured] property from further loss.” The Court determined that he did so, and was not required to go to any additional extraordinary lengths to protect the vessel from further damage. Also, the policy language was clear and unambiguous, and did not contain a “sue and labor clause.” Thus, State Farm was not required to reimburse Reliable (as subrogee) for the full invoiced amount for the emergency services.