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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 18-12105 ________________________
D.C. Docket No. 8:16-cv-02329-JDW-MAP
GEICO MARINE INSURANCE COMPANY,
Plaintiff-Appellant,
versus
JAMES SHACKLEFORD,
Defendant-Appellee.
________________________
Appeal from the United States District Court for the Middle District of Florida ________________________
(December 17, 2019)
Before WILLIAM PRYOR, MARTIN, and KATSAS, * Circuit Judges.
WILLIAM PRYOR, Circuit Judge:
* Honorable Gregory G. Katsas, United States Circuit Judge for the District of Columbia Circuit, sitting by designation. Case: 18-12105 Date Filed: 12/17/2019 Page: 2 of 18
This appeal requires us to decide whether damage to a yacht was covered
under a marine insurance policy. Geico Marine Insurance Company insured James
Shackleford’s 65-foot sailboat, Sea the World. After a storm damaged the vessel in
Florida, Geico Marine denied Shackleford’s claim under the policy. Geico Marine
then filed a declaratory-judgment action against Shackleford. As one ground for
relief, Geico Marine sought a declaration that a navigational limit in the policy that
required the vessel to be north of Cape Hatteras, North Carolina, during hurricane
season barred coverage. After a bench trial, the district court ruled against Geico
Marine and declared that the policy covered the loss. Because we agree with Geico
Marine that the navigational limit bars coverage, we reverse and remand.
I. BACKGROUND
Shackleford purchased the Sea the World in 2009. He paid about $120,000
for the vessel, and at one point he planned to sail her around the world. But those
plans never came to pass.
In 2011, lightning struck the vessel. Shackleford took the vessel to Sailor’s
Wharf, a yacht yard in St. Petersburg, Florida, for repairs. But Sailor’s Wharf only
made matters worse. It improperly hauled the vessel from the water and improperly
“blocked” the vessel while storing it on shore, which caused structural damage to
the ship’s hull.
Shackleford filed an insurance claim with Continental Insurance Company,
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which insured the Sea the World then. In 2014, Continental declared the vessel a
constructive total loss, settled Shackleford’s claim, and canceled the policy.
Continental also waived its subrogation rights and assigned its interest in any claim
against Sailor’s Wharf to Shackleford.
In 2015, Shackleford sued Sailor’s Wharf for breach of its repair contract.
Shackleford v. Sailor’s Wharf, Inc., No. 8:15-cv-00407-VMC-TBM (M.D. Fla.
filed Feb. 26, 2015). As part of discovery in that litigation, Shackleford arranged to
have the vessel hauled ashore for inspection by expert witnesses at Taylor
Boatworks, a boatyard in Cortez on Florida’s west coast. But before Taylor
Boatworks would haul the vessel from the water, it required Shackleford to obtain
liability insurance on the vessel.
In March 2016, Shackleford obtained a liability-only policy from Geico
Marine, which insured several of his other watercraft. The policy did not insure the
hull of the vessel against damage but did permit navigation. The General
Conditions section provided the following terms of coverage:
Where Covered Coverage is provided: A. While the boat is afloat within the navigational area shown on the Declarations Page; and B. While the boat or its equipment is ashore or being transported by land conveyance in the United States or Canada.
The accompanying declarations page, in turn, included the following navigational
limit:
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CRUISING LIMITS: While afloat, the insured Yacht shall be confined to the waters indicated below: (There is no coverage outside of this area without the Company’s written permission.) U.S. Atlantic and Gulf Coastal waters and inland waters tributary thereto between Eastport, ME and Brownsville, TX, inclusive and the waters of the Bahamas including the Turks and Caicos, however the boat must be north of Cape Hatteras, NC from June 1 until November 1 annually.
The day after the policy issued, Shackleford asked Geico Marine to change
the policy to “Port Risk Ashore.” That restriction provides no coverage for
navigation; instead, it provides coverage only while the vessel is out of the water.
Geico Marine issued an endorsement and updated declarations page adding the
restriction that same day. Because coverage now applied only if the vessel was
ashore, the updated declarations page removed the original navigational limit that
required the vessel to be north of Cape Hatteras during hurricane season if afloat.
With the Port Risk Ashore restriction in place, Taylor Boatworks hauled the
vessel ashore so that Shackleford’s expert marine surveyor could inspect her in
connection with the Sailor’s Wharf litigation. Following the inspection,
Shackleford concluded that the damage to the vessel’s hull was less severe than he
originally believed and that the vessel was worth repairing. So he made plans to
sail her from Taylor Boatworks on the west coast of Florida to Fort Lauderdale on
the east coast, where she would undergo extensive repairs.
In May 2016, Shackleford called Geico Marine to seek removal of the Port
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Risk Ashore restriction so he could sail the vessel to Fort Lauderdale. He also
confirmed that the policy now insured the vessel’s hull for $264,000 and that the
vessel had “full coverage” for the voyage. On May 27, 2016, Geico Marine sent
Shackleford an email confirming that it had removed the Port Risk Ashore
restriction. Attached to the email was an endorsement removing the restriction and
an updated declarations page. The updated declarations page reinstated the original
navigational limit that required the vessel “[w]hile afloat” to be “north of Cape
Hatteras, NC from June 1 until November 1 annually.” Shackleford testified that
he never requested or discussed such a navigational limit with Geico Marine and
that he does not recall seeing the updated declarations page before departing for
Fort Lauderdale.
On May 28, one day after Geico Marine removed the Port Risk Ashore
restriction and reinstated the navigational limit, Shackleford set sail from Taylor
Boatworks to Fort Lauderdale. After arriving in Fort Lauderdale, Shackleford
anchored the vessel in nearby Lake Sylvia. In June 2016, a storm caused the vessel
to drag anchor and drove her into a sea wall, leading her to take on water and
suffer other damage. Shackleford filed a claim under his insurance policy, but
Geico Marine denied coverage.
After denying coverage, Geico Marine filed a declaratory-judgment action
against Shackleford, 28 U.S.C. § 2201, and invoked admiralty jurisdiction, id.
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§ 1333. Geico Marine sought a declaration that the policy was void ab initio under
the maritime doctrine of uberrimae fidei, or utmost good faith, because
Shackleford failed to disclose material facts about the vessel when procuring
insurance. And it sought a declaration that coverage was barred by the policy’s
navigational limit, which required the vessel to be north of Cape Hatteras, North
Carolina, during hurricane season.
Following a bench trial, the district court ruled against Geico Marine on both
counts and declared that the policy covered Shackleford’s loss. As to uberrimae
fidei, the district court ruled that the parties contracted out of the doctrine and that,
even if the doctrine applied, Shackleford did not omit any material facts when
procuring insurance. As to the navigational limit, it ruled that the policy did not
contain a navigational limit at the time of the loss and that, if it did, Geico Marine
implicitly waived the limit when it agreed that Shackleford could sail the vessel to
Fort Lauderdale in late May. Geico Marine challenges both rulings.
II. STANDARDS OF REVIEW
In an appeal from a judgment following a bench trial, we review the
conclusions of law de novo and the factual findings for clear error. U.S.
Commodity Futures Trading Comm’n v. S. Tr. Metals, Inc., 894 F.3d 1313, 1322
(11th Cir. 2018). “Questions of contract interpretation are pure questions of law,”
so we review the interpretation of an insurance contract de novo. Tims v. LGE
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Cmty. Credit Union, 935 F.3d 1228, 1237 (11th Cir. 2019).
III. DISCUSSION
Marine insurance contracts qualify as maritime contracts, which fall within
the admiralty jurisdiction of the federal courts and are governed by maritime law.
AIG Centennial Ins. Co. v. O’Neill, 782 F.3d 1296, 1302 & n.6 (11th Cir. 2015)
(citing U.S. Const. art. III, § 2, cl. 1 and 28 U.S.C. § 1333). Even so, “it does not
follow that every term in every maritime contract can only be controlled by some
federally defined admiralty rule.” Id. at 1302 (alteration adopted) (quoting Wilburn
Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 313 (1955)). “In the absence
of a ‘judicially established federal admiralty rule,’ we rely on state law when
addressing questions of marine insurance.” Id. (quoting Wilburn Boat, 348 U.S. at
314); see also Bryan A. Garner et al., The Law of Judicial Precedent § 69, at 570
(2016). The parties agree that Florida law fills any gaps here.
Geico Marine argues that the policy’s navigational limit unambiguously
conditioned coverage on the vessel being north of Cape Hatteras, North Carolina,
from June 1 until November 1 annually if the vessel was afloat. Because
Shackleford breached that limit and because maritime law requires absolute
enforcement of express navigational limits, Geico Marine contends the
navigational limit bars coverage.
Shackleford responds with three reasons why the navigational limit does not
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bar coverage. First, he argues that the policy is ambiguous as to whether it
contained a navigational limit at the time of the loss, and Florida law construes
ambiguities in insurance contracts against the insurer. Second, he argues that Geico
Marine implicitly waived its right to enforce the navigational limit when it agreed
that he could sail the vessel to Fort Lauderdale in late May. And third, he argues
that any breach of the navigational limit does not bar coverage because Florida law
does not strictly enforce express warranties in marine insurance contracts.
We reject Shackleford’s arguments and agree with Geico Marine that the
navigational limit bars coverage. And because we agree with Geico Marine on this
issue, we need not address its argument that Shackleford breached a duty of
uberrimae fidei. The navigational limit is dispositive.
No established rule of maritime law governs whether a navigational limit is
part of a marine insurance contract, so we apply Florida law to determine whether
the policy contained a navigational limit. AIG Centennial, 782 F.3d at 1302. Under
Florida law, we first look to the text of the policy and construe the policy “in
accordance with [its] plain language.” Swire Pac. Holdings, Inc. v. Zurich Ins. Co.,
845 So. 2d 161, 165 (Fla. 2003). But “if the relevant policy language is susceptible
to more than one reasonable interpretation, one providing coverage and the other
limiting coverage,” the policy is ambiguous and we must construe it in favor of
coverage. Id. (alterations adopted). That “a provision is complex and requires
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analysis for application” does not “automatically” mean it is ambiguous. Id. Before
concluding that a provision is ambiguous, we must “read [the] policy as a whole,
endeavoring to give every provision its full meaning and operative effect.” Id. at
166 (citation and internal quotation marks omitted).
Reading the policy as a whole, we readily conclude that it unambiguously
contained a navigational limit when the loss occurred. The policy states that
“[c]overage is provided . . . [w]hile the boat is afloat within the navigational area
shown on the Declarations Page.” And the updated declarations page that issued
the day before Shackleford sailed for Fort Lauderdale includes the following
provision:
CRUISING LIMITS: While afloat, the insured Yacht shall be confined to the waters indicated below: (There is no coverage outside of this area without the Company’s written permission.) U.S. Atlantic and Gulf Coastal waters and inland waters tributary thereto between Eastport, ME and Brownsville, TX, inclusive and the waters of the Bahamas including the Turks and Caicos, however the boat must be north of Cape Hatteras, NC from June 1 until November 1 annually.
Four textual clues lead us to conclude that the “cruising limits” section of the
declarations page unambiguously describes the “navigational area” referenced in
the policy. First, the policy states that the declarations page will contain a
“navigational area.” In the maritime context, the term “navigation” means “[t]he
act of sailing vessels on water.” Navigation, Black’s Law Dictionary (11th ed.
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2019). And the declarations page specifies the “area”—specifically, the “waters”—
in which the vessel could be sailed. So the declarations page contains a
“navigational area” within the ordinary meaning of that term. Second, the policy
states that coverage applies “[w]hile the boat is afloat” within the navigational area
on the declarations page, and the declarations page likewise explains that its
navigational restrictions apply to the vessel “[w]hile afloat.” Third, both the policy
and the declarations page make clear that “coverage” is conditioned on the vessel
remaining within the prescribed navigational area while afloat. And fourth, the
“cruising limits” section of the declarations page serves no purpose if not to define
the “navigational area” upon which the policy conditions coverage. We must not
read the “cruising limits” section out of the policy. See Antonin Scalia & Bryan A.
Garner, Reading Law: The Interpretation of Legal Texts § 26, at 174 (2012) (“If
possible, every word and every provision is to be given effect.”); Swire, 845 So. 2d
at 166 (courts must “endeavor[] to give every provision its full meaning and
operative effect” (citation and internal quotation marks omitted)). No other
interpretation of the policy would give effect to the “cruising limits” section of the
declarations page.
The district court offered two reasons why the policy is ambiguous as to
whether it contained a navigational limit at the time of the loss. One concerns a
discrepancy between the policy and the declarations page, and the other concerns a
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discrepancy between the declarations page and an endorsement to the policy. But
neither reason is persuasive.
First, the district court suggested the policy is ambiguous because it refers to
the “navigational area” shown on the declarations page, and the declarations page
instead uses the term “cruising limits.” But “navigational area” is not a defined
term in the policy, so it carries its ordinary meaning. See Arguelles v. Citizens
Prop. Ins. Corp., 278 So. 3d 108, 111 (Fla. Dist. Ct. App. 2019). And as explained
above, the cruising limits in the declarations page unmistakably identify a
“navigational area” under the ordinary meaning of that term.
Second, the district court found ambiguity based on a perceived
inconsistency between the endorsement and the declarations page that Geico
Marine issued the day before Shackleford sailed for Fort Lauderdale. Unlike the
declarations page, the endorsement contained a section titled “Navigation Area,”
which was left blank. The district court ruled that the blank “Navigation Area”
section at the bottom of the endorsement was inconsistent with the “cruising
limits” in the declarations page and that a reasonable interpretation of the blank
“Navigation Area” section was that the policy contained no navigational limit. But
the district court ignored the following language on the endorsement form:
“Nothing herein contained shall vary, alter or extend any provision or condition of
the Policy other than as stated above.” The blank “Navigation Area” section of the
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endorsement appeared below the preceding language, so it could not alter (or
conflict with) any navigational limit the policy imposed.
The district court erred. The policy is not ambiguous about whether it
contained a navigational limit when the loss occurred. The plain language of the
policy contains a navigational limit. See Taurus Holdings, Inc. v. U.S. Fid. &
Guar. Co., 913 So. 2d 528, 532 (Fla. 2005) (“[I]nsurance contracts are interpreted
according to the plain language of the policy except when a genuine inconsistency,
uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of
construction.” (citation and internal quotation marks omitted)).
The district court alternatively ruled that Geico Marine “implicitly waived”
the navigational limit when it agreed that Shackleford could sail the vessel to Fort
Lauderdale for repairs in late May. The district court found that Geico Marine
knew on May 27 when it lifted the Port Risk Ashore restriction that the vessel
“would be sailed to Fort Lauderdale within a few days for repairs.” And it found
that a navigational limit “was ‘absolutely’ not discussed” when Shackleford first
inquired about removing the Port Risk Ashore restriction. Even accepting those
factual findings, this ruling was legal error.
No established rule of maritime law governs the waiver of a navigational
limit, so we apply Florida law to determine whether Geico Marine waived its right
to enforce that provision. AIG Centennial, 782 F.3d at 1302. In Florida, implied
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waiver of a contractual right requires “conduct which implies the voluntary and
intentional relinquishment of a known right.” Raymond James Fin. Servs., Inc. v.
Saldukas, 896 So. 2d 707, 711 (Fla. 2005). Shackleford’s theory of implied waiver
appears to be that Geico Marine waived the navigational limit by agreeing to a
course of conduct that it knew would make it impossible for Shackleford to comply
with the requirement that his vessel be north of Cape Hatteras by June 1. We are
unpersuaded.
Geico Marine’s decision to lift the Port Risk Ashore restriction on May 27
knowing that Shackleford would soon sail the vessel to Fort Lauderdale for repairs
does not imply waiver of its right to enforce the navigational limit. The
navigational limit required the vessel to be north of Cape Hatteras by June 1 only if
the vessel was “afloat.” The policy provided coverage without regard to geography
“[w]hile the boat . . . is ashore . . . in the United States or Canada.” Geico Marine
knew Shackleford was taking the vessel to Fort Lauderdale for “extensive repairs,”
and it could reasonably have expected that Shackleford would comply with the
navigational limit by having the vessel hauled ashore for repairs in Fort Lauderdale
by June 1. The only way Geico Marine’s conduct could have suggested it intended
to waive the navigational limit is if the voyage to Fort Lauderdale was impossible
to complete by June 1. But Shackleford conceded at oral argument that the vessel
arrived in Fort Lauderdale by June 1 and that he intended to haul the vessel ashore
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upon arrival, which would have complied with the navigational limit. Oral Arg.
Recording at 12:27–12:38, 18:23–18:30 (Dec. 3, 2019). That the vessel arrived in
Fort Lauderdale by June 1 shows that it was possible to complete the voyage by
June 1. So Geico Marine plainly did not agree to a course of conduct that it knew
would make compliance with the navigational limit impossible. Nothing in this
record supports the conclusion that Geico Marine voluntarily and intentionally
relinquished its right to enforce the navigational limit. The district court erred in
ruling otherwise.
Even if Geico Marine did not waive the navigational limit, Shackleford
argues that his breach of the navigational limit does not bar coverage because
Florida law does not strictly enforce express warranties in marine insurance
contracts. As Shackleford acknowledges, federal maritime law requires “strict” or
absolute enforcement of express navigational warranties. Lexington Ins. Co. v.
Cooke’s Seafood, 835 F.2d 1364, 1366 (11th Cir. 1988); see also Strict, Black’s
Law Dictionary (11th ed. 2019) (“Absolute; requiring no showing of fault.”). And
established federal maritime rules, like the rule requiring absolute enforcement of
express navigational warranties, ordinarily control “even in the face of contrary
state authority.” AIG Centennial, 782 F.3d at 1303 (citation and internal quotation
marks omitted). But Shackleford contends that he and Geico Marine contracted out
of the federal maritime rule of enforcement and instead selected Florida’s more
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forgiving rule.
Shackleford argues that the parties contracted out of the federal maritime
rule requiring absolute enforcement of express navigational warranties by
including a “Conformity to Law” provision in their policy. The provision states:
“Any terms of this policy that conflict with the laws of the state where this policy
is issued are considered amended to conform to such laws.” Although parties to a
marine insurance policy are generally free to contract out of federal maritime law,
King v. Allstate Ins. Co., 906 F.2d 1537, 1540–42 (11th Cir. 1990), we are not
persuaded that Shackleford and Geico Marine did so.
Shackleford’s argument that this provision contracts out of the federal
maritime rule has two premises. First, the federal rule of absolute enforcement, as a
default rule of maritime law, was one of the “terms of this policy” to which the
provision refers. Second, the federal rule of enforcement conflicts with Florida law
because Florida allows a marine insurer to avoid coverage based on an insured’s
breach of warranty only if the breach “increased the hazard by any means within
the control of the insured.” Fla. Stat. § 627.409(2). Because the federal rule of
enforcement, an implied term of the policy, conflicts with Florida’s rule,
Shackleford argues that this implied “term” must be amended to conform to
Florida’s more insured-friendly laws.
Shackleford’s argument fails because its first premise is false. As used in the
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policy, the phrase “terms of this policy” refers only to the policy’s express terms,
not terms implied by law. Florida gives words in an insurance contract their
ordinary meaning, which requires reading the words in context. Swire, 845 So. 2d
at 165–66. We do not doubt that as a matter of ordinary meaning the “terms” of a
contract may include terms implied by law. See Term, Black’s Law Dictionary
(11th ed. 2019) (listing “implied term” as one kind of term). But here context
makes clear that the phrase “terms of this policy” refers only to the policy’s
express terms.
The phrase “terms of this policy” appears in a provision titled “Conformity
to Law,” and as its name suggests, the provision operates to conform any illegal
policy terms to Florida law. Provisions like this one exist to address conflicts
between the contract the parties wrote and what the law requires. See 16 Samuel
Williston & Richard A. Lord, A Treatise on the Law of Contracts § 49:24, at 138
(4th ed. 2000) (“Many [insurance] policies have a provision, doubtless superfluous,
that in the event of a conflict between the policy’s terms and the requirements of a
state’s insurance law, the latter will control.”). Because the provision exists to save
the policy the parties wrote from invalidity under state law, the phrase “terms of
this policy” refers only to the policy’s express terms—those written by the parties.
Shackleford effectively asks us to transform the policy’s conformity-to-law
provision into a choice-of-law provision. By default, federal maritime law
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displaces contrary state law when construing a marine insurance contract. AIG
Centennial, 782 F.3d at 1302–03. Shackleford would have us read the conformity-
to-law provision as reversing this default rule, so that state law displaces any
contrary federal maritime rule. But the provision does no such thing. The parties
could have included a choice-of-law provision selecting state law over federal law,
but they did not. And we “may not rewrite [the parties’] contract[], add meaning
that is not present, or otherwise reach results contrary to the intentions of the
parties.” Taurus Holdings, 913 So. 2d at 532 (citation and internal quotation marks
omitted).
Because the parties did not contract out of maritime law, we must apply the
federal rule requiring absolute enforcement of express navigational limits. Under
that rule, “breach of [an] express [navigational] warranty by the insured releases
the insurance company from liability even if compliance with the warranty would
not have avoided the loss.” Lexington, 835 F.2d at 1366. Here, the policy contained
a navigational limit that conditioned coverage on the vessel being “north of Cape
Hatteras, NC from June 1 until November 1 annually” if the vessel was “afloat.”
The vessel suffered damage while afloat during a storm in Florida in early June.
Because the vessel was outside of the covered navigational area when the loss
occurred, the policy does not cover the loss.
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IV. CONCLUSION
We REVERSE the judgment in favor of Shackleford and REMAND with
instructions for the district court to enter judgment in favor of Geico Marine.